This document discusses internal auditing. It defines internal auditing as an independent function that involves continuously evaluating an entity's risk management, governance, and internal controls. The objectives of internal auditing are to verify the accuracy of accounts, review internal check/control systems, ensure adherence to accounting standards, verify assets, and detect errors and frauds. The key differences between internal and external auditing are that internal auditing is continuous, conducted by employees, and has management as its primary user, while external auditing occurs annually and is conducted by a third party for stakeholders. An internal auditor provides independent and objective evaluations of a company's financial and operational activities to ensure efficiency and compliance.

1. NAME : DivyaPramodMahajan
CLASS : T.Y.B.Com. ‘A’ SEM:5
ROLLNO. : 45
PRNNO. : 1202041399
SUBJECT : Auditing &Taxation
TEACHER: Prof.S.N.Gadekar

2. InternalAudit

3. IntroductiontoInternalAudit
Uncertainties in the market and economic
conditions provide powerful lessons about
risk and risk management to many of the
world’s most prominent companies.
Sometimes it can be difficult to keep track
of your internal workings, short of
documenting and tracking everything
which can be a hassle. Its easy to lose track
of the risk posed to your organization.
This is where the role of internal audit
comes which is to provide independent
assurance that an organization’s risk
management, governance and internal
control processes are operating effectively.

4. MeaningofInternalAudit
Internal audit checks how well a
company maintains operational
efficiency and manages
accounting processes while
complying with its standard rules
and regulations. Conducting
audits from time to time ensures
the firms are strict enough in
following the administrative
fundamentals and sticking to a
maximum accuracy rate so far as
financial reporting is concerned.

5. Definition
ICAI describes Internal Audit as :
"An independent management function,
which involves a continuous and critical
appraisal of the functioning of entity with a
view to suggest improvements thereto and
to add value and the overall governance
mechanism of the entity, including the
entity's strategic risk management and
internal control system. Internal Audit,
therefore, provides assurance that there is
transparency in reporting, a part of good
governance".
R.K. Mautz describes Auditing as
“Auditing is concerned with the
verification of accounting data
determining the accuracy and
reliability of accounting statements
and reports.”

6. ObjectivesofInternalAudit
Verifyingtheaccuracy
ofaccounts
Verifyingthe
liabilities
Reviewingthe
systemofinternal
check&control
Adherenceto
accountingstandard
Verifyingthe
companyassets
Detectionof
Errorsandfrauds

7. ComplianceAudit
A compliance audit is an examination of conformity
and adherence of a particular area, process, or
system to policies, plans, procedures, laws,
regulations, contracts, or other requirements that
govern the conduct of the area, process, or system
subject to audit.
OperationalAudit
An operational audit is a review mainly focused on the
internal controls of key processes, procedures, or
systems. The main objective is to improve productivity,
as well as efficiency and effectiveness of the operation.
……
FinancialAudit
A financial audit is an objective examination and
evaluation of the financial statements of an
organization to make sure that the financial records
are a fair and accurate representation of the
transactions they claim to represent.
Information systemAudit
An information technology audit is an examination of
the management controls within IT applications,
operating systems, databases, or the infrastructure.
Reviews may be focused exclusively on IT or performed
in conjunction with a compliance, operational, or
financial audit.
TypesOfInternalAudit

8. DifferencebetweenInternalAudit&ExternalAudit
BasisofDifference InternalAudit ExternalAudit
Period Continuous Process Once in a year
Objective To review the routine activities
and provide suggestion for the
improvement.
To analyze and verify the financial
statement of the company.
Conducted by Employees Third Party
Auditor is appointed
by
Management Members
Checks Operational Efficiency
Accuracy and Validity of Financial
Statement
Users of Report Management Stakeholders

9. MeaningofInternalAuditor
❑An internal auditor (IA) is a
trained professional tasked with
providing independent and
objective evaluations of companies
financial and operational business
activities.
❑They are employed to ensure
that companies follow proper
procedures and function
efficiently.
❑Final reports are presented to
senior management and can
include recommendations.

10. Example
Company ‘A’ presents its financial
report to the Board of directors.
Stella, the finance director, raises
concerns over the excessive
purchase of certain services. The
matter was given in the hands of
internal auditor. After looking into it
thoroughly, it was fond out that all
the services purchased were never
really received by the company. It
was an employee who was causing
the organization to issue payment
for fictitious services. As it was
internal audit, the company gets
chance to improve the system to
ensure it passes through the next
audits successfully.

11. Conclusion
An internal audit can ensure that an
organisation can secure timely
compliance with law and regulations. The
audit provides a degree of safety and
helps manage risk emerging from fraud,
abuse of power, or any other scenarios.
An internal auditor provides the
management with their objective
assessment of the processes and
accounts. The management can improve
their operational and financial
performance using the services of an
internal auditor.

12. ThankYou!