You are an Audit Senior at Manage $($Pty$)$ Ltd and have been assigned to audit Build

Limited $($Build$)$ with the financial year ending $31$ December $2023.$ Mange $($Pty$)$ Ltd has audited Build for the past $4$ years.

Background information

Build was incorporated in January $1995$ and is an investment property company that earns rentals from leasing these properties to retail businesses across South Africa, with the main head office in Cape Town.

Build has been listed on the Johannesburg Stock Exchange $($JSE$)$ since $01$ January

$2023,$ and because of the listing, Build decided to implement an Internal Audit

department to ensure compliance with internal controls and business processes.

Internal Audit Function

The Internal Audit department must comply with the Institute of Internal Auditors $($IIA$)$ Standards. Build$$s Internal Audit has implemented the following within the Internal

Audit Function:

$1.$ The Memorandum of Incorporation details the responsibility of the Internal Audit

function $($IAF$).$

$2.$ The Chief Audit Executive $($CAE$)$ must confirm to the board, every $2$ years, the

status of the Internal Audit Function $($IAF$)$ independence.

$3.$ The Chief Audit Executive $($CAE$)$ must communicate and interact directly with

the Financial Manager.

$4.$ The Board of Directors must develop and maintain a Quality Assurance and

Improvement Program $($QAIP$),$ which covers all aspects of the Internal Audit

Function $($IAF$).$

$5.$ The Quality Assurance and Improvement Program $($QAIP$)$ is only an external

assessment.

$6.$ For the Quality Assurance and Improvement Program $($QAIP$),$ the external

assessments must be done at least once every $10$ years by an unqualified

assessor$/$assessment team inside Build.

$3$ HAUD$332-1-$Jan$-$Jun$2024-$SA$1-$TA$-$V$3-08012024$

$7.$ The Chief Audit Executive $($CAE$)$ to communicate the results of the Quality

Assurance and Improvement Program $($QAIP$)$ to the senior management.

$8.$ The Board of Directors must evaluate and contribute to the improvement of

governance, risk management, and control processes.

$9.$ None one of the Internal Auditors do their continuing professional development

$($CPD$).$

Valuation of investment properties

Build values all of its investment property at fair value, and the properties are valued

at the end of each financial year. Build makes use of a valuation company called Max

$($Pty$)$ Ltd to perform the yearly valuations. From these valuation reports Build will pass

a journal in the annual financial statements annually to increase or decrease the value

of all the investment properties per the valuators report.

Build has been using Max $($Pty$)$ Ltd since Build$$s incorporation in $1995,$ and Max $($Pty$)$

Ltd has over $40$ years of experience in land and property valuation with a good

reputation within the industry.

Max $($Pty$)$ Ltd employs over $100$ staff members who are all skilled and adequately

trained to be property valuators. All employees are registered with the South African Council for the Property Valuers Profession $($SACPVP$),$ and valuators can only become members of this professional body when they have the appropriate degrees and undergo stringent training.

With reference to the valuation of properties:

$$ Describe the auditor$$s procedures in order to rely on the work of a

management expert Max $($Pty$)$ Ltd per ISA $500$ for the financial year

ending $31$ December $2023$ and

$$ Provide reasons within the scenario where the auditor may possibly

rely on Max $($Pty$)$ Ltd based on the auditor$$s procedures identified.