Question

What factors should an external auditor use to assess the objectivity and competence of internal auditors? I have answered this question below, but does anyone have anything to add?

External auditors often use the work of internal auditors, but it is important to gather their own data and opinions because there might be factors that play into the data given and their reliability. External auditors should factor in the experience, education and competence of the internal auditors. They should check their policies, procedures, and checklists they use for their audit. Their quality of work should be assessed as well in determining if they will use their information. Relevance and importance is another factor to assess. Is the internal audit free from bias, conflict of interest, and objectivity. Maybe some of the internal auditors let things slide because it's their friend they are auditing.

Answer 1

Answer:-

While assessing the internal auditors objectivity, the auditor shall obtain information regarding the below factors:-

# The organizational status of the internal auditor appointed for the internal audit of the organisation including-

a.Whether the internal auditor reports to an officer of sufficient status so as to ensure proper audit coverage and adequate consideration and action is taken on the findings and recommendations of the internal auditors.

b.Whether the internal auditor has direct access and reports regularly to the board of directors, the audit committee, or the owner of the business.

c.Whether the employment decisions related to the internal auditor are taken by board of directors, the audit committee, or the owner of the business.

# Policies to maintain internal auditors' objectivity about the areas audited, including—

a.Policies relating to restricting the internal auditors from auditing areas where relatives are employed in important or audit-sensitive positions.

b. Policies restricting the internal auditors from auditing areas which are recently assigned for audit or are scheduled to be assigned.

While assessing the internal auditors Competence, the auditor shall obtain information regarding the below factors:-

a. The professional experience and the educational level of the internal auditors.

b. Professional certification of internal auditors and their continuing education pursuits.

c. Quality of working paper documentation, reports and the recommendations.

d.The audit program ,policies and procedures followed by internal auditors.

For assessing the competence and objectivity of the internal auditor, the auditor usually considers the above information and by discussions with management personnel, and from a recent external quality review of the internal audit function's activities.