Stock take carried out by another auditor

[irfanahmedmeer]

Please consider a case there is a company where you are statuatory auditor and another firm of chartered accountants is internal auditor.

The company is located outside Karachi. The management of the company feels that the stock report issued by the internal auditor (Duly signed) should be acceptable to the external auditor (i.e you) for your external audit.

What are you do. I need advice but please be practical

[Usman Zubair]

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Please consider a case there is a company where you are statuatory auditor and another firm of chartered accountants is internal auditor.

The company is located outside Karachi. The management of the company feels that the stock report issued by the internal auditor (Duly signed) should be acceptable to the external auditor (i.e you) for your external audit.

What are you do. I need advice but please be practical
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What are the reasons for management, to ask the external auditor to rely on Internal auditor certificate/report, is it time of appointment or otherwise. If its time of appointment the external should qualify.

Usman

[irfanahmedmeer]

Boss I mean company does not want two auditors going out there and for all practical reasons doing the same thing

Also using the work of another auditor is also allowed under AS if that auditor is reliable

[jbladeus]

I havent read the said AS recently so am not to sure about the wordings, but i dont think that the AS tells to rely on the work of an auditor who is working as an internal auditor. The AS instead means that the work of a previous or co EXTERNAL auditor can be relied upon.

The opinion of an internal auditor cannot be taken as wholly independent by the external auditor even if its an external CA firm.

________________________
Arrrgh... it sure's gonna be mighty rough sailin' today ... mates!

[smraza]

Agreed with guybrush,
If both the auditors are jointly appointed for an audit, or any specific job, then they can mutually decided about the division of work, but if something goes wrong subsequently relating to the audit, then both the auditors will be collectively responsible for said job, as the opinion will be signed by both the auditors.
Here one thing must also be considered, that the external auditors are appointed by the shareholders for statutory audit, and internal auditors are hired by the management for specific management purposes.
S M R

Edited by - smraza on Sep 30 2003 025209 AM