PLAN TO REPORT How we undertake an Audit 1 INTERNAL AUDIT SHARED - - PowerPoint PPT Presentation

PLAN TO REPORT How we undertake an Audit

Audit Committee Presentation 6th February 2014

INTERNAL AUDIT SHARED SERVICE (IASS)

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PRESENTATION OVERVIEW

INTERNAL AUDIT SHARED SERVICE (IASS)

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• Planning;
• Conducting;
• Reporting;

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• Refer to Annual Audit Plan
• Assign Job Entity to the most appropriate Auditor

(raise job via APACE);

• Prepare Audit Brief (specific Objectives, Scope,

Audit Criteria and Methodology);

• Meet with Auditor to discuss assignment;
• Make initial contact with Auditee;
• Notify Auditee in Writing / Schedule opening

meeting. Planning - Preparing for the Assignment

INTERNAL AUDIT SHARED SERVICE (IASS)

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• Gain an understanding of the nature of the work,

activity, organisation or initiative being audited;

• Attend opening meeting with Auditee;
• Prepare standard documentation (Control Evaluation

Sheets, Working Papers, Report Format).

• Commence Audit Field Work.

Planning - Preparing for the Assignment – Lead Auditor

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• Identify and document the System;

Normally achieved through discussion with Directorate Management.

• The objectives of Recording Systems;

Helps the auditor to understand the procedures for processing, recording and controlling its transactions; Helps assess the overall security of the systems by evaluating controls and any weaknesses; Helps assess the efficiency of the System.

• The Methods of Recording;

Systems notes; Descriptive Questionnaires (I.C.Q’s); Flow Charts and Block Diagrams.

• Sources of Information

Previous audit files, Guides, manuals, desk instructions, interviews with staff who operate the system,

• bservations, organisational charts, job descriptions etc.

Conducting the Audit – Recording and Evaluating the System.

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Example: Payroll System:-

• Control Objectives – “Pay and related costs should be

incurred only in respect of staff currently employed in authorised posts”.

• Expected Controls – “Each department should

periodically be required to confirm the accuracy of a schedule containing names of all employees currently charged to the department, the post held, grade and the cost code of each post”.

• Identifying risks. – “Ghost employees may be set up on

the payroll system and go undetected resulting in fraudulent payments being made”.

Conducting the Audit - Continued

Conducting the Audit - Continued

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• Determine Actual Controls:- this is achieved by:-

Testing and Evidence; Types of Test

• 1. Walk Through Tests – follows a transaction or

process through the system;

• 2. Compliance Tests – Seeks to provide evidence

that internal control procedures identified within the system are actually operating in a manner intended by management;

• 3. Substantive Tests – tests the completeness,

accuracy and the validity of transactions (tends to be directed at the outputs of the system).

Conducting the Audit - Continued

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• Fully document findings on the appropriate

working papers (including Control Evaluation Sheets);

• Comparison of Benchmark (Expected) Control

with Actual Control as determined from the

• utcome of the tests performed and the

evidence gathered;

• Provide an overall assessment of the system.

Reporting

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• The Aim of every report should be to:-
• Prompt management action to implement

recommendations for change leading to improvement in performance and control;

• Provide a formal record of points arising from the

audit and, where appropriate, of the actions agreed with management.

• Internal Audit reports must be accurate, clear,

concise and constructive and issued promptly.

Reporting - Continued

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• Draft Report Prepared – the auditor will use the results of

the tests performed and the assessment of weaknesses found to draw conclusion about the quality and reliability

• f the system under review; including an overall opinion on

the internal control environment;

• Discuss with Client Manager – normally takes the form of a

debrief session at the conclusion of the fieldwork;

• Reviewed by Group Auditors /Principal Auditors;
• Review points documented and addressed;
• Draft Report issued to Auditee including Implementation

Action Plan for completion.

Reporting - Continued

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• Response received from Auditee and Reviewed to

ensure acceptance of recommendations, timeliness of implementation and accuracy.

• Final PDF Audit Report issued (incorporating

Management Responses); Internal Audit diarise key recommendations for follow up; particularly those where risks are high.

• Client Satisfaction Questionnaire sent for

feedback on conduct of the Audit.

Questions???

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Plan to Report