Internal Audits

Question 1

When can the work of internal auditors be used

Answer 1

ISA 610 States that internal audit can be involved in substantive procedures only in areas where only limited judgement is required. All areas involving significant judgements or estimates must be handled by the external auditors

Question 2

When is the work of internal auditors not to be used

Answer 2

If any of these three qualities are absence:

Objectivity – who do the auditors report to

Competency-are the auditors are part of a professional body or are they qualified do they go training et cetera

Systematic-assess if the auditors carry out their work in a discipline and systematic way. Or their quality controls? Is there standard documentation? Is the work planned and reviewed?

Question 3

What should external audit assess regarding internal audit work before deciding to use it

Answer 3

The internal audit work was properly plans, executed, supervise, reviewed, documented

Sufficient appropriate evidence has been obtained to enable the internal auditors to draw a reasonable conclusion

The conclusion reached our appropriate and reports produced a consistent with the results of the work performed.

The assessment will involve the external audit reviewing the work papers of the internal audit and making enquiries of appropriate individuals. Must also include some of the performance of their work