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ALCALA, Joseph BARAÑA, Jehan MACANSANTOS, Christine PONCE, Debra AUD - 310 (B) March 8, 2018

This document discusses the external auditor's use of an entity's internal audit function. It provides guidance on determining whether and how to use the internal auditor's work, evaluating whether that work is adequate, and documenting related conclusions and procedures. The external auditor is responsible for their audit opinion regardless of any use of internal audit work. When using internal audit work, the external auditor must evaluate it and perform their own procedures to determine if it is adequate for the audit purposes.

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31 views14 pages

ALCALA, Joseph BARAÑA, Jehan MACANSANTOS, Christine PONCE, Debra AUD - 310 (B) March 8, 2018

This document discusses the external auditor's use of an entity's internal audit function. It provides guidance on determining whether and how to use the internal auditor's work, evaluating whether that work is adequate, and documenting related conclusions and procedures. The external auditor is responsible for their audit opinion regardless of any use of internal audit work. When using internal audit work, the external auditor must evaluate it and perform their own procedures to determine if it is adequate for the audit purposes.

Uploaded by

Xena Natividad
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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PSA 610

USING THE WORK OF INTERNAL AUDITORS

ALCALA, Joseph
BARAÑA, Jehan
MACANSANTOS, Christine
PONCE, Debra
AUD - 310 (B)
March 8, 2018
INTRODUCTION

SCOPE
 Deals with: Relevant internal auditor’s work
 DOES NOT deal with: Individual internal auditor providing
direct assistance to the external auditor in carrying out audit
procedures
WHAT’S THE RELATIONSHIP?

 Internal Auditors’ roles and objectives are determined by the


management or those charged with governance.
 Internal Audit function is not independent of the entity as is required of
the external audit function.
 External auditor’s responsibility towards his opinion is not reduced by his
use of the work of the internal auditor.
EFFECTIVE DATE

 Period beginning on or after December 15, 2009


OBJECTIVES

1. Whether, and to what extent, to use specific work of the


internal auditors; and
2. If so, whether such work is adequate for the purposes of the
audit.
DEFINITIONS

 Internal audit function - An appraisal activity established or


provided as a service to the entity.
 Internal auditors - Those individuals who perform the activities
of the internal audit function.
DETERMINE WHETHER AND TO WHAT EXTENT TO USE

 External auditor shall determine:


 Whether the internal auditor’s work is likely to be adequate for the
audit purposes; and
 If so, the planned effect of the work on the nature, timing or extent
of the external auditor’s procedures.
WHETHER THE WORK IS LIKELY TO BE ADEQUATE

 External auditor should evaluate:


 The objectivity of the internal audit function;
 The technical competence of the internal auditors;
 Whether the work of the internal auditors is likely to be carried out
with due professional care; and
 Whether there is likely to be effective communication between the
internal auditors and the external auditor.
PLANNED EFFECT ON THE AUDIT PROCEDURES

 External auditor should consider:


 The nature and scope of specific work performed, or to be
performed, by the internal auditors;
 The assessed risks of material misstatement at the assertion level for
particular classes of transactions, account balances, and disclosures;
and
 The degree of subjectivity involved in the evaluation of the audit
evidence gathered by the internal auditors in support of the relevant
assertions.
USING SPECIFIC WORK OF THE INTERNAL AUDITOR

 External auditor shall evaluate and perform audit


procedures on that work to determine its adequacy
for the external auditor’s purposes.
 Evaluate:
 The work was performed by internal auditors having
adequate technical training and proficiency;
 The work was properly supervised, reviewed and
documented;
 Adequate audit evidence has been obtained to enable
the internal auditors to draw reasonable conclusions;
 Conclusions reached are appropriate in the circumstances
and any reports prepared by the internal auditors are
consistent with the results of the work performed; and
 Any exceptions or unusual matters disclosed by the internal
auditors are properly resolved.
DOCUMENTATION

 External auditor shall document:


 Conclusions
 Audit procedures
- end -

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