Public sector internal auditors and their counterparts at supreme audit institutions could provide more effective assurance if they cooperated better, according to a joint study by the European Confederation of Institutes of Internal Auditing (ECIIA) and the European Organisation of Supreme Audit Institutions (EUROSAI).
Internal auditors working in public sector bodies do cooperate with supreme audit institutions, which are usually independent of government, in most European jurisdictions on such issues as evaluating the internal control framework and risk management systems of the audited body. But according to the study, Coordination and cooperation between supreme audit institutions and internal auditors in the public sector, only a minority of jurisdictions have explicit rules, or legislation, in place that specifically deal with how they should co-ordinate their work.
“The relationship between public sector internal auditors and supreme audit institutions is something of a ‘terra incognita,’” ECIIA President Thijs Smit says. “There is an obvious need to map more systematically and in more detail what happens in practice at the moment so jurisdictions can learn from each other what works best and improve the way that the two types of auditor cooperate.” Internal auditors are part of the same public body that supreme audit institutions audit, which raises potential conflict of interest issues.
Despite this, the study identifies significant benefits to effective coordination, including:
- Promoting good governance by exchange of ideas and knowledge
- More effective and efficient audits based on a clearer understanding of respective audit roles
- Better internal and external audit activity resulting from coordinated planning and communication
- Refined audit scope for supreme audit institutions and internal auditors.
At present, audit committees seldom play a role in ensuring effective cooperation even though audit committees can act as a catalyst for better practice in this area, the study suggests.