Relationship with Internal Auditor
dThe role of the
Internal Auditor of an enterprise is determined by the management and
its main objective is different from that of external Auditor.
Nevertheless, some of the ways of achieving their particular
objectives are quite similar and most of the work done and checked by the internal
auditor is useful to the external auditor in inspecting and researching the
natures, timings and extent of his auditing procedures.
The external Auditor should while auditing, understand and evaluate the
functions performed by the internal auditor to the extent he deems
that it will be necessary and relevant in understanding the nature,
timing and degree of his compliance with, substantive procedures of
audit. According to such evaluations, the
external auditor might be able to initiate less detailed auditing
procedures and methods than would be requried otherwise.
The external auditor’s general researching of the internal
audit functions will help the auditor in determining the degree to which he
can rely upon the work and books prepared by the internal auditor. The external
auditor should document his evaluations and conclusions in this matter.
Coordination with the internal auditors is needed by the external
auditor while auditing and this coordination is generally has a greater effect
when meetings are held at pre-decided, and appropriate intervals during the calendar year.
External auditors should have access to the internal audit
reportings that are relevant and be kept informed of any significant matter which has come
to the internal auditors attentions and which the auditor believes might affect
the books and work of the external auditors. Similarly the external auditors should
coney information and inform the internal auditors of any important matters which might affect
his work. Both the auditors need to work in tandem.
Where after evaluating the work of the internal auditor, the
external auditors decides to rely upon specificwork of internal auditors as
a basis for modifying the nature, timings and extent of his auditing
procedures, he must review the internal auditor’s work and
the conclusions arrived at must be documented in writing. The External
auditor should test check the work of the internal auditor on which he
intends to rely.