Abstract
<jats:p>Problem Statement The article is devoted to examining the theoretical and methodological foundations of grant auditing in the context of the requirements of the International Standards on Auditing (ISA) and to enhancing its methodological support under conditions of increased oversight by international institutions. The purpose of the study is to advance the theoretical and methodological principles of grant auditing in accordance with ISA requirements, aimed at improving the quality of the evidence base, strengthening the objectivity of information assessment, and ensuring a high level of assurance regarding the targeted use of resources for both internal and external users (donors). The object of the study is the process of organizing and conducting the audit of grant resources in accordance with the requirements of the International Standards on Auditing (ISA). The methods used in the study include: systemic and logical‑content analysis – for the theoretical generalization of the essence of grant auditing and the identification of intersections between its internal and external functions; comparison, induction, and deduction – for aligning the requirements of the International Standards on Auditing, assessing internal control functions, and determining the sources of audit risk minimization; abstract‑logical generalization – for developing the author’s approaches to designing auditors’ working papers and formulating the final conclusions of the study. The research hypothesis is based on the assumption that the development and systematization of methodological support for grant auditing in accordance with the requirements of ISA 315«Identifying and Assessing the Risks of Material Misstatement» and ISA 610 «Using the Work of Internal Auditors» in practice will enhance the quality and reliability of the evidence base, ensure the soundness of auditors’ professional judgments regarding the assessment of internal control functions, and contribute to strengthening the confidence of international and domestic donors in the performance results of economic entities. Presentation of the Main Material. The intersections between internal and external audit in the process of auditing the reporting of grant‑funded entities are substantiated; it is demonstrated that donors require transparency and reliability of reporting, confirmation of expenditures, and an assessment of the internal control system of grant recipients. Particular attention is given to the role of internal audit in monitoring operations under grant contracts, as well as to the specifics of applying ISA 315 and ISA 610. The process of risk assessment by the external auditor in accordance with ISA 315 and ISA 610 is justified for determining whether it is appropriate to rely on the results of the internal audit function or to involve internal auditors in providing direct assistance. Author‑developed forms of external auditor working papers are proposed for testing internal regulations and evaluating the functions of internal audit; their practical application ensures the unification of control procedures and the minimization of audit risk to an acceptable level. It is argued that effective interaction between internal and external audit contributes to optimizing the audit process, increasing the level of trust from international institutions, ensuring the sustainability of grant resource management, and transforming audit from a formal regulatory requirement into an effective tool for the strategic development of economic entities. The originality and practical significance lie in the development of applied tools that make it possible to formalize and optimize the interaction between control actors, namely: an algorithm for risk assessment by the external auditor in accordance with the requirements of ISA 315 and ISA 610, which ensures an end‑to‑end logical connection between identifying the risks of material misstatement and determining the extent to which internal auditors should be involved. This minimizes subjectivity in forming the audit strategy for grant projects. The use of the working paper «Assessment of the Internal Auditor’s Work» ensures compliance with ISA 610, optimizes the time spent on the audit, provides clear justification for internal quality reviews at the level of a specific engagement, and documents the external auditor’s position in cases of differences in professional judgment regarding the sufficiency and appropriateness of the evidence obtained. Conclusions. The development of the theoretical and methodological foundations of grant auditing requires improving its methodological tools in accordance with the requirements of ISA 315 and ISA 610, which provides a reliable basis for obtaining sufficient and appropriate audit evidence and serves as a key factor in confirming the reliability of the grant recipient’s reporting. The implementation of the proposed approach to risk assessment by the external auditor, together with the recommended working papers, ensures the unification of control procedures, minimizes the influence of subjective factors on the formation of the audit sample, and optimizes time and cost expenditures by enabling the rational use of the internal audit department’s work results.</jats:p>