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
STANDARD ON INTERNAL AUDIT (SIA) 240
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 email@example.com; or at firstname.lastname@example.org
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.
STANDARD ON INTERNAL AUDIT (SIA) 240
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.
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. EXPLANATORY COMMENTS
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
(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
(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
(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. EFFECTIVE DATE
5.1 This Standard is applicable for internal audits beginning on or after a date
to be notified by the Council of the Institute.