INTERNAL AUDIT

Risk Assessment is the identification and analysis of risks that influence the accomplishment of an organization’s Long Term & Short Term objectives, and determining the risk management processes. Risk assessment involves determining the operating objectives, systematic identification of activities/ events that could prevent a business unit from achieving its objectives.
Methodology Adopted include Review of the long term and short term objectives, Setting up Risk Assessment Criteria’s and risks associated with each criteria’s, Risks are categorized into High Medium & Low

Our deliverables for the Long Term Risk Assessment include:

  • Achievement of Long Term Goals
    • Areas having Significant / High / Moderate or Low Impact
    • Areas which would have impact in achieving long term goals would be listed prioritizing the same.

Our deliverables for the Short Term Risk Assessment include:

  • Achievement of Short Term Goals
    • To confirm whether adequate steps have been taken to ensure that the short term goals are attained.

Highlight to the management, Issues that have concern in the control environment in the various departments.

The Definition of Internal Auditing states the fundamental purpose, nature, and scope of internal auditing.

“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.”

We help Organisation assess its Internal Control effectiveness, Operations effectiveness and efficiency and compliance to originations Policies and Procedures Our 30 Years of Internal Audit expertise together with our “catalystic” perspective has meant that we’re known as a genuinely different from others as reviewers of Internal Control effectiveness.

A Business-Focused Approach: Our approach to the Internal Audit is Business Focused and proactive rather than reactive

Taylor Made: Evey solution is tailor made to suit the organizations needs and characteristics

Diagnose A Problem: Analyse the root cause for the problem and recommendations are based to mitigate the same

Being Fully Independent & Keeping an Open Mind: Arriving without preconceived ideas and remaining independent

We undertake financial investigations of misconduct, bribery and corruption; with the main focus on assessing the financial transactions, accounting irregularities, and regulatory and compliance issues on behalf of the companies.

Broad overview of Audit Review Processes performed

  • Gain an understanding of and perform a review the Client’s internal policies and procedures.
  • Gain an understanding of and perform a thorough review of the business process which needs to be investigated s, including flow of data, timing of data flow, etc and analysis of the same.
  • Perform a critical review of process to highlight possible red flags and potential areas of revenue leakages.
  • Perform a thorough screening documents and signatures to evaluate and identify the fraudulent documents, if any.
  • Perform Field investigations including visits to end- user customer to evaluate the level of financial loss incurred by the company.
  • Conduct structured Interviews with the process owners and process members to ascertain the level of their involvement in the alleged fraud. These were Classified as “unknown”, “knowledge”, “involvement” and beneficiary.

Audit Procedures in the form of Audit Programs developed, to focus on the following areas:

  • Assessment of logical correctness of documents.
  • Physical verification and comparison with reports in ERP system.
  • Detection of any forged signatures.
  • Identification of the writers of signatures, handwriting and hand printing appearing on various documents.
  • Detecting any altered documents.
  • Detecting and restoring erasures and eradications.
  • Determining when a document was or was not prepared.
  • Detecting counterfeited documents and examining printed documents.
  • Detecting and restoring faint indented writings.
  • Comparisons of paper and inks.
  • Determining whether two sheets of paper came from the same table or pad of papers.
  • Examinations of paper folds and sequence of folds.
  • Comparisons of torn or cut paper edges.
  • Restoration of charred and partially burned documents.
  • Identifying the machine that made a photocopy and whether two copies were made on the same machine.
  • Examinations of facsimile(Fax) copies.
  • Identifying the source of, alterations to notary seals, wax seals and cachets.
  • Detecting the opening and resealing of sealed documents and examining adhesives.
  • Detecting inserted text in typewritten, printed or handwritten documents.
  • Determining the sequence of handwritten text, signatures and typewriting.
  • Identifying rubber stamp impressions.

Process Based Internal Audit moves

  • From the traditional role of Security, Statutory, Compliance to emerging Constructive, Participative, Proactive, Advisory role,
  • From traditional Audit Areas of Accounts to Emerging Audit areas of Operations, Marketing, Finance, HR Etc,
  • From traditional emphasis of financial controls to emerging emphasis on Managerial, Strategic & Operational Controls

Why Process Based Audit?

  • Covers entire cycle of business process
  • Focus on delivering strategic, managerial and operational objectives
  • Impact of deficiencies in different functions affecting the business goals are addressed

What is Business Process?

Business processes are a set of activities involved within or outside an organization that work together to produce a business outcome for a customer or to an organization.

List of Business Processes include the following:

  • Indent to Payment
  • Order to Cash
  • Production planning
  • Production Order to Warehouse
  • Maintenance Order to Execution
  • Customer Relationship Management
  • Project Management
  • Accounts
  • Finance & Secretarial, Compliance
  • Investment Management
  • Costing
  • Research & Development
  • Fixed Assets Management
  • Human Resources Management

Audit Report

The Audit Report Contains Following 5 Essentials to a quality deliverable

  1. Criteria
  2. What should be

  3. Condition
  4. What is

  5. Cause
  6. Why the condition happened

  7. Effect
  8. The difference and significance between what is and what should be

  9. Recommendations
  10. Action needed to correct the cause

Benefits of Process Based Audit

  • Source root causes of process deficiencies and propose solutions.
  • Provide audit assurances in regards to process effectiveness and efficiency.
  • Make recommendations to improve business process performance.

Stocks/Inventory such as raw materials, consumables, work in progress stock, Finished Goods, Stock at 3rd Party Locations are critical current assets and needs systematized management. As a large number of companies are operating across multiple locations and channel partners, making inventory management a challenge. We undertake periodical physical verification of Inventory and match the same with the books. Also various parameters on the storage of materials, security of materials, control and inward & issues etc are looked into and reported.

Control over inventories is crucial function for all organizations, as the inaccuracies in inventory records can cause erroneous management decisions. Inventory Management intends to verify the accuracy of inventory records by creating mandatory checkpoints and controls. The process involves assigning the proper carrying value to the inventory, so it can be reflected properly in the company’s financial records.

Some of the activities undertaken include:

Store leader updation

Physical Verification & matching of Stock records

Surprise Checks to identify the real position of inventory

Section 134(5)( e) of the 2013 act requires that in case of listed companies, Directors’ Responsibility Statement should, among other matters, state that directors had laid down internal financial controls and such financial controls are adequate and were operating effectively Rule 8(5)(viii) of the Companies Rules, 2014 Requires the board report of all companies to state the details in respect of adequacy of internal financial controls with reference to the financial statements also Section 143(3)(i) of the Act requires the auditors’ report to state whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls.

ICFR therefore is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Pre Audit is an examination of vouchers, contracts, etc., in order to substantiate a transation or a series of transactions before they are recorded or paid for.

Pre Audit serves multiple purpose, its provides management an assurance that the transactions are subject to review/error free, review before the official audit and not surprise during the audit, continuous process of monitoring internal controls and segregation of duties.

Concurrent Audit refers to examination of the financial transactions at the time of happening or parallel with the transaction. Concurrent Audit is carried out ensure accuracy, authenticity, compliance with procedures and guidelines.

Concurrent Audit provides adequate assurance to the management that the laid down procedures and guidelines are adhered.

Concurrent Audit is suitable for companies with large number of Branches, into financial Services, volume of transactions are high etc.