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Further to the revision by the IAASB of ISA 610 Using the Work of Internal Auditors, FEE notes the proposed change in the ED to amend the Code in order to avoid that the Code is in conflict with ISA 610, particularly if the proposed change intends clarifying that individuals in the internal audit function do not meet the definition of a member of the “engagement team”.
In the ED, it is concluded that individuals in the internal audit function providing direct assistance do not meet the definition of a member of the engagement team because they are not partners or a member of the professional staff of the firm or network firm. The IESBA proposes a change to the definition of engagement team to state that individuals in an internal audit function providing direct assistance do not meet the definition of the engagement team under the Code.
The proposed change in the ED is consistent with the FEE Comments on the IAASB Exposure Draft on proposed ISA 610 (Revised) issued on 15 November, 2010. In relation to this particular aspect, FEE suggested that it would be relevant to state clearly as part of a definition that internal audit staff are not to be considered as members of the engagement team.
Moreover, since FEE believes that internal audit staffs are not members of the engagement team, this means that they are not in general, thus not only when providing direct assistance to the external auditor but also when not providing direct assistance to the external auditor. Therefore, FEE agrees that individuals within an audit client’s internal audit function must be excluded from the definition of a member of the engagement team as proposed in the ED in accordance with ISA 610, but also regardless of whether they are providing direct assistance or not on the audit engagement. The IESBA could use the proposed change in the ED as an opportunity to expand the clarification of the definition of “engagement team” in the Code in this respect.