- This topic has 5 replies, 2 voices, and was last updated 6 years ago by
.
- Posts
Can an external auditor of a listed company provide internal audit services to the same company if different teams are used ?
For a PIE, it would be prohibited if the internal audit services relate to:
– a significant part of the internal controls over financial reporting or
– financial accounting systems (or amounts/disclosures) that are significant (material) to the financial statements.For any client, an external auditor cannot assume management responsibilities (e.g. in the context of internal audit services it would be a nonsense if an audit firm were to report to TCWG on their internal audit activities on behalf of management – and also to report on internal controls to TCWG as external auditor).
If not prohibited by these restrictions the auditor would assess the threats to the fundamental principles and reduce them to an acceptable level (e.g. different teams).
Or is there some flexibility for non listed clients? Like any independent external staff can be appointed for internal audit of non listed firms
PIE is “public interest entity” (includes listed clients). Where I say “any client” I mean PIE or non-PIE. So in terms of assuming management responsibility there is no flexibility.
Subject to these restrictions (i.e. not a PIE and not assuming management responsibility), an external audit can provide internal audit services to a client with appropriate safeguards (e.g. different teams carrying out each assignment).
- You must be logged in to reply to this topic.