For planned engagements, the objectives proceed from which the annual audit plan is derived. For unplanned engagements, the objectives are established prior to the start of the engagement and are designed to address the specific issue that prompted the engagement.
Engagement objectives are different than management's operational objectives. Operational objectives specify what the client hopes to accomplish while engagement objectives deal with what the internal auditor hopes to accomplish.
Broad categories of engagement objectives includes:
- Effectiveness and efficiency of operations
- Reliability of reporting
- Compliance
The scope of engagement must include consideration of relevant systems, records, personnel and physical properties including those under the control of third parties.
If significant consulting opportunities arise during an assurance engagement, a specific written understanding as to the objectives, scope, respective responsibilities and other expectations should be reached and the results of the consulting engagement communicated in accordance with consulting standards.
In performing consulting engagements, internal auditors must ensure that the scope of the management is sufficient to address the agreed upon objectives. If internal auditors develop reservations about the scope during the engagement, these reservations must be discussed with the client to determine whether to continue with the engagement.
Any restriction placed on the internal audit activity that thwarts it from fulfilling the intended scope should be communicated, preferably in writing to the board, audit committee or other appropriate governing authority.
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