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Internal Controls at the Planning Stage in Statutory Audit (Part ii) Internal controls play a pivotal role in the statutory audit process, particularly during the planning stage. This critical phase sets the groundwork for the entire audit engagement, laying the foundation for the assessment of risk, identification of key control objectives, and determination of audit procedures. In this article, we explore the significance of internal controls at the planning stage of a statutory audit, along with practical examples to illustrate their application. Importance of Internal Controls at the Planning Stage: 1. Risk Assessment: Understanding the effectiveness of internal controls helps auditors assess the risk of material misstatement in the financial statements. 2. Control Objectives: These objectives are aligned with the organization's goals and objectives and are designed to address specific risks and vulnerabilities. 3. Audit Procedures: Auditors rely on the effectiveness of internal controls to determine the nature, timing, and extent of audit procedures required to achieve audit objectives. Examples of Internal Controls at the Planning Stage Ab Auditor Might be Interested In: 1. Segregation of Duties: Segregation of duties is a fundamental internal control that helps prevent fraud and errors by dividing responsibilities among different individuals. For example, in the accounts payable process, segregation of duties ensures that the employee responsible for approving invoices is separate from the individual responsible for issuing payments. During the planning stage, auditors assess the adequacy of segregation of duties to determine the risk of unauthorized transactions or misappropriation of funds. 2. Authorization and Approval Procedures: Authorization and approval procedures establish the framework for initiating and approving transactions within an organization. 3. Information Technology Controls: Information technology controls encompass the policies and procedures designed to safeguard information systems, data integrity, and confidentiality. 4. Monitoring and Review Mechanisms: Monitoring and review mechanisms ensure ongoing compliance with internal controls and facilitate timely detection of control deficiencies or anomalies. #audit #quality #accounting #tax #dubai #uae #vat #bookkeeping #taxation #corporatetax #fta #accountant #icaew #aca #acca #charteredaccountant #finance #feasibilitystudy #consultant #consultancy #risk #advisory #internalaudit #externalaudit #riskassessment Contact us for any assistant: Phone: +97158 585 2494 Email: ayoub.a@aptglobalfirms.com APT Global | Avinash Gupta | Uttam Patel | APT AND CO LLP To read more about this topic, visit our website https://lnkd.in/daEg8wmu

Internal Auditor (IA): Definition, Process, and Example What Is an Internal Auditor (IA)? An internal auditor (IA) is a trained professional employed by companies to provide independent and objective evaluations of financial and operational business activities, including corporate governance. They are tasked with ensuring that companies comply with laws and regulations, follow proper procedures, and function as efficiently as possible. Understanding an Internal Auditor (IA) The main job of an internal auditor (IA) is to identify problems and correct them before they are discovered during an external audit by an outside firm or regulatory agencies, such as the Securities and Exchange Commission (SEC). One of the roles of the SEC is to regulate how companies report their financial statements to help ensure that investors have access to all of the necessary information before investing. An internal audit generally performs the three tasks outlined below. - Assess any risks and the internal controls within a company - Ensure that a company and its employees are in compliance with federal and state laws and regulations - Make suggestions as to what needs to be done to rectify a failed audit or issues that were identified as problematic during the audit Internal Auditing Process To achieve this goal, internal auditors will typically perform a multitude of tasks, including examining financial statements, expense reports, inventory, financial data, budgeting and accounting practices, as well as creating risk assessments for each department. Detailed notes are taken, interviews with employees are conducted, work schedules are supervised, physical assets are verified, and financial statements are scrutinized to eliminate potentially damaging errors or falsehoods and find ways to boost productivity.

Internal Audit interview Insights with Q & A #internalaudit #audit #sox #controlchecks #finance #accounts #auditor 1. Tell me about yourself and your experience in internal auditing. Answer: With over 2 years of experience in Accounts Payable and US Taxation, a strong foundation in finance and compliance has been built. While working on transaction payment methods and process improvements, a keen interest in internal auditing emerged, particularly in internal checks. This experience provided valuable insights into identifying inefficiencies, ensuring proper control mechanisms, and improving overall operational accuracy. Internal auditing now presents an exciting opportunity to further contribute to organizational success by ensuring compliance, enhancing processes, and mitigating risks. 2. Why do you want to become an internal auditor? Answer: Understanding business processes and identifying areas where risks or inefficiencies exist is highly rewarding. Internal auditing provides an opportunity to work with different departments to ensure the organization operates efficiently and complies with regulations. The role's dynamic nature and the ability to make impactful recommendations create a continuous learning and problem-solving environment. 3. What interests you about auditing in this particular industry? Answer: This industry faces unique challenges due to its regulatory environment, making it particularly interesting. Its complexity and the need for constant vigilance in compliance and risk management align well with a passion for improving processes and ensuring operational efficiency. The opportunity to contribute by addressing these challenges and supporting the organization in achieving its goals is appealing. 4. How do you perform a risk assessment for an audit? Answer: Risk assessments begin by understanding the business objectives and identifying risks that could impact them. External and internal risks are evaluated, considering factors like financial health, operational efficiency, and regulatory compliance. A risk matrix is used to prioritize risks based on their likelihood and impact. Engaging with management and department heads helps identify vulnerable areas. The audit plan is then tailored to focus on high-risk areas. 5. Explain the process you use for testing internal controls. Answer: The process starts by gaining an understanding of the control environment through reviewing documentation, conducting interviews, and performing walkthroughs. Samples are selected for testing, ensuring the control operates as intended. Techniques such as inquiry, observation, and re-performance are used. For automated controls, data analytics may be applied to verify system configurations. Findings are documented, and recommendations are made to strengthen or improve controls where necessary.

Internal Controls at the Planning Stage in Statutory Audit (Part ii) Objectives and Responsibilities of Internal Controls Internal controls form the backbone of an organization's governance framework, playing a crucial role in achieving various objectives that collectively contribute to the efficient, ethical, and secure conduct of business. In this article, we delve into the primary objectives of internal controls, highlighting their significance in ensuring the integrity of financial records, preventing fraud, and fostering the efficient operation of businesses. (a) Objectives of Internal Controls 1. Efficient Conduct of Business: Controls are designed to streamline processes, minimize redundancies, and optimize resource utilization. 2. Safeguarding Assets: Access controls, physical security measures, and asset tracking mechanisms are implemented to protect tangible and intangible assets. 3. Preventing and Detecting Fraud and Other Unlawful Acts: Controls such as transaction approvals, segregation of duties, and regular reconciliations serve as deterrents to fraudulent behavior. 4. Completeness and Accuracy of Financial Records: Control activities related to data entry, reconciliation, and validation mechanisms contribute to the reliability of financial information. 5. Timely Preparation of Financial Statements: Controls are designed to expedite the financial reporting process while maintaining accuracy and compliance. 6. Compliance with Laws and Regulations: Controls may include policies, procedures, and monitoring mechanisms to verify adherence to legal requirements. (b) Responsibilities for Internal Control Ensuring the effectiveness of internal controls involves the collaboration of various stakeholders within an organization. The delineation of responsibilities is crucial for a comprehensive and well-coordinated control environment. Management Responsibilities: · Design and Implementation · Monitoring and Oversight · Risk Assessment Board of Directors Responsibilities: · Oversight · Assurance Internal Audit Responsibilities: · Evaluation · Recommendations Employees' Responsibilities: · Adherence · Training and Awareness #audit #quality #accounting #tax #dubai #uae #vat #bookkeeping #taxation #corporatetax #fta #accountant #icaew #aca #acca #charteredaccountant #finance #feasibilitystudy #consultant #consultancy #risk #advisory #internalaudit #externalaudit #riskassessment Contact us for any assistant: Phone: +97158 585 2494 Email: ayoub.a@aptglobalfirms.com APT Global | Avinash Gupta | Uttam Patel | APT AND CO LLP To read more about this topic, visit our website https://lnkd.in/dKEJQkR9

Post 1: Internal Audit Interview Insights 1. What is internal auditing? Internal auditing 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. 2. What are the objectives of internal auditing? The primary objectives are to ensure the reliability and integrity of financial and operational information, safeguard assets, ensure compliance with laws and regulations, and promote effective and efficient operations. 3. How do you ensure the independence and objectivity of the internal audit function? Independence and objectivity are ensured by having internal auditors report directly to the audit committee of the board of directors, maintaining a separate and distinct function from operational management, and adhering to professional standards and ethical guidelines. 4. What are the main components of an internal audit report? An internal audit report typically includes an introduction, scope and objectives of the audit, methodology, findings, recommendations, and a conclusion. It may also include management responses and action plans. 5. Describe the steps involved in the internal audit process. The internal audit process involves planning (including risk assessment), execution (fieldwork), reporting (drafting the audit report), and follow-up (ensuring corrective actions are implemented). 6. What is risk assessment in internal auditing? Risk assessment is identifying, evaluating, and prioritizing risks to focus audit efforts on areas of highest importance and potential impact. It involves understanding the organization’s objectives and identifying the risks that could hinder achieving these objectives. 7. How do you prioritize risks during an audit? Risks are prioritized based on their likelihood and potential impact on the organization. This involves discussions with management, reviewing past audit findings, and considering industry trends and emerging risks. 8. What is the difference between internal and external auditing? Internal auditing is performed by employees within the organization and focuses on improving internal processes and controls. Independent external auditors perform external auditing and primarily focus on the financial statements' accuracy and fairness. LinkedIn LinkedIn Guide to Creating LinkedIn Learning #procuretopay #sap #management #change #payments #procurement #payment #ptp #financecareer #sapcommunity #ca #cma #icmai #sapcommunity #accounting #finance #accounts #rtr #internalaudit #ifrs #indas #assurance #auditcontrol

Post 1: Internal Audit Interview Insights 1. What is internal auditing? Internal auditing 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. 2. What are the objectives of internal auditing? The primary objectives are to ensure the reliability and integrity of financial and operational information, safeguard assets, ensure compliance with laws and regulations, and promote effective and efficient operations. 3. How do you ensure the independence and objectivity of the internal audit function? Independence and objectivity are ensured by having internal auditors report directly to the audit committee of the board of directors, maintaining a separate and distinct function from operational management, and adhering to professional standards and ethical guidelines. 4. What are the main components of an internal audit report? An internal audit report typically includes an introduction, scope and objectives of the audit, methodology, findings, recommendations, and a conclusion. It may also include management responses and action plans. 5. Describe the steps involved in the internal audit process. The internal audit process involves planning (including risk assessment), execution (fieldwork), reporting (drafting the audit report), and follow-up (ensuring corrective actions are implemented). 6. What is risk assessment in internal auditing? Risk assessment is identifying, evaluating, and prioritizing risks to focus audit efforts on areas of highest importance and potential impact. It involves understanding the organization’s objectives and identifying the risks that could hinder achieving these objectives. 7. How do you prioritize risks during an audit? Risks are prioritized based on their likelihood and potential impact on the organization. This involves discussions with management, reviewing past audit findings, and considering industry trends and emerging risks. 8. What is the difference between internal and external auditing? Internal auditing is performed by employees within the organization and focuses on improving internal processes and controls. Independent external auditors perform external auditing and primarily focus on the financial statements' accuracy and fairness. LinkedIn LinkedIn Guide to Creating LinkedIn Learning #procuretopay #sap #management #change #payments #procurement #payment #ptp #financecareer #sapcommunity #ca #cma #icmai #sapcommunity #accounting #finance #accounts #rtr #internalaudit #ifrs #indas #assurance #auditcontrol

What is Internal Audit? When I am asked, “What does an internal auditor do?” my response is usually, “How much time do you have for me to answer that question?”  As a long time internal auditor (35 years), I have often been disappointed by the perception of management (and others) regarding the purpose and value of internal audit. Ask management about internal audit and their response is usually’ “Audit reviews financial statements and processes.” Sometimes, this is the fault of the internal audit shop itself – restricting its audits to finance-related topics or audits that are easy such as accounts payable and P-Card.   So, my question this week is, “What do you do as an internal auditor?” Please provide examples of the audits you perform. Check out Auditopia for more: https://lnkd.in/edTvE66e

The Difference Between Inernal Audit and External Audit: 🔅What is an internal audit? An internal audit is an evaluation of a business’s internal controls and accounting processes. These audits help make sure your business remains in compliance with laws and regulations and help maintain the accurate and timely reporting of financial data. The overall goal of internal auditing is to make a company more efficient, more profitable and better at making key decisions. 🔅What is external audit? An external audit looks at the accuracy of a company’s financial statements and whether its accounting practices comply with all applicable rules and regulations. The auditor also verifies that the financial reports and records offer an accurate picture of the company’s performance ⭕️ Internal and external audits both seek to provide an independent opinion about a company’s finances or practices. However, they differ significantly when it comes to who performs the audit, its overall purpose, and its scope. Here is a closer look at these differences:-👇 1️⃣. Scope: INTERNAL audits usually focus on a specific area of a company, while EXTERNAL audits look at all relevant financial information and any other practices that could confirm the veracity of budget statements. 2️⃣. Purpose: INTERNAL audits focus on measuring current performance and finding areas for improvement, while EXTERNAL audits focus on proving the accuracy and veracity of financial statements. 3️⃣. Auditor: EXTERN auditors are from a third party while INTERNAL auditors work on a company’s behalf. #InternalAudit #Auditing #ExternalAudit #elsamaryma #MamdouhElSamary #Scope #Auditor #Purpose #GRC #AuditWork #Auditor

Section 138 of the Companies Act, 2013, mandates certain classes of companies to appoint an internal auditor. The exact applicability criteria were specified by the Companies (Accounts) Rules, 2014, and are generally updated by the Ministry of Corporate Affairs (MCA) as needed. As per the latest guidelines, here’s a detailed look at which companies need to appoint an internal auditor: 1. Applicability to Different Types of Companies An internal auditor is required for the following types of companies: Listed Companies: All listed companies are required to appoint an internal auditor, regardless of their size or revenue. Unlisted Public Companies meeting any of the following criteria: Paid-up share capital of ₹50 crore or more during the preceding financial year. Turnover of ₹200 crore or more during the preceding financial year. Outstanding loans or borrowings from banks or public financial institutions of ₹100 crore or more at any time during the preceding financial year. Outstanding deposits of ₹25 crore or more at any time during the preceding financial year. Private Companies meeting any of the following criteria: Turnover of ₹200 crore or more during the preceding financial year. Outstanding loans or borrowings from banks or public financial institutions of ₹100 crore or more at any time during the preceding financial year. 2. Who Can Be an Internal Auditor? The internal auditor can be: A Chartered Accountant (CA), whether in practice or not. A Cost Accountant (CMA). Any other individual who the company deems to possess the necessary qualifications and experience. An employee of the company can also be appointed as an internal auditor if they meet the company's requirements. 3. Scope, Functions, and Role of the Internal Auditor The Board of Directors or the company’s Audit Committee (if applicable) defines the scope, functioning, and periodicity of the internal audit. The internal audit is designed to: Assess risk management strategies. Enhance internal controls. Improve corporate governance. Assist in compliance with statutory and regulatory requirements. This flexibility allows companies to focus on specific areas of risk or performance relevant to their operations. 4. Reporting and Compliance The internal auditor must report to the Board of Directors or the Audit Committee (if applicable) regularly. The findings and recommendations from the internal audit are to be reviewed and acted upon by management to enhance operational efficiency and compliance.

Post 1: Internal Audit Interview Insights 1. What is internal auditing? Internal auditing 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. 2. What are the objectives of internal auditing? The primary objectives are to ensure the reliability and integrity of financial and operational information, safeguard assets, ensure compliance with laws and regulations, and promote effective and efficient operations. 3. How do you ensure the independence and objectivity of the internal audit function? Independence and objectivity are ensured by having internal auditors report directly to the audit committee of the board of directors, maintaining a separate and distinct function from operational management, and adhering to professional standards and ethical guidelines. 4. What are the main components of an internal audit report? An internal audit report typically includes an introduction, scope and objectives of the audit, methodology, findings, recommendations, and a conclusion. It may also include management responses and action plans. 5. Describe the steps involved in the internal audit process. The internal audit process involves planning (including risk assessment), execution (fieldwork), reporting (drafting the audit report), and follow-up (ensuring corrective actions are implemented). 6. What is risk assessment in internal auditing? Risk assessment is identifying, evaluating, and prioritizing risks to focus audit efforts on areas of highest importance and potential impact. It involves understanding the organization’s objectives and identifying the risks that could hinder achieving these objectives. 7. How do you prioritize risks during an audit? Risks are prioritized based on their likelihood and potential impact on the organization. This involves discussions with management, reviewing past audit findings, and considering industry trends and emerging risks. 8. What is the difference between internal and external auditing? Internal auditing is performed by employees within the organization and focuses on improving internal processes and controls. Independent external auditors perform external auditing and primarily focus on the financial statements' accuracy and fairness. LinkedIn LinkedIn Guide to Creating LinkedIn Learning #procuretopay #sap #management #change #payments #procurement #payment #ptp #financecareer #sapcommunity #ca #cma #icmai #sapcommunity #accounting #finance #accounts #rtr #internalaudit #ifrs #indas #assurance #auditcontrol