Relationship between ASA 315 and ASA 610Relationship between ASA 315 and ASA 610

Relationship between ASA 315 and ASA 610

1. Many entities establish internal audit functions as part of their internal control and governance structures. The objectives and scope of an internal audit function, the nature of its responsibilities and its organisational status, including the function’s authority and accountability, vary widely and depend on the size and structure of the entity and the requirements of management and, where applicable, those charged with governance.
2. ASA 315 addresses how the knowledge and experience of the internal audit function can inform the external auditor’s understanding of the entity and its environment, the applicable financial reporting framework and the entity’s system of internal control, and identification and assessment of risks of material misstatement. ASA 315[3] also explains how effective communication between the internal and external auditors also creates an environment in which the external auditor can be informed of significant matters that may affect the external auditor’s work.
3. Depending on whether the internal audit function’s organisational status and relevant policies and procedures adequately support the objectivity of the internal auditors, the level of competency of the internal audit function, and whether the function applies a systematic and disciplined approach, the external auditor may also be able to use the work of the internal audit function in a constructive and complementary manner. This Auditing Standard addresses the external auditor’s responsibilities when, based on the external auditor’s preliminary understanding of the internal audit function obtained as a result of procedures performed under ASA 315, the external auditor expects to use the work of the internal audit function as part of the audit evidence obtained.[4] Such use of that work modifies the nature or timing, or reduces the extent, of audit procedures to be performed directly by the external auditor.
4. [Deleted by the AUASB. Refer Aus 1.2]
5. There may be individuals in an entity that perform procedures similar to those performed by an internal audit function. However, unless performed by an objective and competent function that applies a systematic and disciplined approach, including quality control, such procedures would be considered internal controls and obtaining evidence regarding the effectiveness of such controls would be part of the auditor’s responses to assessed risks in accordance with ASA 330.[5]