The external auditor assesses the internal audit function of a company as highly effective. In respect of a material area of the financial statements where there is known to be a significant risk of misstatement and a high level of judgment is required, what reliance may the external auditor place on the work of the internal auditor?

Please select the right answer.

None, but may still rely on internal audit work in other areas

None, but may use internal audit staff to carry out supervised tests in this area

Some, but should obtain additional evidence to support the conclusions reached by the internal auditor

Full reliance in respect of the accuracy of the figures, but the external auditor must form his own judgment on accounting policies and presentation