That external auditors' reliance on internal audit work could produce a significant cost saving through reduction of external audit time external auditors assess ia work to determine the extent of their reliance on internal audit. Chapter 2 external and internal audit 8 introduction this chapter builds on chapter 1 but takes the issues of external and internal audit a step further and considers the importance of a good working relationship. 2 the external auditor and reliance on internal audit isa 610 considering the work of internal audit governs the situation where external auditors are auditing that operates an internal audit function reasons why external auditor should use internal audit much duplication of work may be eliminated - eg internal audit may already have detailed systems descriptions, flowcharts.
Gramling et al (2004) clarify that because reliance on internal audit can affect nature, timing, and extent of the annual audit program, discretion should be utilised when determining if reliance on internal audit work will increase the efficiency of the audit, yet not compromise quality. An important supporting evidence of the audit report and conclusions is the audit documentation, which is required by the sas 96 for the auditors understanding and review of the audit work, the nature of audit work performed, and to show the agreement between the records and the financial statements. One of the reasons why the auditors do not use the words we certify is that reliance is placed on sampling procedures it is implied from above that 100% examination is not mandatory the auditor may form his conclusions on the basis of tests performed on a sample of population.
Auditor, and that this responsibility is not reduced by reliance on the work of a management's expert or an auditor's expert brian pine is examiner for cat paper 8 and foundations in accountancy. The purpose of this study is to evaluate external auditors' reliance on internal audit's work when advanced audit techniques are introduced by the internal auditor and the impact this reliance has on budgeted audit hours. Project status complete objective(s) of project to revise isa 610, using the work of internal auditors to reflect developments in the internal auditing environment and changes in practice regarding the interactions between the external and internal auditors.
External auditors reliance on internal audit as a part of overall control system external auditors will have to test the design and operating effectiveness of the internal control system of their audit client's as this will directly affect the reliability of the company's financial information transactions or selected captions 2work of. In doing so, the auditor will need to identify the optimum balance between, on one hand, relying on internal controls and reducing the level of his substantive tests, and on the other hand, placing little or no reliance on internal controls and seeking audit satisfaction from a higher. State the factors that the external auditor should consider before placing reliance on the work of the internal auditor question one (a) you have recently been appointed as the external auditor of xyz ltd explain the stages you would take in the conduct of your audit.
This standard focuses on whether the external auditor can use the work of the internal audit function for purposes of audit, and the revised version of the standard, clarifies whether the internal auditors can be used to provide direct assistance to the external auditor. External auditors' reliance on internal auditors and its impact on audit fees: an empirical investigation reliance on internal audit work a total of 188 cases were distributed to audit managers. Major group companies are reliance industries limited (including main subsidiary reliance retail limited) and reliance industrial infrastructure limited organizational structure of reliance figure [ 1 ] reliance major subsidiaries reliance petroleum limited (rpl) was a subsidiary of reliance industries limited (ril) and was created to exploit the emerging opportunities, creating value in the refining sector worldwide. Audit essay international science press, examines the study of the relationship between internal audit and corporate governance with various argumentations of internal audit activities, attempting to sketch out their relationship. Most internet search results for internal audit, external audit, and reliance pertain to external audit reliance on internal audit's work although this test is far from scientific, it does show an interesting pattern.
Purpose - the purpose of this paper is to explore whether internal audit's reporting relationship with the audit committee and the client's business risk environment impact external auditors' reliance on the work of internal audit design/methodology/approach - an experiment is conducted. For example internal auditors may enable external auditors to understand the internal control system before any work is being carried out (haron et al 2004) for external auditors to rely on the work of internal auditors, the external auditors must assess the work of the internal audit function. Managing the internal audit activity is the responsibility of the chief audit executive (cae) mr eatough was the cae in this case, therefore it was his responsibility to oversee the quality of the firm's work and to report the outcomes to the board.
Note: when performing an integrated audit of financial statements and internal control over financial reporting, refer to paragraphs 16-19 of pcaob auditing standard no 5, an audit of internal control over financial reporting that is integrated with an audit of financial statements, for discussion on using the work of others to alter the nature, timing, and extent of the work that otherwise would have been performed to test controls. The board recently revised the internal auditing standard that serves the purpose of assisting the external auditor's in using the work of the internal auditors though external auditors are mainly concerned with auditing company's financial statements but lack of time and in some cases lack of resources raises a question as to their audit quality. Results of multiple discriminant analysis indicate internal audit work performance is the most important factor that determines the extent of external auditors' reliance on internal audit work overall, findings suggest that organizations can enhance corporate governance effectiveness by strengthening internal audit and fostering internal. Moore (1993) found similarity in judgment made in area of internal control and objective assessment by external auditor and internal auditor, so the former expected less audit effort as a result of reliance on the internal auditorsâ€™ work based on their knowledge of company operations, processes, and procedures (clark, etal (1980.