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4.2 Relying of the work of internal audit

An internal audit department forms part of the client's system of internal control.

Auditors may be able to cooperate with a client's internal audit department and place
reliance on their procedures in place of performing their own in areas such as:

 Tests of controls

 Risk assessment

 Fraud investigations

 Compliance with laws and regulations.

ISA 610 (Revised) Using the Work of Internal Auditors states that before relying on
the work of internal audit, the external auditor must assess the effectiveness of the
internal audit function and assess whether the work produced by the internal auditor
is adequate for the purpose of the audit.

Assess the specific work that may be
Assess the internal audit function
relied upon

 Objectivity (consider status and  Whether the work was properly
reporting lines) planned, performed, supervised,
reviewed and documented
 Competence (consider resources,
training and proficiency)  Whether there is sufficient
appropriate evidence to support the
 Systematic and disciplined auditor’s conclusions
approach (consider planning,
supervision, review, documentation  Whether the conclusions reached
and QC for internal audit work). are appropriate.

The external auditor may re-perform some of the procedures that the internal auditor
has performed to ensure they reach the same conclusion.

The extent of the work to be performed on the internal auditor's work will depend on
the amount of judgment involved and the risk of material misstatement in that area.

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