Internal Audit Techniques
Assessment techniques ensure an internal auditor gathers a full understanding of the interior control procedures and whether employees are complying with control directives.
Indirect assessment techniques include reviewing flowcharts, manuals, departmental control policies or other existing documentation. If documented procedures aren’t being followed, direct discussion with department staff could also be necessary.
Auditing fieldwork procedures can include transaction matching, physical inventory count, audit trail calculations, and account reconciliation as is required by law. Analysis techniques may test random data or target specific data, if an auditor believes an internal control process must be improved.
Internal audit reporting includes a proper report and should include a preliminary or memo-style interim report. An interim report typically includes sensitive or significant results the auditor thinks the board of directors must know directly .
The final report includes a summary of the procedures and techniques used for completing the audit, an outline of audit findings, and suggestions for improvements to internal controls and control procedures. The formal report is reviewed with management and proposals for improvement are discussed. Follow up after a period of your time is important to make sure the new recommendations are implemented and have improved operating efficiency
Objective of Internal Audit
- Proper Control: One of the most objectives of an internal audit is to stay stringent control over all the activities of an organization. The management needs assurance of the authenticity of the financial records and therefore the efficiency of the operations of the firm. internal audit helps establish both.
- Perfect accounting: An internal audit keeps a really close check on the accounting of an organisation.. It checks everything from the vouchers, to the authority of transactions to mathematical accuracy. All entries are verified against documents and other proof. Chances of mistakes or frauds are greatly reduced.
- Review of Business: The purpose of an internal audit is to keep a check on the financial and operational aspects of a business. So because the current fiscal year is ongoing, internal audit can means the mistakes, weak points, and strengths of the business. this may allow an ongoing review, rather than waiting till the year-end.
- Asset Protection: In the process of internal audit, there’s always a valuation and verification of an asset. there’s also a physical verification of the ownership and possession of the asset. and just in case of special transactions like sale, purchase or revaluation of the asset, the authorization of this is often also audited in an internal audit. therefore the assets enjoy complete protection.
- Keeps a Check on Errors: In a attestation service , the auditor are going to be ready to determine if any mistakes were made within the financial records. But this only happens at the top of the fiscal year.
And the mistakes are corrected thereafter. But just in case of an internal audit, the mistakes are spotted as soon as they’re made, and corrected immediately.
- Detection of Fraud: In case the corporate has an internal audit , the detection of fraud becomes much easier. This is often because there’s a year-round check on the workers.In fact, an employee is a smaller amount likely to aim fraud within the presence of an internal auditor. He won’t have any time gap between the occurrence of fraud and its detection to hide it up. This may dissuade employees from committing fraud