Question

What factors should an external auditor use to assess the objectivity and competence of internal auditors?

Answer 1

Factors to be used by an external auditor to assess the objectivity and competence of the internal auditor are as follows:

1. In order to comprehend and assess the competence of the internal auditors the external auditors should gather information from the previous year’s audit with respect to the following:

• Educational professional qualifications and degree of the internal auditor.
• Competence and certification capability of the internal auditor
• The policies, procedures and programs in relation to audit followed by the internal auditor.
• The extent of audit working papers maintained by the auditor which detail out all the important aspects of the audit work carried out by the auditor.

2. In order to comprehend the objectivity of the internal audit carried out , the external auditor should consider the following:

• The organisational position and importance accorded to the audit function in terms of the level at which the internal auditor reports in order to understand whether the reporting is done to an appropriate level so that action is taken based on the audit findings.
• Whether the internal auditor has been able to ensure that the internal audit has been given a wide coverage.
• Whether the organisation has certain policies whereby the internal auditors are not given permission to audit certain areas which may adversely affect the objectivity of the audit function.
• Whether internal audit standards have been followed.