SAS No. 65 does not explicitly include internal auditors’
knowledge about the organization’s operations. However,
the external auditor may consider the internal auditor’s
expertise in a particular facet of the organization’s operations
to be more important than the internal auditor’s
knowledge of auditing techniques. In fact, studies by Clark,
Gibbs, and Schroeder (1980) and Gibbs and Schroeder
(1979) involving external auditors have shown that internal
auditors’ knowledge of company operations, processes,
and procedures was the most important criterion for
assessing internal audit competence.