Internal Audit – Project Status
• IAASB
– February 2010 – Task Force finalized draft for
discussion with IAASB and IAASB CAG in
March 2010
– June 2010 - approval of exposure draft
• IESBA
– Closely following project, correspondent Task
Force member
– October 2009 and February 2010 – IESBA
discussed project
Internal Audit
• IAASB Revision to ISA 610 Using the Work
of the Internal Audit Function
– Direct assistance by internal auditors
Direct Assistance
• Expansion of scope of ISA 610
• External auditor to evaluate level of competence
and degree of objectivity of internal auditors
• Direct, supervise and review work performed
• Internal auditors are not independent therefore
work is presumed to provide less reliable evidence
• Direction, supervision and review will ordinarily be
more extensive
Engagement Team
• Definition
“All partners and staff performing the engagement, and
individuals engaged by the firm or a network firm who
perform assurance procedures on the engagement. This
excludes external experts engaged by the firm or a
network firm.”
• ISA 610 states internal audit is not independent
• Additional review and supervision
• IESBA of view no clarification to definition needed
Management Responsibilities
• A firm shall not assume a management
responsibility for an audit client (290.165)
• Whether an activity is a management
responsibility depends on circumstances and
requires the exercise of judgment (290.163)
• Example that would generally be considered
a management responsibility… directing and
taking responsibility for the actions of the
entity’s employees (290.163)
Clarification needed?
• No
– Depends on the circumstances and requires
judgment
– External audit is not a management
responsibility
• Yes
– Without clarification readers might
inappropriately interpret example as
encompassing direct internal auditor assistance
February IESBA View
• No clarification needed
– Clear intent of wording is direction and
supervision of client’s employees in their day-today activities
– Does not encompass direct assistance provided
by internal auditors
Any other comments?