Relying upon the work of an internal auditor is the auditing
standard 7, it tells us the limit of external auditor’s dependence on the
internal auditor. We know that internal auditor is the part of management team,
so it is sure the decisions in the opinion of internal audit report will be
affected by management. By considering these points, external auditor has to
depend on the work of an internal auditor.
Here are some rules regarding this in this AAS 7
- Both internal auditor and external auditor’s target is same. Both want to see correct accounting http://www.svtuition.org/2010/02/accounting.htmlinformation which is given through management’s financial statement. Both collect evidence for capturing frauds and errors in accounting data. So, as per simple rule, external auditor should keep faith on the information and opinion which is provided by an internal auditor. External auditor should not increase his tension by creating doubts on the reports which are provided by internal auditor. He should faith that internal auditor and his identity are just drops of rain whose aim is to clean the rock of company. No one can faith, how can drops clean the rock but it is the truth because these rain drops are fallen by God’s order and they do not do any jealousy with each other. Like this, external auditor should keep his behavior with internal auditor. He should love to internal auditor and in the refund, he will get love.
- By loving deeply with internal auditor, he should not forget his duty. He is auditor; he should check every fact’s truth. External auditor should not faith in internal auditor’s report by closing his eyes. He should check it one by one. It is true, internal auditing decreases the work of external auditor but internal auditor is also human being. So, there is the chance of mistakes in it. If external auditor does not satisfy from the reports of internal auditor, external auditor can start to work of auditing from beginning by checking each transaction and events of business.
- External auditor should review the system of internal control. To know the system is important because if there is the weakness in it, then, there is chance of mistake in it. External auditor should check the qualification of employees of internal audit department. If external auditor will assure regarding the technical competence of these employees, then external auditor can rely on the information which are provided by internal audit department.
- External auditor will have the option of sample test of work of internal auditor. If sample test is as per the standards of external auditor, external auditor can rely on these work and include in the part of his audit work.
Related : AAS 6
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