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Flashcards in using the work of internal audit function Deck (5)
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1

internal audit function

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.

2

2 ways to use the internal audit function

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.

3

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

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

4

if using the IA to obtain evidence the external auditor should

read the IA function reports

perform procedures to evaluate IAs planning, conclusions etc

perform some of IA work to be used

5

When IA is providing direct assistance must verify 2 things

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.