Page 321 - CA Final Audit Titanium Full Book. (With Cover Pages)

CA Ravi Taori

We have covered SA 610 in detail as per ICAI Module in Chapter 3 , we are covering here only additional
concepts of SA 610 which are not covered in Chapter 3.

(CNO—IA180) If the External Auditor uses Internal Auditors to Provide Direct Assistance on the Audit,
the External Auditor shall include in the Audit Documentation
If the External Auditor uses Internal Auditors to Provide Direct Assistance on the Audit, the External
Auditor shall include in the Audit Documentation-
Step 1 Related-
Evaluation of Objectivity & Competence: The evaluation of the existence and significance of threats to the
objectivity of the internal auditors, and the level of competence of the internal auditors used to provide direct
assistance.
Step 2 Related
Area of Work: The basis for the decision regarding the nature and extent of the work performed by the
internal auditors.
Step 3 Related
Written Agreements: The written agreements obtained from an authorized representative of the entity and
the internal auditors.
Working Papers: The working papers prepared by the internal auditors who provided direct assistance on the
audit engagement.
Review Details: Who reviewed the work performed and the date and extent of that review in accordance with
SA 230 Audit Documentation.

(CNO—IA.200) Internal Audit as A Management Function
1A. Management Process: Management is a process by which the affairs of an enterprise are conducted in
such a manner that its goals and objectives are attained through optimum utilisation of all available resources,
within the legal, social, economic and environmental constraints.
1B. Fundamental Functions: At the most fundamental level, management functioning is a set of five general
functions: planning, organizing, staffing, directing and controlling.
While the first five functions of planning, organizing, staffing and leading are critical attributes to create and
grow stakeholder’s wealth, controlling is the critical function that is key to preserve stakeholder’s wealth.
2. Revised Definition of Internal Audit: As per the revised definition of the term ‘Internal Audit’ as per para
3 of the ICAI’s Framework Governing Internal Audits, “Internal audit provides independent assurance on the
effectiveness of internal controls and risk management processes to enhance governance and achieve
organisational objectives”.
2A. Governance: Accordingly, Internal Auditor is expected to critically evaluate the management activities and
advise them on the areas of improving internal controls.
2B. Risk Management: Manage business and operational risks effectively by recommending appropriate
mitigating controls.
2C. Internal Control: Internal Audit is an important element of management controlling function, it helps
management to set up appropriate systems and processes in place to mitigate risk while remaining
independent to the operations.
Internal Auditor is expected to report on the identified gaps and areas of weak internal control, further he is
expected to identify the root cause of the problems and suggest appropriate mitigating steps and strengthen the
internal controls environment of the organization.
Accordingly, Internal Audit is seen as an important function that helps management to achieve organization
goals and perform its function in an orderly manner.

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