When an Independent Auditor Decides That the Work Performed by Internal

question 34

Multiple Choice

When an independent auditor decides that the work performed by internal auditors may have a bearing on the nature, timing and extent of contemplated audit procedures, the independent auditor should plan to evaluate the objectivity of the internal auditors.Relative to objectivity, the independent auditor should:

• A)consider the organisation level to which internal auditors report the results of their work.
• B)review the quality control program in effect for the internal audit staff.
• C)examine the quality of the internal audit reports.
• D)consider the qualifications of the internal audit staff.

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Definitions:

Insufficient Capacity

A situation where a firm cannot meet the demand for its products or services due to limitations in its production or service capabilities.

Plant Asset

Long-term tangible assets used in the production and sale of goods and services, such as machinery and buildings.

Productive Demands

The requirement for goods and services based on their use in producing other goods and services.

Additional Costs

Expenses incurred that are above the initially planned or estimated amounts.