ACCA Advanced Audit and Assurance (AAA) Practice Exam

In which circumstance would ISA 610 be relevant for an external auditor?

1. When evaluating management's estimates

2. When assessing the effectiveness of internal controls

3. When planning to use the work of internal auditors

4. When determining the materiality of financial statements

The correct answer is: When planning to use the work of internal auditors

ISA 610, titled "Using the Work of Internal Auditors," is particularly relevant when an external auditor is planning to utilize the work performed by the internal audit function. This standard provides guidance on how external auditors should consider the competence and objectivity of the internal auditors, as well as the work they have done. When external auditors decide to rely on internal audit work, they must evaluate the internal audit function's independence, methodologies, and work quality. This ensures that the evidence gathered is reliable and can be integrated into the external audit's overall procedures and conclusions. Therefore, when the external auditor is in the planning stage and considering how the internal auditors’ work might be applied or relied upon, ISA 610 comes into play to support that evaluation process. The other options listed do not directly pertain to the specific guidance provided by ISA 610. While they may relate to aspects of the audit process, only option C specifically addresses the scenario in which ISA 610 applies.