During planning of an assurance engagement over a procurement process, an internal auditor must establish evaluation criteria. Which statement best describes the purpose of evaluation criteria in an engagement?
- AThey define the standards or benchmarks against which the audited condition is compared to reach conclusions. Correct
- BThey list the specific audit procedures the team will perform to gather sufficient evidence.
- CThey set the scope boundaries that determine which units and periods the engagement will examine.
- DThey record the residual risk ratings that management has accepted for the process under review.
Why A is correct: Evaluation criteria are the benchmarks (such as policy, regulation, or good practice) against which the actual condition is measured to form findings and conclusions.
Why B is wrong: This is tempting because procedures also appear in the plan, but procedures are the work programme, not the standards used to judge the condition against a benchmark.
Why C is wrong: Scope defines coverage and boundaries, which candidates confuse with criteria, but scope does not supply the benchmark used to evaluate whether the condition is acceptable.
Why D is wrong: Residual risk ratings inform risk-based planning and sound plausible, but they are management's risk position, not the yardstick the auditor uses to evaluate the condition.