Document ID: chunk:federal_register_of_legislation:F2023C01133:reg:7:p14
Version: federal_register_of_legislation:F2023C01133
Segment Type: reg
Provision Reference: reg 7 (pt 14/17)
Character Range: 43405–46459

of this Auditing Standard is necessary.

Communication with Those Charged with Governance  (Ref: Para. 20)

A23.         In accordance with ASA 260,[21] the external auditor is required to communicate with those charged with governance an overview of the planned scope and timing of the audit.  The planned use of the work of the internal audit function is an integral part of the external auditor's overall audit strategy and is therefore relevant to those charged with governance for their understanding of the proposed audit approach.

Using the Work of the Internal Audit Function

Discussion and Co‑ordination with the Internal Audit Function  (Ref: Para. 21)

A24.         In discussing the planned use of their work with the internal audit function as a basis for co‑ordinating the respective activities, it may be useful to address the following:

           * The timing of such work.

           * The nature of the work performed.

           * The extent of audit coverage.

           * Materiality for the financial report as a whole (and, if applicable, materiality level or levels for particular classes of transactions, account balances or disclosures), and performance materiality.

           * Methods of item selection and sample sizes.

           * Documentation of the work performed.

           * Review and reporting procedures.

A25.         Co‑ordination between the external auditor and the internal audit function is effective when, for example:

           * Discussions take place at appropriate intervals throughout the period.

           * The external auditor informs the internal audit function of significant matters that may affect the function.

           * The external auditor is advised of and has access to relevant reports of the internal audit function and is informed of any significant matters that come to the attention of the function when such matters may affect the work of the external auditor so that the external auditor is able to consider the implications of such matters for the audit engagement.

A26.         ASA 200[22] discusses the importance of the auditor planning and performing the audit with professional scepticism, including being alert to information that brings into question the reliability of documents and responses to enquiries to be used as audit evidence.  Accordingly, communication with the internal audit function throughout the engagement may provide opportunities for internal auditors to bring matters that may affect the work of the external auditor to the external auditor's attention.[23]  The external auditor is then able to take such information into account in the external auditor's identification and assessment of risks of material misstatement.  In addition, if such information may be indicative of a heightened risk of a material misstatement of the financial report or may be regarding any actual, suspected or alleged fraud, the external auditor can take this into account in the external auditor's identification of risk of material misstatement due to