On-Site Support

Background & Introduction

  1. The On-Site Support Programme was initiated by IAA as a follow-up to the “workshop-type” training sessions provided to the Internal Audit Units of the MDAs and MMDAs.
  2. It is to assist the Internal Auditors to translate the knowledge and techniques taught at the training sessions into practice and also sharpen their skills in the performance of their duties.

Objectives
  1. To train Internal Audit staff in MDAs and MMDAs in the professional practice of Internal Auditing.
  2. The trained Internal Audit staff is able to plan and conduct professional internal audits and write reports to standards prescribed by the IAA.

Methodology
  1. Brief internal audit staff about the support, the audit process and the respective roles of the internal audit staff and the facilitator.
  2. Select the thrust areas.Observe the entry conference.
  3. Guide the internal audit staff throughout the audit process.
  4. Review the current and permanent audit files as well as the audit evidence gathered.
  5. Review the draft audit reports.Observe exit conference and discuss with management on lapses detected.
Fieldwork
The facilitator is to assist the internal audit staff in the audit processes namely:
  1. Planning.
  2. Execution.
  3. Reporting.
  4. Follow-up.
Planning
  1. Drawing strategic and annual audit plans.
  2. Drawing programme of work and audit programmes.
Strategic & Annual Audit Plans
  1. The strategic audit plan contains all the auditable areas within the organization to be covered by the Internal Audit Unit during the subsequent three years. The plan should also identify the auditable areas that are not covered and the reasons for which there will be no verification.The plan should be prepared by the head of the IAU and approved by the Head of the organization.
  2. Identification and prioritisation of auditable areas are to be based on:
    1. An assessment of risk pertaining to the achievement of the organizations objectives, considering audit area and the degree of risk.
    2. Human resources and competency of IAU.
    3. Discussions with HOD and other senior management requests.
  3. The strategic audit plan is to be maintained and reviewed annually. It can be reviewed following the suggestions from the ARIC and/or the HOD or determined priorities and important changes in the organisation’s activities.
  4. An annual audit plan which includes objectives, priority, timing and resource requirements is prepared by the IAU for each year and approved by the head of the Organization. It is primarily a subset from the Strategic Audit Plan and forms a basis for ongoing review of the strategic work plan. It includes:
    1. Types of audits to be performed during the current year;
      Audit Programme;
    2. Allocated resources (time management);
    3. Staff training and development.

Audit Programmes

  1. Audit programs are the detailed procedures used to test transactions and processes of the organization.
Objectives
  1. To assess the efficiency and effectiveness of the internal controls on the operations of the organisation.
  2. To assess the organisation’s compliance with the International and national legislation.
  3. To review the operating system.

Execution
Execution includes the following activities:
  1. Documentation of auditable systems and transactions;
  2. Creation and organisation of permanent audit working papers file;
  3. Creation and organisation of current audit working papers file;
  4. Gathering of evidence and documenting work done;
  5. Review of audit work;
  6. Discussion of findings and recommendations with management.

Documentation of Auditable Systems and Transactions
  1. Documentation of the auditable systems and transactions helps the auditor to get a fair understanding of the system he is auditing.
  2. In documenting the system the auditor starts from the point where the transaction was initiated through to its approval to its recording into the general ledger.
  3. The designations of officers in charge as well as list of documents used in the transactions are documented.
  4. Test is then conducted to test the efficiency of the system.

Creation and Organisation of Permanent Audit Working Papers File
The Auditor files documents that are of permanent nature in the permanent audit file. The filing system is as follows.

Audit plans and IAU activities :

  1. Strategic and Annual plans, Annual Report on the functioning of the internal audit system.
  2. Review of activities of the IAU and self assessment check-list.
Environment :
  1. Applicable rules, laws and regulations and Financial Information.
  2. Material on the organisation - division of duties and responsibilities, number of employees, job descriptions, organisation chart, nature and location of accounting records.
  3. Internal Policies & Operating Procedures Manuals
  4. Documentation on the Internal Control System including the system of approvals, authorisations, segregation of duties and supervision.
Audit reports :
  1. Copy of previous years audit final reports
Audit Manual :
  1. Revisions to the Internal Audit Manual
Creation and Organisation of Current Audit Working Papers File :
  1. The audit staff document the work performed in working papers.
  2. The working papers serve as the connecting link between the audit assignment, the auditor's fieldwork, and the final report.
  3. Working papers contain the records of planning and preliminary surveys, audit procedures, fieldwork, and other documents relating to the audit.

Gathering of Evidence & Documentation of Work
The Audit work process includes the following activities:
  1. Verification
  2. Comparison
  3. Examination
  4. Re-computation
  5. Confirmation
  6. Reconciliation
  7. Vouching
  8. Tracing
  9. Observation

Review of Audit Work
  1. The Head of the Internal Audit Unit take up the responsibility of reviewing the Audit work of his subordinates.
  2. This starts from the planning of the audit work to the execution through to the evaluation of the internal controls to the development of the reports.
  3. He is to ensure that planned audit work has actually been accomplished; that comments on that work have been addressed; and that he obtains the responses of the Internal Auditors on the queries raised.

Findings & Recommendations
The documentation of the audit findings and recommendation takes the following format:
  1. Audit Finding
  2. Criteria
  3. Condition
  4. Cause
  5. Effect
  6. Recommendation

Reporting
The audit report follows the following format:
  1. Executive summary
  2. Introduction and background
  3. Objectives
  4. Scope
  5. Methodology
  6. Detailed findings, recommendations and client’s responses
  7. Conclusion and audit opinion

Follow-up
  1. The follow-up process is to ensure whether audit recommendations have been implemented and proper audit procedures are being followed.
  2. The Auditor records the date the recommendations are implemented or the target date for implementation.
  3. The follow up report which is the audit recommendation status report forms a basis for the next audit.

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