Question

In connection with the examination of financial statements by an independent auditor, management suggests that members of the internal audit staff be utilized to minimize audit costs. Which of the following tasks could most appropriately be delegated to the internal audit staff?

1) Selection of accounts receivable for confirmation, based upon the internal auditor's judgment as to how many accounts and which accounts will provide sufficient coverage.
2) Preparation of schedules for negative accounts receivable responses.
3) Evaluation of the internal control for accounts receivable and sales.
4) Determination of the adequacy of the allowance for doubtful accounts.

Answer 1

The most appropriate task for internal audit staff is the preparation of schedules for negative accounts receivable responses, as it involves clerical work without requiring professional judgment, unlike the selection of accounts or evaluating the internal control and allowance adequacy.

Step-by-step explanation:

In the context of an independent audit of financial statements, the utilization of internal audit staff can be a practical way to reduce costs. However, the tasks delegated should be non-judgmental and not require the external auditor's professional judgment. Among the options provided:

• Selection of accounts receivable for confirmation requires auditor's professional judgment and therefore is not suitable for delegation to internal audit staff.
• Preparation of schedules for negative accounts receivable responses can be delegated, as it is a clerical task and does not involve the application of professional judgment.
• Evaluation of the internal control for accounts receivable and sales requires an external auditor's independent perspective and should not be delegated.
• Determination of the adequacy of the allowance for doubtful accounts requires professional judgment and also should not be delegated to internal staff.

Therefore, the task that is most appropriate for delegation to internal audit staff is the preparation of schedules for negative accounts receivable responses.