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INTERNAL

AUDITING

AUDIT
The

general meaning of an audit is an


evaluation of a person, organization, system,
process, enterprise, project or product.
Audit means unbiased examination, and
evaluation of the financial statements of an
organization.
Audit are performed to ascertain the validity,
reliability of information: also to provide an
assessment of a systems Internal Control.

BASIC TYPE OF
AUDIT
Financial
Non

Audit

Financial Audit

Financial

Audit

- Address questions
of accounting,
recording and
reporting of financial
transactions.
Reviewing the
adequacy of internal
control also falls
within the scope of
financial audit.

INTERNAL AUDIT
VS. EXTERNAL

The role of internal auditing is


determined
by management and its
AUDIT
functions objective vary according to
managements requirements and as
such it is part of the entity.

External audit, on the other


hand, is carried out independently
to express an opinion on the fairness
of the financial statements, with the
primary concern and objective of
determining whether the financial
statements are free from material
misstatements. It is, therefore, not a
part of entity.

WHAT IS INTERNAL
AUDIT?

INTERNAL AUDITING
Is an independent,

objective assurance and


consulting activity designed
to add value and improve an
organizations operations

Helps an organization in accomplishing its

objectives
by
bringing a systematic,
disciplined approach to evaluate and improve the
effectiveness of risk management, control and
governance processes

Functions include among other things,

examining, evaluating and monitoring the


adequacy and effectiveness
of the accounting
and internal control systems

INTERNAL AUDITING

is an independent appraisal function within an


organization to examine and evaluate its activities as a
service organization.
the objective of internal auditing is to assist members
of the organization in the effective discharge of their
responsibilities.

THE PURPOSE OF
INTERNAL
Eyes and Ears
AUDITING
Policeman

Watchdog
Consultant

CONTRO
L
Control is defined as the policies,
procedures,
practices
and
organizational structures designed to
provide reasonable assurance that
business objectives will be achieved
and that undesired events will be
prevented or detected and corrected.

WHY DO WE NEED
CONTROLS?
If

everything
seems under
control, you
are not going
fast enough.

AUDIT
PROCEDURES

AUDIT OF
CASH RECEIPTS

COLLECTOR
Obtain list of official receipts issued to collector/s.
If official receipts are complete, trace used/issued official receipts
if properly and completely recorded to the collectors cash book.
If official receipt was cancelled, attach the original copy to the OR
booklet and it must be verified by the bookkeeper.
Verify series of official receipts. Series should be complete.
Should be chronologically used/issued

Verify

the amount in words and in figures


Calculate total collections
Verify if total collections are remitted in-tact to
the treasurer
There should be no splitting of remittance
There should be no delay in remittance
If there is unremitted balance, conduct cash
count. Unremitted balance should tally with
the actual cash counted. Note for any cash
shortage/overage.

CASHIER/TREASU
Obtain list of official receipts issued to
RER
collector/s.

If

official receipts are complete, traced


used/issued official receipts if properly
and completely recorded to the collectors
cash book.
Verify series of official receipts. Series
should be complete.

Should

be chronologically used/issued.
Verify amount in words and in figures.
Calculate total collections.
Verify if total collections are remitted in-tact
to the bank.
There should be no splitting of remittance.
There should be no delay in remittance.
Verify validated deposit slip if are recorded to
the passbook.

BOOKKEEPER
Cash

book balance must tally to the balance in


the General Ledger and Balance Sheet
prepared by the Bookkeeper.
Traced daily total of cash receipts from the
Treasurers Cash Book if recorded to the
Bookkeepers CASH RECEIPTS BOOK.
Verify proper posting of accounts (example:
credit to ISF Receivable, ISF Income, etc.)
Summarized daily transactions of cash
receipts to arrive into MONTHLY FIGURE
(total cash receipts for the month.)

Traced

summarized total monthly


collection if properly recorded to their
respective account in the GENERAL
LEDGER
From the General Ledger, traced if
properly presented to the Financial
Statements.

AUDIT OF
CASH
All Disbursements should be in accordance
DISBURSEME
with the CIAs policy (e.g. amount of
honorarium, per diem, remittance to NIA, etc.)
NT
If possible, all disbursement should be made in

checks except for small items which should be


paid through petty cash
From the Cash Disbursement Books, review
corresponding vouchers paid as to the
following;

All

disbursements must have supporting


documents such as original official receipts,
payrolls etc.
All vouchers must have at least 3 signatories;
the bookkeeper, treasurer and the manager.
Approval of the manager is a must.
All vouchers must have been acknowledged
by the payee (received by portion)

Calculate

total disbursements
for the months and trace if
properly recorded to the cash
disbursement books.

CHARACTER

is doing the right


thing when nobody is looking.
There are too many people who
think that the only thing thats right
is to get by and the only thing thats
wrong is to get caught.

INTEGRITY

is doing the right thing


even if nobody is watching.

Whoever

is careless with the truth in


small matters cannot be trusted with
important matters.

QUESTIONS

OBTAIN LIST OF OFFICIAL RECEIPTS


ISSUED TO COLLECTOR/S

VERIFY SERIES OF OFFICIAL


RECEIPTS

SHOULD BE CHRONOLOGICALLY
USED/ISSUED

VERIFY THE AMOUNT IN WORDS AND IN


FIGURES

SAMPLE OF SPLITTING OF REMITTANCE

SAMPLE OF DELAYED REMITTANCES