Assume that the external auditor decides that because of work performed by internal auditors, the audit risk has been reduced to an acceptable level. As a result of this assessment, the auditor can do which of the following?
A) The auditor must test the assertions directly and document a separate conclusion.
B) The auditor can decide that direct testing is not necessary.
C) The auditor must delegate the responsibility of expressing an opinion to the internal auditors.
D) The auditor can assume that inherent risk is zero.

Question

Quizplus · Accepted Answer

If the external auditor determines that the audit risk has been reduced to an acceptable level due to the work of the internal auditors, the auditor can decide that direct testing is not necessary. However, the auditor is still responsible for obtaining sufficient and appropriate audit evidence to support the opinion. Therefore, the auditor cannot assume that inherent risk is zero or delegate the responsibility of expressing an opinion to the internal auditors. Testing the assertions directly and documenting a separate conclusion may be necessary in some cases, but it is not mandatory if the auditor is satisfied with the work of the internal auditors.

Assume That the External Auditor Decides That Because of Work