Document ID: chunk:federal_register_of_legislation:F2023C01133:reg:7:p10
Version: federal_register_of_legislation:F2023C01133
Segment Type: reg
Provision Reference: reg 7 (pt 10/17)
Character Range: 32065–35332

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 standards relating to objectivity, or whether their internal policies achieve the same objectives.

A8.             Competence of the internal audit function refers to the attainment and maintenance of knowledge and skills of the function as a whole at the level required to enable assigned tasks to be performed diligently and in accordance with applicable professional standards.  Factors that may affect the external auditor's determination include the following:

           * Whether the internal audit function is adequately and appropriately resourced relative to the size of the entity and the nature of its operations.

           * Whether there are established policies for hiring, training and assigning internal auditors to internal audit engagements.

           * Whether the internal auditors have adequate technical training and proficiency in auditing.  Relevant criteria that may be considered by the external auditor in making the assessment may include, for example, the internal auditors' possession of a relevant professional designation and experience.

           * Whether the internal auditors possess the required knowledge relating to the entity's financial reporting and the applicable financial reporting framework and whether the internal audit function possesses the necessary skills (for example, industry‑specific knowledge) to perform work related to the entity's financial report.

           * Whether the internal auditors are members of relevant professional bodies that oblige them to comply with the relevant professional standards including continuing professional development requirements.

A9.             Objectivity and competence may be viewed as a continuum.  The more the internal audit function's organisational status and relevant policies and procedures adequately support the objectivity of the internal auditors and the higher the level of competence of the function, the more likely the external auditor may make use of the work of the function and in more areas.  However, an organisational status and relevant policies and procedures that provide strong support for the objectivity of the internal auditors cannot compensate for the lack of sufficient competence of the internal audit function.  Equally, a high level of competence of the internal audit function cannot compensate for an organisational status and policies and procedures that do not adequately support the objectivity of the internal auditors.

Application of a Systematic and Disciplined Approach  (Ref: Para. 15(c))

A10.         The application of a systematic and disciplined approach to planning, performing, supervising, reviewing and documenting its activities distinguishes the activities of the internal audit function from other monitoring controls that may be performed within the entity.

A11.         Factors that may affect the external auditor's determination of whether the internal audit function applies a systematic and