Audit

In short; the procedure of Internal Audit is same as is of Statutory Audit. Here you have to address your report to the management.

The areas covered under internal audit is arger than the the statutory audit.

For simplicity; first of all; you can compare figures of two periods. Both for Profit and Loss Account and Balance Sheet. See the differences and analyse whether these are justified according to the activities conducted by the company. For example; if in previous year insurance was Rs.70,000 and this year Rs.50,000 only it means something is wrong. Either some of the assets are not insured or the proper accounting treatment has not been given. It may also happen that some part of insurance paid has been debited to other account.

Major concern in internal audit is for internal controls. Internal controls means the procedure defined by the management. You have to check whether there is any loophole in the internal controls. If these are ok then focus your attention on their proper implementation.

You should have a close watch over the behavious of the employees also during your audit. Many things may be revealed which need immediate attention.

CA Surendra Rakhecha

Surat