AU-C ORIGINAL PRONUNCEMENT
|Statements on Auditing Standards (SAS) 128.
|This statement is effective for audits of financial statements for periods ending on or after December 15, 2014.
AU-C PRACTICE ALERT
In February 2014, the Auditing Standards Board (ASB) issued SAS No. 128, Using the Work of Internal Auditors. This standard completes the AICPA's Clarity Project and supersedes SAS No. 65. It also amends AU-C 315 and various other sections. Those changes are reflected in this volume. The standard amends SQCS No. 8 to redefine the audit team to exclude members of the internal audit function.
The standard does not apply if the internal audit function is not relevant to the audit or if the external auditor does not intend to use the work of the internal audit function. It's worth noting that the external auditor is not required to use internal audit. However, using the internal audit function can result in cost savings and a more effective audit.
SAS No. 128 addresses the external auditor's responsibilities if using the work of internal auditors. The external auditor may use internal audit to:
- Obtain audit evidence
- Provide direct assistance under the direction, supervision, and review of the external auditor
The standard's requirements are, for the most part, organized around those two uses.
Making the Decision to Use Internal Audit
The new SAS introduces the concept of a “systematic ...