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Circ5 2005

The document provides guidance on the Auditor-General's access to internal audit working papers. It states that the Auditor-General should not be required to sign a "hold harmless letter" to gain access, as the letter is intended to indemnify against third party claims and could restrict the Auditor-General's access required by law. Instead, the internal audit contract should address ownership of papers and indemnification issues if access is required by a third party like the Auditor-General. As the external auditor of public sector entities, the Auditor-General needs access to internal audit papers per auditing standards and has a legal right to full and unrestricted access under the Public Audit Act.

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37 views

Circ5 2005

The document provides guidance on the Auditor-General's access to internal audit working papers. It states that the Auditor-General should not be required to sign a "hold harmless letter" to gain access, as the letter is intended to indemnify against third party claims and could restrict the Auditor-General's access required by law. Instead, the internal audit contract should address ownership of papers and indemnification issues if access is required by a third party like the Auditor-General. As the external auditor of public sector entities, the Auditor-General needs access to internal audit papers per auditing standards and has a legal right to full and unrestricted access under the Public Audit Act.

Uploaded by

Gavin Henning
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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The South African Institute of Chartered Accountants Circular 5/2005

GUIDANCE ON ACCESS
TO INTERNAL AUDIT
WORKING PAPERS BY
THE AUDITOR-GENERAL
The Auditor-General, where he acts as the external auditor of an entity, .01
should not be requested to sign a “hold harmless letter” to gain access
to the internal audit working papers of a member firm where the latter
acts as the internal auditor of a public sector entity.

The purpose of the hold harmless letter, which is commonly used in .02
private sector engagements, is to indemnify the firm giving access to its
working papers against claims arising from making the working papers
available to a third party.

Instead of requesting a hold harmless letter, SAICA suggests that the .03
letter of engagement or the internal audit contract in respect of the
internal audit function between the audit firm and the entity appointing
that firm should regulate the ownership of the internal audit working
papers and issues relating to indemnification, if applicable, where
access to the working papers is required by a third party.

SAAS 610 – Considering the Work of Internal Audit provides guidance .04
to external auditors in considering the work of internal audit. The
external auditor should undertake an assessment of the activities of
internal audit in order to determine their effects on the nature, timing
and extent of the external audit procedures.

As a result of the requirements of the Public Finance Management Act, .05


Act No 1 of 1999, as amended, in the public sector, the provision of
internal audit services has become a significant service offered by
member firms. The Auditor-General, as the external auditor of public
sector entities, will need to have access to the internal auditors’
working papers in accordance with the requirements of SAAS 610 to
determine the impact of internal audit on his work. In addition, section
15 of the Public Audit Act, Act No 25 of 2004, entitles the Auditor-
General (or an authorised auditor) to have full and unrestricted access
to all the entity’s information. A requirement for the Auditor-General to
sign a hold harmless letter in order to have access to information could
1 Issued May 2005
CIRCULAR 5/2005 GUIDANCE ON ACCESS TO INTERNAL
AUDIT WORKING PAPERS BY
THE AUDITOR-GENERAL

be regarded as placing a restriction on his/her ability to have full and


unrestricted access, since any such restriction would be contrary to
legislation.

Johannesburg I S Sehoole
May 2005 Executive President

Issued May 2005 2

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