Question

In an engagement performed at the organization's real estate development subsidiary, the engagement objective was to determine that capitalized land improvements had been assigned equally to all developed lots. The internal auditors identified the following information:

1.Independent appraisals of all lot values

2.Sales records for similar subdivision lots

3.An analysis of market values of each lot

Which of the following informational criteria, if any, are violated?
1) Sufficiency and relevance.
2) Reliability and sufficiency.
3) Relevance and reliability.
4) No criteria are violated.

Answer 1

The information used by the internal auditors to evaluate the distribution of capitalized land improvements was appropriate, indicating that no informational criteria have been violated.

Step-by-step explanation:

The information provided by the internal auditors during the evaluation of capitalized land improvements in a subsidiary's real estate development indicates that none of the informational criteria are violated.

The auditors have obtained independent appraisals of all lot values, sales records for similar subdivision lots, and conducted an analysis of market values for each lot. These pieces of information are both relevant to the objective of ensuring equal distribution of capitalized land improvements and are reliable, as they come from independent appraisals and actual sales records, which also ensure sufficiency of the data.