using the work of internal audit function

Question 1

internal audit function

Answer 1

a function of an entity that performs assurance and consulting activities designed to evaluate and improve the effectiveness of the entities

governance

risk management

internal control processes.

Question 2

2 ways to use the internal audit function

Answer 2

1. to obtain audit evidence-substitute internal audit work for work the external auditor would have to do. (test of control, substantive procedures). working as part of audit team
2. to provide direct assistance-use the internal audit to perform procedures subject to the external auditor’s direction, supervision and review.

Question 3

when the external auditor is going to use internal audit, they must verify 3 things

Answer 3

objectivity- report to BOD or high level of governance. not someone like controller who is below BOD.

competence-educaiton, experience, certification

systematic and disciplined approach-the ia function should use a formal structured approach including quality control

Question 4

if using the IA to obtain evidence the external auditor should

Answer 4

read the IA function reports

perform procedures to evaluate IAs planning, conclusions etc

perform some of IA work to be used

Question 5

When IA is providing direct assistance must verify 2 things

Answer 5

objectivity
competence

external auditor takes 100% responsibility for all conclusion reached by internal audit. no need to refer to internal audit in report because you take full responsibility for them.