An internal auditor's work would most likely affect the nature, timing, and extent of an independent CPA's auditing procedures when the internal auditor's work relates to assertions about the:

Question

Quizplus · Accepted Answer

Choice "C" is correct. In making judgments about the extent of the effect of the internal auditor's work on the auditor's procedures, the auditor considers the materiality of financial statement amounts, the risk of material misstatement of the assertions related to these financial statement amounts, and the degree of subjectivity involved in the evaluation of the audit evidence gathered in support of the assertions. As the degree of subjectivity increases, the need for the auditor to perform tests of the assertions increases. Testing the existence of fixed asset additions involves very little subjectivity, and thus work performed by the internal auditor may reduce the auditor's testing in this area. Choice "A" is incorrect. Testing the existence of contingencies involves much subjectivity, and should, therefore, be performed by the auditor. Choice "B" is incorrect. Testing the valuation of intangible assets involves much subjectivity, and should, therefore, be performed by the auditor. Choice "D" is incorrect. Testing the valuation of related party transactions involves much subjectivity, and should, therefore, be performed by the auditor.

An Internal Auditor's Work Would Most Likely Affect the Nature