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External &Internal Audit System
1. Internal And External
Auditing
1
Group
No-10 Vikas Tiwari
Vakul Singh
Vivek Singh
Indian Business Academy
Gr. Noida
4/11/2009
2. Internal audit and internal
control
2
What is internal audit?
‘An independent appraisal service to
management measuring and evaluating the
effectiveness of the internal control system’
What is internal control?
‘A process established by management to
provide reasonable assurance that
organizational objectives will be achieved’
4/11/2009
3. Purpose of Internal Audit
3
To improve and add value to the activities of
public administration
by assessing whether the public resources are
managed in conformity with the principles of
economy, effectiveness and efficiency and to
provide guidance.
Internal audit; provides independent and
objective assurance and consultancy.
Is process is performed with a systematic,
regular and disciplined approach in accordance
with generally accepted standards.
comprises financial, compliance, system,
performance and IT audit is carried out by
4/11/2009
internal auditors.
4. Certification and Proficiency of Internal
Auditors
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Having a higher education diploma
Administrative or audit experience
Public Internal Auditor Certificate is awarded
upon a series of exams
Certificates are graded every three years
according to trainings attended and
performance points acquired
A higher degree certificate is awarded to those
who hold an internationally recognized
certificate
A minimum of a hundred hours of professional
training in every three years is required
Maintaining and improving level of skills and
knowledge required by the duty 4/11/2009
5. What is External Audit
5
An external auditor is an audit professional
who performs an audit on the financial
statements of a company, government,
individual, or any other legal entity or
organization, and who is independent of the
entity being audited.
4/11/2009
6. They are distinguished from
Internal Audit
6
The internal auditor's primary responsibility
is appraising an entity's risk management
strategy and practices, management .
Internal audit do not express an opinion on
the entity's financial statements.
4/11/2009
7. The role of the external audit
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The external audit should not be a part of
the internal control process
The external audit should provide
independent external comment to
management on the ‘standards, quality and
coverage of internal audit’
The external audit should not duplicate
internal audit work unless grounds for
concern
The external audit should examine and
comment on both internal control and
internal audit quality 4/11/2009
8. How audits add value
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Identify and correct noncompliance issues
•
Identify improvement opportunities in
•
standards and procedures
Value added includes:
•
Improved consistency and lower variability
Reduced errors, rework, cycle time, costs
Increased productivity 4/11/2009
