Topic 4: Coordinate the Internal Audit Activity's Efforts

Efficient use of internal audit resources implies that attempts should be made to maximize audit coverage and minimize redundancies. This requires coordinating the internal audit coverage with external auditors, regulatory oversight bodies and other internal assurance functions.

Internal Auditors vs External Auditors

Internal auditors

• Apply a systematic, disciplined approach to evaluate and improve the effectiveness of organizational risk management, control and governance process.
• Concerned with all aspects of the organization
• Focus on future events as a result of their continuous review and evaluation of controls and processes.

External auditors

• Ordinary examination is designed to obtain sufficient evidential matter to support an opinion on the overall fairness of the annual financial statement. 
• Approach is historical in nature.

The CAE is responsible for regular evaluations of the coordination between internal and external auditors. Such evaluations may also include assessments of the overall efficiency and effectiveness of internal and external audit activities. The CAE communicates the results of these evaluations to senior management and the board, including relevant comments about the performance of external auditors. 

CAE must ensure proper coverage and minimize duplication of efforts.

Practical examples demonstrating the coordination of internal audit activity efforts with the external auditors include:

• Comparing annual internal and external audit plans to eliminate duplication and encourage cooperation in performance of an audit activity where appropriate
• Enterprise-wide agreement so that results of activities are shared to help the organization achieve objectives and eliminate risks
• Communication/sharing of the external audit perspective on risk management, control and governance process with the internal audit activity to help with the internal audit planning.