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Recently, The Institute of Chartered Accountants of India (ICAI) issued exposure drafts of two new Standards on Internal Audit –
The Institute of Chartered Accountants has also proposed to revise SIA on internal controls and issued an exposure draft for SIA 120, Standards on Internal Audit Controls.
‘Certain class of companies shall require mandatorily carrying out an internal audit at regular interval as decided by the audit committee of such companies’
SIA 350 Standard deals with the responsibility of the Internal Auditor to conduct due review and supervision of the internal audit assignment to ensure its effective performance and completion.
SIA 350 provides guidance on review and supervision of the internal audit assignments by an internal auditor to ensure the effectiveness of the audit.
Due to differential nature, objectives and scope of different assignments, the extent, and periodicity of review and supervision vary for each assignment. It is the responsibility of the Chief internal auditor to plan and document the extent and periodicity at the time of audit planning.
SIA 350, Review and Supervisions of Audit Assignments applies to all internal audit assignments, conducted either by an in-house auditor or an our-sourced auditor and also to any advisory assignments undertaken by the Internal Auditor.
See, Read: An Internal Auditor: Why are they important in a Company?.
According to Standard on Internal Auditing following documents are required-
The Chief Internal Auditor while performing the internal audit function shall maintain a written process explaining how review and supervision shall be performed. He will also ensure quality and conformity to the Standards on Internal Audit
The auditor has the overall responsibility to review and supervise the nature, timing, and extent of all internal audit activities and to ensure that evidence collected is sufficient and reliable.
As per SIA 350 Review and Supervisions of Audit Assignments all documentation shall undergo at least one level of review. A review of all the audit work papers shall be carried out, to ensure these are sufficient and appropriate to allow the reviewer to arrive at the same conclusions and formulate similar observations, as done by the audit staff.
SIA 390 deals with the responsibility of the Internal Auditor in monitoring and reporting of prior audit issues, usually in the form of an “Action Taken Report (ATR)” of previous audits.
Further, the role and responsibility of an internal auditor are to monitor and report the issues which were raised before an internal audit. The internal auditor should track and evaluate that whether corrective actions are taken by the management of auditee to resolve the issues raised during prior audits are in line with the recommendations made in respective audit reports.
SCOPE- SIA 390-Monitoring and Reporting of Prior Audit Issues applies to all internal audits where prior audit issues remain open and are pending for the implementation of audit recommendations within pre-agreed timelines.
The objectives of this standard SIA 390-Monitoring and Reporting of Prior Audit Issues is to ensure:
Also, Read: Inventory Audit: Purpose of Inventory Audit.
SIA 390-Monitoring and Reporting of Prior Audit Issues continuously monitor the closure of prior audit issues through timely implementation of action plans included in past audits. This shall be done with a formal monitoring process, elements of which are pre-agreed with management.
Additional audit procedures shall be performed by the Internal Auditor after receiving confirmation from the auditee regarding the implementation of corrective actions and to confirm that the issues have been adequately addressed. Sufficient and appropriate audit evidence shall be obtained. The documentation shall be maintained to confirm either effective closure of the issue or reasons for its delay or deferral.
Read our article:A Complete Guide on Auditing Standards Issued by ICSI: Applicable from 1st April 2020