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Exposure Draft of Standard on Internal Audit (SIA) 240, Using the Work of an Expert (Comments to be received by March 28, 2019)
February, 28th 2019
                                          EXPOSURE DRAFT


                      USING THE WORK OF AN EXPERT *

The Internal Audit Standards Board of The Institute of Chartered Accountants of
India (ICAI) invites comments on Standard on Internal Audit (SIA) 240, Using the
Work of an Expert.

Comments are most helpful if they indicate a clear rationale and, where applicable,
provide a suggestion for alternative wording.

Comments can be e-mailed either at; or at

Last date for sending comments is March 28, 2019.

* This Standard on Internal Audit (SIA 240) seeks to revise and supersede Standard on Internal Audit (SIA) 16, Using the
Work of an Expert, issued in March 2009 (as recommendatory in nature). This SIA is being issued in its place as a
mandatory standard from its effective date.

                        USING THE WORK OF AN EXPERT

   Introduction ...........................................................................................      1

   Objectives ......................... ..............................................................           2

   Requirements .........................................................................................        3

   Explanatory Comments ........................................................................                 4

   Effective Date ........................................................................................       5

This Standard on Internal Audit (SIA) 240, Using the Work of an Expert, issued by the
Council of the Institute of Chartered Accountants of India should be read in
conjunction with the "Preface to the Standards on Internal Audit", "Framework
governing Internal Audits" and "Basic Principles of Internal Audit" issued by the

     1.1   An Expert, for the purpose of this Standard on Internal Audit (SIA), refers
           to a person or an entity (such as an association of persons, a firm or a
           company), which possesses certain special skills or unique knowledge,
           along with some years of experience and expertise in a particular area,
           field or discipline.

     1.2   In conducting internal audit assignments, the Chief of Internal Audit may
           seek the assistance and place reliance on the work of an Expert. This may
           be in the form of specific audit procedures covering a complex area or
           field (such as, Information Technology, Civil/Electrical/Mechanical
           Engineering, Banking, Oil & Gas Industry, etc.) or a unique and
           specialised discipline (such as, Actuarial Services, Forensic Accounting,
           Taxation, Treasury operations, Financial products, Risk Modelling,
           Intellectual Property or business valuations, etc.).

     1.3   An Expert is generally appointed to help complete part of an internal
           audit assignment in situations where the required skills are not available
           within the internal audit team or function. The Expert can be an employee
           of the company, much like the Internal Auditor, provided all criteria
           concerning his independence and objectivity with respect the internal
           audit assignment is fulfilled.

     1.4   Scope: This Standard applies to all internal audit assignments where part
           of the internal audit work is completed by an Expert and relied upon by
           the Internal Auditor to provide an independent assurance.

           However, an external service provider, engaged to provide regular
           internal audit services, is not covered by this Standard. For such
           appointments, the Internal Auditor shall refer to another SIA 230 on
           "Objectives of Internal Audit" to fulfil the requirements of engaging
           External Service Providers, such as ensuring an Engagement Letter to
           cover the terms and conditions of engagement.

     2.1   The objectives of using the work of an Expert is to:
           (a)   Obtain technical assistance and support from competent experts
                 where the internal audit team does not possess the necessary
                 knowledge and expertise;
           (b)   Internal audit procedures conducted in complex and specialised
                 areas meet expected quality standards;
           (c)   Outcome of the internal audit work is credible and reliable; and
           (d)   Work     performed    is    in   conformance     with   the   applicable
                 pronouncements of the Institute of Chartered Accountants of India.

     2.2   The overall objective of using the work of an Expert is to allow the
           Internal Auditor to place reliance on the technical work completed in the
           most informed manner so as to form an opinion on the outcome of the
           audit procedures and to add further credibility and reliability to the
           findings of the internal audit.


     3.1   The Internal Auditor shall make an independent determination of using
           the work of an Expert based on:
           (a)   The technicality and complexity of the subject matter of internal
           (b)   The risk assessment and importance of the subject matter; and
           (c)   A comparison of the expertise available within the internal audit
                 team to conduct a quality audit with the expertise required to
                 execute the technical procedures.

     3.2   The Internal Auditor shall have the authority to select, appoint and
           engage the Expert. Where this authority rests with someone else, then the
           Internal Auditor shall conduct procedures to validate the independence
           and objectivity of the Expert and share any concerns highlighted with
           those who have the authority to make the decision regarding appointment
           of the Expert. (Para 4.1)

     3.3   The Internal Auditor shall conduct an independent evaluation of the
           qualifications and credentials of the expert. (Para 4.2)
     3.4   Where the findings of the Expert will form part of the assurance report to
           be issued by the Internal Auditor, the Internal Auditor shall participate in
           the defining the scope, approach and work to be conducted by the Expert.
           (Para 4.3). Otherwise, the Internal Auditor shall not incorporate the
           finding of the Expert in his Internal Audit report. (Para 3.6).

     3.5   The Internal Auditor shall perform an evaluation of the work completed
           by the Expert to ensure that the work completed constitutes appropriate
           and reliable evidence to support the overall conclusions to be reported.
           (Para 4.4).

     3.6   The Internal Auditor shall retain ultimate responsibility for internal audit
           conclusions and opinions which are incorporated in his internal audit
           report, unless specifically mandated otherwise by the Assurance User (the
           recipient of the Internal Audit Report). Hence, the Internal Auditor shall
           not refer to the work of an Expert in his Internal Audit Report. (Para 4.5)


     4.1   Independence and Objectivity of the Expert (Para 3.2):

           The Internal Auditor should conduct procedures to assess the ability of
           the Expert to function in an independent and objective manner, such as
           the following:
           (a)   The appointing and supervisory authority: Where the authority to
                 appoint and supervise the Expert rests with someone other than the
                 Internal Auditor, they could also have the ability to influence the
                 outcome of the Expert's work.
           (b)   Employee of the Company or External Service provider: An external
                 professional will be less influenced by company management than
                 an Expert who is an employee of the company and reporting to
           (c)   Relationship of Expert: Where there is any relationship of the Expert
                 with Company Management, especially with those who have some
                 role in the internal audit assignment, the objectivity of the Expert
                 may get compromised.
      (d)   Personal Interests: Where the Expert has any personal, financial or
            organisational interests (such as significant portion of his income is
            derived from the company), it may prevent the rendering of an
            unbiased and impartial report.

4.2   Qualifications and Credentials of the Expert (Para 3.3):

      The Internal Auditor shall independently validate the qualification and
      credentials of the Expert, with procedures, such as the following:
      (a)   Confirmation of educational & professional qualifications and
            membership of professional bodies;
      (b)   Background and reference checks of the experience and/or
            reputation of the Expert;
      (c)   Details of instances and nature of similar past assignments
            undertaken; and
      (d)   Self Certification by the Expert regarding his qualifications,
            expertise, any conflict of interest or any pending disciplinary actions.

4.3   Defining the Scope, Approach and Work of the Expert (Para 3.4):

      Where the Internal Auditor plans to incorporate the findings of the work
      of the Expert as part of his Internal Audit Report, the Internal Auditor
      shall participate in defining the Plan and Procedures of the Expert, as
      follows (indicative list):
      (a)   Define the audit objective of the technical procedures planned;
      (b)   Identify the Subject matter to be reviewed and evaluated, especially
            what is included or excluded;
      (c)   Define any specific requirements or limitations of the work to be
      (d)   The information required by the Expert and the source of that
            information, the nature and reliability of the original data to be used;
      (e)   Define any assumptions which need to be incorporated as part of the
      (f)   Extent of access to required systems, locations, records and company
            personnel; and
      (g)   Clarify the confidentiality of information requirements and
            ownership of work papers.
4.4   Evaluating the Work of an Expert (Para 3.5)

      During and after completion of the work by the Expert, the Internal
      Auditor shall conduct an evaluation of the outcome of the findings of the
      Expert to make a determination of the quality of the work performed and
      to validate the reliability of the findings, as follows:
      (a)   A detailed review of the report and findings;
      (b)   Extent and thoroughness of the procedures completed;
      (c)   Any scope limitations or other hurdles faced in completing the
            assignment, such as missing information or access limitations;
      (d)   If appropriate, a review of certain work papers to understand the
            basis of significant observations; and
      (e)   The harmony and congruence of the Expert's findings with the rest
            of the Internal Audit report.

      In exceptional cases, where the findings of the Expert are not consistent
      with other aspects of the entity, the Internal Auditor should attempt to
      resolve the inconsistency through discussions with the Auditee and the
      Expert. In extreme situations, conducting additional procedures or
      engaging another Expert may be required to resolve the inconsistency.

4.5   Reference to Expert in Internal Audit report (Para 3.6):

      Where the Assurance User mandates the Expert to issues his own Report,
      or where the findings of the Expert are included separately as an
      addendum (e.g., an Appendix) to the Internal Audit report and the
      Internal Auditor has not participated in the planning and supervision of
      the Expert's work, the Internal Auditor shall make an exclusion caveat to
      his internal audit report so as to clearly exclude his responsibility from the
      work of the Expert.

4.6   Documentation: To confirm compliance of audit procedures with this
      SIA, a list of the documents required is as follows:
      (a)   Details of procedures conducted to validate the requirements of an
            Expert (Para 3.1).
      (b)   Details of procedures conducted to validate the Independence and
            Objectivity of the Expert (Para 4.1).
           (c)   Details of procedures conducted to verify the Qualifications and
                 Credentials of the Expert (Para 4.2).
           (d)   Details of procedures conducted to define the Scope, approach and
                 work plan of the Expert (Para 4.3).
           (e)   A summary of the review completed to evaluate the quality and
                 reliability of the work completed (Para 4.4).


     5.1   This Standard is applicable for internal audits beginning on or after a date
           to be notified by the Council of the Institute.
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