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DISCUSSIONS > IIA GENERAL DISCUSSION AREA [ REFRESH ]
Thread Title: SOX Consultants can't Leverage work from External Auditors?
Created On Thursday August 23, 2012 11:53 AM
  SOX Consultants can't Leverage work from External Auditors?
  SOX Consultants can't Leverage work from External Auditors?


Coopington


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Joined: May 2011

Thursday August 23, 2012 11:53 AM

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Question,

I'm trying to find where in the SOX laws, standards, etc. that it says a seperate consulting group cannot leverage off work done by the external auditing firm.

We have 2 groups, the external firm who attests to our financial statements, and then we have our SOX consultants that assist us in performing our SOX testing. The consulting group asked for the identical materials that was provided to our external audit firm and my rep from the audit firm told me they can't supply any of their testing because they have to be totally separate from the consulting group. I can't find where this is documented in the SOX laws. Can anyone help me understand this??

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Paul_M


Posts: 102
Joined: Apr 2003

Monday August 27, 2012 3:59 PM

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Why are your SOX consultants testing the same things that the externals are testing?
Why are your external auditors not relying on the work of your consultants?
Both of these represent inefficiencies in the audit process.

I’m not sure what your audit firm means by saying “they have to be totally separate from the consulting group.” While the external auditor must maintain independence, the PCAOB’s Audit Standard 5 (Paragraphs 16-19) specifically allows the external auditor to “use the work of others to reduce the work the auditor might otherwise perform himself or herself.” The “others” may be “internal auditors, company personnel (in addition to internal auditors), and third parties working under the direction of management.”

The external auditor must evaluate “the competence and objectivity of the persons whose work the auditor plans to use to determine the extent to which the auditor may use their work.” (AS 5, paragraph 18) The guidance for the external auditor in assessing this is found in AU sec. 322, The Auditor's Consideration of the Internal Audit Function in an Audit of Financial Statements, paragraphs .09 through .11.

You should discuss this with your external audit partner. You should make sure that the external auditor and your SOX consultant have appropriately coordinated their work. Otherwise, the consultants and your auditors may be wasting your money.


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DISCUSSIONS > IIA GENERAL DISCUSSION AREA [ REFRESH ]
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