Transcript Slide 1

A c c o u n t a i d TM
Accounting for Aid. Aid in Accounting
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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
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INTERNAL AUDIT : MEANING
 It is independent appraisal activity for review of
 Accounting
 Financial &
 Other operation as basis of
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Protection
Constructive service to the management
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NATURE & SCOPE
Nature
 Not a function of authorization & recording
 Function starts only after authorization
Scope
 The scope is as determined by the management
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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
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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
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AUDIT FEES
 It depends upon
 Size of the audit team
 Seniority of the audit team
 Complexity of the work
 Frequency of reporting
 Regional dispersion
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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
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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
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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
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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
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CONCLUSION
 Internal audit is independent exam of the IC system
 It is conducted to evaluate the execution & effectiveness of the
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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
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FURTHER READING
 AccountAble 133: Internal Audit
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