BY:MOHAMMAD WAHID ABDULLAH KHAN
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| Mohammad wahid abdullah khan |
Summary: “WAK” model is a internal auditing process tool by which this tools an internal auditor wishing to implement an strategic process to complete the auditing program, only these presented three stage of WAK model process are well elaborated and know, for base on this process tool an internal auditor is able to formulate and implement the auditing aim, Auditors can work in a wide variety of settings. Auditors employed by private business, corporations, and financial companies also employed by both state and government agencies.
“WAK” model approach that if you want to be an auditor. You must have excellent analytical skills and great attention to detail. You must be proficient in accounting and auditing computer software & changes in law. Auditors should also possess a high standard of professional integrity as decisions are implemented on the basis of their statements and service.
Confronted with difficult dynamics of economic environment, businesses put an increasing emphasis on finance, management. Accounting and audit becomes more important and relevant to our daily life- as a bridge. Audit, financial, & business related education / literacy is not the only permeate in people's life but also control vital business arteries and eventually; the entire economic systems which exposed to such a business world.
I feel strongly that it is necessary to prepare everyone with a set of quantitative and analytical skills what would make them geared up to face the real financial /economical problems with confidently.
As a financial consultant, I found that without any doubt “Internal auditing” is most important than ever in business today. Internal auditing function is playing a very important role to a wide range of business from local to global business organizations of manufacturing and services industries. After a long study I discovered that if it is possible to make the whole Internal Auditing process in a framework through apply in an easy way. Then both of the parties (Auditors and business organizations) could find out the errors and resolve in the process of Internal Auditing to achieve the ultimate goal of the business.
I would like to interpretation my view on the explanation about the internal audit & auditors activities before going into the “WAK MODEL”. I have tried to make clear all the parts of internal auditing ahead of the WAK MODEL because I believe that the people who are related with accounts, finance, auditing and also the business owners will understand overall about the internal auditing. What is the necessary of Internal Auditing? And where is the use of “WAK MODEL”. This model will help the students/learners for bearing in mind as a career to become an internal auditor.
A. Internal audit overview:
01. Summary: Internal Audit Activity and Internal Auditor in the Ethical Culture of an Organization stresses that internal auditors, like everyone else in a company, have a role to play in corporate ethics--a role that can vary by the existence of, lack of, or degree of development of the organization's ethical culture. In fact, the internal auditor's role can be shaped as well by the existence, or lack, of an individual designated the chief ethics officer, furthermore internal auditors setting out to perform an ethics audit face both their own concerns about the often-uncharted territory of such tasks as well as the concerns of their colleagues and supervisors. Those concerns, experts say, can be allayed once such an audit is fully developed. Seemingly diaphanous notions can, in fact, be quantified and examined, and issues of appropriate versus inappropriate behavior can be addressed successfully.
02. Introduction > internal audit
These introductions describe - “the Internal Auditor’s responsibilities with respect to the internal audit function. The Internal Auditor describes audit planning and scheduling, and discusses the scope and types of internal audits generally performed at the organization as well Internal auditors verify the effectiveness of their organization's internal controls and check for mismanagement, waste, or fraud. They examine and evaluate their financial and information systems, management procedures, and internal controls to ensure that records are accurate & controls are adequate. They also review company operations, evaluating their efficiency, effectiveness, and compliance with corporate policies and government regulations,
03. Why should organization audit?
There are many sophisticated management tools available to organizations to help them undertake activities like business process re-engineering, continuous performance improvement or balance scorecards and business excellence to conduct some sort of initial assessment or audit to establish a starting position or baseline, this baseline information is then used as a reference against which improvements in performance over time can be measured,
As far as data protection is concerned the key reasons for carrying out audit activities are:
• Determines the risk appetite of the organization
• Establishes the risk management framework
• Identifies potential threats and assesses risks
• Decides on response to risks like implementation of control
• Monitors and coordinates the risk management processes and the outcomes,
• Provides assurance on the effectiveness of risk management processes
Internal audit can be the key source providing objective assurance that all the significant risks have been identified, risk management process is working effectively and efficiently, risks are being reported and controls are effective. As part of this work, the internal audit activity will provide advice, coaching and facilitation services to assist executive management in carrying out their responsibilities.
04. Who conducts an internal audit?
Some organizations are large enough to have a designated internal audit function. However most internal audit are carried out by staff members from within the organization,
05. Definition of 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.”
In different - “Independence allows internal auditors to carry out their work freely and objectively. This concept requires that internal auditors are independent of the activity they audit “Objectivity is an independent mental attitude which requires internal auditors to perform audits in such a manner that they have an honest belief in their work product and that no significant quality compromises are made. Objectivity requires that internal auditors do not subordinate their judgment on audit matters to others”
06. What are the advantages of an internal audit?
An internal audit offers several advantages; I have presented some of important advantages:
• In directs management’s attention to the key business issues. The audit analyzes weaknesses in the system of control and become the basis for practical recommendation for improvement.
• It gives management confidence when controls are operating satisfactorily.
•It identifies opportunities for improving efficiency and effectiveness.
•It gives early notice of potential problems, so that management can take action to head them off,
07. Scope of Internal Audits
The internal audit function’s scope of operations is by its very nature quite expansive. The internal audit function will assist the College in fulfilling its vision, mission, strategic initiatives, and objectives, while adhering to its core values, by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of enterprise-wide risk management, internal control systems, and governance processes.
The external auditors have to express an opinion on accuracy and fairness of financial information. The scope of internal audit is much wider than statutory/external audit. It should ideally cover all the organization’s activities. They include:
•Financial audit –accuracy, completeness and fairness of financial statements
•Operational audit- effectiveness and efficiency of operations
•Safeguarding of assets
•Review of projects
•Management audit
•Fraud detection- developing fraud exposures for every audit and detecting red flags
•Review of effectiveness of internal control
•Compliance with laws, regulations, policies and procedures
•Preservation of ethical culture – monitors the ethical climate and report on red flags that may compromise ethics
•Providing advice on reducing waste or inefficiency
08. Objectives of the internal audit:
An internal audits primary object is to examine key controls
• Financial – how is money handled within the organization? For example – who authorizes payment, and what checks and balance are in place to prevent unauthorized spending and fraud
• Administrative – are these conducive to meeting strategic objectives.
• System related – what system are in place departmentally and across the organization and how do they fit together,
The first step is to determine which of the above considerations are you priorities and set the broad audit objectives to reflect them,
09. Role of auditors
The auditor’s opinion on the truth, fairness, accuracy etc. of the financial statement imposes a larger responsibility on the auditor, which transcends the relationship with the client. The external auditor has to maintain total independence from the client. The auditor is supposed to be a watchdog. Government, creditors, investors and the business and financial community rely on the independence, objectivity and integrity of the auditors for maintaining confidence in operations of a company.
Too continually review and update control for adequacy and ensure controls established are strictly adhered to and in line with the guiding objectives of the Centre. Directly Ensure Compliance in all departments
• Monthly checks the Cashier record and the Supervisor’s posting into the cash book and Pastel.
• Verifies and checks all supporting documents for purpose, beneficiary, value authorization and date
• Verifies and checks all supporting documents for purpose, beneficiary, value authorization and date
• Check and ensure that relevant processes are followed for stock requisition
• Ensure internal control measures are operating as laid down
• Ensure overview function of internal audit is spread all over the operation of the Centre
• Carry out Spot check on all movable assets including cash
10. Responsibilities of auditors
• Internal Auditor:
Internal Audit is a service to management. Its functions include examining and evaluating internal control and providing assurance to the management. It is a part of the organization’s system of internal control and its scope includes ALL aspects of internal control, not just financial control. The scope of internal audit is much wider than statutory/external audit as discussed in detail above. It should ideally cover all the organization’s activities.
In short approach:
• Develop, document, implement, test, and maintain a comprehensive internal audit plan and system of internal controls to help provide assurance that applicable laws, regulations, and College policies and procedures are complied with judiciously
• Examine financial transactions for accuracy and compliance with institutional policies and applicable laws and regulations
• Evaluate financial and operational procedures to assure adequate internal controls are present;
• Identify, assess, and evaluate the College’s risk areas; make appropriate recommendations for improved internal controls and accounting procedures; and research and adopt industry best practices where appropriate
• Work with the senior leadership of the College to identify key business risks, assess those risks, and establish risk management procedures and practices based on industry best practices
• External Auditor
External auditors have to express an opinion on accuracy and fairness of financial information. An external audit program encompasses a full-scope financial statement audit, an attestation of internal controls over financial reporting, or other agreed-upon external audit procedures.
A typical report includes inter IIA, information on
• Whether they have obtained all the necessary information
• Whether the companies has kept all the requisite books of accounts
• Whether the financial statements are in conformity with books of accounts
• The financial statements present a true and fair view of the state of affairs
• Proper records for assets, inventory, loans etc. have been maintained by the company
• Adequacy of internal control procedures
• Existence of internal audit system commensurate with nature and size of business.
• Details of statutory dues and matters under litigation
Although internal and external auditors have different and clearly defined roles they do share the same broad purpose of serving the public by helping to ensure the highest standards of regularity and propriety for the use resources and in promoting efficient, effective and economic administration.
11. Types of Audits
In preparing the Annual Internal Audit Plan, the Internal Auditor shall determine the type of audit to be performed for each auditor. The following is a summary of the various types of audits which will generally be conducted:
I. Financial audit:
Financial audits are designed to validate the accuracy and completeness of records and account balances. Financial audits will utilize substantive tests, analytical reviews, and other validation procedures which may or may not include functional tests or transaction reviews.
In financial audits, significance or materiality is usually defined as a monetary value consequently, planning decisions mainly involve the intended degree of audit assurance and the extent of audit work required to provide it. The requirements will vary from one organization to another and applicable laws and regulations. Some activities common to most audits:
•Risk assessment
•Defining Materiality
•Financial statement assertions
•Financial analysis of cash flow statement
•Compliance and substantiate procedures
•Analytical procedures
Meeting these objectives involves verification of:
•Revenue
•Sales
•Bank deposits
•Bank reconciliation
•Accounts payable
•Accounts receivable
•Disbursements
•Petty cash transactions
•Loans & Advances
•Assets
II. Operational Audits
This type of audit involves a thorough review of a department’s operating procedures and internal controls. They deal with broad performance issues, focusing on whether funds and resources have been economically, efficiently and effectively managed to fulfill the mission and objectives. An operational audit includes elements of a compliance audit, a financial audit, and an information systems audit. In particular, management audits examine and report on matters related to any or all of the following:
•The adequacy of management systems, controls and practices, including those intended to control and safeguard assets, to ensure due regard to economy, efficiency and effectiveness;
•The extent to which resources have been managed with due regard to economy and efficiency; and,
•The extent to which programs, operations or activities of an entity have been effective.
III. Departmental Audits:
Departmental audits are designed to review and evaluate the activities and operations of a particular College function, activity, department, or unit under review. Departmental audits will evaluate accounting controls, ensure compliance with College policies and procedures, applicable laws and regulations, and validate the records and account balances of the auditor. Departmental audits will utilize a complete battery of audit tests and procedures, including, but not limited to, functional tests, transaction reviews, substantive tests, and analytical reviews.
IV. Operational Audits:
Operational audits are designed to evaluate procedures and controls which impact the attainment of the College’s organizational goals and objectives. Operational audits also measure compliance with College policies and procedures as well as applicable laws and regulations. During operational audits, functional tests and transaction reviews will be utilized.
V. Grant and Contract Audits:
Grant and contract audits are designed to evaluate the contracting process, compliance with the provisions of grants and contracts, and third-party contractual performance. These audits may be performed with respect to any function, activity, department, or unit of the College and shall include all types of contracts; e.g., federal and private grants and contracts, construction contracts, and professional service contracts.
VI. Fraud and Financial Irregularity Audits:
Fraud and financial irregularity audits are designed to verify the existence and magnitude of suspected fraud and financial irregularities. Fraud and financial irregularity audits may be conducted at the request of the Finance Committee of the Board of Trustees, the President, other senior members of College management; as a result of a tip from the College’s whistleblower hotline; or at the discretion of the Internal Auditor. The Internal Auditor shall utilize the highest level of discretion when undertaking a fraud or financial irregularity audit. The Internal Auditor shall promptly notify the Finance Committee of the Board of Trustees (including the Chair of the Finance Committee), the President, and any other member of senior management which may be appropriate, of any significant findings which result from a fraud or financial irregularity audit.
VII. Follow-up Audits:
Follow-up audits are designed to determine whether corrective action has been taken on previous audit recommendations. These audits are usually conducted six months after the Final Audit Report was issued and usually include only the deficiencies reported in the Final Audit Report. The follow-up audit shall include such functional or substantive tests that are necessary to verify that necessary and appropriate corrective actions have been taken
12. The Phased Audit Approach
A phased audit approach is generally used to conduct, watch, and whole internal audits in a timely and skilled manner. This approach may not be followed for certain special projects requested by the Finance Committee of the Board of Trustees and/or senior management, during fraud or financial irregularity audits, and under other special circumstances.
This phased audit approach allows the Internal Auditor to:
• Establish guidelines for completing internal audits;
• Identify the entire internal audit process, rather than emphasizing the fieldwork
Component as the extent of the internal audit process;
•Establish responsibilities and outputs for each phase of the internal audit process; and
• Provide regular communication that serves to control and document the internal audit progress.
This audit approach is the mechanism for planning, executing, and controlling the internal audit function through periodic reports and appraisals as the internal audit process progresses.
As discussed below in more detail, the phased audit approach consists of five phases:
• The planning phase;
• The organizing phase;
• The preliminary phase;
• The conducting phase; and
• The reporting phase.
Every phase of the internal audit development has definite requirements and produces specific deliverables.
(B.) “WAK” Model (The way of best solution for an organization/ project internal audit process)
B/1. Abstract:
The internal audit is an essential and now much discussed part of business, the institute of internal auditors an international association of internal auditors, offers this definition - “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.” to this end internal auditing furnishes staff with analyses, appraisals, and recommendations relating to these activities Internal audit is a service its functions include examining and evaluating internal control and providing assurance to the management. It is a part of the organizations system of internal control and its scope includes .all aspects of internal control. Not just financial control. The scope of internal audit is much wider than external audit. It ideally covers all the organizations activities,
Although internal and external auditors have different and clearly defined roles they do share the same broad purpose of serving the public by helping to ensure the highest standards of regularity and propriety for the use resources and in promoting efficient effective and economic administration,
That would be helpful for management for understand and realize the company present position & situation so that an internal auditor can attentive the management about house organization, The internal auditor may be contracted to perform additional tests to determine whether such policies and procedures are operating effectively within the service organization.
B/2. Executive Summary of “WAK” Model:
This “WAK” model discus the internal auditing process for the professional auditors. Internal auditor provides information that helps people in business increase their chances of making decisions that will benefit their companies. Auditing is the language of business, and like other languages, it has its own terms and rules. Understanding this language and learning to interpret it is your first step to becoming successful in your own business and in your personal financial life as well.
In your personal life you can use business information to make decisions through internal auditing. About investing in the business, applying for a loan, and evaluating potential jobs. Banks use Auditing information auditing to make decisions about granting loans. Government agencies base their regulations on Auditing information.
Auditing information can even be useful to non-business entities with an interest in how businesses affect local, national, or foreign communities and community members. Businesses use auditing information for planning and budgeting and for making decisions about borrowing and investing.
Overall, Auditing aids businesses in the process of making better decisions. The basics of Auditing are the same regardless of the size or type of business. In this “WAK” model you will learn through the examination of a desire small business, for more complex businesses, the economic transactions become more varied and complex as does the process of reporting them to various users.
The foundation of it all, however, remains the same. This “WAK” model will give you a solid foundation you will be able to use in any business situation you encounter. Whether you own a business or do not, even if you’ve never had any experience with auditing I think this is the perfect model for you. I hoping that you will find from this “WAK” model useful in helping you to understand these auditing issues as they apply to your small business and to your personal life.
(C.) solution of Internal audit process!
The internal audit responsible for planning and implementing Individual audits, and for the overall internal audit plan. This includes defining the scope and resources required for an audit, establishing the methodology and approach, and delegating Specific responsibilities for the overall adequacy, quality, and reporting of such audit activity and the corridor to solution in actuality is
Solution = Wish > abilities > knack (WAK)
Or else
Wish > abilities > knack (WAK) = Solution
That means if you use your wishful ness from of the heart you can gain an actual ability, and apply this gain ability you can able to done your mission smoothly, also through your ability you can show your working knack, and that is the only path of internal auditing solution,
C/1.WISHFUL: I think wish means a frame or express desires concerning; to invoke in favor of, or against, any one; to attribute, or cal down, in desire; to invoke; to imprecate, Almost all human beings do have something to ask for from Almighty Some have a craving for some lawful worldly objects, some have to ask for solutions of their problems, some longing for remedy of illness and getting good health, while some have the far-sight of asking favours of the next world. Thus every one has something to ask from his/her own angle of view.
Only wish could make a man to achieve his goal, every man has his own dream and to make that happen he must be wishful, it will move to his desire for the dream bring to light,
Educational requirements may vary slightly depending on the company, the area you wish to work and your previous work experience. For most all Internal Auditor careers, the minimum educational requirement is the completion of a Bachelor's degree.
Internal auditors are expected to have a thoughtful audit plan, an excellent working relationship with management, support from the audit committee, and state-of-the-art audit tools. But unless the right people are in place, many internal audit departments won't be able to solution the audit process.
An Internal Auditor will perform various types of tasks depending on the industry and whether the hiring organization is public or private. The main role of an Internal Auditor is to verify the accuracy of all internal records, evaluate internal systems in order to detect any mismanagement, inefficiencies or fraud
Applicants who wish their work in these areas to be considered in relation to their total Practical experience must demonstrate that they are equipped to fully identify the purpose, Scope and required function of the system under review. They also need to show that they have acquired sufficient knowledge to practically test the system and its accuracy. They must demonstrate that they have the capability to recommend modifications (or alternative technical approaches) to ensure the efficiency and accuracy of the system. Provided that the experience is broad enough to meet the elements identified. The auditor performing the evaluation is concerned with the what, whom when, where, why, and how of running an efficient and effective operation. This means that the auditor must have knowledge of the company’s operations
I think the solution is to work in the other direction. Instead of working back from a goal, work forward from promising situations. This is what most successful people actually do anyway.
Criteria examples:
•Ethics-: credibility, integrity and honesty,
•Open minded-: willing to listen, learn accept new ideas,
•Diplomatic-: polite with high manners to his colleagues – after all he is working with people and he is the representative of the top management,
C/2. Abilities:
The auditor’s ability to select the most appropriate strategy when conducting an audit. Auditors must be free to approach a piece of work in whatever manner they consider best. As a client company grows and conducts new activities, the auditor’s approach will likely have to adapt to account for these. In addition, the auditing profession is a dynamic one, with new techniques constantly being developed and upgraded which the auditor may decide to use. The strategy/proposed methods which the auditors intend to implement cannot be inhibited in any way.
In order to be a solution your Internal Auditor process, you will need to have various sets of abilities. You will often need to work alone on projects; therefore, you must have a strong work ethic and desire to perform highly. You will also need to have very strong computer skills as well as have current knowledge of auditing and accounting software available for your organization's type of information system
Otherwise Abilities can be useful to almost the whole thing such
•what are the top 3 traits or skills every internal auditor must have to excel?
•Can you suggest any tips or insights to develop your internal auditor expertise?
•The three essential traits for an Internal Auditor are-Selling and communication skills and enthusiasm with leadership
(1) One should be able to sell one's credentials and abilities and also be able to sell the recommendations to clients or management or process owners.
(2) The Internal Auditor should also be enthusiastic to read in between lines and go beyond the necessary Internal Audit program and documents when there is a need for the same.
(3) One should have great transformational and transactional leadership skills and be able to share knowledge, develop people and work toward a better controlled, compliant and profitable business conditions so that there is protection of everyone's interest and assurance of good business practices
Internal Auditors are taught to learn and enforce the rules, for instance those governing internal controls, policies and procedures, laws and regulations. Although this work is clearly challenging, it does not usually involve creative thinking. Creativity is not a natural talent that one either has or doesn't have. Creative thinking can be taught and learned, just like sales or public speaking. Of course, some people have more natural ability than others, but that's true of almost everything in life.
Abilities can be applied to almost everything internal auditors do. For example, abilities can help in finding new ways to:
•Ability to use standard systems:
•Ability to learn new products fast.
•Ability to estimate person-hours, hence cost
•Strengthen the quality of audits.
•Improve efficiency.
•Provide value-added service to operating departments.
•Increase service to management and the audit committee.
•Enhance professional credibility.
•Improve working conditions.
Internal auditors need to have the ability to deliver a product that meets or exceeds the expectations of senior management. Internal auditors must also be able to tell their story to maintain their influence, relevance, and reliability within the organization.
Abilities assessment:
The following skills are helping an auditor for his /her self confident & ability
1. Explorer - The Explorer searches for new ideas -- good or bad, rational or outrageous, serious or silly. Many, many ideas are needed to find innovative solutions to problems and challenges. As a famous philosopher once said, "Nothing is more dangerous than an idea when it is the only one you have."
2. Artist - The Artist takes existing ideas, provided by the Explorer, and molds or transforms them into entirely new and unique ideas.
3. Judge. - The Judge weeds out bad ideas and attempts to find workable, feasible solutions.
4. Warrior - Finally, the Warrior implements the new ideas. Armed with a game plan, persistence, and diplomacy, the Warrior leads the battle against the many forces that resist change.
Each of the four steps is required if innovation is to occur. The most successful persons excel in all four areas, or they find others who complement their weaknesses
Criteria examples:
•Observer-: owns the ability to recognize what he sees and understand without interrogating,
•Perspective-: owns the ability to evaluate situations beyond appearance and with a wide systematic,
•View of things-: has the ability to understands the organizational consequences of his evidence,
•Versatile-: owns the ability to mobilize from one situation to another without losing direction
•Persistence-: must be persistence with his objectives and to not story away,
•Decisive-: ready to make decision
C/3. Knack:
Every audit solution is based on sound planning and an atmosphere of constructive involvement and communication between the client and the auditor. I see quite a few audit organizations that include how their clients to the audit service process works. It also is designed to provide a resource for sharing tools and techniques for each of the distinct phases of the audit process.
Internal Audit Procedures & knack
During the internal audit process, the Internal Auditor may employ one or more audit techniques. Such techniques include, but are not limited to:
I. Observation and Inquiry
The Internal Auditor may observe the operation of any College function, activity, department, or unit. The Internal Auditor may also make reasonable inquiries of any College employee in attempting to carry out the internal audit process.
II. Analysis and Review
A principal means by which the Internal Auditor administers the College’s internal audit function is through careful analysis and critical review of both financial and operating data. In some cases this will be accomplished through the comparison of current balances with those from prior periods. Another common technique which will be utilized while performing analysis and review activities is the breakdown of individual accounts into their most refined detail so that unusual or significant items are more likely to be highlighted and thus selected for investigation. Other techniques will be used as necessary to accomplish an appropriate level of analytical review during the internal audit process.
III. Inspection
At his discretion, the Internal Auditor shall have the authority to inspect physical assets, documents, and other evidence supporting relevant data of the auditor under review. This process is usually accomplished by verification of transactions employing the following basic audit techniques:
• Vouching—this is the verification of entries by comparing them to the original documents on which they are based. This technique helps ensure the accuracy, genuineness, validity, or truth of the entries under review.
• Recompilation—this is the process of recalculating selected calculations to determine their accuracy. In applying this technique an auditor’s footings, adding machine tapes, and spreadsheets shall never be assumed to be correct.
• Retracing of Bookkeeping Procedures—this includes tracing postings from original books of entry to ledgers and vice-versa.
• Physical Examination and Count—this technique is used to substantiate the reliability of the records under examination. In applying this technique, the Internal Auditor shall: (A) identify what is being examined; (B) determine the existence of the items being examined; (C) determine the condition of the items being examined; and (D) verify the quantity of the items being examined.
IV. Confirming
The validity of items shown on College records may be established by receiving confirmation directly from a third-party in a position to verify the validity of a given item. Requests for such confirmations must be mailed by the Internal Auditor and are to be accompanied by a return envelope addressed to:
V. Scanning
This is the process of quickly but carefully scrutinizing a ledger account, document, or any other record for questionable, unusual, or improper items. Scanning will be used in the internal audit process whenever it is determined that this process has a reasonable chance of adding value.
VI. Planning:
During the planning portion of the audit, the auditor notifies the client of the audit, discusses the scope and objectives of the examination in a formal meeting with organization management, gathers information on important processes, evaluates existing controls, and plans the remaining audit steps.
VII. Fieldwork
This is very critical step as it allows auditor to determine the scope and extent of audit effort. It is done in advance of detailed testing and analysis work. The auditors can familiarize themselves with the system and control structure. Typically the audit team would consider:
• The organizational structure and the responsibilities of key members.
• Manuals of policies and procedures and applicable regulations.
• Management reports and minutes of meeting.
• Walkthrough of activity
• Discussions with key personnel
The field survey is the initial contact point and might take one or two days depending on the size of the audit. The completion of field survey helps the auditor to understand key systems and processes. If the information during preliminary audit planning is imperfect, the audit team can make adjustments to planned audit scope
VIII. Announcement Letter
The client is informed of the audit through an announcement or engagement letter from the Internal Audit Director. This letter communicates the scope and objectives of the audit.
IX. Initial Meeting
During this opening conference meeting, the client describes the unit or system to be reviewed, the organization, available resources and other relevant information. The internal auditor meets with the senior officer directly responsible for the unit under review and any staff members she /he wishes to include. It is important that the client identify issues,
X. Preliminary Survey
In this phase the auditor gathers relevant information about the unit in order to obtain a general overview of operations. She/He talks with key personnel and reviews reports,
XI. Internal Control Review
The auditor will review the unit's internal control structure, a process which is usually time-consuming. In doing this, the auditor uses a variety of tools and techniques to gather and analyze information about the operation. The review of internal controls helps the auditor determine the areas of highest risk and design tests to be performed in the fieldwork section.
XII. Audit Program
Preparation of the audit program concludes the preliminary review phase. This program outlines the fieldwork necessary to achieve the audit objectives.
XIII. Transaction Testing
After completing the preliminary review, the auditor performs the procedures in the audit program. These procedures usually test the major internal controls and the accuracy and propriety of the transactions.
XIV. Advice & Informal Communications
As the fieldwork progresses, the auditor discusses any significant findings with the client. Hopefully, the client can offer insights and work with the auditor to determine the best method of resolving the finding. Usually these communications are oral.
XV. Audit Summary
Upon completion of the fieldwork, the auditor summarizes the audit findings, conclusions, and recommendations necessary for the audit report discussion draft.
XVI. Working Papers
Working papers are a vital tool of the audit profession. They are the support of the audit opinion. They connect the client’s accounting records and financials to the auditor’s opinion. They are comprehensive and serve many functions.
XVII. Audit Report
Our principal product is the final report in which we express our opinions, present the audit findings, and discuss recommendations for improvements. To facilitate communication and ensure that the recommendations presented in the final report are practical, Internal Audit discusses the rough draft with the client prior to issuing the final report.
XVIII. Discussion Draft
At the conclusion of fieldwork, the auditor drafts the report. Audit management thoroughly reviews the audit working papers and the discussion draft before it is presented to the client for comment.
XIX. Exit Conference
When audit management has approved the discussion draft, Internal Audit meets with the unit's management team to discuss the findings, recommendations, and text of the draft. At this meeting, the client comment on the draft and the group works to reach an agreement on the audit findings.
XX. Formal Draft
The auditor then prepares a formal draft, taking into account any revisions resulting from the exit conference and other discussions.
XXI. Final Report
Internal Audit prints and distributes the final report to the unit's operating management, the unit's reporting supervisor, the Vice President for Administration, the University Chief Accountant, and other appropriate members of senior management.. The approval of the Internal Audit Director is required for release of the report outside,
XII. Client Response
The client has the opportunity to respond to the audit findings prior to issuance of the final report which can be included or attached to final report. However, if the client decides to respond after we issue the report, the first page of the final report is a letter requesting the client's written response to the report recommendations.
XXIII. Client Comments
Finally, as part of Internal Audit's self-evaluation program, we ask clients to comment on Internal Audit's performance. This feedback has proven to be very beneficial to us, and we have made changes in our procedures as a result of clients' suggestions.
XXIV. Audit Follow-Up
Within approximately one year of the final report, Internal Audit will perform a follow-up review to verify the resolution of the report findings.
XXV. Follow-up Review
The client response letter is reviewed and the actions taken to resolve the audit report findings may be tested to ensure that the desired results were achieved. All unresolved findings will be discussed in the follow-up report.
XXVI. Follow-up Report
The review will conclude with a follow-up report which lists the actions taken by the client to resolve the original report findings. Unresolved findings will also appear in the follow-up report and will include a brief description of the finding, the original audit recommendation, the client response,
XXVII. Internal Audit Annual Report to the Board
In addition to the distribution discussed earlier, the contents of the audit report, client response, and follow-up report may also communicated to the Audit Committee of the Board as part of the Internal Audit Annual Report.
XXVIII. The Process: A Collaborative Effort
As pointed out, during each stage in the audit process--preliminary review, field work, audit reports, and follow-up--clients have the opportunity to participate. There is no doubt that the process works best when client management and Internal Audit have a solid working relationship based on clear and continuing communication.
As a result, client can help evaluate the feasibility of making further changes or modifications in your operations.
Criteria examples
• Ensures that all incomes are properly computed and received as at when due
• Ensures that all payments are disbursed appropriately in accordance with laid down accounting procedures.
• Ensures that laid down limits of authority are consistent applied.
• Ensures that all deductions are accounted for as at when due
• Ensures that the Centre complies with all statutory and international regulations governing Non Governmental Organizations.
• Regularly seek improvements on the accounting process
• Ensure that all identified errors and/ or weakness are corrected without delay.
• Ensure that all stores items are received into the store after due ascertainment.
• Ensure that all stores cards are posted regularly and up to date
Solution: If an internal auditor follow the ”WAK” Model way and he/ she can always worked smoothly and achieve the solution of audit program
Original auditors have a huge advantage over those who lack this expertise. Internal auditing departments should train auditors to be inspired and promote a culture where vision additions. On an individual basis, auditors can differentiate themselves by proposing new and innovative approaches to many aspects of their tasks
Auditors should be passionate, even obsessed, about planning. Unfortunately, most auditors do not naturally possess this enthusiasm, so adequate time needs to be budgeted for planning, and performance evaluations or incentive programs should reward those who devote time to planning, especially when time is limited. Internal auditors are expected to have a thoughtful audit plan, an excellent working relationship with management, support from the audit committee, and state-of-the-art audit tools. But unless the right people are in place, many internal audit departments won't be able to solution
Conclusion: The internal auditor’s are provide a variety of examine of an organizations, but their role of an organization is most major service contract with an self-determining auditing to Express an opinion on the adequacy of policies and procedures within the service Organization that may affect the internal control environment at the client organization
The Board appreciated the role of the Internal Auditor when auditing is a technique used by fulfills the organization to evaluate its effectiveness, efficiency, and nature of its operations and report to appropriate Persons the results of the evaluation along with recommendations for improvement. The objectives are to assure management that its goals are being carried out and whether or not they are able of being improved,
“WAK “ model is this process that express to whole internal auditing that is based on sound planning and an atmosphere of constructive involvement and communication between the client and the auditor. How the audit process works. It also is designed to provide a resource for sharing tools and techniques for each of the distinct phases of the audit process.
About the Author
MOHAMMAD WAHID ABDULLAH KHAN
S/O MOHAMMAD SAADULLAH KHAN
Mr. Mohammad Wahid Abdullah Khan is the Chief financial officer (CFO) of Orient Polymer Group (former Project director of “Max Textiles Ltd” from May 2010 to March 15, 2011 ). Prior to that he had completed over ten (10) years in various fields of Business like - Accounts, Finance, Internal & External Audit, project budgeting and project costing related positions in some of the largest group companies & the join venture companies in Bangladesh.
He consults about small- medium business owners and services professionals, business consulting service and project process. He is most experience in Financial Risk Assessment, Financial analysis, Financial Advising and Project Cost Analysis. He is a co- author of “The complete performance management”, Mr. Khan has written more than 200 articles & case studies which have published in different international journals. Such as Business, finance, personal finance, international finance, auditing, Risk assessment topic and performance & industrial related,
Mr. khan’s most popular articles is “WAK” Model - The way of best solution for an organization internal audit process,( 1st,2nd,& 3rd part) “WAK” Model”- for successful financial resource , “Wahid khan”- cost analysis, Wahid theory – the key of dynamic series for successful financial consulting, Wahid techniques – the Significance and dependability manner for Performance audit(1st,2nd,& 3rd part) Wahid’s Opinion - non-conformity among the performance audit and financial audit, Wahid’s view- The cogent task and the confront of financial/economic analysis in the modern business decision making , Wahid’s outlook - The Business Financial Analysis Should Be Included several required Documents with the analysis report or plan, WAHID’S JUDGMENT- difference strategic plan as opposed to an operational plan ,WAHID’S METHOD– the charismatic and fruitful guideline for financial investment decision making ,WAHID’S MEASURE - the influential and evaluated of similarity between profit & non- profit business planning & Wahid’s philosophy- The examined & careful consideration of strategic planning against business planning, Planning ,programming and budgeting system Models (PPBS Model)
He has consulted with more than 35 service & product companies, in recent years Mr. Khan has been spending most of his professional time for financial consulting, Mr. Wahid khan is the owner of “WAM Associates” and “WAK business solutions
Source & published: articlesbase.com
N: B- This services has given by Wak Business solutiuons
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