ACCA AAA · Chapter 17
Internal audit
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Using the work of internal auditors
External auditor decides evaluate the function and the work
Internal audit function
- Assurance/consulting on governance, risk and controls
- May review controls, IT, balances and suspected fraud
External audit planning
- Improve understanding of entity and internal control
- Identify RoMM and significant matters
- Plan responses using relevant knowledge and findings
Use of prior work: ISA 610
- May change nature/timing or reduce extent of own work
- External auditor need not use it
- External auditor remains solely responsible for opinion
Objectivity
- Reporting line and access to TCWG
- Freedom from conflicting duties or management restriction
- Outsourcing does not automatically ensure objectivity
Competence
- Qualifications, experience and training
- Entity knowledge, staffing, time and resources
Systematic and disciplined approach
- Methods, planning and documentation
- Supervision, review, quality control and follow-up
Threshold
- Do not use work if any of these three conditions is absent
Relevance
- Does nature/scope suit overall strategy and audit plan?
- Coordinate planned activities with internal audit
- Communicate planned use to TCWG
External auditor does more when
- Greater judgement is required
- Assessed RoMM is higher, especially significant risks
- Objectivity support is weaker or competence lower
Retained responsibilities
- Make all significant audit judgements
- Remain sufficiently involved in the audit
Before relying on particular work
- Read reports and inspect supporting papers
- Assess planning, performance, supervision and review
- Check evidence, conclusions and consistency of reports
- Enquire and reperform some work
If work is deficient
- Perform additional procedures and reconsider use
Direct assistance
- Internal auditors work under external auditor direction
- Separate from using completed internal audit work
- Restricted for significant judgements and higher risks
- Prohibited under ISAs (UK)
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