Subsection 2: Certification of accounts

The professional practice standard relating to obtaining an understanding of and making use of the work of the internal audit, approved by the Minister of Justice, is set out below:

PROFESSIONAL PRACTICE STANDARD RELATING TO AWARENESS AND USE OF INTERNAL AUDIT WORK

Introduction

1. When the entity has an internal audit, the statutory auditor becomes familiar with its operation and the objectives assigned to it. He may use the work carried out by the internal audit as evidence collected in respect of the assertions he wishes to verify.

2. The purpose of this standard is to define the principles relating to:

- the statutory auditor's taking cognisance of the internal audit;

- the statutory auditor's use of the work performed by the internal audit.

Taking cognisance of the internal audit

3. When the statutory auditor acquaints himself with the entity to form a frame of reference within which he plans his audit and assesses the risk of material misstatement of the accounts, he enquires:

- about the place occupied by internal audit in the entity's organisation. The statutory auditor examines the rules and procedures put in place in the entity to ensure the objectivity of the internal auditors in carrying out their work and issuing their conclusions;

- the nature and scope of the work entrusted to the internal audit.

Use of the work carried out by the internal audit

4. When the statutory auditor considers using the work carried out by the internal audit, he shall assess in particular:

- the professional qualifications of the internal auditors and their experience acquired in these functions;

- the organisation of the internal audit in terms of planning, implementation and supervision of the work;

- the existing documentation, including work programmes and other written procedures;

- whether management takes into account the recommendations made by the internal audit and whether it implements actions in response to these recommendations.

5. When the statutory auditor decides to use certain internal audit work, he shall assess in particular whether:

- the nature and scope of this work meet the needs of its audit;

- this work has been carried out by persons with sufficient professional qualifications and experience and has been reviewed and documented;

- an appropriate solution has been found to the issues highlighted by the work of the internal audit;

- the reports or other summary documents drawn up by the internal audit are consistent with the results of the work carried out by the latter.

6. The statutory auditor also assesses whether this work constitutes sufficient and appropriate elements to enable him to reach conclusions on which to base his opinion on the financial statements.

7. If this is not the case, the statutory auditor shall consider the consequences for his own work.