AUE3702 ASSIGNMENT 2
1.1 The external auditors’ procedures to evaluate whether reliance can be placed on verification of
property, plant and equipment performed by the internal audit function.
The engagement partner assured the audit committee that they will rely internal auditors to
reduce the audit fee for the current audit.
This is incorrect to rely on the internal audit function to reduce the audit fee.
The following should be considered to determine the extent of work of the internal audit
function can be used:
• Objective of the internal audit function
Refers to perform those tasks without allowing bias, conflict of interest or undue
influence.
We need to know whether internal audit function is free of any conflicting responsibility
We need to know whether those charged with governance oversee employment
decisions related to internal audit function.
• Competence of the internal audit function
Refers to the attainment and maintenance of knowledge and skills of the function at the
level of required.
Whether the internal audit function is adequately and appropriately resourced relative
to the size of the entity.
Whether there are established policies for hiring, training, and assigning internal
auditors to the audit engagement.
In conclusion we cannot provide reliance on the internal audit function before assessing the
objective and competence of the audit function.
1.2 Concerns on the working paper prepared by the internal audit function on the physical
verification of property, plant, and equipment.
• There is no reviewer, preparer, and review date.
• It does not show who verified the asset and the date on which the asset verified.
• It does show whether the assets verified are in good condition and no signs of
impairment.
• It does not show the location on which the assets were verified.
• It does have signatures of the people verified the assets.
• There is no audit procedures and objective.
• There is no conclusion.
ACCADEMIC NEEDS CONTACT /0651609781
1.1 The external auditors’ procedures to evaluate whether reliance can be placed on verification of
property, plant and equipment performed by the internal audit function.
The engagement partner assured the audit committee that they will rely internal auditors to
reduce the audit fee for the current audit.
This is incorrect to rely on the internal audit function to reduce the audit fee.
The following should be considered to determine the extent of work of the internal audit
function can be used:
• Objective of the internal audit function
Refers to perform those tasks without allowing bias, conflict of interest or undue
influence.
We need to know whether internal audit function is free of any conflicting responsibility
We need to know whether those charged with governance oversee employment
decisions related to internal audit function.
• Competence of the internal audit function
Refers to the attainment and maintenance of knowledge and skills of the function at the
level of required.
Whether the internal audit function is adequately and appropriately resourced relative
to the size of the entity.
Whether there are established policies for hiring, training, and assigning internal
auditors to the audit engagement.
In conclusion we cannot provide reliance on the internal audit function before assessing the
objective and competence of the audit function.
1.2 Concerns on the working paper prepared by the internal audit function on the physical
verification of property, plant, and equipment.
• There is no reviewer, preparer, and review date.
• It does not show who verified the asset and the date on which the asset verified.
• It does show whether the assets verified are in good condition and no signs of
impairment.
• It does not show the location on which the assets were verified.
• It does have signatures of the people verified the assets.
• There is no audit procedures and objective.
• There is no conclusion.
ACCADEMIC NEEDS CONTACT /0651609781
