Your SlideShare is downloading. ×
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Internal control and internal audit  presentation for bank
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Internal control and internal audit presentation for bank

3,588

Published on

Internal audit means a continuous critical review of financial and operating matters of a business. In other words, we can say that the audit of a business conducted by the business for a continuous …

Internal audit means a continuous critical review of financial and operating matters of a business. In other words, we can say that the audit of a business conducted by the business for a continuous basis. Internal audit is done by the internal staff appointed particularly for the audit purposes. These are called internal auditors.

0 Comments
14 Likes
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
3,588
On Slideshare
0
From Embeds
0
Number of Embeds
3
Actions
Shares
0
Downloads
0
Comments
0
Likes
14
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. 1
  • 2. Prepared by Mohammad Halim Stanikzai Mobile +93 78 000 2057 Email: halim.stanikzai@centralbank.gov.af 2
  • 3. Concept of Internal Control. • Principal of Internal Control. • Objective of Internal Control. 3
  • 4. WHAT IS INTERNAL CONTROL? 4
  • 5. •Internal Control indicate the whole system of controls employed by the management in the conduct of the business. or •Internal Controls assist management and staff of the organization to achieve the organization objectives. 5
  • 6. 1. Records and Books: should be kept up to date and at regular intervals . 2. Independent Checking: Work performed by one person should be independently and automatically check by another person. 3. Changing : It is also an important principal that no one should handle the transaction from beginning to end. 4. Proper Supervision: for the effective control system management should have up to date information about the trade and financial position of the company. 6
  • 7. 5. Clear Rules: All those rules relating to cash, Stock , receipt and issuance of goods should be very clear and well defined. 6. Instruction in Working: For the effective internal control it is necessary that all instruction should be in written form. 7. Qualified and Competent Staff: For effective control system it is also need of Qualified and competent staff. 8. Incentive for Honest worker: Honest and hard working person must be encouraged he must be given some reward in the shape of promotion and cash. 7
  • 8. Following are the main objective of internal control: 1. To prevent errors and frauds. 2. To prevent miss use of goods and cash. 3. To keep an accurate record of all the business transactions. 4. Protect organization assets against their improper expenditure. 5. Assure the accuracy and dependability of all the financial and operating information. 8
  • 9. 6. Protect against the incurrence of improper liabilities. 7. Judge operating efficiency. 8. Measure the adherence to established policies of company. 9
  • 10. •Composition of Board and Audit Committees •Internal Audit •Personnel policies and practices: Developing appropriate recruiting policies Screening prospective employees Developing training policies that communicate prospective roles and responsibilities. Exercising disciplinary action for violations of expected behavior. Evaluating, consoling and promoting people based on periodic performance appraisals. Implement ting compensation programes that motivate and reward superior performance while avoiding disincentives to ethical behavior. 10
  • 11. • Control activities are actions, supported by policies and procedures that, when carried out properly and in a timely manner, address or reduce risks. • Can be either: •Preventive or •Detective 11
  • 12. 12
  • 13. 13
  • 14. • Concept of Internal Audit. Role of internal Audit? Ethics (Dr. PICCO) What is External Audit? Difference between Internal Audit and External Audit. • • IMPORTANCE OF MUTUAL CO-OPERATION. 14
  • 15. Internal audit means a continuous critical review of financial and operating matters of a business. In other words, we can say that the audit of a business conducted by the business for a continuous basis. Internal audit is done by the internal staff appointed particularly for the audit purposes. These are called internal auditors. Or Internal Audit is the critical and independent examination of financial and operation documents. 15
  • 16. It 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 16
  • 17. The internal audit is a continuous review of operations and records undertakes within the business and is normally done by specially assigned staff. It should operate independently of all the internal check and in no case should divest any one of the responsibilities placed upon him. Internal auditing is an independent appraisal activity within an organization for the review of operations as a service to management. It is managerial control which functions by measuring and evaluating the effectiveness of other controls. 17
  • 18. To achieve its objectives the auditor has to review the following areas: 1. Reliability and integrity of the information. 2. Compliance with the policies, plans, procedures, laws and regulations. 3. Safeguarding of assets. 4. Economical and efficient use of resources. 5. Accomplishment of established objectives and goals for operations or programs. 18
  • 19. 1. Professionalism 2. Integrity 3. Competence 4. Confidentiality 5. Objectivity 19
  • 20. 1. Professionalism 2. Integrity: Internal auditors: 1. Shall perform their work with honesty, diligence, and responsibility. 2. Shall observe the law and make disclosures expected by the law and the profession 3. Shall not knowingly be a party to any illegal activity, or engage in acts that are discreditable to the profession of internal auditing or to the organization. 4. Shall respect and contribute to the legitimate and ethical objectives of the organization. 20
  • 21. 3. Competency Internal auditors: 1. Shall engage only in those services for which they have the necessary knowledge, skills, and experience 2. Shall perform internal audit services in accordance with the International Standards for the Professional Practice of Internal Auditing (Standards). 3. Shall continually improve their proficiency and the effectiveness and quality of their services. 4. Confidentiality Internal auditors: 1. Shall be prudent in the use and protection of information acquired in the course of their duties.. 2. Shall not use information for any personal gain or in any manner that would be contrary to the law or detrimental to the legitimate and ethical objectives of the organization. 21
  • 22. 5. Objectivity Internal auditors: 1. Shall not participate in any activity or relationship that may impair or be presumed to impair their unbiased assessment. This participation includes those activities or relationships that may be in conflict with the interests of the organization. 2. all not accept anything that may impair or be presumed to impair their professional judgment. 3. Shall disclose all material facts known to them that, if not disclosed, may distort the reporting of activities under review 22
  • 23. EXTERNAL or STATUTORY AUDIT: If an independent auditor examines the books and records of the company on the behalf of the shareholders, it is called external audit. While auditor is called statutory or external auditor. 23
  • 24. Difference between Internal Audit and External Audit. 24
  • 25. 25 No Internal Audit External Audit 1 Internal auditor is appointed by the management of the company. External auditor is appointed by the shareholders of the company. 2 Legally internal audit is not compulsory. External audit is compulsory by law. 3 Internal Audit work is a continuous throughout the year. External Audit is done annually at the end of the fiscal year. 4 Internal auditor is employee of the company. External auditor is an independent person. 5 Internal auditor has not to submit any report to the shareholders. External auditor submits report to the shareholders. 6 Internal auditor checks all the transactions. External auditor may apply test check. 7 Internal auditor gives suggestions to the management for the betterment of the business. External auditor has no need to give suggestions unless he is asked. 8 Internal auditor primary duty is to External auditor has to report about final
  • 26. 26 No Internal Audit External Audit 10 Internal Auditor is a permanent employ of the organization. External Audit is an independent contractor. 11 Internal Auditor reward is called Salary. External Auditor reward is called fee. 12 Internal auditor has no right to attend the meetings of the company's shareholders. External auditor has a the right to attend the meetings. 13 Internal auditor primary duty is to find the frauds and errors. External auditor has to report about final accounts whether these are true or false. 14 Internal auditor checks all the transactions. External auditor may apply test check. 15 For internal auditor any specific qualification is not compulsory. For external auditor specific qualification is compulsory.
  • 27. External auditor may get much assistance from the internal auditors about the accounting system and technical knowledge of the business. To reduce his work he may rely on the work of internal auditor. But if any error or fraud remains undetected then external auditor will he held responsible. In some cases internal auditor may also restrict his work in that section where external auditor has made detailed checking. So by mutual co-operation both the auditors may help each other and may reduce their work. Any how external auditor can not shift his responsibilities on the internal auditor. 27
  • 28. Internal control is broadly defined as a process, effected by an entity's board of trustees, management, and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: * Effectiveness and efficiency of operations * Reliability of financial reporting * Compliance with applicable laws and regulations *Safeguarding of assets
  • 29. : An internal control that is used to prevent undesirable events, errors and other occurrences than an organization has determined could have a negative material effect on a process or end product An internal control that is used to prevent undesirable events, errors and other occurrences than an organization has determined could have a negative material effect on a process or end product .
  • 30. To prevent from undesirable out come we should have effective policies and procedures . The Organization should already set policies and procedures for checks. To have set policies and procedures means preventive control.
  • 31. This type of internal control mechanism is intended to find problems within a company's processes. Detective control may be employed in accordance with many different goals, such as quality control, fraud prevention and legal compliance.
  • 32. Risk Detective Preventive Bank notes not properly sealed During physical verification /control through related staff the finding detected. Suggestions to act upon the already set policies Policies for sealing bank notes are already defined, means preventive control Employees not performing well The finding can be detected during performance appraisal Provide suggestions to set positive working environment, training, motivating and encouraging. Motivational tools are in place. Proper record of academic and professional background of employees One person makes, controls and approves receipts While referring to related documents this can be detected. Urgent action required , ToR Proper delegation of responsibilities and authorities Mistakes in the cheques This observation is made while the cheques are processed or authorized. Advise to cashier not to process such cheques Regulations and guidelines are already defined for cashiers
  • 33. Contacted materials are not received in time Contractor could not manage to handle the required materials in time. To fine the contractors as per conditions of contract Before to agree a contract conditions should be agreed Misusing office equipments Comparing the work load with the usage of office equipment, this observation can be made Urgent action required Awareness should be given to the employees One internal audit team regularly auditing same department conflict of interest While preparing annual plan this observation is made Conflict of interest is legally avoided As per Internal Audit Policies audit teams shall be assigned in different departments Two members of the same family working in one department (Confidentiality) This observation can be made during recruitment The concern department should take Confidentiality in to consideration. Recruitment policies
  • 34. Employees caught in corruption bribery Observation can be detected during property evaluation of employees/complain Urgent and legal action required Keeping in view needs of the employees.
  • 35. Why Do we Conduct Internal Audit?
  • 36. (a) High Priority Recommendations Ref Issues Recommenda tions Management Response / Action Plan 1 Write your findings that violated DAB policies and Procedures Recommend action (s) to be taken to mitigate risk exposure Agreed Proposed action: Write the corrective action to be taken by the branch (specify who is responsible) (b). Medium Priority recommendations Ref Issues Recommenda tions Management Response / Action Plan 2 Write your findings that violated DAB policies and Procedures Recommend action (s) to be taken to mitigate risk exposure Agreed Proposed action: Write the corrective action to be taken by the branch (specify who is responsible)
  • 37. © Low priority recommendations. Ref Issues Recommenda tions Management Response / Action Plan 3 Write your findings that violated DAB policies and Procedures Recommend action (s) to be taken to mitigate risk exposure Agreed Proposed action: Write the corrective action to be taken by the branch (specify who is responsible)

×