The document discusses internal audit, providing definitions, objectives, principles and need. It defines internal audit as an independent function that appraises an entity's operations to strengthen governance and risk management. The scope of internal audit includes reviewing accounting and controls, ensuring efficiency and compliance. It is needed due to increased business size, regulations, and technology usage. Internal audit adds value through risk management, assurance, compliance and fraud prevention. Key principles are integrity, objectivity, independence and professional care. The Companies Act 2013 requires certain public and private companies to appoint internal auditors.

1. INTERNAL
AUDIT
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2. WHAT IS INTERNAL AUDIT
Internal audit is an independent
management function, which involves a
continuous and critical appraisal of the
functioning of an entity with a view to
suggest improvements thereto and add
value to and strengthen the overall
governance mechanism of the entity,
including the entity's strategic risk
management and internal control system.
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3. Scope And Objective
• Review of accounting system and related internal
controls
• Examination for management of financial and
operating information
• Examination of the economy, efficiency and
effectiveness of operations including non-financial
controls of an organization
• Physical examination and verification
• Adoption of standard accounting practices
• Proper authority on the acquisition and disposal of
assets
• Prevention and detection of fraud
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4. NEED FOR INTERNAL AUDIT
• Increased size and complexity of businesses
• Enhanced compliance requirements
• Focus on risk management and internal controls
to manage them
• Unconventional business models
• Intensive use of information technology
• Stringent norms mandated by regulators to
protect investors
• An increasingly competitive environment
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5. INTERNAL AUDIT ADDING VALUE TO
ORGANISATION
• Risk Management
• Providing Assurance Regarding Internal
Controls
• Compliance
• Fraud Detection
• Consulting and Operations
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6. INTERNAL AUDIT
PRINCIPLES
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Integrity
objectivity
Independence
Confidentialit
y
Due
Professional
Care

7. Internal audit as per Companies
Act 2013 section(138)
• The Companies Act 2013 provide statutory
recognition this area has opened a scope of
Chartered Accountants and others professionals
• Section 138(1) of the act provide such class of
companies as may be prescribed shall be required
to appoint an internal auditor, who shall be either
be an Chartered Accountant or a Cost
Accountant Or such other professional as may be
decided by the board to conduct internal audit of
the function and activities of the company
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8. Applicability of Internal
Audit
Public Company
Private
Company
Listed
Company
Unlisted
Company
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9. Listed Company
Public Company
Unlisted Company
Applicable to all listed
Company
Applicable to every unlisted company having
1.Paid up share capital 50 Crore or more
during preceding financial year OR
2.Turnover of rupees of 200 crore or more
during preceding financial year OR
3.Outstanding loan or Borrowings from banks
or Public financial institution exceeding one
100 Cr or more during the preceding financial
year OR
4.Outstanding loan of 25 crore or more at any
time during the preceding financial year
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10. Private Company
1. Turnover of 200 crore rupees or more at ant time during
the preceding financial year OR
2. Outstanding loan or borrowings from banks or public
financial institution exceeding 100 crore or more at any
point of time during the preceding financial year
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11. INTERNAL AUDIT IN TODAYS
ORGANISATION
• Relationship with the Audit Committee
• Relationship with the Management
• Relationship with the External Auditor
• Co-ordination of internal and external audit work
increases economy, efficiency, and effectiveness of
the overall audit process.
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12. Standards on Internal
Audit
1. Planning an Internal Audit
2. Basic principal Governing Internal Audit
3. Documentation
4. Sampling
5. Analytical Procedure
6. Quality Assurance in Internal Audit
7. Terms of Internal Audit Engagement
8. Communication with Management
9. Internal Audit Evidence
10. Consideration of Fraud in Internal Audit
11. Internal Control Evaluation
12. Enterprise Risk Management
13. Internal Audit in an Information Technology Environment
14. Knowledge of the Entity and its Environment
15. Using the Work of an ExpertRahul Mithia

13. Functions Of Internal
Auditor
• Ensure the correctness and completeness of accounts.
• Examine the accounts to ensure regularity in expenditure.
• Look into the propriety of the financial transaction.
• Ensure that the resources expended by the executive have
produced desired result.
• Keep a constant vigil on all financial dealings and
transactions in the organization.
• Find out whether there have been any financial irregularity or
malpractice in incurring expenditure.
• Point out mistakes and indicate how they can be rectified and
avoided in future.
• Verify the physical achievements of schemes/projects in the
Institutions.
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14. Process of Internal Audit
• Notification
• Planning
• Opening Meeting
• Understanding the Policies and Procedure
• Execution of Internal Audit
• Closing Meeting
• In House Internal Audit Review
• Internal Audit Reporting
• Cover Page
• Table Of Contents
• Executive Summary
• Background of module and Audit
• Methodology
• Purpose and scope of audit
• Scope limitation
• Summary and Detail of audit observation
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15. Rahul Mithia

16. Period
Place
Audit Team
Supervision
Audit Scope : Transaction Vouching, Inventory System Controls, Internal Controls,
Intra Unit Transactions,
Excise Records,
TDS, FBT and Service Tax
Audit Observations
1. Audit Observation .
System Weakness
Suggested Improvements
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INTERNAL AUDIT REPORT OF ……………………………………..