(b) Reliance on ternal audit documentation
There are two issues to consider; the ability of internal audit to produce the documentation and the actual accuracy of the documentation itself.
The ability of the internal audit department to produce the documentation can be determined by:
– Ensuring that the department has staff who have appropriate qualifications. Provision of a relevant qualification e.g. membership of a computer related institute would be appropriate.
– Ensuring that this and similar documentation is produced using a recognised plan and that the documentation is tested prior to use. The use of different staff in the internal audit department to produce and test documentation will increase confidence in its accuracy.
– Ensuring that the documentation is actually used during internal audit work and that problems with documentation are noted and investigated as part of that work. Being given access to internal audit reports on the inventory software will provide appropriate evidence.
Regarding the actual documentation:
– Reviewing the documentation to ensure that it appears logical and that terms and symbols are used consistently throughout. This will provide evidence that the flowcharts, etc should be accurate.
– Comparing the documentation against the ‘live’ inventory system to ensure it correctly reflects the inventory system. This comparison will include tracing individual transactions through the inventory systems.
– Using part of the documentation to amend Cal & Co’s audit software, and then ensuring that the software processes inventory system data accurately. However, this stage may be limited due to the need to use live files at Tirrol Co.
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