Best Practise Internal Audit Process

Best Practise Internal Audit Process

Internal Audit must be responds to external expectation and measurements, normally established by the audit committee, executive management , and other audit customers


Any 5 Activities on Internal Audit Process
A. Audit Planning
B. Fieldwork
C. Working Paper
D. Reporting
E. Supervision

A. Audit Planing
Background Information
Duties and responsibility of audit customer
Organizational charts, and financial budgets and reports
Relevant company policies and procedures(particularly any recent changes)
Developments and practices in the industry
Relevant government regulations
Prior audit reports and working paper
External audit reports and working papers


Preliminary Survey to the Internal Controls system
The overall business process
Strengths in the systems (key controls)
Weaknesses in the system and cause and significance
Operating policies and procedures
Responsibility for tasks and duties appropriately assigned
Whether supervisory review and approval was appropriate ( ie. management should not be able to override controls)

Scope of audit work
Reliability And Integrity Of Information
Compliance With Policy, Plans, Procedures, Laws And Regulations.
Safeguarding Assets
Economical and Efficient Use of Resources
Accomplishment of Established Objectives and Goals for Operations or Programs

Planning Memorandum
The scope and objectives of the audit should reflect the significant aspects of the activity as determined by the background and survey information.
Staff should determined and justify their estimated time budget which may vary, and appropriately so, from the initial annual scheduling budgets.

B. Fieldwork
Opening Conference with Management
Their expectation and suggestion about audit
Discussion of planned scope and objectives for review of the business process
Special concern and request of management
Discussion and concurrent of key exposures, risk and controls point
Potential use of self assessment and participation of customer staff in audit, or other measure to reduce cycle time for the audit
When and with whom findings would be discussed

Audit Program
Based on the review of the controls for the business activity
Used to investigate weaknesses found in the preliminary survey
Reviewed by the Head of Internal Audit or other supervisory personnel to add value to the planned procedures
Designed to prompt auditors to look for potential process improvement, apply quality principle and other customer service opportunities

C. Working Paper
Working Paper
Cross-referenced to the audit program
Labeled with a heading describing the name and location of the customer, the date or peridof the audit, and specific test the working paper supports
Initialed and dated by preparer
Indexed and numbered systimaticallyand in compliance with the department policy
Documented to show the source of information and materials examined
Footnoted with explanation and any symbols used
Cross-referenced to related working paper
Adequate explanation of sample selection procedures
Summaries describing test result, conclusion and recommendation
Evidence of discussion with customer about findings, recommendations, and possible remedial actions

D. Supervision
Due Professional Care
Internal auditors should meet their resposibilityfor assisting in deterrence of fraud by evaluating and testing the adequacy and effectiveness of internal controls, commensurate with the exposure and risk of audited area
Internal auditors should alert to opportunities, such as control weaknesses, that could allow fraud

Supervision
Audit objectives were based on the key business control identified during the survey
Audit program steps addressed the system controls
Audit work included consideration process improvement and additional customer service opportunities
Working paper adequately support the auditor’s finding, conclusion, and the recommendations
Supervisory personnel should provide opportunities to the staff during the audit to discuss change of scope, objectives or procedure


E. Reporting
Audit Report
Focused on the system or process improvement, including practical suggestion for correcting weaknesses that address the causes
Identified the location audited
Stated the purpose, scope, and objectives
Adequately described any scope limitations and how they affected the procedures used
Presented findings and recommendations clearly, completely, factually, and objectively with the emphasis of significant item
Acknowledge positive accomplishment and corrective actions.
Contained an executive summary
Contained any findings or comments that are always supported by the working papers
Show cross-references to supporting working paper
Was signed by the internal auditing director or designee
Was retained in the working paper files
Stated an overall opinion relating to the scope and objectives