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    Internal Audit Process

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    ShanilDayalan
    The presentation provides an overview of internal auditing for university staff. It explains that internal audit is an independent, objective function that evaluates risk management and internal controls. The objectives are to provide awareness of what auditors examine and an understanding of internal controls. Internal controls are defined as processes designed by management to reasonably ensure the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations. The internal audit process at the university was described, which involves planning, fieldwork, reporting, and follow up. Key components of internal controls - control environment, risk assessment, control activities, information and communication, and monitoring - were also summarized.

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    Internal Audit Process

    Uploaded by

    ShanilDayalan
    38 views30 pages
    The presentation provides an overview of internal auditing for university staff. It explains that internal audit is an independent, objective function that evaluates risk management and internal controls. The objectives are to provide awareness of what auditors examine and an understanding of internal controls. Internal controls are defined as processes designed by management to reasonably ensure the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations. The internal audit process at the university was described, which involves planning, fieldwork, reporting, and follow up. Key components of internal controls - control environment, risk assessment, control activities, information and communication, and monitoring - were also summarized.

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    InternalAuditProcessGeneralPresentation.pptx

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    The presentation provides an overview of internal auditing for university staff. It explains that internal audit is an independent, objective function that evaluates risk management and internal controls. The objectives are to provide awareness of what auditors examine and an understanding of internal controls. Internal controls are defined as processes designed by management to reasonably ensure the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations. The internal audit process at the university was described, which involves planning, fieldwork, reporting, and follow up. Key components of internal controls - control environment, risk assessment, control activities, information and communication, and monitoring - were also summarized.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    38 views30 pages

    Internal Audit Process

    Uploaded by

    ShanilDayalan
    The presentation provides an overview of internal auditing for university staff. It explains that internal audit is an independent, objective function that evaluates risk management and internal controls. The objectives are to provide awareness of what auditors examine and an understanding of internal controls. Internal controls are defined as processes designed by management to reasonably ensure the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations. The internal audit process at the university was described, which involves planning, fieldwork, reporting, and follow up. Key components of internal controls - control environment, risk assessment, control activities, information and communication, and monitoring - were also summarized.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 30

    Pre-Audit Presentation

    INTERNAL AUDIT PROCESS

    OBJECTIVES OF PRESENTATION
    Provide a basic understanding of
    internal audit
    Provide a basic awareness of the
    principles of internal controls so:

    You

    have an understanding of what were


    looking for as we conduct the audit
    You can help us identify risks (potential
    problems) that warrant attention

    WHAT IS 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. Institute of Internal Auditor

    WHAT DOES INTERNAL AUDIT DO?


    We examine how University departments
    and processes operate.
    Our emphasis is on evaluating internal
    controls.

    UNIVERSITY AUDIT PROCESS


    Prepare annual audit plan
    Conduct internal audit planning and opening
    meeting
    Perform audit fieldwork
    Conduct preliminary closing meeting
    Obtain management responses
    Draft audit report & distribute
    Conduct closing meeting
    Disseminate final report
    Perform audit follow up

    INTERNAL AUDIT REPORTING LINES

    Board of
    Regents

    President

    Internal
    Auditor

    WHAT ARE INTERNAL CONTROLS?


    A process effected by an organizations
    people, designed to provide reasonable
    assurance in the following categories:
    Effectiveness and efficiency of operations
    Reliability of financial reporting
    Compliance with laws and regulations
    COSO definition COSO- Committee of Sponsoring Organizations of the
    Treadway Commission

    WHAT ARE INTERNAL CONTROLS?


    Internal Controls are People Dependent
    Internal Controls
    Are developed by people
    Guide people
    Provide accountability to people
    Are carried out by people

    WHAT ARE INTERNAL CONTROLS?


    Reasonable Assurance??
    Too little control presents undue risk
    Excessive Controls are costly and
    counterproductive

    UNDUE RISK / EXCESSIVE CONTROLS


    Undue Risks Cause:
    Loss of Assets,
    Donors or Grants
    Poor Business
    Decisions
    Noncompliance
    Increased
    Regulations
    Public Scandals

    Excessive Controls
    Cause:
    Increased
    Bureaucracy
    Reduced Productivity
    Increased
    Complexity
    Increased Cycle Time
    Increase of No-Value
    Activities

    THREE CONTROL CATEGORIES

    Effectiveness and efficiency of


    operations
    Processes

    run smoothly and help us meet


    our objectives

    Reliability of financial reporting


    Numbers

    are accurate and are an aid to


    decision-making

    Compliance with laws and regulations


    Stay

    out of trouble

    TOO SIMPLIFY:
    Internal controls can be defined as
    those processes that management relies
    on to make sure things dont get goofed
    up.
    Paul Kanneman

    INTERNAL CONTROLS
    FROM EVERYDAY LIFE

    YOU ARE PRACTICING GOOD INTERNAL


    CONTROLS WHEN YOU
    Study

    for a test
    Make a grocery list
    Lock your car doors
    Set your alarm clock
    See your dentist for your annual
    checkup
    Stop home delivery of your mail or
    newspaper when youre away

    BEFORE WE PROCEED:
    Who is responsible for the Universitys
    internal controls?
    Everyone including You

    FIVE INTERRELATED COMPONENTS OF INTERNAL


    CONTROL

    Control Environment
    Risk Assessment
    Control Activities
    Information and Communication
    Monitoring

    INTERNAL CONTROL PYRAMID

    INTERNAL CONTROL PYRAMID


    Internal controls are not something that
    are simply laid on top of the organization
    Internal controls must permeate the
    organization

    CONTROL ENVIRONMENT
    The tone at the top provides the foundation.
    Includes the following elements:
    Demonstrates commitment to integrity and
    ethics
    Exercises oversight responsibility
    Establishes structure, authority, and
    responsibility
    Demonstrates commitment to competence
    Enforces accountability

    RISK ASSESSMENT
    Recognizing potential problems and ensuring there
    are procedures to deal with them.
    Four Steps to Risk Assessment
    Establish objectives
    What

    Identify risks
    What

    can happen?

    Plan risk management


    What

    do you want to achieve?

    is our response?

    Plan for change


    Implement

    control activities

    INTERNAL RISK FACTORS


    New personnel
    Change in management responsibilities
    Revamped information systems
    New programs
    Communication
    Student needs or expectations

    EXTERNAL RISK FACTORS


    Economic environment
    New legislation or regulations
    New technology
    Natural disasters, criminal or terrorist
    actions
    Community needs or expectations
    Vendor/Contractor performance and
    reliability

    CONTROL ACTIVITIES

    Preventative
    Approval
    Authorization
    Security
    Segregation

    of duties

    Detective
    Verification
    Reconciliation
    Review

    FOR THE FOLLOWING PROBLEM


    Identify the risk(s) and
    A control activity that could have
    reduce the risk

    PROBLEM

    Because of the time the department


    secretary has spent reconstructing the
    department chairs research, other tasks are
    low priority. The secretary keeps cash
    receipts (cash and checks) in an unlocked
    desk drawer. The drawer contains $2000 in
    cash and 40 checks totaling $3000. Some
    checks are more than six months old. Some
    have not been endorsed and other have
    been endorsed University name.

    PROBLEM - RISKS
    Lost or stolen cash and checks
    Stale checks
    Budget shortfall

    PROBLEM CONTROL ACTIVITIES


    Restrictive endorsements
    Secure location
    Cash receipts journal
    Frequent deposits
    Verify deposits
    Department head review

    INFORMATION & COMMUNICATION

    Systems or processes that support the


    identification, capture, and exchange of
    information in a form and time frame
    that enable people to carry out their
    responsibilities.

    MONITORING

    Processes used to assess the quality of


    internal performance over time.
    Ongoing monitoring occurs in the
    ordinary course of operations, and
    includes regular management and
    supervisory activities.

    THANK YOU

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