Question

The first-year auditor on the engagement has suggested that since no exceptions were detected in previous years, no work on internal controls is required because last year’s evidence will be sufficient.

-Explain why the first-year auditor’s suggestion may or may not be appropriate and outline what work is required.

-Explain the concept of benchmarking. Why is it appropriate for an auditor to use a benchmarking audit strategy that uses information from tests of controls performed in prior years?

Answer 1

An auditor need to check and verify all transactions and internal control related to finance. An auditor suggestion is not appropriate that since previous year no any exceptions found therefor he don't require evidence this year as well.

An auditor give opinion on the basis of evidance obtained by him in current financial year not in previous year therefor that auditor suggestion is not appropriate.

Benchmarking is an approach of setting goals and measuring productivity based on best industry practices. It gives information against which performance can be measured. Benchmarking helps in improving performance by learning from the best practices and the processes by which they are achived.

It is appropriate for auditor to evaluate the work done by him and their staff that all work can be complete at given time frame and no any work remain to check. It also increase the efficiency of the auditor.

It helps auditor to use the benchmarking audit strategy where auditor compare and analyze the date with previous year and find the variance if any.

I hope this clear your doubt.

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