When it comes to assessing whether to place a reliance on the work of the internal auditors, the external auditor must follow the requirements of ISA 610 which sets out the criteria for assessing whether to place a reliance on the work of the internal auditor including:
1) the extent to which the internal audit function's objectivity is supported by its organisational status, relevant procedures and policies, whom the internal auditors report to and whether they are subject to conflicting responsibilities which may prevent them from communicating significant issues opently
2) scope of function by considering the nature and extent of assignments performed by the internal auditors and the actions taken by management as a result of their report
3) level of technical competence , therefore the external auditor must ensure that they are adequately trained and qualified
4) whether a systematic and disciplined appropriate is taken by the internal auditors in planning, supervising, reviewing and documenting assignments. The auditor should also consider whether the function has appropriate quality control procedures, audit manuals, work programs and audit documentation.