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Internal Audit


Internal Audit is defined as under:

“Internal audit provides independent assurance on the effectiveness of the internal controls and risk management processes to enhance governance and achieve organisational objectives.”

Internal Audit is an independent function established within an organisation to examine and evaluate its activities as a service to the organisation. It serves the organisation to accomplish objectives by bringing a systematic, disciplined and consistent approach to assess and strengthen the effectiveness of risk management, control and governance process.

Internal Audit applicability differs from organisation to organisation. Still, it is advisable to get it carried out even if it is not mandatorily applicable to you to detect and minimise the chances of fraud & errors and review the effectiveness & efficiency of internal control operations of the organisation so that the required corrective actions, if any,can be taken well in time.

Scope and Objectives of Internal Audit

The scope and objectives of internal Audit are dependent upon the size and the structure of the entity and its management’s requirements.
The internal Audit operates typically in one or more of the following areas:
  1. Review of the accounting system and related internal controls.
  2. Examination of the management of financial and operating information.
  3. Examination of the effectiveness and efficiency of operations including the financial controls of an organisation.
  4. Physical examination and verification.

The objects of Internal Audit are stated as below:
  1. Verification of the accuracy, reliability and authenticity of the financial, accounting and statistical records.
  2. Ascertaining that accepted accounting policies, principles and practices have been developed while preparing the financial accounts.
  3. The assets are purchased/disposed under proper authorisation. Also, ensuring that the access to the assets is restricted to the authorised persons at the permitted times.
  4. Ascertaining that the liabilities are incurred for the authorised activities of the organisation.
  5. The internal checks system operating in the organisation is sound and economical.
  6. Fraud and errors are prevented and detected.
  7. Reviewing overall operations of the internal control system and if deviations or weakness are noted, the same is communicated to the appropriate authorities on a timely basis. 

Internal Audit Framework

The operation of the internal audit function must comply with the following code:
  • Formal Charter
  • Documentation of Reporting Structure
  • Detailed Testing
  • Competency
  • Liasioning with external auditors
  • Audit committee and the external auditors
  • Reviewing 

Effectiveness of Internal Audit

External Auditor should consider the following factors in relying on the work of Internal Auditor:
(a) The adequacy of audit programmes about the scope of the audit report.
(b) The planning of the work, supervision, evaluation and review of the documentation of the assistants;
(c) The availability of sufficient appropriate audit evidence.
(d) The appropriateness of conclusion attained and the audit report thereon.
(e) Any expectations or suspicious matters disclosed by the Internal Audit.

Why choose MAG's Internal Audit Services?

Manish Anil Gupta & Co. is known for its internal audit services in Delhi. Following  are the reasons why you should choose MAG as your internal auditors:
  • Our proficient auditors adopt a risk-based approach focusing on the objectives and constraints of our clients to accomplish those objectives.
  • Our services have been improved for consistent executive ordinances in all internal audit practices all over the world.
  • We are contributing expertise to implement the audit work in specialised areas such as fraud investigations, monitoring of projects, implementation of systems and revenue assurance.
  • Our experts' team also serves clients in various industries like Manufacturing, Telecom industries, Education, Textile and Consumer Business.
  • Our services can aid both the sides - you and your counsel with a comprehensive and disciplined approach that gives practical and realistic solutions, not just reliable reports.
  • Our specialists and services are centred on value creation and offer you the vision and foresight throughout the enterprise as a whole.
If you are looking for Internal audit in west delhi, MAG is the best solution for your worries. You can reach us at for internal audit assignments.

Frequently Asked Questions

Following companies are compulsorily required to appoint an internal auditor to conduct the Internal Audit of the company:
  1. all the listed companies,
  2. all the unlisted public companies having-
  1. paid-up share capital of Rs. 50 crores or more in the last financial year, or
  2. turnover of Rs. 200 crores or more in the last financial year, or
  3. outstanding loans or borrowings exceeding Rs. 100 crores or more at any time in the last financial year, or
  4. outstanding deposits of Rs. 25 crores or more at any time in the last financial year, and
  1. all the private companies having-
  1. turnover of Rs. 200 crores or more in the preceding financial year, or
  2. outstanding loans or borrowings exceeding Rs. 100 crores or more at any time in the last financial year.
An internal auditor can be a cost accountant or a chartered accountant (whether practising or not), or any other professional decided by the Board to conduct the company's internal audit.The internal auditor might or might not be an employee of the company.A statutory auditor cannot act as an internal auditor of the company.
Internal Auditor has to be appointed by the Board of Directors of the company at the Board Meeting.
Internal controls are the rules and processes implemented by a company to ensure the integrity of financial and accounting information, promote accountability, safeguard the assets, prevent fraud, and ensure that the company complies with the applicable laws and regulations.
A public company is required to file Form MGT-14 with the Registrar within 30 days from the date of passing of the resolution by the Board for the appointment of the internal auditor.

A private company is not required to make any intimation with the ROC for such an appointment.

The effectiveness of internal audit can be ensured by following a formal charter, having competent staff, liaising with external auditors, and conducting reviews.

The purpose of internal audit is to provide independent assurance on the effectiveness of an organization's internal controls and risk management processes to enhance governance.

The scope and objectives of internal audit depend on the size and structure of the entity and its management's requirements, which typically include reviewing accounting systems and controls, financial and operating information, and the effectiveness and efficiency of operations
Internal audit is important for organizations because it helps them identify and mitigate risks, ensure compliance with laws and regulations, safeguard assets, and improve operational efficiency. It provides an objective assessment of the organization's internal control systems and helps management make informed decisions.
Internal audit is conducted by employees/Management within the organization to assess internal controls, while external audit is performed by independent auditors to evaluate the accuracy of financial statements or any other specific objective.
The frequency of internal audits depends on various factors, including the size and complexity of the organization, industry regulations, and internal risk assessments. Internal audits are typically conducted annually, but some organizations may require more frequent audits based on their specific needs.
The steps involved in an internal audit typically include planning, risk assessment, testing and evaluation of controls, documentation of findings, reporting, and follow-up. The audit process is designed to systematically examine the organization's operations, identify weaknesses, and provide recommendations for improvement.
Conducting internal audits offers several benefits, including:
  • Identifying and mitigating risks
  • Strengthening internal controls
  • Enhancing operational efficiency
  • Ensuring compliance with laws and regulations
  • Detecting and preventing fraud and errors
  • Providing management with objective insights and recommendations
  • Improving decision-making processes
The scope of internal audit varies depending on the size, structure, and management requirements of the organization. It typically includes reviewing the accounting system and internal controls, examining financial and operating information management, assessing the effectiveness and efficiency of operations, and conducting physical examinations and verifications.
A: Management plays a critical role in internal audit by providing support, cooperation, and access to necessary information and resources. They are responsible for implementing the recommendations provided by internal auditors and ensuring that appropriate actions are taken to address identified risks and control deficiencies. Management also oversees the follow-up process to monitor the progress of implementing audit recommendations.

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