SA 610 (REVISED) USING THE WORK OF INTERNAL AUDITORS

•    SA 610 ( REVISED)
IMPLEMENTATION GUIDE TO STANDARD ON AUDITING (SA)610

•    SA 610

•    STANDARD ON AUDITING ARE ISSUED BY THE AUDITING AND ASSURANCE STANDARD BOARD (AASB) OF ICAI TO ASSIST AUDITORS IN PRACTICAL IMPLEMENTATION OF THESE SATNDARDS

•    APPLICABILITY OF THE STANDARD:

1.       THIS STANDARD DOES NOT APPLY IF THE ENTITY DOES NOT HAVE AN INTERNAL AUDIT FUNCTION

2.       SA 610 IS NOT APPLICABLE WHEN AN INDIVIDUAL INTERNAL AUDITOR PROVIDE DIRECT ASSISTANCE TO EXTERNAL AUDITOR FOR AUDIT PROCEDURES AND THE APPLICABLE LEGAL AND REGULATORY FRAMEWORK RESTRICTS ACCESSING INTERNAL AUDITOR’S WORKING PAPERS.

•    OBJECTIVES

•    IF AN ENTITY HAS AN INTERNAL AUDIT FUNCTION AND IT IS RELEVENCE TO THE EXTERNAL AUDITOR’S WORK AND THEN THE EXTERNAL AUDITOR SHOULD DETERMINE:

1.       IF THE SPECIFIC WORK OF THE INTERNAL AUDITOR CAN BE USED AND IF SO WHAT EXTENT

2.       SUCH WORK IS ADEQUATE FOR THE AUDIT PURPOSE

SA 610 USING THE WORK OF INTERNAL AUDITOR’S EFFECTIVE FOR AN AUDIT OF FINANCIAL STATEMENTS FOR PERIODS BEGINNING ON OR AFTER 1^ST APRIL,2010

•    INTERNAL AUDIT FUNCTION

•    AN APPRISAL ACTIVITY ESTABLISHED OR PROVIDING AS A SERVICE TO THE ENTITY. ITS FUNCTION INCLUDES AMONGST OTHER THINGS EXAMINING,EVALUATING AND MONITORING THE ADEQUACY AND EFFECTIVENESS OF INTERNAL CONTROL

•    THE RELATIONSHIP BETWEEN INTERNAL AND EXTERNAL AUDITOR

•    INTERNAL AUDITOR:

•                ROLE AND SCOPE DETERMINED BY THE MANAGEMENT,OBJECTIVE AND FUNCTIONS

EXTERNAL AUDITOR:-

1.       STATUTORY AND DEFINED BY THE APPLICABLE LAWS AND REGULATIONS

2.       DIFFERENT OBJECTIVES BUT SOME FUNCTIONS PERFORMED TO ACHIEVE OBJECTIVES MAY BE SIMILAR

3.       SOLE RESPONSIBILITY FOR EXPRESSING OPINION

•    WHETHER AND TO WHAT EXTENT TO USE OF INTERNAL AUDITOR WORK

•    EXTERNAL AUDITOR SHOULD DETERMINE :

•                IF THE INTERNAL AUDITOR’S WORK IS ADEQUATE FOR AUDIT PURPOSE AND EVALUATE :

1.       OBJECTIVITY OF INTERNAL AUDIT FUNCTION

2.       INTERNAL AUDITOR’S TECHNICAL COMPETENCE

3.       INTERNAL AUDITOR’S WORK IS CARRIED OUT WITH PROFESSIONAL CARE

4.       EFFECTIVE COMMUNICATION BETWEEN THE INTERNAL AUDITOR AND THE EXTERNAL AUDITOR

•    PLANNED EFFECT OF INTERNAL AUDITOR’S WORK ON THE NATURE,TIMING AND EXTENT OF EXTERNAL AUDITOR’S PROCEDURES  AND CONSIDER:-

1.       NATURE AND SCOPE OF SPECIFIC WORK PERFORMED OR TO BE PERFORMED

2.       ASSESSED RISK OF MATERIAL MISSTATEMENT AT THE ASSERTION LEVEL FOR A PARTICUALR CLASS OF TRANSACTION ACCOUNT BALANCE AND DISCLOSURE

3.       THE DEGREE OF SUBJECTIVITY INVOLVED IN EVALUATING THE AUDIT EVIDENCE TO SUPPORT THE RELVENT ASSERTIONS.

•    EXAMPLE

1.       EXAMINING OF FINANCIAL AND OPERATING INFORMATION

2.       MONITORING AND REVIEWING OF INTERNAL CONTROLS

3.       RISK MANAGEMENT

4.       REVIEW OF COMPLIANCE  WITH LAWS AND REGULATIONS

•    SPECIFIC WORK OF  INTERNAL AUDITOR AND DOCUMENTATION

THE EXTERNAL AUDITOR SHOULD EVALUATE AND PERFORM AUDIT PROCEDURES IN THAT WORK TO THE DETERMINE THE ADEQUACY IF :-

1.       WORK PERFORMED EXHIBITS ADEQUATE TECHNICAL TRAINING AND PROFICIENCY

2.       PROPERLY SUPERVISED,REVIEWED AND DOCUMENTED

3.       SUFFICIENT AUDIT EVIDENCE HAS BEEN OBTAINED TO DRAW REASONABLE CONCLUSIONS

4.       CONCLUSIONS REACHED ARE APPROPRIATE

5.       REPORTS ARE CONSISTENT WITH WORKING PAPERS

6.       EXCEPTIONAL OR UNUSUAL MATTERS IF ANY ARE PROPERLY RESOLVED