Revised Code of Ethics in the Phils - 2010

290199 when a firm uses the work of an internal audit

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Unformatted text preview: vileges; • Taking responsibility for designing, implementing and maintaininginternal control; and • Performing outsourced internal audit services, comprising all or asubstantial portion of the internal audit function, where the firm isresponsible for determining the scope of the internal audit work andmay have responsibility for one or more of the matters noted in (a)– (f). 290.198 To avoid assuming a management responsibility, the firm shall only provideinternal audit services to an audit client if it is satisfied that: (a) The client designates an appropriate and competent resource,preferably within senior management, to be responsible at all timesfor internal audit activities and to acknowledge responsibility fordesigning, implementing, and maintaining internal control; (b) The client’s management or those charged with governance reviews,assesses and approves the scope, risk and frequency of the internalaudit services; (c) The client’s management evaluates the adequacy of the internal auditservices and the findings resulting from their performance; (d) The client’s management evaluates and determines whichrecommendations resulting from internal audit services to implementand manages the implementation process; and (e) The client’s management reports to those charged with governancethe significant findings and recommendations resulting from theinternal audit services. 290.199 When a firm uses the work of an internal audit function, ISAs require theperformance of procedures to evaluate the adequacy of that work. When afirm accepts an engagement to provide internal audit services to an auditclient, and the results of those services will be used in conducting theexternal audit, a self-review threat is created because of the possibility thatthe 74 audit team will use the results of the internal audit service withoutappropriately evaluating those results or exercising the same level ofprofessional skepticism as would be exercised when the internal audit workis performed by individuals...
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