10 March 2010
If a Chartered Accountant is appointed as an Internal auditor (i.e. as an employee of X company) how will he/she can ensure that there is no loophole in Purchases Sales Expenses Assets. What are the internal controls that has to be set up in these areas so that there is absolute control on all these issues. Thanking you, for everyone who enlighten me on this issue.
10 March 2010
you must first of all go through "GUIDELINES ON INTERNAL AUDIT" issued by ICAI from time to time. you should create a system of proper recording of each and every transaction at different levels of the organisation, such as, maintaining registers, retaining copies of bills, approval register, etc and set-up a periodic check of all these records. by this, you can ensure rare chances for loopholes.
for ex:- for purchases, you can insert/ verify the system as PO-Gate Entry-Store ledger-purchase register-payment register-party individual account. then extend it to payment of freight, bank charges, deductions made from party for non-compliance of any terms or conditions.
in order to ensure least possibility of defaults, the auditor must keep a deep and thorough check on even a minute event that happens across the procedure.
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