You joined an auditing firm called Horizon Auditors and are the Audit Manager on a

client called Barnyard $($Pty$)$ Ltd who has a $30$ June $2023$ financial year$-$end. Horizon

Auditors have been the auditors of Barnyard $($Pty$)$ Ltd for the last four years.

Internal Audit Function of Barnyard $($Pty$)$ Ltd

Barnyard $($Pty$)$ Ltd was incorporated in July $2014$ and has outsourced its Internal Audit

Department up until $30$ June $2022.$ Mr$.$ Adams, the CEO $($Chief Executive Officer$)$

however decided to establish an Internal Audit Department on $1$ July $2022$ during the

current financial year. Mr$.$ Adams appointed his $24-$year$-$old niece, Miss. Wildschut as

the Head of the Internal Audit Department. The main focus of the Internal Audit

Department is to develop a strong in$-$house internal audit function. Miss. Wildschut,

who is a human resource graduate, is joined by six other members of the Internal Audit

Department.

Members of the Internal Audit Department:

Miss. Wildschut, Head of the Internal Audit Department and a human resource

graduate. She is a member of the IIA.

Three qualified internal auditors, with diplomas in internal auditing. Only one is

a member of the IIA.

Two human resources graduates. None of them are members of the IIA.

One administrator who is not a member of the IIA.

The Internal Audit Department reports through Miss. Wildschut directly to Mr$.$ Adams.

Miss. Wildschut is also the link between Mr$.$ Ceasar $($Chairman of the Audit

Committee$)$ and the Internal Audit Department. Mr$.$ Adams was instrumental in the

development of the Internal Audit Department, as he developed most of the internal

audit function policies $($recruitment$,$ promotion, and reporting policies$).$ However, he

did not develop the remuneration policy.

The Internal Audit Department was requested to plan and attend to the inventory

counts at Barnyards $($Pty$)$ Ltd$\text{'}$s various warehouses. Mr$.$ Adams has been complaining

about the high audit fees charged by Horizon Auditors and indicated that HorizonREQUIRED:

Discuss, in terms of ISA $610,$ whether Horizon Auditors can place reliance on the work

that will be performed by the Internal Audit Team of Barnyard $($Pty$)$ Ltd for the financial

year ended $30$ June $2023$ as prescribed by the Internal Standards on Auditing.

$(20$ marks$)$