Objective
To determine whether the work of the internal audit function can be used, and if so, whether and to what extent it can be relied upon.
Key requirements
- Evaluation of the internal audit function — objectivity, competence, systematic and disciplined approach
- Evaluation of specific internal-audit work to be used — relevance, sufficiency, appropriateness
- Reperformance of some of the body of work used to validate quality
- No use of internal audit for tests of controls related to significant risks
- Communication with internal audit function
Typical procedures
- Review of internal audit charter and quality-assurance programme
- Selective reperformance of internal audit work used as audit evidence
- Coordination meetings with the head of internal audit
Common pitfalls
- Reliance on internal audit without evaluating their independence from the auditee operations
- No documented evaluation of their quality programme
- Use of internal-audit work for significant-risk areas (prohibited)
SA 610 in practice
SA 610 sits in the Audit Evidence phase of the audit. The Standards on Auditing are issued by the ICAI Auditing and Assurance Standards Board (AASB) and deemed to be prescribed by the Central Government under Section 143(10) of the Companies Act 2013. Compliance with SAs is mandatory for every audit conducted by a Chartered Accountant in India.
For authoritative text, refer to the ICAI AASB Compendium of Standards on Auditing at icai.org.
