SIA 320 Internal Audit Evidence:
- Meaning: As per the definition given in the standard, “Internal Audit Evidence refers to all the information used by the Internal Auditor in arriving at the conclusion on which the auditor’s opinion is based”.
- Scope: The scope and work area of the Internal Audit evidence includes the following-
- Information collected during the performance of the various activities in the internal audit and the procedures used for testing.
- Information retained from all the records and processes underlying in the entity.
- Objective: The objectives behind gathering proper and appropriate Internal Audit Evidence that are reliable as well, are as follows-
- It aids in the supervising and reviewing the work carried in the internal audit.
- For confirming the nature of the audit procedures, there timing and its sufficiency that were undertaken as per the planning of the internal audit and the terms and conditions of the engagement.
- For allowing the Internal Auditor in forming reviews and opinions about the outcome of the completed internal audit services and procedures.
- For establishing the work performed in conformance with the laid pronouncements provided by Institute of Chartered Accountants of India (ICAI).
- The overall objective of obtaining the Internal Audit Evidence that are appropriate and also reliable is to allow the auditors in providing base proofs for all the findings during the audit.
Requirements in Internal Audit Evidence:
The basic requirements that must be met during the collection of the Internal Audit Evidence are as follows-
- Nature of Evidence: The evidences collected must be from the books, records, systems and procedures underlying in the company or from the performance of the testing procedures and activities of the audit. Documents that support the transactions and business arrangements of the company must also be collected and considered.
- Reliability and Consistency of Evidence: The reliability of the evidences and information collected by the auditor depends on the nature of its source i.e., either external or internal, its type and the in-depth details provided in it. It also depends on the timing of the conduction of the audit. In cases where the auditors are in dilemma regarding the reliability of the evidences then they must evaluate the audit procedures that requires to be modified for resolving the conflicts and problems.
- Evidence Collection and Recording Process: The Internal Audit Evidence must be recorded in a manner in which it can be reviewed independently without the help of the Internal Auditor. It should also meet basic standards of quality in order to achieve and fulfil the objectives of the internal audit. All the details of the quality standards, manner of evidence collection, its review, sufficiency, authenticity and appropriateness and reliability must be written in form of internal audit procedure.
- Documentation: The documentation must contain the written policy and process of collecting the internal audit evidence. The required documents as per the SIA 320 are as followed-
- As part of the Internal Audit Manual the policy and processes on the audit evidence must be in written format.
- Wherever appropriate, all the details of the collected evidence, relevancy of the findings and the formed opinions and reviews that have been cross referenced with the program of the Internal Audit.