Document ID: chunk:federal_register_of_legislation:F2023C01133:reg:7:p9
Version: federal_register_of_legislation:F2023C01133
Segment Type: reg
Provision Reference: reg 7 (pt 9/17)
Character Range: 29250–32368

of the nature of the internal audit function's responsibilities, its status within the organisation, and the activities performed, or to be performed, and make enquiries of appropriate individuals within the internal audit function (if the entity has such a function); or

           * Unless prohibited, or restricted to some extent, by law or regulation, the external auditor, after appropriate evaluation, may decide to use work that has been performed by the internal audit function during the period in partial substitution for audit evidence to be obtained directly by the external auditor.[14]

[Sentence deleted by the AUASB.  Refer Aus 1.2][15]

Determining Whether, in Which Areas, and to What Extent the Work of the Internal Audit Function Can Be Used

Evaluating the Internal Audit Function

Objectivity and Competence  (Ref: Para. 15(a)–(b))

A5.             The external auditor exercises professional judgement in determining whether the work of the internal audit function can be used for purposes of the audit, and the nature and extent to which the work of the internal audit function can be used in the circumstances.

A6.             The extent to which the internal audit function's organisational status and relevant policies and procedures support the objectivity of the internal auditors and the level of competence of the function are particularly important in determining whether to use and, if so, the nature and extent of the use of the work of the function that is appropriate in the circumstances.

A7.             Objectivity refers to the ability to perform those tasks without allowing bias, conflict of interest or undue influence of others to override professional judgements.  Factors that may affect the external auditor's evaluation include the following:

           * Whether the organisational status of the internal audit function, including the function's authority and accountability, supports the ability of the function to be free from bias, conflict of interest or undue influence of others to override professional judgements.  For example, whether the internal audit function reports to those charged with governance or an officer with appropriate authority, or if the function reports to management, whether it has direct access to those charged with governance.

           * Whether the internal audit function is free of any conflicting responsibilities, for example, having managerial or operational duties or responsibilities that are outside of the internal audit function.

           * Whether those charged with governance oversee employment decisions related to the internal audit function, for example, determining the appropriate remuneration policy.

           * Whether there are any constraints or restrictions placed on the internal audit function by management or those charged with governance for example, in communicating the internal audit function's findings to the external auditor.

           * Whether the internal auditors are members of relevant professional bodies and their memberships obligate their compliance with relevant professional