Emerald Ltd maintains a large, full-time internal audit staff that reports directly to the chief accountant.Audit reports prepared by the internal auditors indicate that the structure is functioning as it should be and that the accounting records are reliable.The external auditor will probably:
A)eliminate tests of controls.
B)increase the depth of the procedures to obtain an understanding of controls directed towards operating efficiency.
C)avoid duplicating the work performed by the internal audit staff.
D)place limited reliance on the work performed by the internal audit staff.

Question

Quizplus · Accepted Answer

The external auditor is required to independently assess the reliability of the accounting records and internal controls. While the internal audit staff may have found the structure to be functioning as it should be, the external auditor cannot solely rely on their work and must perform their own testing to ensure the accuracy of the financial statements. Therefore, limited reliance should be placed on the work performed by the internal audit staff.

Emerald Ltd Maintains a Large, Full-Time Internal Audit Staff That