Part A

a$)$ Your audit client, Bath Ltd$,$ has recently hired an internal auditor to deal with increased regulation requirements. Siobhan, the CEO of Bath Ltd$,$ has indicated that she believes the presence of this internal auditor will dramatically reduce the work that your audit firm will need to perform and she anticipates that this will impact on the audit fee.

REQUIREMENT:

The audit engagement partner is concerned about this request and asked you to draft a report to the CEO where $($if at all$)$ you will be able to reduce your audit testing due to the work of the newly$-$appointed internal auditor. The audit engagement partner has indicated that your report should include the audit requirements imposed by ISA $610-$ Using the work of Internal Auditors.

b$)$ REQUIREMENT:

i$)$ Outline the auditor's rights and duties in relation to resignation and removal.

ii$)$ Discuss the purposes of audit working papers and explain why each purpose is important.