The document provides an overview of the audit process. It defines an audit and describes the various types including financial, operational, compliance, information systems, and specialized audits. It then outlines the key steps in the audit process, including planning, fieldwork, reporting, and follow-up. Planning involves notifying the client, reviewing controls and processes, and developing an audit program. Fieldwork consists of transaction testing, documentation, and communication with the client. Reporting includes draft reports, an exit conference, formal reports, and client responses. Follow-up ensures issues are resolved.

1. Audit And Its Process
Prepared by :Mrs BeminaDinesh
Assistant Professor
ESIC college of nursing

2.  The term “Audit” is borrowed from the Latin word “Audire”, i.e.
to hear.
 Audit is Latin word. *Meaning of audit is official examination of
the accounts.
 * In today’s global health industry organizations or service
providers are required to demonstrate that they have adequate
financial controls and safeguard when they host or process data
of their customers.
 *Auditing is originated from accounting practices and the
development of accounting audit was motivated by the capitalist
production concept, which used it as tool for financial control.
 *In health field, auditing was introduced in the early 20th
century, as a tool to verify the quality of care, by analyzing the
registers on medical record.

3.  Auditing is the procedure by which proficient liberated person
accumulate and examine the evidence to form an assessment and
convey their point of view to the individual concerned with their
audit report.
 •Audit is defined as “it is the process of evaluation or analysis of
something to determine its accuracy or safety, or is the document
that declares the result of such an analysis or evaluation.”
 *Audit is defined as, “it is a process to analyze and evaluate
something.”
 *Audit is defined as, “it is an independent review and
examination of records and activities to assess the adequacy of
system controls, to ensure compliance with established policies
and operational procedures, and to recommend necessary
changes in controls, policies, or procedures.”

4.  It makes sure that all the financial statement of concern
is presented fairly.
 Audit gives a fair and true picture in accordance with
financial reporting framework.
 It enhances the degree of confidence of intended users
in financial statement.

5.  Audit is a vital part of accounting.
 Audits were mainly associated with gaining information
about financial system and financial records of company or
business.
 Recent audit includes non financial subject areas such as,
safety, security, information system performance.
 It is process of verifying cost of manufacturing or
producing of any articles.
 A systemic and accurate verification of cost accounts and
records.
 An audit must adhere to generally accepted standards
established by governing bodies.

8.  • An external audit is review of financial statement or report of an entity,
usually a government or business, by someone not affiliated with organization
or agency.
 It is independent review of financial documents provided to auditor.
 The audit is conducted by regulatory agency hired by the entity and the
auditors are generally the public account.
 For government or public sector, an external audit will include review of
budget, the allocation of funds and the actual expenses to ensure the budgeted
revenues and expenses were correctly complied and used and in a private
sector.
 It includes a review of organization’s quarterly or monthly financial reports as
well as statements on revenues and expenditures to ensure they are correctly
tabulated and reported.
 These are usually conducted once a year at the end of fiscal year. • A year end
financial report is prepared by entity, which is one of the documents verified in
external audit.
 Types of external audits:
• Financial audit
• Operations audit
• Compliance audit

9.  To ensure that internal control, processes, guidelines
are adequate and in line with the government
requirements.
 To provide an independent and unbiased assessment of
an organization’s internal governance and financial
matters.
 To verify internal procedures.
 To evaluate adherence of the organization to standards
and principals.
 To evaluate the adequacy and effectiveness of existing
internal control.

10.  Internal audit has been recognizing as an aid to management for
monitoring the financial performance and effectiveness of
various departments/ units in the execution of various program,
schemes and activity.
 Internal audit is an independent management function, which
involves a continues and critical appraisal of the functioning of
an organization with a view to suggest improvements and add
value to and strengthen the overall governance mechanism of
organization or entity, including the entity’s risk management and
internal control system.
 The internal audit activity evaluates risk exposure relating to
organization’s governance, operation and information system in
relation to effectiveness and efficiency of operation, reliability
and integrity of financial and operational information,
safeguarding of assets, and compliance with laws, regulation and
contract.

11. OBJECTIVE OF INTERNAL AUDIT
 • To suggest improvements to the functioning of the entity organization
 • To strengthen the overall governance mechanism of the entity organization
including its strategic risk management as well as internal control system
 • To prepare for the external audit
PURPOSE OF INTERNAL AUDIT
• To establish standards and to provide guidance in respect of internal planning.
ROLE OF INTERNAL AUDIT
Regulatory and compliance role
•Quality of public expenditure
•Proper implementation of rules and regulation
•Maintenance of proper records
•Accuracy in expenditure reporting
Efficiency cum performance roles
•Efficiency and economy in public expenditure
•Propriety of expenditure
•Effectiveness of expenditure
•Proper realization, accounting and reporting of revenue receipts.

12.  1. Financial audit:
• Financial audits typically involve a focus on financial controls as they relate
to reporting.
These audits focus on accounting controls present in the general ledger or sub-
ledger systems.
Financial statement auditing is the focus of our external auditors.
Internal Audit will complement the work they perform based on an agreed
plan.
 2. Operational audit:
• Operational audits focus on the review and assessment of a business process.
• The activities of the business process may result in a direct or indirect
financial impact to the organization such as the collection of student tuitions or
patient account balances.
• Internal Audit primarily focuses on operational audits but can extend the
scope to include accounting procedures that can impact financial reporting.
 3. Compliance audit:
• Compliance audits review the level of compliance with internal policies or
external regulatory requirements.

13.  4. Information Systems:
• Audits of Information Systems look at the overall
infrastructure and network of the University and the
controls that relate to the security of the network and the
systems that are maintained in support of the goals of the
University. They also include technical operations, data
centre operations, project management procedures, and
application controls.
 5. Integrated Audits:
• Integrated audits look at controls that address financial,
operational, compliance and information systems risks.
These audits are typically centred on a business cycle or a
specific part of a cycle or process

14.  6. Administrative audits:
• Assess issues related to the efficiency of operational
productivity within an organization.
 7. Specialized audit:
• There are number of specialized reviews that examine areas
such as services performed by third parties and forensic auditing.
 8. Forensic audit:
• Traditionally forensic audit has been defined as an audit
specialized in discovering, disclosing and follow up on frauds
and crimes.
In recent years the forensic profession has been called upon to
participate in investigations related to corporate fraud and
cybercrime.

17.  The audit process is similar for most engagements and
normally consists of four stages:
 Planning (sometimes called Survey or Preliminary Review),
 Fieldwork,
 Audit Report, and
 Follow-up Review.
Client involvement is critical at each stage of the audit
process.
As in any special project, an audit results in a certain
amount of time being diverted from your department's usual
routine.
One of the key objectives is to minimize this time and avoid
disrupting ongoing activities.

18.  During the planning portion of the audit,
 The auditor notifies the client of the audit,
 Discusses the scope and objectives of the examination
in a formal meeting with organization management,
 Gathers information on important processes,
 Evaluates existing controls, and plans the remaining
audit steps.

19.  Announcement Letter:
The client is informed of the audit through an announcement or engagement
letter from the Internal Audit Director.
 Initial Meeting:
The client describes the unit or system to be reviewed, the organization,
available resources (personnel, facilities, equipment, funds), and other relevant
information.
 Preliminary Survey:
 In this phase the auditor gathers relevant information about the unit in order to
obtain a general overview of operations.
 Internal Control Review:
The auditor will review the unit's internal control structure, a process which is
usually time-consuming.
 Audit Program
Preparation of the audit program concludes the preliminary review phase.
This program outlines the fieldwork necessary to achieve the audit objectives.

20.  Transaction Testing
 Advice And Informal Communicaion
 Audit Summary
 Working Papers

21. Discussion Draft
 At the conclusion of fieldwork, the auditor drafts the
report.
 Audit's goal is to complete the audit and issue a draft audit
report within 30 days after the completion of fieldwork.
 Audit management reviews the audit working papers and
the discussion draft before it is presented to the client for
comment.
 This discussion draft is submitted to the client for review
before the exit conference.

22.  Exit Conference
 Internal Audit meets with the unit's management team to discuss the
findings, recommendations, and text of the discussion draft.
 At this meeting, the client comments on the draft and the group works
to reach an agreement on the audit findings.
 Is an opportunity for the auditor, department management, process
owners, and other to review and validate audit outcomes.
 The Exit Conference should accomplish the following:
1) Present observations and determine if the current operating context
might affect past transactions.
2) Confirm facts, observations, and conclusions, e.g., that the findings
are accurate.
3) Validate the cause leading to findings and present recommendations.
4) Estimate the effect of the findings on operations or its risk
management.
5) Solicit draft management comments on the audit findings and
determine if alternative recommendations adequately eliminate the
cause of findings.
6) Define the timeline for issuing the final audit report and implementing
recommendations.

23.  Audit Finding
 Reconciliation Supervisory Review (Urgent)
 During our sample review of account reconciliations, it was noted that
many account reconciliations were not being reviewed by the
supervisor in Item Processing and Deposit Operations.
 Recommendation
 We recommend management review all accounts at least monthly.
 Action Plan
 The Supervisor of the Item Processing Department was advised of this
requirement and has implemented changes as requested.
 The Deposit Operations Manager will sign and review all account
reconciliations.
 A secondary signature by the balancing associate and/or supervisor will
also be implemented.
 This procedure is currently in place.

24.  Exit Conference Checklist
 Procedure
 Set the date, time, and location of the exit meeting.
 The agenda should include the following:
• Accomplishment of the audit objectives (theirs and ours).
• Discussion of potential audit findings and recommendations.
• Discussion of when management’s response <br /> will be due.
• Audit reporting process.
• Follow up process.
Document results of the exit meeting.
 Exit Conference
 This section of the report summarizes the pertinent information regarding the Audit Exit
Conference. It includes:
 The date the conference was held.
 The persons in attendance and their titles.
 A statement that a summary of the Findings and Recommendations was discussed.

25.  Formal Draft
 The auditor then prepares a formal draft, taking into account any
revisions resulting from the exit conference and other discussions.
 This report is issued to the audited requesting a written response to any
audit findings and recommendations.
 When the changes have been reviewed by audit management and the
client, the final report is issued.
 Our principal product is the final report in which we present the audit
findings and discuss recommendations for improvements.
 Once the fieldwork is completed, Internal Audit will draft a report to
include the result of the audit including recommendations for
improvement.
 After the draft report is completed, it will be forwarded to department
management for review and discussion at a scheduled exit conference.

26.  Final Report
 After audited management has been given an opportunity
to respond to the Preliminary Draft, the Final Draft Report
is presented to the Accountability Oversight Committee for
approval.
 Upon approval of the Final Draft the Final Report is issued.
 Auditor distributes the final report the Chief Financial
Officer, the Chief Accountant, the President, the Board of
Directors, and other appropriate members of senior
management.
 Final Reports are considered public information and will be
available to anyone.

27.  Client Response
 The client has the opportunity to respond to the audit
findings prior to issuance of the final report which can
be included or attached to our final report.
 In the response, the client should explain how report
findings will be resolved and include an
implementation timetable.
 In some cases, managers may choose to respond with a
decision not to implement an audit recommendation
and to accept the risks associated with an audit finding.

28.  Client Comments
 Finally, as part of Internal Audit's self-evaluation
program, we ask clients to comment on Internal Audit's
performance.
 This feedback has proven to be very beneficial to us,
and we have made changes in our procedures as a result
of clients' suggestions

29.  Depending on the nature of the audit or the audit findings, the
Follow-Up procedure may formal or informal”.
 Approximately one year of the final report,
 Internal Audit will perform a follow-up review to verify the
resolution of the report findings
Followed up review
 The actions taken to resolve the audit report findings may be
tested to ensure that the desired results were achieved.
Followed up Report
 To resolve the original report findings.
 Unresolved findings will include a brief description of the
finding, the original audit recommendation, the client response,
the current condition, and the continued exposure to the board of
company.

30. Audit Annual Report
 Memorandum to the senior manager that notifies them that audit
activities are underway and describes the follow-up process.
 This memo should include: timeframes for the project,
 a copy of the outstanding findings relating to areas reporting a request
that they distribute the findings to these areas and ask the managers to
provide Internal Audit with the information requested,
 a statement that these comments were previously distributed as part of
an audit report or close-out letter notification that the results will be
reported to Board of Trustees.
The Announce Memo report
 Findings Access database provides sample wording for the notification
memo.
 The notification memo should be sent.