Standards Proposed for Internal/External Auditor Relationship

The Internal Auditing and Assurance Standards Board has proposed new standards outlining an external auditor’s responsibilities when using internal auditors’ work during an audit.

The enhanced standards from the IAASB, which operates under the auspices of the International Federation of Accountants, address recent developments in the internal auditing environment and the evolving relationship between internal and external auditors.

The proposed International Standard on Auditing 610 (Revised), “Using the Work of Internal Auditors,” aims to enhance the external auditor’s performance by providing a stronger framework for evaluating and using the work and assistance of an entity’s internal auditors. Related enhancements to the external auditor’s required considerations of the internal audit function are also proposed in ISA 315 (Revised), “Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment.”

“Internal auditing standards and practices continue to evolve, as does the relationship between external and internal auditors,” said IAASB Chairman Arnold Schilder in a statement. “Ensuring that global audit practices take account of these changes benefits both auditors and preparers. Through our revision of ISA 610, we believe external auditors will be better equipped to evaluate opportunities for effective coordination with internal auditors.”

To access the exposure draft or submit a comment, visit the IAASB's website at www.iaasb.org/ExposureDrafts.php. Comments on the exposure draft are due Nov. 15, 2010.