"Internal Audit Specific Guidelines No. 10 - Coordination of Internal Audit and External Audit"

Internal Audit Specific Criterion No. 10 - Coordination of Internal and External Auditing

Internal Auditing and External Auditing are the two extensively used methods of quality assurance in accounting and financial services. Together, they form an integrated system of assurance that promote transparency, consistency and accuracy of financial statements, while addressing the changing needs of the business. Although internal auditing and external auditing have distinct activities, there are areas where their activities overlap or can be similarly beneficial. In order to ensure that both methods are managed in a synergistic way, coordinating the resources of both methods is essential.

To ensure that such coordination is taking place, Internal Audit Specific Criterion No. 10 provides guidance on how to coordinate the activities of both internal and external auditors. The principle of Internal Audit Specific Criterion No. 10 is that both internal and external auditors should work together in a professional and ethical manner to ensure that their activities are complementing each other and enabling their respective audit objectives to be met.

One of the key activities that should be adopted in order to adhere to Internal Audit Specific Criterion No. 10 is to develop a coordinated plan between internal and external auditors. The goal of such a plan is to identify synergies between the activities of both auditors, to coordinate their work in order to maximize their respective audit objectives, and to ensure that the best use of audit resources is realized. Such a plan should take into consideration the strengths and weaknesses of each auditor, as well as the type of audit being performed. The plan should also identify any conflicts between the internal and external audit activities, and the recommended solution to resolve those conflicts.

Additionally, Internal Audit Specific Criterion No. 10 encourages frequent communication between the internal and external audit functions. Such communication should include exchanging updates about their respective audit objectives, achievements and problems faced. This communication should also consider any potential overlap between the two activities, and if so, how additional resources may be allocated to provide additional assurance in those areas.

Adequate documentation of the internal auditing and external auditing processes is also necessary, in order to maintain the high standards of both methods. As part of Internal Audit Specific Criterion No. 10, an audit trail must be established that records the important decisions and conclusions reached. This audit trail should be easily accessible to both internal and external auditors, so that any questions or discrepancies can be reviewed and remedied.

Keeping this in mind, and with the leadership of Internal Audit, they can ensure that their processes are efficiently coordinated, while maintaining high quality of audit objectives. By doing so, Internal Audit will be capable of providing business with assurance that their financial statements are accurate and consistent, while both methods ensure that the resources being used are being efficiently and full.

Internal audit and external audit play an important role in financial management. Internal audit is the keep of internal control system and external audit is the audit of financial information reported to shareholders and other interested parties.

No. 10 Coordination of Internal Auditing with External Auditing is established according to the ten internal audit specific criteria issued by the Chinese Institute of Internal Auditors to provide guidance for internal auditors in coordinating their work with external auditors.

When required, the internal audit function should cooperate with the external auditor to reduce the cost of audit, avoid duplication of work and eliminate problems in the audit process. The internal audit staff should briefly explain to the external auditor the scope and scope of the audit, the scope of authority of the internal audit staff, the work performed and the results obtained, and the internal control system.

The Internal Audit staff should provide the external auditors with sufficient relevant information and explain the conditions that have hindered the audit in response to their inquiries. Moreover, the Internal Audit staff should analyze and assess the situation, provide practical suggestions and reach out to the external auditor to assist in clarifying any potential problems as they arise.

The coordination of internal auditing with external auditing is essential in ensuring proper financial control. Internal Audit staff should facilitate relevant audit activities, provide professional suggestions, and help improve external audit efficiency, accuracy, and compliance. Through active collaboration and coordination, internal audit staff can help protect the companys sustainable development and ensure compliance with the laws and regulations.