RELIANCE ON THE WORK OF OTHERS

Internal audit ISA 610

Functions of internal audit
Monitoring of internal control
Examination of financial and operating information
Value for money audit : Economy, efficiency and effectiveness
Compliance with laws and regulations
Special investigations

Impact on external audit
May be able to rely on work of IA
Provides an opportunity reliance on IA allows for a more efficient audit; but
Also a threat to independence / objectivity and audit quality
Note that the focus of IA work may not be appropriate IA considers risk to the
business, which may be different from audit risk that EA is interested in

Therefore if EA wants to rely upon IA they need to

1. Assess the IA function in general
organisational status
scope of function
technical competence
due professional care

2. Evaluate specific IA work on which they want to place reliance
adequate training
sufficient appropriate evidence
conclusions appropriate
exceptions are resolved
amendments must be made to the audit programme as a result of reliance on IA

Experts ISA 620

Similar to reliance on IA EA needs to consider

1. Competence and objectivity of the expert - Qualifications
2. Whether the scope of the experts work is appropriate - experience
3. Whether the work is appropriate audit evidence
4. References of the work they do
5. Confidentiality issues sign a confidentiality agreement
6. Acceptance by other staff within the team