Usingtheworkof Internalauditors

ISSA I 1610

Pr AC T IC e NOT e 610

PracticeNote1toInternationalStandardonAuditing(ISA)610 (Revised 2013)

UsingtheWorkof InternalAuditors

Background

ThisPracticeNoteprovidessupplementaryguidanceon ISA610 (Revised 2013) – Using theWorkof InternalAuditors. It is read together with the ISA. ISA 610is(Revised 2013)effective for audits of financialstatements for periods begin- ningendingon or after December 15, 200914.ThePracticeNoteiseffectivethesamedateas theISA.

IntroductiontotheISA

ISA610(Revised 2013) dealswiththeexternalauditor’sresponsibilitiesrelating toif usingthework of internalauditors when the external auditor has determined, in accordance with ISA 315 that. This includes (a) using the work of the internal audit function is likely to be relevant to the in obtaining audit.

ISA 610 does not deal with instances when individual evidence and (b) using internal auditors to provide direct assistance tounder the direction, supervision and review of the external auditor in carrying out audit procedures..

Contentof thePracticeNote

P1.ThePracticeNoteprovidesadditionalguidancefor publicsectorauditorsrelatedto: (a) Overall Considerations.

(a) Overall considerations

(b) Determiningwhether, in which areas,andtowhatextent touse theworkof theinternalauditors.

(c) Determining whether, in which areas, and to what extent internal auditors can be used to

provide direct assistance

Applicabilityof the ISAinPublic SectorAuditing

P2.ISA610(Revised 2013) is applicable to auditors of public sector entities in their role as auditors of financialstatements.

Additional Guidanceon PublicSectorIssues

OverallConsiderations

P3.The objectives of a financialaudit in the public sector areoften broader than expressing an opin-

ionopinion whether the financialstatements have been prepared, in all material respects, in accordance

1 All Practice Notes are considered togetherwithISSAI 1000, “general Introduction to the INTOSAI Financial Audit guidelines.”

2 ISA 315, ”Identifying and Assessing the risks of Material Misstatement Through Understanding the entity and Its environment.” paragraph 23.

USINg The WOrk OF INTerNAl AUdITOrS

ISSAI 1610

PRACTICE NOTE 610

ISSAI 1610

Pr AC T IC e NOT e 610

with the applicable financialreporting framework (i.e. the scope of the ISAs).Additional objec- tivesobjectivesmayincludeauditandreportingresponsibilities,for example,relatingtoreportingwhether thepublicsectorauditorsfound anyinstancesof non-compliancewithauthorities,including budgetsandaccountabilityframeworks,and/orreportingon theeffectivenessof internalcontrol. Public sector auditors may findactivities carried out by the internal audit function relating to the entity´snon-compliancewithauthoritiesincludingbudgetandaccountabilityandtheentity´s effectivenessof internalcontrolrelevanttotheaudit.In such casespublicsectorauditorsmayuse thework of theinternalauditorstosupplementtheexternalauditwork intheseareas.

Determining Whether, in Which Areas, and to What Extent to Use

TheWork of the Internal Auditors

P4.Publicsectorauditors in their determination of whether the work, when evaluating the objectivityof theinternalauditors are likely to be objective for the purposes of the audit function, as notedrequired in paragraph 915(a) of the ISA, con- siderconsider any relevant INTOSAI guidance related to assessing the objectivity of the internal auditors and,ifrelevant,theexistenceandreportsof anypublicsectorinternalauditfunctionoversight body. However, wheretheinternalauditfunctionisestablishedby legislationor regulation,and thefollowingcriteriaaremet,thereisastrong indicationthattheinternalauditfunctionmaybepresumed to be objective:

(a)(a) Is accountabletotopmanagement,for exampletheheador deputyheadofthegovernment entity,andtothosechargedwithgovernance;

(b)(b) Reports theauditresultsbothtotopmanagement,for exampletheheador deputyheadof the governmententity,andthosechargedwithgovernance;

(c)(c) Is locatedorganizationallyoutsidethestaffandmanagementfunctionof theunitunderaudit;

(d)(d) Is sufficientlyremoved from political pressure to conduct audits and report findings,opinions, and conclusions objectively without fear of political reprisal;

(e)(e) Does notpermitinternalauditstafftoauditoperationsfor whichtheyhave previouslybeenresponsible for to avoid any perceived conflictof interest; and

(f) Has accesstothosechargedwithgovernance.

USINg The WOrk OF INTerNAl AUdITOrSDetermining Whether, in Which Areas, and to What Extent Internal

Auditors Can Be Used to Provide Direct Assistance

P5. The objectives of a financial audit in the public sector are often broader than expressing an opinion in accordance with an applicable financial reporting framework. Such broader objectives often lead to greater expectations of the users of the financial statements, including the public at large, with respect to such matters as the independence of those conducting the audit.

For that reason, the expectations of public sector auditors within an applicable jurisdiction and the public interest generally, may be relevant in the evaluation of the threats and safeguards to using internal auditors to provide direct assistance, in addition to those criteria already identified in the ISA.

USING THE WORK OF INTERNAL AUDITORS