Evaluating the Work of Internal AuditEvaluating the Work of Internal Audit

Evaluating the Work of Internal Audit

20 When the external auditor intends to use specific work of internal audit, the external auditor shall evaluate and perform audit procedures on that work to confirm its adequacy for the external auditor’s purposes.

21 Under paragraph 20 of this Auditing Standard, the auditor needs to evaluate the specific work of internal audit which involves consideration of the adequacy of the scope of work and related programs and whether the assessment of the internal audit remains appropriate. This evaluation may include consideration of whether:

• the work is performed by persons having adequate technical training and proficiency as internal auditors and the work of assistants is properly supervised, reviewed and documented;
• sufficient appropriate audit evidence is obtained to be able to draw reasonable conclusions;
• conclusions reached are appropriate in the circumstances and any reports prepared are consistent with the results of the work performed;
• identified issues and risks were reported to the relevant governance body; and
• any exceptions or unusual matters disclosed by internal audit are properly resolved.

22 The nature, timing and extent of the audit procedures performed on the specific work of internal audit will depend on the external auditor’s judgement as to the risk of material misstatement of the area concerned, the assessment of internal audit and the evaluation of the specific work by internal audit. Such audit procedures may include examination of items already examined by internal audit, examination of other similar items and observation of internal audit procedures.

23 Under ASA 230 Audit Documentation, the external auditor needs to record conclusions regarding the specific internal audit work that has been evaluated and the audit procedures performed on the internal auditor’s work.