Question

You are the external auditor of Suleman and Stock Ltd. The CEO, Ahsan Suleman, has contacted you because the company is considering setting up an internal audit department for the first time and he is looking for some guidance as to what is required for an effective internal audit department.

Required:

Explain the key considerations Ahsan Suleman should consider when setting up an internal audit department.

Answer 1

Answer -

INTERNAL AUDIT :

Internal audits evaluate a company's internal controls, including its corporate governance and accounting processes. These audits ensure compliance with laws and regulations and help to maintain accurate and timely financial reporting and data collection.

THINGS TO GET CONSIDERED BY SULEMAN & STOCK BEFORE INTERNAL AUDIT :

• COMMON CRITERIA TO LOOK UP :

When reviewing policies and procedures, it is essential to think about whether written policies are meeting the needs of customers and adding value to the organization. Policies and procedures should focus on continuous improvement as it relates to how work is performed.

• 1 . CREATE AN AUDIT CALENDAR :

A structured and systematic approach to the auditing process can help ensure the function gets completed. And, like any other business goal, audits should be integrated into corporate objectives. Scheduling audits on the business calendar ensures that it is done consistently.

• 2 . ALERT DEPARTMENTS OF SCHEDULED AUDITS :

It is simply common courtesy to give departments notice of an audit so they can have the necessary documents and materials ready and available for the reviewer.

• 3. IDENTIFY AREAS THAT NEED AUDITING : Identify departments that operate by using policies and procedures written by the organization or by regulatory agencies. This can include areas as complex as manufacturing processes or as simplistic as accounting procedures.Make a list of each area and the functions of the area that require review.

• 4. DOCUMENT RESULTS :

Document the results and any differences in practice to how the policies are written, when policies are complied with and when they are not. This may also include other information that is gathered from the interview process. Again, the goal is to identify gaps in compliance and to figure out a way to bridge that gap.

• 5. REPORT FINDINGS :

Create an easy to read audit report. These reports should be reviewed with senior management, and an improvement plan should be developed for areas that have gaps in practice compliance.

These are the Key considerations to Look over by Ahsan Suleman When Setting up for an Internal Audit Department ..