Question

There are some issues that will be occur when applied ICS related to Auditor:

The management may over rely on the strength of the ICS and therefore relax their supervision which may leave room for errors and frauds thus exposing the auditor to potential civil liabilities.

ICS may reduce the auditor’s vigilance and observations with an unfavorable effect on the quality of the audit.

ICS may be abused by the internal auditors through collusion with the management and this may lead to the external auditor being mislead

How can you overcame these issues?

Answer 1

External Auditor should not rely on the ICS and comply with the auditing standards.ICS followed by internal auditor may b get used to analyse the efficiency and effectiveness of internal control. As ICS implemented by internal auditor may be get abused as in given case.. So, external should fullfil his responsibility of checking by own by applying auditing standards. Prime responsibility of checking is of external auditor only.. thats why he can not fully rely on what internal auditor states..