Internal Audit
This query is : Resolved
15 July 2009
Before accepting the Internal Audit of a company, should a intimation of the same be sent to the previous internal auditor as done wrt previous statutory auditor.
15 July 2009
Yes. As per code of conduct we have to sent to earlier auditor for no objection before taking up the assignment.
20 July 2009
Are U sure, can anybody confirm
01 August 2024
Yes, it is a good practice to send an intimation to the previous internal auditor before accepting the internal audit assignment for a company. Although the Companies Act, 2013 does not explicitly mandate this procedure, it aligns with principles of professional courtesy and ethical practices. Here’s why and how it should be done:
### **Reasons for Intimation:**
1. **Professional Courtesy:**
- **Respect for Previous Auditor:** Informing the previous internal auditor about the change helps maintain professional courtesy and respect for their previous work.
2. **Transparency and Ethics:**
- **Ethical Considerations:** It ensures transparency and adheres to ethical standards, avoiding any potential conflicts or misunderstandings between the outgoing and incoming auditors.
3. **Understanding of Continuity:**
- **Information Gathering:** The new auditor might seek information or documentation from the outgoing auditor to ensure continuity in the audit process and understanding of the company’s audit history.
### **Steps to Follow:**
1. **Send a Formal Intimation:**
- **Letter of Intimation:** Draft a formal letter or email to the previous internal auditor, informing them of your acceptance of the internal audit assignment. Mention the effective date of the new appointment and request any necessary information or documentation that might facilitate a smooth transition.
2. **Obtain a No Objection Certificate (if applicable):**
- **No Objection Certificate (NOC):** Although not always required, it can be helpful to obtain a No Objection Certificate from the previous internal auditor, confirming that there are no pending issues or objections to the transition.
3. **Review Previous Work (if applicable):**
- **Examine Past Work:** If feasible, review the previous internal auditor’s work to understand the context and any ongoing issues that might impact your audit.
### **Regulatory and Ethical Guidelines:**
- **Institute of Chartered Accountants of India (ICAI) Guidelines:**
- **Ethics and Conduct:** Refer to the ICAI’s ethical guidelines and conduct rules, which emphasize professional behavior and communication in auditing. These guidelines encourage maintaining professional courtesy and integrity in dealings with former auditors.
### **Example of an Intimation Letter:**
Here is a sample letter format for intimation to the previous internal auditor:
---
**[Your Firm’s Letterhead]**
**Date: [DD/MM/YYYY]**
**To,**
**[Previous Internal Auditor’s Name]**
**[Previous Auditor’s Firm Name]**
**[Address]**
**Subject: Intimation of Appointment as Internal Auditor**
Dear [Previous Auditor’s Name],
We wish to inform you that our firm, [Your Firm’s Name], has been appointed as the internal auditor for [Company Name] for the financial year [Year/Period]. We will be commencing our audit from [Effective Date].
We would appreciate it if you could provide us with any relevant information or documentation that would assist in ensuring a smooth transition and continuity of the internal audit process.
Please let us know if there are any pending matters or issues that need to be addressed during this transition period.
Thank you for your cooperation.
Yours sincerely,
**[Your Name]**
**[Your Designation]**
**[Your Firm’s Name]**
**[Contact Information]**
---
By following these practices, you ensure that the transition of internal audit responsibilities is handled smoothly and professionally.
### **Reasons for Intimation:**
1. **Professional Courtesy:**
- **Respect for Previous Auditor:** Informing the previous internal auditor about the change helps maintain professional courtesy and respect for their previous work.
2. **Transparency and Ethics:**
- **Ethical Considerations:** It ensures transparency and adheres to ethical standards, avoiding any potential conflicts or misunderstandings between the outgoing and incoming auditors.
3. **Understanding of Continuity:**
- **Information Gathering:** The new auditor might seek information or documentation from the outgoing auditor to ensure continuity in the audit process and understanding of the company’s audit history.
### **Steps to Follow:**
1. **Send a Formal Intimation:**
- **Letter of Intimation:** Draft a formal letter or email to the previous internal auditor, informing them of your acceptance of the internal audit assignment. Mention the effective date of the new appointment and request any necessary information or documentation that might facilitate a smooth transition.
2. **Obtain a No Objection Certificate (if applicable):**
- **No Objection Certificate (NOC):** Although not always required, it can be helpful to obtain a No Objection Certificate from the previous internal auditor, confirming that there are no pending issues or objections to the transition.
3. **Review Previous Work (if applicable):**
- **Examine Past Work:** If feasible, review the previous internal auditor’s work to understand the context and any ongoing issues that might impact your audit.
### **Regulatory and Ethical Guidelines:**
- **Institute of Chartered Accountants of India (ICAI) Guidelines:**
- **Ethics and Conduct:** Refer to the ICAI’s ethical guidelines and conduct rules, which emphasize professional behavior and communication in auditing. These guidelines encourage maintaining professional courtesy and integrity in dealings with former auditors.
### **Example of an Intimation Letter:**
Here is a sample letter format for intimation to the previous internal auditor:
---
**[Your Firm’s Letterhead]**
**Date: [DD/MM/YYYY]**
**To,**
**[Previous Internal Auditor’s Name]**
**[Previous Auditor’s Firm Name]**
**[Address]**
**Subject: Intimation of Appointment as Internal Auditor**
Dear [Previous Auditor’s Name],
We wish to inform you that our firm, [Your Firm’s Name], has been appointed as the internal auditor for [Company Name] for the financial year [Year/Period]. We will be commencing our audit from [Effective Date].
We would appreciate it if you could provide us with any relevant information or documentation that would assist in ensuring a smooth transition and continuity of the internal audit process.
Please let us know if there are any pending matters or issues that need to be addressed during this transition period.
Thank you for your cooperation.
Yours sincerely,
**[Your Name]**
**[Your Designation]**
**[Your Firm’s Name]**
**[Contact Information]**
---
By following these practices, you ensure that the transition of internal audit responsibilities is handled smoothly and professionally.
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