INTERNAL AUDIT – UNDERSTANDING AND PRELIMINARY ASSESSMENT QUESTIONNAIRE
The answers to the following questions may assist in obtaining an understanding and making a preliminary assessment of internal audit.
Questionnaire
Yes
No
N/A
Organisational Status
1 Who does the head of internal audit report to and is this appropriate?
2 Do those charged with governance's and/or management’s view of internal audit appear not to limit internal audit?
3 Is the head of internal audit free from:
(a) the influences of operational management which would impact on the head of internal audit’s objectivity?
(b) any operating responsibility?
4 Does the head of internal audit have:
(a) direct access (in case of need) to:
(i) the governing body?
(ii) the chairman of the governing body?
(iii) the chief executive?
(iv) the audit committee (if applicable)?
Questionnaire
Yes
No
N/A
Organisational Status – continued
(b) freedom/flexibility from direct instruction from those charged with governance as to the scope and direction of audit activity?
(c) freedom to communicate with the external auditor on relevant matters on a regular basis?
(If the answer to any of questions 3(a) or (b) or 4(a) to (c) is negative, describe how objectivity is achieved and maintained).
Scope of Function
5 (a) Does internal audit regularly examine the controls over all significant accounting operations which affect the financial report? (If not, describe the areas not covered by internal audit).
(b) Does the head of internal audit have flexibility to act using discretion on suggestions made by the external auditor as to areas to be included in the internal audit program?
(c) Do internal audit reports and working papers indicate that internal audit applies a professional approach to audit assignments?
(d) Has past experience shown that internal audit has been able to complete previous internal audit programs?
Questionnaire
Yes
No
N/A
Scope of Function – continued
6 (a) (i) Do internal audit reports identify weaknesses/problems and contain recommendations for improvements?
(ii) Are such reports addressed to the appropriate level of those charged with governance capable and able to achieve satisfactory audit results?
(iii) Are copies of all reports forwarded to:
the chairman of the governing body or chief executive? and/or
the audit committee (if applicable)?
(b) Are copies of all reports relating to accounting and associated records available to the external auditor?
(If 6(a) or (b) are answered in the negative, describe the method of reporting).
7 (a) Is there evidence, for example in the minutes of governing body and/or audit committee meetings that internal audit reports have been considered?
(b) Is there evidence that a person of senior authority, for example the chief executive, has taken action to see that internal audit recommendations are properly considered?
Questionnaire
Yes
No
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Scope of Function – continued
(If the answer to 7(a) or (b) is negative, describe the process for ensuring that consideration is given to internal audit reports and recommendations).
Technical Competence
8 Is the head of internal audit a professionally trained auditor? (If not, describe qualifications by training and by experience for the position held).
9 (a) Do the entity's hiring and/or internal promotion/transfer policies for internal audit require:
(i) tertiary qualifications?
(ii) formal professional qualifications?
(iii) previous internal audit experience?
(b) Does the entity provide internal audit staff with the opportunity to maintain professional competence, for example by encouraging:
(i) internal staff training?
(ii) attendance at external training and professional courses?
10 Do assignments undertaken reflect those charged with governance confidence in internal audit, and provide experience in audit related work?
Questionnaire
Yes
No
N/A
Technical Competence - continued
11 Do the reports prepared by internal audit reflect a clear understanding of the audit task undertaken and the expression of valid conclusions?
12 If the entity has a large internal audit function, does it contain an adequate proportion of professionally trained/experienced auditors?
Due Professional Care
13 (a) Does internal audit have a procedures manual clearly describing staff responsibilities and audit procedures concerning documentation?
(b) Is the work of internal audit controlled and supervised through managers or supervisors responsible to the head of the department, each of whom supervises the work of staff allocated?
14 (a) Does internal audit use written audit programs prepared in conformity with appropriate professional standards and practice?
(b) Are comprehensive audit programs prepared for all internal audit engagements?
15 (a) Does internal audit prepare working papers to record work done and conclusions drawn?
(b) Are the working papers reviewed by appropriate internal audit staff?
Questionnaire
Yes
No
N/A
Due Professional Care - continued
16 Where the internal audit activity is co-sourced or fully outsourced, is the relationship between the organisation and the third party provider appropriate and well managed?
(If the answer to any of questions 13 to 16 is negative describe the process used for planning, supervising, reviewing and documenting internal audit work).