Lecture Internal Audit ALS 1997

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AUDITING By- Suraj Prakash Asst.Professor Amity College of Commerce & Finance. Rajdhani College (D.U)

Internal check & Audit:

Internal check & Audit "Accounting is a necessity to the business organization where as auditing is a luxury"

AUDITING Audit Uncover Defect In The System. :

AUDITING A udit U ncover D efect I n T he S ystem .

Internal Audit:

Internal Audit Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations . It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. Internal auditing is a catalyst for improving an organization’s effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes. With commitment to integrity and accountability, internal auditing provides value to governing bodies and senior management as an objective source of independent advice. Professionals called internal auditors are employed by organizations to perform the internal auditing activity.

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AUTHORITY FOR THE AUDIT Establishing the internal audit programme:- Objective. 2. Responsibility. Resources Procedure & Guidance Implementing Internal Audit Program Scheduled audit. Evaluating Auditor Selecting Audit Team. Directing & its Activity Maintaining Records Monitoring & reviewing the Internal audit program. Monitoring & reviewing . Identifying the need of Corrective actions. Suggestive corrective actions. Identifying Opportunities for improvement Competence & evaluation of auditor Audit activities Plan Do Check Improving the audit program Act Flow Chart Of IA

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Internal audit reports Condition : What is the particular problem identified? Criteria: What is the standard that was not met? The standard may be a company policy or other benchmark. Cause: Why did the problem occur? Consequence: What is the risk/negative outcome (or opportunity foregone) because of the finding? Corrective action: What should management do about the finding? What have they agreed to do and by when?

5 Most Common Mistakes When Doing Internal Audit:

5 Most Common Mistakes When Doing Internal Audit

You view auditing as a mundane task almost bordering on a chore.:

You view auditing as a mundane task almost bordering on a chore. Set out to add value to your business. Be a soldier of fortune Be alert & keep your eyes & ears open at all times. Grasp the opportunity to seek out problem so you can propose solution

#2.You give the impression that you are looking for someone to blame.:

#2.You give the impression that you are looking for someone to blame. Dispel the myth that you are out to “get people”. Avoid Careless words Replace “Whose fault would that be then ?” with “What part of the system is letting you down?” Promote the mantra A udit U ncover D efect I n T he S ystem. Always focus on the PORCESS & not the PERSON

#3. You perform an audit without sufficient preparation.:

#3. You perform an audit without sufficient preparation. Do you homework & check through the standard & relevant work procedures. Draw up a checklist with relevant part of the standard, the internal procedure & then add suitable question as a prompt to yourself. Allow sufficient time – especially when you are just starting out.

#4. You skimp on details & move from being objective to subjective.:

#4. You skimp on details & move from being objective to subjective. Always seek out objective evidence . Remember the key question – Show me…… But Don’t be deflective by the good talker Slow the audit down if necessary. Always record good & bad aspects. Don’t skimp on detail because of the time pressures.

#5. You report lacks content & traceability:

#5. You report lacks content & traceability You must not slip into the habit of vague generalizations “Several orders were checked & found to comply”. List all order you checked & include their reference number. Refer to & include your CAR number as relevant . Imagine someone has to retrace your step – they need to see the order that you saw

Thank You:

Thank You