Auditing

• Auditing refers to verifying of

books of accounts and giving a
true and fair view on the same.
• Auditing is often perceived as a “fact
checking” exercise that yields more costs than
benefits.

• Process to review the practice against

documented procedure.
 Quality audits
-Quality audits are used to perform a structured
review of the project to determine whether the
team is complying with project and organization
policies, procedures, and processes.

Quality audit is the process of systematic examination

of a quality system carried out by an internal or
external quality auditor or an audit team. It is an
important part of organization's
quality management system and is a key element in
the ISO quality system standard, ISO 9001.
 Quality audits

• Quality audits are categorized as product

audits, process audits and system audits,
which are used to examine different parts of
an organization, including accounting and
finance departments.
 Two types of auditing
• Two types of auditing are required to become
registered to the standard: auditing by an
external certification body (external audit) and
audits by internal staff trained for this process
(internal audits).
• Quality auditing and internal auditing are both
used to audit financial systems and identify
deficiencies in internal control.
 Auditor

An auditor is a person or a firm appointed by a

company to execute an audit.
 Types of Auditor

• 1. External auditor/ Statutory auditor

is an independent firm engaged by the client
subject to the audit, to express an opinion on
whether the company's financial statements
are free of material misstatements, whether
due to fraud or error.
2.Internal Auditors
• Internal Auditors are employed by the
organizations they audit.
• 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".[2]
 What does an Auditor do?

• 1. Provides an opinion on financial

statements.

• 2. Understands the business and its

environment.
3.Obtains sufficient evidence to form a valid
opinion

4. Maintains an independent attitude to

provide credible opinions and
recommendations
Why do companies have audits?
 Why do companies have audits?

• 1. Government compliance.

• 2. Fraud Prevention.
 Why do companies have audits?

3.Credibility

4.Process Improvement
for Internal Auditors
 Purpose

• To communicate the integrity, objectivity,

confidentiality, and competence expected of
internal auditors,
Trust, and Credibility

• Auditors should conduct themselves in a manner

which promotes co-operation and good relations
between auditors and within the profession.

• In all parts of society there is a need for

credibility. It is therefore essential that the
reports and opinions are considered to be
thoroughly accurate and reliable by
knowledgeable third parties.
.Integrity
• The integrity of internal auditors establishes trust and
provides the basis for relying on their judgment
-Not engage in activities that might discredit the audit
profession

• Treating everyone, including the public officers clients

and members if the general public with courtesy,
respect, fairness and objectivity.

• Rendering service in a timely, efficient and effective

manner.
• Independence,

• Independence from the audited entity and

other outside interest groups is indispensable
for auditors. This implies that auditors should
behave in a way that increases, or in no way
diminishes, their independence.
Objectivity
-Internal auditors must be objective in
gathering, evaluating, and communicating
information about the activities being
examined. They must make a balanced and
impartial assessment of all the relevant facts
and not be unduly influenced by their
interests, or those of others, in making
judgments
Confidentiality
• Internal auditors must respect the value and
ownership of the information they receive and
not disclose it without the appropriate
authority (unless obligated for legal or
professional reasons).
• Competence
• Internal auditors must apply their knowledge,
skills, and experience in the performance of
their assessment duties
• Perform audits in accordance with the
procedures and practices of the organizations.
• Continually improve proficiency and the quality
and value of the audit services.
• Assist other auditors to develop their audit
management skills.
 Steps in the internal audit

• 1) Planning the Audit Schedule. A key part of

a good process is having an overall Audit
Schedule that is readily available to let
everyone know when each process will be
audited over the upcoming cycle (usually a
yearly schedule)
 Steps in the internal audit

• 2) Planning /preparing the Process Audit. The

first step in planning the individual process
audits is to confirm with the process owners
when the audit will take place.
 Steps in the internal audit

• 3) Conducting the Audit. An audit should start

with a meeting of the process owner to make
sure that the audit plan is complete and ready.
 Steps in the internal audit

• 4) Reporting on the Audit.

• A closing meeting with the process owner is a
necessity to ensure that the flow of
information is not delayed.
 Steps in the internal audit

• 5) Follow-up on Issues or Improvements

Found. 

• -Verifications of action taken

• 6.Submission of audit reports

 Top 5 Audit Challenges

1. Managing Multiple Compliance Audits:

2. Internal Policy
3.Controlling costs and increasing efficiency

Cost-cutting has been a major buzzword for even

the most successful of businesses during this
recent economic downturn.

4.Higher Priorities/Putting extra focus on fraud

5.Motivating audit team members

6.Managing exposure to risk

 failure testing

• . Failure testing is a way to ensure that you are

producing a product and service that will not
fail under different circumstances and
situations of stress, weather, temperature,
and so on and so forth.
Thank you