Senior Auditor Mock Interview
Master 25 Senior Auditor interview questions covering risk assessment, compliance standards, and audit methodology.
Question 7 of 25
As external auditors, how can we rely on the work of internal auditors?
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Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
As part of their responsibilities, internal auditors document policies and procedures. In some cases, external audit firms can rely on the work of the internal audit team in conducting the financial statement audit.
Brian Schuchart is a CPA and Senior Finance Business Partner. His professional experience includes senior management roles with NBC Sports, Virtual Health, and the Children's Hospital of Philadephia.
"Audit rules require auditors to obtain an understanding of a client's internal controls. As part of their responsibilities, an internal audit team often documents and assesses internal controls for their organization. In some cases, the external auditors can leverage this work in completion of their financial statement audit. In other words, they don't need to duplicate the work of the internal audit team. However, as external auditors we will often need to do our own transaction testing and therefore cannot rely on the internal audit team's work."
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There is a separate AICPA auditing standard that governs "Using the work of internal auditors". The external auditor can obtain an understanding of the clients' internal controls and processes by reading the reports of the internal auditors. In planning the high-risk audit areas and based on the auditor's assessment of risk that the financial statements could be materially misstated, the external auditor can seek an opinion from the internal auditor about the controls related to these areas. Accordingly, the external auditor can determine the extent to perform audit procedures, using tests of controls or substantive testing.
Cindy's Feedback
Great answer. Again, you sound extremely knowledgeable. Can you show, through your own example, how you've appropriately relied on internal auditors to show an application of your knowledge?
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