We are the auditors of a large UK international charity where it is not possible to rely on local auditors. This is because local auditors are only appointed where there is a statutory requirement to have local audits, meaning that most jurisdictions do not have local audits.

Our approach starts with a detailed understanding of the monitoring controls in place in the UK. In particular, we document the process of reporting from each local office to the UK and the review processes in the UK to identify unusual trends or transactions. We perform testing to confirm that this review process is adequately documented.

At the interim stage of the audit, we choose items to sample test from across each of the charity’s operating locations. We do so in good time for the audit evidence to be collated for the main audit fieldwork. At the fieldwork stage, we sample test the selected transactions and balances. We also consider the key controls overseas and whether the findings of our work indicate the need for improvements in local controls including those controls around the reporting to the UK. In recent years we have identified control improvements in a number of areas including the record keeping over local fixed assets and the reconciliation processes for partner bank accounts.

The charity has an internal auditor in place who focuses on the overseas offices. We communicate with the internal auditor each year to understand key elements of their work and review their reports to identify findings which may impact significantly on the external audit. We also keep an open dialogue through the year to understand matters of interest as they arise.