## Coordination: External Auditor and Internal Audit Function

Governing Standard: SA 610 – Using the Work of Internal Auditors

Coordination between the external auditor and the internal audit function is effective when:

#	Condition
1	Discussions take place at appropriate intervals throughout the period
2	The external auditor informs the internal audit function of significant matters that may affect the function
3	The external auditor has access to relevant internal audit reports and is informed of any significant matters that may affect the audit engagement

### Why Coordination Matters

Effective coordination reduces duplication of effort, ensures the external auditor can consider the implications of internal audit findings, and leverages the internal auditor's knowledge of the entity — particularly in fraud-prone environments such as hospitality chains.

Worked example

### Example 1

Scenario: M/s PSR & Associates audit The Saturn Hotel, a five-star hotel chain where frauds are common. The company has internal auditors at multiple locations. To use internal auditors' work effectively, PSR must ensure: (i) regular discussions with internal auditors throughout the audit period; (ii) PSR informs internal audit of any significant matters that could affect their work; and (iii) PSR has access to all internal audit reports and is told promptly of significant findings that could affect PSR's own procedures.

⚠️ Common exam mistakes

Treating coordination as a one-time meeting at year-end rather than an ongoing process throughout the audit period.
Assuming external auditors have automatic access to internal audit reports — access must be explicitly agreed and maintained.
Confusing 'coordination' with 'reliance' — coordination is about communication; reliance requires a separate assessment of the internal audit function's competence and objectivity.

Bare-Act text Coordination with the Internal Audit Function · SA 610 – Using the Work of Internal Auditors · click to expand

Coordination between the external auditor and the internal audit function is effective when, for example: (i) Discussions take place at appropriate intervals throughout the period. (ii) The external auditor informs the internal audit function of significant matters that may affect the function. (iii) The external auditor is advised of and has access to relevant reports of the internal audit function and is informed of any significant matters that come to the attention of the function when such matters may affect the work of the external auditor so that the external auditor is able to consider the implications of such matters for the audit engagement.

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Coordination between External Auditor and Internal Audit Function

Worked example

⚠️ Common exam mistakes