Under What Circumstance Is It Appropriate for the Auditor to Rely

question 78

Multiple Choice

Under what circumstance is it appropriate for the auditor to rely on the work of an internal auditor?

• A)It is never acceptable for the external auditor to rely upon the work of the internal auditor.
• B)The external auditor may relay on certain of the work of the internal auditor after making a comprehensive assessment of the auditor and his/her work.
• C)The external auditor may rely on the work of the internal auditor if he/she is also a CPA.
• D)There is no restriction in relying upon the work of internal auditors.

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Definitions:

Consolidated Balance Sheet

A financial statement that combines the assets, liabilities, and shareholders' equity of a parent company and its subsidiaries into one document.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account column totals that are equal.

Book Value

The value of a company or asset according to its financial statements, calculated as total assets minus intangible assets (like patents) and liabilities.

Trademark

A recognizable sign, design, or expression which identifies products or services of a particular source from those of others.