CASE STUDY Thomas is a junior auditor on the audit team for James Ltd (James). The same audit firm has been James auditor for the past two years. During this time, the auditors have completed both the financial audit and the compliance audit for the Department of Treasury and Finance, stating that the business has adhered to the Corporations Act 2001. James has requested that the auditors undertake both audit engagements again for the current year. In each of the previous two years, the audit team has tested all of James internal controls relevant to ensuring compliance with the Regulations. There have been no exceptions detected in this testing of controls in the past two years. A combined approach is also planned for the current year.

Thomas suggests that, since there were no exceptions detected in previous years, no work on internal controls is required because last years evidence will be sufficient.

Required

Explain why Thomas suggestion is not appropriate.