College of Accounting Education

3F Facundo Hall, Business and Engineering Building

Matina Campus, Davao City
Telefax: (082)305-5456
Phone No.: (082)300-5456 Local 137

Reference:
a. PSA 610 – Using the work of internal auditors
b. PSA 620 – Using the work of an auditor’s expert

1. Which of the following is correct regarding the relationship between the internal audit function and the
external auditor?
I. While the objectives of the internal audit function and the external auditor are different, some
of the ways in which the internal audit function and the external auditor achieve their respective
objectives may be similar.
II. The external auditor has sole responsibility for the audit opinion expressed, and that
responsibility is not reduced by the external auditor’s use of the work of the internal auditor.

a. I only c. Both a and b

b. II only d. Neither a nor b

2. Which of the following shall the auditor must determine before considering whether to use the work of
an internal auditor or not?
a. Whether the work of the internal auditors is likely to be adequate for purposes of the audit
b. The planned effect of the work of the internal auditors on the nature, timing or extent of the
external auditor’s procedures.
c. Both a and b.
d. Neither a nor b.

3. What are the factors that must be evaluated by the external auditor to determine whether the work of the
internal auditors is adequate for the purposes of the audit?
a. The objectivity of the internal audit function
b. The technical competence of the internal auditors
c. Whether the work of the internal auditors is likely to be carried out with due professional care
d. All of the above.

4. When determining whether the work of internal auditors is likely to be adequate for the purposes of the
audit, the external auditor must assess the objectivity of the internal auditor. Which of the following
pertains to objectivity?
a. Whether the internal auditors are members of relevant professional bodies.
b. Whether the internal auditors are free of any conflicting responsibilities.
c. Whether activities of the internal audit function are properly planned, supervised, reviewed and
documented.
d. Whether the internal auditors are members of relevant professional bodies.

5. Which of the following relates to the “examination of financial and operating information” function of
the internal auditor?
a. The internal audit function may be assigned specific responsibility for reviewing controls,
monitoring their operation and recommending improvements thereto.
b. The internal audit function may be assigned to review the means used to identify, measure,
classify and report financial and operating information, and to make specific inquiry to
individual items, including detailed testing of transactions, balances and procedures.
c. The internal audit function may assist the organization by identifying and evaluating significant
exposure to risk and contributing to the improvement of risk management and control system.
d. The internal audit function may be assigned to review the economy, efficiency and effectiveness
of operating activities, including non-financial activities of an entity.

6. Which of the following best describes auditor’s expert?

a. An individual or organization possessing expertise in a field other than accounting or auditing,
whose work in that field is used by the entity to assist the entity in preparing the financial
statements.
b. An individual or organization possessing expertise in a field other than accounting or auditing,
whose word in that field is used by the auditor in obtaining sufficient appropriate audit evidence.
c. Both a and b.
 College of Accounting Education
3F Facundo Hall, Business and Engineering Building
Matina Campus, Davao City
Telefax: (082)305-5456
Phone No.: (082)300-5456 Local 137

d. Neither a nor b.

7. Which of the following matters may an external auditor not seek for the assistance of an expert?
a. The actuarial calculation of liabilities associated with insurance contracts or employee benefit
plans.
b. The estimation of oil and gas reserves.
c. The determination of the present value of the entity’s loan receivable.
d. The interpretation of contracts, laws and regulations.

8.