internal auditing.ppt

INTERNAL AUDITING

AUDIT The general meaning of an audit is an evaluation of a person, organization, system, process, enterprise, project or product.Audit means unbiased examination, and evaluation of the financial statements of an organization. Audit are performed to ascertain the validity, reliability of information: also to provide an assessment of a systems Internal Control.

BASIC TYPE OF AUDIT

Financial Audit

Non Financial Audit

Financial Audit

- Address questions of accounting, recording and reporting of financial transactions. Reviewing the adequacy of internal control also falls within the scope of financial audit.

INTERNAL AUDIT VS. EXTERNAL AUDITExternal audit, on the other hand, is carried out independently to express an opinion on the fairness of the financial statements, with the primary concern and objective of determining whether the financial statements are free from material misstatements. It is, therefore, not a part of entity.

The role of internal auditing is determined by management and its functions objective vary according to managements requirements and as such it is part of the entity.

WHAT IS INTERNAL AUDIT?

Is an independent, objective assurance and consulting activity designed to add value and improve an organizations operations INTERNAL AUDITINGHelps an organization in accomplishing its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes Functions include among other things, examining, evaluating and monitoring the adequacy and effectiveness of the accounting and internal control systems

is an independent appraisal function within an organization to examine and evaluate its activities as a service organization. the objective of internal auditing is to assist members of the organization in the effective discharge of their responsibilities.INTERNAL AUDITING

THE PURPOSE OF INTERNAL AUDITING

Eyes and EarsPolicemanWatchdogConsultant

CONTROLControl is defined as the policies, procedures, practices and organizational structures designed to provide reasonable assurance that business objectives will be achieved and that undesired events will be prevented or detected and corrected.

WHY DO WE NEED CONTROLS?If everything seems under control, you are not going fast enough.

AUDIT PROCEDURES

AUDIT OFCASH RECEIPTS

COLLECTORObtain list of official receipts issued to collector/s.If official receipts are complete, trace used/issued official receipts if properly and completely recorded to the collectors cash book.If official receipt was cancelled, attach the original copy to the OR booklet and it must be verified by the bookkeeper.Verify series of official receipts. Series should be complete.Should be chronologically used/issued

Verify the amount in words and in figuresCalculate total collectionsVerify if total collections are remitted in-tact to the treasurerThere should be no splitting of remittanceThere should be no delay in remittanceIf there is unremitted balance, conduct cash count. Unremitted balance should tally with the actual cash counted. Note for any cash shortage/overage.

CASHIER/TREASURERObtain list of official receipts issued to collector/s.If official receipts are complete, traced used/issued official receipts if properly and completely recorded to the collectors cash book.Verify series of official receipts. Series should be complete.

Should be chronologically used/issued.Verify amount in words and in figures.Calculate total collections.Verify if total collections are remitted in-tact to the bank.There should be no splitting of remittance.There should be no delay in remittance.Verify validated deposit slip if are recorded to the passbook.

Cash book balance must tally to the balance in the General Ledger and Balance Sheet prepared by the Bookkeeper.Traced daily total of cash receipts from the Treasurers Cash Book if recorded to the Bookkeepers CASH RECEIPTS BOOK.Verify proper posting of accounts (example: credit to ISF Receivable, ISF Income, etc.)Summarized daily transactions of cash receipts to arrive into MONTHLY FIGURE (total cash receipts for the month.)BOOKKEEPER

Traced summarized total monthly collection if properly recorded to their respective account in the GENERAL LEDGER From the General Ledger, traced if properly presented to the Financial Statements.

AUDIT OF CASH DISBURSEMENTAll Disbursements should be in accordance with the CIAs policy (e.g. amount of honorarium, per diem, remittance to NIA, etc.)If possible, all disbursement should be made in checks except for small items which should be paid through petty cashFrom the Cash Disbursement Books, review corresponding vouchers paid as to the following;

All disbursements must have supporting documents such as original official receipts, payrolls etc.All vouchers must have at least 3 signatories; the bookkeeper, treasurer and the manager. Approval of the manager is a must. All vouchers must have been acknowledged by the payee (received by portion)

Calculate total disbursements for the months and trace if properly recorded to the cash disbursement books.

CHARACTER is doing the right thing when nobody is looking. There are too many people who think that the only thing thats right is to get by and the only thing thats wrong is to get caught.

INTEGRITY is doing the right thing even if nobody is watching.

Whoever is careless with the truth in small matters cannot be trusted with important matters.

QUESTIONS

OBTAIN LIST OF OFFICIAL RECEIPTS ISSUED TO COLLECTOR/S

VERIFY SERIES OF OFFICIAL RECEIPTS

SHOULD BE CHRONOLOGICALLY USED/ISSUED

VERIFY THE AMOUNT IN WORDS AND IN FIGURES

SAMPLE OF SPLITTING OF REMITTANCE

SAMPLE OF DELAYED REMITTANCES

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