DOCUMENTATION

Under ISA 610 (Revised), when an external auditor uses the work of the internal audit function or obtains direct assistance from internal auditors, they must include specific, comprehensive documentation in their audit working papers.

The mandatory documentation requirements differ depending on whether the external auditor is using existing work completed by internal audit or obtaining direct assistance from internal auditors.

Dual Documentation Framework

                       ISA 610 Mandatory Working Paper Documentation
                                             │
               ┌─────────────────────────────┴─────────────────────────────┐
               ▼                                                           ▼
     Using Existing Work of IA                                     Using Direct Assistance (DA)
 ┌───────────────────────────────────┐                       ┌───────────────────────────────────┐
 │ 1. Evaluation of Objectivity,     │                       │ 1. Evaluation of Objectivity &    │
 │    Competence & Discipline        │                       │    Competence of Assistance Staff │
 │ 2. Audit Procedures Performed on  │                       │ 2. Written Agreement: Management  │
 │    the IA Work (Re-performance)   │                       │ 3. Written Agreement: IA Staff    │
 │ 3. Conclusions Reached on the     │                       │ 4. Direct Supervision & Review    │
 │    Adequacy of IA's Work          │                       │    Working Papers                │
 └───────────────────────────────────┘                       └───────────────────────────────────┘

Mandatory Working Paper Requirements

1. Mandatory Documentation When Using Existing Work of Internal Audit

If the external auditor plans to rely on internal audit reports, walkthroughs, or control testing performed independently by internal auditors during the year, the working papers must explicitly contain:

Mandatory Document / Section	Required Content in Working Papers	ISA 610 Reference
Evaluation of the Internal Audit Function	Formal documentation evaluating: • The function's organizational status and objectivity. • Professional competence of the internal audit staff. • Application of a systematic and disciplined audit approach.	ISA 610.36(a)
Nature & Extent of Reliance	Clear rationale for the specific areas of work relied upon, demonstrating how high-risk and high-judgment areas were excluded from reliance.	ISA 610.36(b)
Audit Procedures Executed on IA Work	Detailed evidence showing the audit procedures performed by the external auditor to evaluate the adequacy of IA's work, including: • Review of internal audit working papers. • Re-performance of a sample of internal audit procedures.	ISA 610.36(c)
Conclusion on Adequacy	Explicit conclusion stating whether the work of the internal audit function was adequate for the external auditor's purposes.	ISA 610.36(c)

2. Mandatory Documentation When Obtaining Direct Assistance (DA)

If internal auditors perform audit procedures under the direct direction, supervision, and review of the external auditor, the audit file must contain:

Mandatory Document / Section	Required Content in Working Papers	ISA 610 Reference
Evaluation of Objectivity & Competence	Assessment of the specific internal auditors providing assistance, confirming the absence of significant threats to objectivity (e.g., self-review threats) and verifying adequate skill levels.	ISA 610.37(a)
Written Management Representation	Signed agreement from an authorized representative of the entity (e.g., Board/Audit Committee) acknowledging that internal auditors will follow external auditor instructions and that management will not intervene.	ISA 610.37(b)
Written Confidentiality Undertaking	Signed agreements from the individual internal auditors undertaking direct assistance, confirming they will maintain confidentiality and disclose any potential conflicts of interest.	ISA 610.37(b)
Basis of Allocation & Judgment	Documentation detailing the nature and extent of tasks assigned to direct assistance staff, proving no high-risk or high-judgment tasks were delegated.	ISA 610.37(c)
Supervision, Review & Re-performance Record	Evidence showing that the external auditor: • Directed and supervised the internal auditors during execution. • Reviewed working papers prepared by internal auditors. • Tested/re-performed a sample of the direct assistance work.	ISA 610.37(d)

Common Deficiencies Found in Inspection Reviews

External audit quality reviews often flag non-compliance with ISA 610 documentation when auditors fail to include:

• Missing Signed Agreements: Proceeding with direct assistance without having the written management and individual confidentiality undertakings signed prior to commencing work.
• Lack of Re-Performance Evidence: Relying on internal audit work without documenting the external auditor's sample re-performance to verify accuracy.
• Generic Evaluations: Using generic boilerplate statements about internal audit competence rather than documenting specific evaluations of the personnel performing the work.