13.6 Relationship between external and internal auditors in the public sector

The relationship between external and internal auditors in the public sector can vary depending on the specific circumstances and organizational structure. Here are some key aspects of their relationship:

1. Independence and Objectivity:
   • Both external and internal auditors are expected to maintain independence and objectivity in their work.
   • External auditors are independent of the public entity and provide an external perspective, ensuring an unbiased and impartial assessment.
   • Internal auditors, although employed by the public entity, are expected to maintain independence in their activities and report directly to the highest levels of management or the audit committee.
2. Collaboration and Coordination:
   • External and internal auditors often collaborate and coordinate their activities to maximize audit effectiveness and efficiency.
   • External auditors may rely on the work of internal auditors by reviewing their audit work papers, risk assessments, and internal control evaluations.
   • Internal auditors may support external auditors by providing relevant information, access to records, and assisting in audit procedures.
3. Interchange of Information:
   • External and internal auditors share information and findings that are relevant to their respective audit objectives.
   • Internal auditors communicate their audit plans, progress, and significant findings to external auditors, ensuring transparency and facilitating external audit planning.
   • External auditors may share their audit scope, areas of focus, and identified risks with internal auditors to align efforts and avoid duplication of work.
4. Professional Cooperation:
   • External and internal auditors maintain a professional working relationship, respecting each other’s roles and responsibilities.
   • They may engage in discussions and consultations on audit matters, technical issues, and emerging risks to enhance audit quality and consistency.
   • External auditors may provide guidance and share best practices with internal auditors to enhance their audit methodologies and practices.
5. Quality Assurance and Peer Review:
   • External auditors may review and evaluate the work of internal auditors as part of their quality assurance processes.
   • Internal auditors may participate in external quality assurance reviews or peer reviews conducted by professional audit organizations to assess the effectiveness of their internal audit function.