The Principal Auditor’s ProceduresThe Principal Auditor’s Procedures

The Principal Auditor’s Procedures

12 When planning to use the work of another auditor, the principal auditor shall consider the professional competence of the other auditor in the context of the specific assignment.

13 Some of the sources of information for this consideration could be common membership of a professional organisation, common membership of, or affiliation with, another firm or reference to the professional organisation to which the other auditor belongs. These sources can be supplemented when appropriate by enquiries with other auditors, bankers, etc. and by discussions with the other auditor.

14 The principal auditor shall perform procedures to obtain sufficient appropriate audit evidence, that the work of the other auditor is adequate for the principal auditor’s purposes, in the context of the specific assignment.

15 Under paragraph 14 of this Auditing Standard, the principal auditor needs to advise the other auditor of:

(a) the independence requirements regarding both the entity and the component and obtain written representation as to compliance with them;

(b) the use that is to be made of the other auditor’s work and report and make sufficient arrangements for the coordination of their efforts at the initial planning stage of the audit;

(c) matters such as areas requiring special consideration, procedures for the identification of intercompany transactions that may require disclosure and the timetable for completion of the audit; and

(d) the accounting, auditing and reporting requirements and endeavour to obtain written representation as to compliance with them.

16 The principal auditor might also, for example, discuss with the other auditor the audit procedures applied, review a written summary of the other auditor’s procedures (which may be in the form of a questionnaire or checklist) or review working papers of the other auditor. The principal auditor may wish to perform these procedures during a visit to the other auditor. The nature, timing and extent of audit procedures will depend on the circumstances of the engagement and the principal auditor’s knowledge of the professional competence of the other auditor. This knowledge may have been enhanced from the review of previous audit work of the other auditor.

17 The principal auditor may conclude that it is not necessary to apply procedures such as those described in paragraph 16 because sufficient appropriate audit evidence has previously been obtained that acceptable quality control policies and procedures are complied with in the conduct of the other auditor’s practice. For example, when they are affiliated firms the principal auditor and the other auditor may have a continuing, formal relationship providing for procedures that give that audit evidence such as periodic inter-firm review, tests of operating policies and procedures and review of working papers of selected audits.