Page 96 - CA Final FADU_ChartBook

CHAPTER 16 INTERNAL AUDIT

CNO-IA.020
Applicability of Internal Audit All Listed companies G Accomplishment of Goals & objectives
conditions Public co. Private co. Whether they are clearly stated & attainable
INTERNAL AUDIT Unlisted
companies Deposits > Rs 25 Cr Precise quantifiable terms To achieve them proper
(both monetary & Non monetary) planning including budgeting
Paid upb share capital > Rs 50 Cr
There should be sufficient flexibility should be done
IA is generally involved in performing following activities: O/S Loan / Borrowing from
> Rs 100Cr > Rs 100 Cr
(Banks & FI’s) R Utilization of Resources
A) Activities related to Governance
Turnover > Rs 200Cr > Rs 200Cr For this compare Actual performance with operating Identify facilities/
Performance evaluation of management Resources which are
Note- Deposits & loan be seen at any point of time standards & norms [OSN] for resources under-Utilized.
Compliance of ethical & core values of entity of preceding financial year Evaluate whether proper OSN have been established
PUSC & T.O. - To be seen during preceding FY
Adequacy of communication about risks & Review methods of establishing OSN
corresponding controls to employees Appointments / Terms For this
& condition It will be done by audit committee,if not, then BOD Examine assumptions made while setting OSN
B) Activities related to Risk Management
Whether OSN are detailed enough for each resource /
They will decide scope, functiong, periodicity &
Identifying risky areas facility so that it can be used by operating person for
methodology, in consultation with internal audit
monitoring & evaluating performance
Assessing risks
CNO-IA.030 Custodianship & Safeguarding of Assets
Managing risks A
Also covers fraud risk
Asset Related System related
SCOPE OF INTERNAL AUDITING INCLUDES
C) Activities related to Internal Control Verify existence Review Internal controls for Intangible assets
REVIEW OF MANAGEMENT FUNCTION
IA may evaluate following controls for mgt of Assets Review segregation of duties
i) Compliance of laws & regulations Following management Audit functions are covered Safeguarding assets In case of electronic data processing review physical &
against loss system controls on processing facilities
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ii) Safeguarding assets Shortcut – nternal auditor ne GRASP karni chahiye ye chije
whether all assets are
iii) Review of operating activities I Review of Internal control system & procedures accounted for fully
iv) Operating & Financial Information System I Relevance & Reliability of Information
S Organizational structure
G Accomplishment of Goals & objectives
R Utilization of Resources The structure is designed to achieve organisation
A Custodianship & Safeguarding of Assets objective effectively ( harmony )
S Organizational structure
CNO-IA.025 For this Evaluate Following ( GM Motors BaNS D efective Structure)
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P Review of Compliance with Polices, Plans, Procedures & Regulations
G Grouping of activities for managerial controls
SEC 138 INTERNAL AUDIT I Review of Internal control system & procedures
M Process of managerial development ( vital for fast growing enterprises )
B Satisfactory balance between authority & responsibility
Chartered accountant Assessing the Whether they Whether control Whether internal Reviewing No overlapping of responsibility Between managerial staff at headquarters and
design & operational are operating risk is reduced & is limitations N executives at operating units
Who can do internal audit Cost accountant controls are cost
efficiency & throughout the it compensating of Internal S Span of controls should be reasonable for each executive
Such other professional effectiveness period inherent risk effective controls
Dual responsibities can be avoided, where it is not possible, then fix what is primary
They may or may not be in practice D Responsibility & to which particular senior
I Relevance & Reliability of Information
They may or may not be employee of the co. D No undue dominance of one functions over other
Legal form of Auditors They can be S Structure should be simple & economical
Evaluate reliability & integrity of financial & operating information given
to management & external agencies
Individuals Partnership firm Body Corporate
Examine reliability of financial & operational records
For this Check whether there is Exception Reporting Continue on next page...

Usefulness of reports
Costing requirements

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