Document ID: chunk:federal_register_of_legislation:F2023C01133:reg:7:p7
Version: federal_register_of_legislation:F2023C01133
Segment Type: reg
Provision Reference: reg 7 (pt 7/17)
Character Range: 23438–26787

Standard remain appropriate.

Direct Assistance

Aus 25.1 The external auditor shall not use internal auditors to provide direct assistance on the external audit engagement.

26.‑35. [Deleted by the AUASB.  Refer Aus 1.2][9],[10]

Documentation

    36. If the external auditor uses the work of the internal audit function, the external auditor shall include in the audit documentation:

(a)                The evaluation of:

(i)                 Whether the function's organisational status and relevant policies and procedures adequately support the objectivity of the internal auditors;

(ii)               The level of competence of the function; and

(iii)             Whether the function applies a systematic and disciplined approach, including quality control;

(b)                The nature and extent of the work used and the basis for that decision; and

(c)                The audit procedures performed by the external auditor to evaluate the adequacy of the work used.

37. [Deleted by the AUASB.  Refer Aus 1.2][11]

* * *

Application and Other Explanatory Material

Definition of Internal Audit Function  (Ref: Para. 2, 14(a))

A1.             The objectives and scope of internal audit functions typically include assurance and consulting activities designed to evaluate and improve the effectiveness of the entity's governance processes, risk management and internal control such as the following:

    Activities Relating to Governance

           * The internal audit function may assess the governance process in its accomplishment of objectives on ethics and values, performance management and accountability, communicating risk and control information to appropriate areas of the organisation and effectiveness of communication among those charged with governance, external and internal auditors, and management.

    Activities Relating to Risk Management

           * The internal audit function may assist the entity by identifying and evaluating significant exposures to risk and contributing to the improvement of risk management and internal control (including effectiveness of the financial reporting process).

           * The internal audit function may perform procedures to assist the entity in the detection of fraud.

    Activities Relating to Internal Control

           * Evaluation of internal control.  The internal audit function may be assigned specific responsibility for reviewing controls, evaluating their operation and recommending improvements thereto.  In doing so, the internal audit function provides assurance on the control.  For example, the internal audit function might plan and perform tests or other procedures to provide assurance to management and those charged with governance regarding the design, implementation and operating effectiveness of internal control, including those controls that are relevant to the audit.

           * Examination of financial and operating information.  The internal audit function may be assigned to review the means used to identify, recognise, measure, classify and report financial and operating information, and to make specific enquiry into individual items, including detailed testing of transactions, balances and procedures.

           * Review of operating activities.  The internal audit function may be assigned to review the economy,