{"id":23425,"date":"2019-08-24T21:07:30","date_gmt":"2019-08-24T15:37:30","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=23425"},"modified":"2020-08-26T16:56:44","modified_gmt":"2020-08-26T11:26:44","slug":"audit-exposure-draft-of-standards-on-internal-audit-sia-120-internal-control","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/audit-exposure-draft-of-standards-on-internal-audit-sia-120-internal-control\/","title":{"rendered":"Audit Exposure Draft of Standards on Internal Audit (SIA) 120, Internal Control"},"content":{"rendered":"<p class=\"has-drop-cap\">Recently, The Institute of Chartered Accountants of India (ICAI) issued exposure drafts of two new Standards on <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Internal Audit&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A glossary on internal audit is a valuable resource that compiles and defines essential terms and concepts in the field of internal auditing. It aids professionals and learners in comprehending(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/internal-audit\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>Internal Audit<\/a> &ndash;<\/p>\n\n\n\n<ul><li><strong>SIA&nbsp;\n350-Review and Supervision of Audit assignments,<\/strong><\/li><li><strong>SIA 390-Monitoring and Reporting of Prior Audit\nIssues<\/strong><\/li><\/ul>\n\n\n\n<p>The <strong>Institute of Chartered Accountants<\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Institute_of_Chartered_Accountants_of_India\">[1]<\/a><\/sup> has also proposed to revise SIA on internal controls and issued an exposure draft for SIA 120,&nbsp;Standards on Internal Audit Controls.<\/p>\n\n\n\n<p>&lsquo;Certain class of companies shall require\nmandatorily carrying out an internal audit at regular interval as decided by\nthe audit committee of such companies&rsquo;<\/p>\n\n\n\n<div class=\"shadow2\"> -According to section 138 of the Companies Act, 2013 read with rule 13 of the Companies (Accounts) Rules, 2014<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">SIA 350,&nbsp;Review and Supervisions of\nAudit Assignments<\/h2>\n\n\n\n<p>SIA 350 Standard deals with the <a href=\"https:\/\/enterslice.com\/learning\/roles-and-responsibilities-of-internal-auditor\/\"><strong>responsibility of the Internal Auditor<\/strong><\/a> to conduct due review and supervision of the <strong>internal audit<\/strong> assignment to ensure its effective performance and completion.<\/p>\n\n\n\n<p>SIA 350 provides guidance on review and supervision\nof the internal audit assignments by an internal auditor to ensure the\neffectiveness of the audit. <\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Scope<\/h2>\n\n\n\n<p><strong>SIA 350,&nbsp;Review and Supervisions of Audit Assignments<\/strong> applies to all <a href=\"https:\/\/enterslice.com\/internal-audit\"><strong>internal audit<\/strong><\/a> assignments, conducted either by an in-house auditor or an our-sourced auditor and also to any advisory assignments undertaken by the Internal Auditor.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the\nobjective of SIA 350?<\/h2>\n\n\n\n<ul><li>To validate and update\nthe audit assignment plan, including the planned audit procedures and the\nadequacy of the resources allocated; <\/li><li>Evaluate the audit\nprocedures undertaken, evidence collected, proper documentation and conclusions\ndrawn by the audit staff;<\/li><li>Formulate the audit\nobservations and draft the internal audit report; <\/li><li>Establish that work\nperformed is in conformance with the applicable pronouncements of the Institute\nof Chartered Accountants of India (ICAI).<\/li><li>Through timely\ncorrective actions, the auditee should ensure to mitigate the risks highlighted\nin the audit observations or that a conscious decision is taken to accept the\nrisks, in case recommendations are delayed or not implemented.<\/li><\/ul>\n\n\n\n<p><b>See, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/enterslice.com\/learning\/an-internal-auditor-why-are-they-important-in-a-company\/\">An Internal Auditor: Why are they important in a Company?<\/a><\/mark>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the Documents Required in SIA 350?<\/h2>\n\n\n\n<p><em><strong>According to Standard on Internal Auditing following documents are required-<\/strong><\/em><\/p>\n\n\n\n<ul><li>As part of the Internal\nAudit Manual-Process documentation on Review and Supervision, <\/li><li>Documentation indicating\nthe signature and date of a review undertaken on the work papers, follow-up\npoints raised, and minutes of any review meetings held with the audit team.<\/li><li>The documentation shall record the\nevidence of the supervision and review conducted which shall also include the\nperformance of any audit procedures after the review.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">What are the requirements\nof SIA 350?<\/h2>\n\n\n\n<p>The Chief Internal Auditor while\nperforming the internal audit function shall maintain a written process\nexplaining how review and supervision shall be performed. He will also ensure\nquality and conformity to the Standards on Internal Audit <\/p>\n\n\n\n<p>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. <\/p>\n\n\n\n<p>As per SIA 350 <strong>Review and Supervisions of Audit Assignments <\/strong>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.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">SIA 390-Monitoring and Reporting of Prior Audit Issues<\/h2>\n\n\n\n<p>SIA 390 deals with the responsibility\nof the Internal Auditor in monitoring and reporting of prior audit issues,\nusually in the form of an &ldquo;Action Taken Report (ATR)&rdquo; of previous audits.<\/p>\n\n\n\n<p>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. <\/p>\n\n\n\n<p><strong>SCOPE- SIA 390-Monitoring and\nReporting of Prior Audit Issues<\/strong> applies to all internal audits where prior audit issues remain\nopen and are pending for the implementation of audit recommendations within\npre-agreed timelines.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What is the objective of SIA 390?<\/h2>\n\n\n\n<p><em>The\nobjectives of this standard <strong>SIA 390-Monitoring and Reporting of Prior Audit\nIssues <\/strong>is to ensure:<\/em><\/p>\n\n\n\n<ul><li>To Properly monitor and closure of\nopen issues from prior audits; <\/li><li>Independent validation of corrective\nactions taken by the auditee;<\/li><li>Escalation of any concerns in case of\ndelays in the closure of issues;<\/li><li>Timely reporting of the status to\nthose charged with governance.<\/li><\/ul>\n\n\n\n<p><b>Also, Read:<\/b> <mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/enterslice.com\/learning\/inventory-audit\/\">Inventory Audit: Purpose of Inventory Audit<\/a><\/mark>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the Documents Required in SIA 390?<\/h2>\n\n\n\n<ul><li>The monitoring plan agreed with management,\nincluding escalation procedures and protocol to be followed in case of delays. <\/li><li>Auditee confirmations of implementation of\naudit recommendations, or reasons for no implementation and acceptance of\nrisks.<\/li><li>The documentary evidence and working papers to\nsupport additional audit procedures performed to confirm effective closure of\nprior issues.<\/li><li>Escalation communication, with management\nresponses.<\/li><li>Periodic status reports issued to the\nmanagement and Audit Committee.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">The Requirement of SIA 390<\/h2>\n\n\n\n<p><strong>SIA 390-Monitoring and Reporting of Prior Audit Issues<\/strong>\ncontinuously monitor the closure of prior audit issues through timely\nimplementation of action plans included in past audits. This shall be done with\na formal monitoring process, elements of which are pre-agreed with management.<\/p>\n\n\n\n<p>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.<\/p>\n\n\n\n<div class=\"shadow1\"><b>Note<\/b> &ndash; In case of delays or ineffective implementation of the agreed corrective actions, the Internal Auditor shall escalate such delays and concerns to the appropriate levels of management. <\/div>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/enterslice.com\/learning\/a-complete-guide-on-auditing-standards-issued-by-icsi-applicable-from-1st-april-2020\/\">A Complete Guide on Auditing Standards Issued by ICSI: Applicable from 1st April 2020\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recently, The Institute of Chartered Accountants of India (ICAI) issued exposure drafts of two new Standards on Internal Audit &ndash; SIA&nbsp; 350-Review and Supervision of Audit assignments, SIA 390-Monitoring and Reporting of Prior Audit Issues The Institute of Chartered Accountants[1] has also proposed to revise SIA on internal controls and issued an exposure draft for [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":23466,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[11],"tags":[2677],"acf":{"service_id":"49"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - 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