- Before an auditor begins any part of his audit work, he must assess the strength of the ICS on which he intends to place reliance and this is even more important under systems based audits because the ICS will influence his audit plan, sample size, and above all the quality and number of audit assistants he intends to use.
- If reliance is to be placed on the ICS the auditor should ensure that there is sufficient evidence to show that the ICS or controls on which he intends to place reliance have been working properly or effectively throughout the period under review.
- The extent of reliance upon the ICS will depend on such factors as:
- His past experience with the Company’s ICS.
- Any increase in the volume of business transactions.
- Changes in line managers or other top management officials. Such changes may effect the implementation of existing controls.
- Changes in accounting policies and practices.
- Changes in the size of the Company, i.e. through contraction or expansion
In all, the presence of a strong ICS can serve to reduce the auditor’s work load, i.e. enable him to apply tests but this does not reduce his liabilities.