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INTERNAL AUDIT

INTERNAL AUDIT. CONTENTS. What is internal audit? Scope & nature of internal audit Benefit of internal audit Frequency of internal audit Fees on internal audit Internal audit in NGOs Who can be internal auditor Relying on the work of internal auditor. INTERNAL AUDIT : MEANING.

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INTERNAL AUDIT

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  1. INTERNAL AUDIT

  2. CONTENTS • What is internal audit? • Scope & nature of internal audit • Benefit of internal audit • Frequency of internal audit • Fees on internal audit • Internal audit in NGOs • Who can be internal auditor • Relying on the work of internal auditor

  3. INTERNAL AUDIT : MEANING • It is independent appraisal activity for review of • Accounting • Financial & • Other operation as basis of • Protection • Constructive service to the management

  4. NATURE & SCOPE Nature • Not a function of authorization & recording • Function starts only after authorization Scope • The scope is as determined by the management

  5. BENEFIT • Helps to ensure functioning of ic system • Ensure only genuine expenses are accounted • Meet the legal compliances • Minimize the occurrence of fraud & error • Ensure the existence of internal check • Tool of achieving control on all activities of organisation

  6. BASIC PRINCIPLES OF ESTABLISHMENT • Should have independent status in organization • Should be free from executive function • Can investigate any phase of activity at any time & under any circumstance • Must have clear understanding of the objective • Staffs should be adequately qualified

  7. AUDIT FEES • It depends upon • Size of the audit team • Seniority of the audit team • Complexity of the work • Frequency of reporting • Regional dispersion

  8. FREQUENCY • The frequency depends upon • Terms of reference & needs • Structure of organisation • May be on • Monthly basis • Quarterly basis • Half yearly basis • It may be carried on periodical or continuous basis

  9. INTERNAL AUDIT IN NGOS • It is quite different from corporate internal audit • It depends upon the size & complexity of NGOs • If NGOs crosses 5 crore it is considered essential • NGOs generally prefer a firm familiar with their environment & operating conditions • In NGOs same ca firm can carry internal & statutory audit

  10. WHO CAN DO INTERNAL AUDIT • Management appoints internal auditor • May be an employee or outsider • Large organisations have system of internal audit as internal part of IC system • Ca firms also provide this service • Professional expertise & exposure

  11. RELYING UPON INTERNAL AUDITOR • SA 610 as issued by ICAI prescribes circumstances to rely on work of internal auditor • Scope of internal audit • Qualification of the internal auditor • Experience of the internal auditor • Procedure followed by him • Action taken by the management

  12. CONCLUSION • Internal audit is independent exam of the IC system • It is conducted to evaluate the execution & effectiveness of the IC system • Procedure of audit is independent • However auditor may be dependent or independent • Reporting is to be done to the C.E.O. Or the audit committee if any • More information please refer AccountAble 133

  13. FURTHER READING • AccountAble 133: Internal Audit

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