Concurrent audit vs. internal audit
CA M.NAGARJUNA REDDY (CHARTERED ACCOUNTANT) (591 Points)
26 March 2012
7 Replies
CA Madhvi
(...Blissful...)
(1658 Points)
Replied 26 March 2012
Concurrent audit is carried out by independent CA and internal audit is done by internal audit department of the bank..as far as i knw...
CA M.NAGARJUNA REDDY
(CHARTERED ACCOUNTANT)
(591 Points)
Replied 26 March 2012
Thanks Madhvi.!!!
Any difference in their nature of work?
CA Madhvi
(...Blissful...)
(1658 Points)
Replied 26 March 2012
more or less same..concurent audit mstly carried out on daily basis if volume is high.....
CA Saroj Kumar
(Keen to learn something new every moments)
(2588 Points)
Replied 26 March 2012
The Internal audit and concurrent audit have similar nature and both are initiated by the management it self. But there is a basis defense between internal audit and concurrent audit. Concurrent audit is regular audit of ant transactions while internal audit is a periodic audit. In Concurrent audit report of audit may not be there, but in internal audit report is always there.
Raja Panduranga CA, CS, LLB
(Cheif Finance Officer)
(581 Points)
Replied 26 March 2012
CONCURRENT AUDIT
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Concept |
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Concurrent audit is a systematic and timely examination of financial transaction on a regular basis to ensure accuracy, authenticity, compliance with procedures and guidelines.The emphasis under concurrent audit is not on test checking but on substantial checking of transactions. |
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The concept of concurrent audit has been introduced to reduce the time gap between occurrence of transaction and is overview or checking. The concurrent audit serves the purpose of effective control as it is normally conducted by external agencies like chartered accountants firms. |
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Scope |
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Concurrent audit is an examination, which is contemporaneous with the occurrence of transactions or is carried out as near thereto as possible. It attempts to shorten the interval between a transaction and its examiantion by an independent person not in its documentation. In concurrent audit, there is an emphasis in favour of substantive checking in key areas rather than test checking. |
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This concurrent audit is essentially a managment process integral to the establishment of internal accounting functions and effective controls and setting the tone for a vigilance internal audit to preclude the incidence of serious errors and fraudulent manipulations.The main focus while conducting concurrent audit it to ensure that transactions are not dealt with in routine but in adherence with the systems and procedures laid down. The study of various fraudulent transactions with the systems and procedures, by the bank employees, which resulted in misuse of one's position. Hence, the focus of concurrent audit is on adherence to laid down systems, procedures and safegaurds. |
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A concurrent auditor may not sit in judgement of the decisions taken by a branch manager or an authorised official. The concern was that this is beyond the scope of concurrent auditor. However, the auditor will necessarily have to see whether the transaction or decisions are within the policy parameters laid down by the Head Office, they do not violate the instructions or policy prescripttions of the RBI, and that they are with in the delegated authority and in compliance with the terms and conditions for exercise of the delegated authority.In every large branch, which has different divisions dealing with specific activities, concurrent audit is a means to help the in-charge of the branch to ensure on an ongoing basis that the different divisions function within laid-down parameters and procedures. |
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Objective |
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The main objectives of concurrent audit include that any violation of procedure is brought to light. Ascertaining whether sanction for advances and expenditures is taken from competent authority.Examining books of accounts records and registers to ensure that they are maintained in accordance with the prescribed systems.Ensuring compliance of laid down systems, procedures and policies. |
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Adequate measures are being taken in advance to prevent future frauds, etc., to avoid difficulties, which may arise.To check cash, securities,.etc., to ensure that they are in due order and in agreement with books.Detection and arresting of any leakage of income, if any. Evaluating the quality of customer services provided and giving useful suggestions. |
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Assessing overall performance of the branch while assessing productivity and profitability and to offer useful comments on the basis of audit conducted. Restriction of matter discussed on the spot with the help of concerned official. Reporting any inefficiency in any operational level. Reporting any irregularity in working which may result in financial or other loss to branch. |
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Reporting to appropriate levels of managment for appropriate actions for remedial measures. Scrutinizing the completeness of documents submitted for availing advances and other facilities and physical checking of stocks and other assets at relevants places. To follow up with authorities to ensure timely rectification of irregularities reported which were not rectified on the spot. Verify prompt timely and regular submission of the periodical and statutory returns. |
INTERNAL AUDIT
What Is Internal Audit?
Just what do auditors do? How do they select their "auditee"? Many units don't give audits a second thought until they are selected for review. Here is some general information about the internal audit function at Cornell.
- Who are internal auditors?
- Why does Cornell have an internal audit function?
- Where does the audit function fit in the organization?
- What's the difference between external and internal auditors?
- What if an external auditor contacts you?
- How are units selected for audit?
- What are internal auditors looking for?
- What if something isn't handled correctly?
- Is the Audit Office part of the Division of Financial Affairs?
- Can a department request an audit?
- How long does an audit take?
-
What if I don't have the time to deal with the auditors? What if it's a bad time for an audit because (choose one)
a) we're short-staffed
b) the finance director just quit
c) it's budget season
d) we're crawling with students!
e) we're trying to close out the year. - Who will receive my audit report?
- Does the Board of Trustees see what is in the audit reports?
- Who audits the Audit Office?
- If I call you with information about a possible irregularity, will my identity be kept a secret?
Who are internal auditors?
As defined by the Institute of Internal Auditors (IIA), "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.
Internal Auditors' roles include monitoring, assessing, and analyzing organizational risk and controls; and reviewing and confirming information and compliance with policies, procedures, and laws. Working in partnership with management, internal auditors provide the board, the audit committee, and executive management assurance that risks are mitigated and that the organization's corporate governance is strong and effective. And, when there is room for improvement, internal auditors make recommendations for enhancing processes, policies, and procedures."
Why does Cornell have an internal audit function?
The University Audit Office exists by charter and by-law to assist University management and the Audit Committee of the Board of Trustees in effectively fulfilling their responsibilities. We are charged with examining and evaluating the policies, procedures, and systems which are in place to ensure: the reliability and integrity of information; compliance with policies, plans, laws, and regulations; the safeguarding of assets; and, the economical and efficient use of resources.
In simpler words, we're here to help.
Where does the audit function fit in the organization?
The University Auditor has a solid-line reporting relationship to Cornell's President and the Audit Committee of the Board of Trustees.
We're a small office with a big job.
What's the difference between external and internal auditors?
External auditors can be government auditors or independent public accounting firms that Cornell hires. Government auditors focus primarily on compliance with government regulations and award terms. Since both federal and state governments fund a significant portion of the university's activities, they want to make sure we use their money as they intended.
Independent public accounting firms review the university's annual financial statements to ensure the information presented accurately portrays Cornell's financial condition. Government agencies, Cornell's Board of Trustees, and bond rating agencies rely on the independent auditor's opinion of Cornell's financial statements.
Internal auditors sometimes look at the same data or perform some of the same steps as external auditors. If there is a problem, it's better to find it and fix it before external auditors review our practices.
What if an external auditor contacts you?
All external audits should be coordinated through the University Audit Office or Sponsored Program Services. If you or your unit is contacted by an external auditor, before sharing any information, direct them to contact the University Audit Office or Sponsored Program Services. We can sometime dissuade an audit or at least minimize the impact on an operation.
Remember, internal audit is on your side and can help you get through an external audit.
How are units selected for audit?
Every two years, the University Audit Office helps determine where Cornell risks failing in its mission due to internal procedural deficiencies. First, the university is broken down into areas of institutional concern, such as Sponsored Research, and auditable activities such as units, departments, cost centers, subsidiaries, information systems or processes. Next, relevant risk factors such as control environment, reputation/legal impact, and operations impact are weighted. Institutional concerns and auditable activities are then scored using these factors and the audit office decides which areas to audit based on these risk rankings and the audit resources available.
What are internal auditors looking for?
Primarily compliance with university policies and sound internal controls. Cornell's policies are designed to help ensure we all comply with applicable laws and regulations and operate efficiently. By following these policies we help protect the university from unnecessary risks and help ensure sound business practices are consistent throughout the university. University policies can be found here: However, not all internal controls can be codified in policy. If we find control weaknesses, we regularly make recommendations to implement a control even though it may not be specifically required by policy.
What if something isn't handled correctly?
We will make recommendations for improvement. The recommendations are realistic because we want you to implement them. It is the responsibility of management to weigh possible additional costs of implementing our recommendations in terms of benefits to be derived and the relative risks involved.
Is the Audit Office part of the Division of Financial Affairs?
No, the Audit Office works independently of the Division of Financial Affairs. Our office has a solid-line reporting relationship to Cornell's President and the Audit Committee of the Board of Trustees.
Can a department request an audit?
Yes! We consider requests for audit work, although our ability to perform the audit might be affected by our staffing levels, or year end deadlines. Still, if you are concerned about an area in your department, we will try to make time for a limited examination of the area.
We're also available to do presentations and training for your department.
How long does an audit take?
We budget between 200 and 600 hours for a typical audit, depending on the size and complexity of the area. We normally have one auditor leading the audit, and auditors will sometimes have more than one audit in process at a time, so an audit could take from two months to six months to complete.
What if I don't have the time to deal with the auditors? What if it's a bad time for an audit because (choose one):
a) we're short-staffed
b) the finance director just quit
c) it's budget season
d) we're crawling with students!
e) we're trying to close out the year.
During the audit opening meeting, we will discuss the audit schedule and try to accommodate time constraints that you may have. Although 200 to 600 hours looks like a lot of time, much of our work is done behind the scenes. Many people operate under the erroneous belief that in doing an audit we will spend lots of time with you and take time away from your other obligations. We may need to meet key personnel on the audit two or three times for maybe an hour at a time over the audit period. We may spend equal amounts of time, and perhaps less, with others in the department, but we will not be monopolizing anyone's time in the department and much of our work such as audit planning and report writing, is done in our offices.
Who will receive copies my audit report?
We send copies of audit reports to the department administration, the President, the Vice President for Finance and CFO, the Controller, the external auditors (PricewaterhouseCoopers) and to others, depending on the type of audit. Reports on academic units are sent to the Provost. IT audit reports go to the Vice President for Information Technologies. Reports on irregularities are sent to University Counsel, and may be sent to either the Dean of Faculty, Vice President for Human Resources, or the Judicial Administrator depending on if they involve faculty, staff, or students.
Does the Board of Trustees see what is in the audit reports?
We prepare an annual report for the Trustees containing a dozen or so of the most significant findings or systematic issues from our audits for the year.
Who audits the Audit Office?
Excellent question! Actually, we are audited every five years by other auditors under guidelines set forth by the Association of College and University Auditors. This "peer review" process draws upon the standards and guidelines set forth by the Institute of Internal Auditors in their International Standards for the Professional Practice of Internal Auditing. The peer reviewers typically include auditors from other universities, public accounting firms, or specialists in an audit area and they issue a report with findings and recommendations, just as we do when we audit university units.
If I call you with information about a possible irregularity, will my identity be kept a secret?
This is a hard question to answer without knowing whether or not the specific circumstance you are reporting will end up in legal action. As a general rule, we do not reveal our sources to the person being investigated. And we always try to corroborate any accusations with our own observation. If an irregularity is referred to the District Attorney for legal prosecution, and your testimony would be critical to the outcome of the case, it may become necessary to involve you in the irregularity. In addition, the Cornell Hotline provides for anonymous report of financial irregularities.
hemal
(CA FINAL)
(176 Points)
Replied 27 March 2012
Der, even internal audit is carried out by CA, but generaly it is carried for entire work in one time on the other side concurrent audit is done on day by day basis. Further as per my experience branches which are not covered by statutory audit generaly have internal audi once in every two year. For e.g. i have conducted intenal audit for Dena bank. This can be more popular with name Risk Based Internal Audit (RBIA) which is based on grading system.
CA M.NAGARJUNA REDDY
(CHARTERED ACCOUNTANT)
(591 Points)
Replied 27 March 2012
Thank you hemal for your responce.
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