PSA 610

USING THE WORK OF INTERNAL AUDITORS

ALCALA, Joseph
BARAÑA, Jehan
MACANSANTOS, Christine
PONCE, Debra
AUD - 310 (B)
March 8, 2018
INTRODUCTION

SCOPE
 Deals with: Relevant internal auditor’s work
 DOES NOT deal with: Individual internal auditor providing
direct assistance to the external auditor in carrying out audit
procedures
WHAT’S THE RELATIONSHIP?

 Internal Auditors’ roles and objectives are determined by the

management or those charged with governance.
 Internal Audit function is not independent of the entity as is required of
the external audit function.
 External auditor’s responsibility towards his opinion is not reduced by his
use of the work of the internal auditor.
EFFECTIVE DATE

 Period beginning on or after December 15, 2009

OBJECTIVES

1. Whether, and to what extent, to use specific work of the

internal auditors; and
2. If so, whether such work is adequate for the purposes of the
audit.
DEFINITIONS

 Internal audit function - An appraisal activity established or

provided as a service to the entity.
 Internal auditors - Those individuals who perform the activities
of the internal audit function.
DETERMINE WHETHER AND TO WHAT EXTENT TO USE

 External auditor shall determine:

 Whether the internal auditor’s work is likely to be adequate for the
audit purposes; and
 If so, the planned effect of the work on the nature, timing or extent
of the external auditor’s procedures.
WHETHER THE WORK IS LIKELY TO BE ADEQUATE

 External auditor should evaluate:

 The objectivity of the internal audit function;
 The technical competence of the internal auditors;
 Whether the work of the internal auditors is likely to be carried out
with due professional care; and
 Whether there is likely to be effective communication between the
internal auditors and the external auditor.
PLANNED EFFECT ON THE AUDIT PROCEDURES

 External auditor should consider:

 The nature and scope of specific work performed, or to be
performed, by the internal auditors;
 The assessed risks of material misstatement at the assertion level for
particular classes of transactions, account balances, and disclosures;
and
 The degree of subjectivity involved in the evaluation of the audit
evidence gathered by the internal auditors in support of the relevant
assertions.
USING SPECIFIC WORK OF THE INTERNAL AUDITOR

 External auditor shall evaluate and perform audit

procedures on that work to determine its adequacy
for the external auditor’s purposes.
 Evaluate:
 The work was performed by internal auditors having
adequate technical training and proficiency;
 The work was properly supervised, reviewed and
documented;
 Adequate audit evidence has been obtained to enable
the internal auditors to draw reasonable conclusions;
 Conclusions reached are appropriate in the circumstances
and any reports prepared by the internal auditors are
consistent with the results of the work performed; and
 Any exceptions or unusual matters disclosed by the internal
auditors are properly resolved.
DOCUMENTATION

 External auditor shall document:

 Conclusions
 Audit procedures
- end -