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INTERNALAUDIT DEPARTMENT
Mitrata Inclusive Financial Services (MIFS)
Definition
“Internal auditing is an independent, objective
assurance and consulting activity designed to add value
and improve an organization's operations. It helps an
organisation accomplish its objectives by bringing a
systematic, disciplined approach to evaluate and
improve the effectiveness of risk management, control,
and governance processes. ”
The Institute of Internal Auditors
INTERNALAUDIT DEPARTMENT:
OBJECTIVE
• To detect any fraud or misappropriation irrespective of its size, magnitude other staff involved
in it.
• To detect any malpractice, collusion or action on part of employees that is against the
organizational policies/culture or can bring disrepute to the institution.
• To see if operational policies/processes are being adhered to all levels and to detect
deviations.
• To check unethical staff behavior and to get a sense of organizational image as perceived by
clients.
• To check the accuracy of reports, MIS and Accounting, accuracy of records maintained
through verification against evidences such as receipts, including records maintained at client
level in the form of loan card.
• To provide feedback/opinion related to operational risks such as staff dissatisfaction and areas
of potential conflict
INTERNALAUDIT DEPARTMENT:
IMPORTANCE
• Internal control systems help manager’s measure performance, make decisions, evaluate
processes and limit risks.
• Internal controls provide an early warning system so management can respond in a proactive
manner to take advantage of opportunities and to limit the negative effects of impending
problems.
• The quality and reliability of an MFI’s internal control function are factors which investors
and donors consider when assessing MFIs for investment.
• The ability of an organisation to identify and manage future risks is often seen as the best
predictor of long-term success.
• An effective internal control system can significantly reduce the cost of the external audit.
STYLE OF INTERNALAUDIT FUNCTIONING
Identify Risks
Find Better Ways and Best Practices
Partner With Management to Find Solutions
Prevent Problems
Provide training
Respond to policy & technical accounting
questions
Offer suggestions for improvement
Advisory role
Organisational Structure- Internal Audit Department
Board of Director’s
MD Audit Committee
Head Internal Audit
Internal Auditor
Internal Auditor
Internal Auditor
•The internal audit and control department is headed by Manger
Internal Audit which reports to Audit Committee.
•There are internal auditors under Manger Internal Audit which are
responsible for conducting EDC audits in the field.
REPORTING FLOW CHART ALONG WITH
TIMELINE
The Manager Internal Audit must develop a comprehensive annual work plan, and submit it to
the audit committee comprising of MD, Chief Strategy Officer (CSO) and One of Board of
Director member for approval.
INTERNALAUDIT DEPARTMENT: SCOPE
• Verifying the policy of finance department.
• Verifying the policy of HR & Administration dept.
• Verifying the policy of MIS dept.
• Compliance report verification
• Field visit
• Loan utilization check
• Documentation verification.(registers, loan files)
• Cash book and vouchers verification
• MIS data verification
• EDC grading
COMPLIANCE REPORT
• Compliance report verification is mandatory for every
EDC.
• All findings were physically verified whether the issues
are resolved or not as per the compliance report.
• If fraud compliance found it was under the category of
high risk.
FIELD VISIT
• As maximum of the operation process done at the field level
so major part of the audit focus on field visit. It includes;
• Village survey verification
• CGT meeting verification as per policy
• GRT meeting verification as per policy
• Disbursement client verification as per loan file and Bijly data.
• PAR client visit.
• Fore-closure client visit.
• Death case client visit.
• Cluster meeting visit during the period of audit schedule.
(Ref; All activities done with sampling basis)
LOAN UTILIZATION CHECK
• Loan utilization check conducted at the field level as
well as EDC level.
• At the field level loan utilization check physically by
interacting with client.
• At the EDC level it was checked by LUC file whether
LUC done within 15 days.
DOCUMENTATION VERIFICATION
• 100% loan files verified during the audit period.
• Registers include; stock register, collection
register, attendance register and disbursement
register.
• Files include; leave file, Cluster meeting
attendance file, village survey file and loan
utilization file.
CASH BOOK & VOUCHERS
• All monetary transaction occurred during the audit
coverage compulsory verify with cash book.
• 100% check of all vouchers including payments and
receives.
MIS DATA VERIFICATION
• MIS error verification conducted on a sampling
basis.
• Loan card data in the field check with MIS data.
• Client details verification done with comparing
loan file data and MIS data.
EDC GRADING
• EDC grading done as per the ratting report based on
questionnaire.
• 91-100% ( A grade)
• 81-90% ( B grade)
• 71-80% ( C grade)
• Below 70% ( D grade)
EXPECTATION OF INTERNAL AUDIT DEPT, FROM
OPERATION DEPARTMENT
• Supporting from all departments including;
operation, HR, Finance and MIS.
• If auditor behavior is not good and force to female
staff to work in EDC late hours then immediately
inform to audit head.
• Avoid bad practices like flattery, spooning etc.
CONCLUSION
• A normal audit conducted with a minimum of
6 days and in special cases it will extends as
per the requirement.
• Internal audit department mainly focusing on
rectification of issue/error rather than only
finding.
THANK YOU

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Internal audit department

  • 1. INTERNALAUDIT DEPARTMENT Mitrata Inclusive Financial Services (MIFS)
  • 2. Definition “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization's operations. It helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes. ” The Institute of Internal Auditors
  • 3. INTERNALAUDIT DEPARTMENT: OBJECTIVE • To detect any fraud or misappropriation irrespective of its size, magnitude other staff involved in it. • To detect any malpractice, collusion or action on part of employees that is against the organizational policies/culture or can bring disrepute to the institution. • To see if operational policies/processes are being adhered to all levels and to detect deviations. • To check unethical staff behavior and to get a sense of organizational image as perceived by clients. • To check the accuracy of reports, MIS and Accounting, accuracy of records maintained through verification against evidences such as receipts, including records maintained at client level in the form of loan card. • To provide feedback/opinion related to operational risks such as staff dissatisfaction and areas of potential conflict
  • 4. INTERNALAUDIT DEPARTMENT: IMPORTANCE • Internal control systems help manager’s measure performance, make decisions, evaluate processes and limit risks. • Internal controls provide an early warning system so management can respond in a proactive manner to take advantage of opportunities and to limit the negative effects of impending problems. • The quality and reliability of an MFI’s internal control function are factors which investors and donors consider when assessing MFIs for investment. • The ability of an organisation to identify and manage future risks is often seen as the best predictor of long-term success. • An effective internal control system can significantly reduce the cost of the external audit.
  • 5. STYLE OF INTERNALAUDIT FUNCTIONING Identify Risks Find Better Ways and Best Practices Partner With Management to Find Solutions Prevent Problems Provide training Respond to policy & technical accounting questions Offer suggestions for improvement Advisory role
  • 6. Organisational Structure- Internal Audit Department Board of Director’s MD Audit Committee Head Internal Audit Internal Auditor Internal Auditor Internal Auditor •The internal audit and control department is headed by Manger Internal Audit which reports to Audit Committee. •There are internal auditors under Manger Internal Audit which are responsible for conducting EDC audits in the field.
  • 7. REPORTING FLOW CHART ALONG WITH TIMELINE The Manager Internal Audit must develop a comprehensive annual work plan, and submit it to the audit committee comprising of MD, Chief Strategy Officer (CSO) and One of Board of Director member for approval.
  • 8. INTERNALAUDIT DEPARTMENT: SCOPE • Verifying the policy of finance department. • Verifying the policy of HR & Administration dept. • Verifying the policy of MIS dept. • Compliance report verification • Field visit • Loan utilization check • Documentation verification.(registers, loan files) • Cash book and vouchers verification • MIS data verification • EDC grading
  • 9. COMPLIANCE REPORT • Compliance report verification is mandatory for every EDC. • All findings were physically verified whether the issues are resolved or not as per the compliance report. • If fraud compliance found it was under the category of high risk.
  • 10. FIELD VISIT • As maximum of the operation process done at the field level so major part of the audit focus on field visit. It includes; • Village survey verification • CGT meeting verification as per policy • GRT meeting verification as per policy • Disbursement client verification as per loan file and Bijly data. • PAR client visit. • Fore-closure client visit. • Death case client visit. • Cluster meeting visit during the period of audit schedule. (Ref; All activities done with sampling basis)
  • 11. LOAN UTILIZATION CHECK • Loan utilization check conducted at the field level as well as EDC level. • At the field level loan utilization check physically by interacting with client. • At the EDC level it was checked by LUC file whether LUC done within 15 days.
  • 12. DOCUMENTATION VERIFICATION • 100% loan files verified during the audit period. • Registers include; stock register, collection register, attendance register and disbursement register. • Files include; leave file, Cluster meeting attendance file, village survey file and loan utilization file.
  • 13. CASH BOOK & VOUCHERS • All monetary transaction occurred during the audit coverage compulsory verify with cash book. • 100% check of all vouchers including payments and receives.
  • 14. MIS DATA VERIFICATION • MIS error verification conducted on a sampling basis. • Loan card data in the field check with MIS data. • Client details verification done with comparing loan file data and MIS data.
  • 15. EDC GRADING • EDC grading done as per the ratting report based on questionnaire. • 91-100% ( A grade) • 81-90% ( B grade) • 71-80% ( C grade) • Below 70% ( D grade)
  • 16. EXPECTATION OF INTERNAL AUDIT DEPT, FROM OPERATION DEPARTMENT • Supporting from all departments including; operation, HR, Finance and MIS. • If auditor behavior is not good and force to female staff to work in EDC late hours then immediately inform to audit head. • Avoid bad practices like flattery, spooning etc.
  • 17. CONCLUSION • A normal audit conducted with a minimum of 6 days and in special cases it will extends as per the requirement. • Internal audit department mainly focusing on rectification of issue/error rather than only finding.

Editor's Notes

  1. Please full screen the ppt slide and single click on each point