Where the external auditor has decided to place reliance on the work of internal auditor, he should review the working papers to satisfy himself as to:-
i) Audit programs are adequate.
ii) The work is performed by trained staff and the work of assistants is properly supervised, reviewed and documented.
iii) Sufficient appropriate audit evidence was obtained.
iv) Conclusions made are appropriate.
v) Reports prepared are based on the work done.
vi) Exceptions or unusual items have been properly resolved. The external auditor should record all the working he has received. The external auditor should also test the work of internal auditor.
Testing the Work of Internal Auditing
It can be done in the following ways:
i) Re-performing the work done by internal auditor, on test basis, to ensure that the same results are achieved;
ii) Selecting a few similar items and perform independent test; and
iii) Observation of internal auditing procedures.
