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Dear Gromit,
Hello!
As the internal audit is procedural rather than risk-based, I have a question regarding these two methods.
I know that risk-based approach is about setting materiality and performance materiality as the benchmark for the purpose of audit and the level of materiality is the discretion of the auditor. So for the procedural one, should I assume there is a predetermined materiality level set for all functions in the internal audit (e.g. set in a manual for it); or alternatively, there is no things such like materiality for the internal audit?
Thanks a lot!
Have a nice day!
Internal audit is not really concerned with materiality or whether the FS give a true and fair view. They look in detail at whether or not employees are following the specified accounting procedures and whether or not any procedures need to be changed to improve internal control.
IA get very excited about any departure from the rules as they can write a report about it and that justifies their existence!
@Gromit said:
Internal audit is not really concerned with materiality or whether the FS give a true and fair view. They look in detail at whether or not employees are following the specified accounting procedures and whether or not any procedures need to be changed to improve internal control.IA get very excited about any departure from the rules as they can write a report about it and that justifies their existence!
Thanks a lot Gromit!
I now have another question regarding the compliance with laws of regulation of audit:
ISA 250 states that external auditors must ensure the compliance of laws and regulations by those who charged with governance in terms of the material amounts in FSs.
Based on this, I am confused with this ISA:
1. ISA 250 requires the check of compliance of laws and regulations so should I assume the compliance of laws and regulations is important to those who charged with governance (they must comply when preparing FS esp. in material aspects) and the external auditor (they have the duty to check for the non-compliance)? Also, I cannot find any specific ISA regarding the compliance by those who charged with governance. Should I think compliance with law and regulations by the business is an implied duty set by the statue?
2. ISA 250 specifically states the non-compliance is about the business as whole rather than a personal matter. For instance, if the CFO committed crime about the insider dealing or money laundering, is it a personal matter; or is it the non-compliance of the whole business and it should be handled by the external auditor?
Thanks a lot!
Have a nice day!
@Gromit said:
Internal audit is not really concerned with materiality or whether the FS give a true and fair view. They look in detail at whether or not employees are following the specified accounting procedures and whether or not any procedures need to be changed to improve internal control.IA get very excited about any departure from the rules as they can write a report about it and that justifies their existence!
Dear Gromit,
Following on from previous post:
ISA UK and Ireland’s definition says: Non-compliance – Acts of omission or commission by the entity, either intentional or unintentional, which are contrary to the prevailing laws or regulations. Such acts include transactions entered into by, or in the name of, the entity, or on its behalf, by those charged with governance, management or employees. Non-compliance does not include personal misconduct (unrelated to the business activities of the entity) by those charged with governance, management or employees of the entity.
—On this occasion, my question is still about how to distinguish the ‘personal misconduct’ and the non-compliance by those who charged with governance. If in the Board someone has the prevailing power (not consistent with UK Corporate Governance code), e.g. still the CFO and he or she committed the crime such as fraudulent FR , should it be seen as a personal conduct?—
Thank you once again for your help!
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