To optimize corporate assurance spend and minimize disruption to business units, internal and external audit functions implement cooperation models based on the International Standard on Auditing (ISA 610) guidelines.
[External Audit Strategy Plan] <─── Data Collaboration ───> [Internal Audit Working Papers]
ISA 610 defines the parameters under which external auditors can rely on the work completed by the internal audit function to support their year-end financial statement certifications.
The external audit team evaluates the internal audit department across three key performance dimensions before relying on their documentation:
- Organizational Status and Independence: Verifying that the internal audit function reports functionally to an independent Audit Committee and remains free of operational management responsibilities.
- Professional Competence Framework: Assessing the qualifications, certifications (e.g., CIA, CPA), and technical experience of the internal audit staff.
- Application of a Systematic and Disciplined Approach: Confirming that the internal audit team utilizes structured working paper platforms, documents comprehensive testing records, and operates a robust quality assurance and improvement program (QAIP).
When these criteria are met, the external auditors can coordinate testing schedules and utilize internal audit working papers to reduce redundant testing across common balance sheet lines.
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