710auditprocess.pptx

8/15/2019 710auditprocess.pptx

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ACCO.710

AUDIT PROCESS

JOSE CINTRON MBA

Planning

Fieldwork

Audit Follow Up

Audit Report


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Planning

Announcement

Letter

InitialMeetingPreliminarySurvey

InternalControlReviewAuditProgram

Fieldwork

Transaction

Testing

Advice In!ormalCommunications

AuditSummary

"orkingPapers

AuditReport

#iscussion

#ra!t

$%itCon!erence

Formal#ra!t

FinalReport

Client Response

ClientComments

Audit Follow&Up

Follow&up

Review

Follow&upReport

Audit AnnualReport to t'e

(oard

AU#ITPR*C$SS


3/30

Audit Planning The audit process is similar for most

engagements and normally consists of four

stages: Planning (sometimes called Survey orPreliminary Review), Fieldwork, udit Report,and Follow!up Review" #lient involvement iscritical at each stage of the audit process" s

in any special pro$ect, an audit results in acertain amount of time %eing diverted fromyour department&s usual routine" 'ne of thekey o%$ectives is to minimie this time and

avoid disrupting ongoing activities"


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Planning

uring the planning portion of the audit, theauditor noti*es the client of the audit,discusses the scope and o%$ectives of thee+amination in a formal meeting withorganiation management, gathersinformation on important processes, evaluatese+isting controls, and plans the remainingaudit steps"


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Announcement Letter: The client isinformed of the audit through anannouncement or engagement letter from thenternal udit irector"

Initial Meeting+ the client descri%es the unitor system to %e reviewed, the organiation,availa%le resources (personnel, facilities,

e-uipment, funds), and other relevantinformation"


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Audit Program

Preparation of the audit program concludesthe preliminary review phase" This programoutlines the *eldwork necessary to achievethe audit o%$ectives"


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Audit Step : To communicate the results of the audit to management W/PNo.

Et.

!".

A#t.

!".

A.

B.

C.

P"ep$"e $ D"$%t Repo"t:

1. Write report introduction, background & scope.

2. Consolidate conclusion summaries into a report, !ref

". Write memo for less significant items.

#. $ubmit report for re%ie & clear re%ie notes.

'. $et up the (it Conference and distribute )raft *eport

+. Conduct (it Conference to brief on the audit results and reuest a date for completion of the

correcti%e action plan. -ote: /f an0 material changes to the audit report are identified,

establish the date for re%ised report to be issued.

O&t$i' Co""e#ti(e A#tio' P)$'

. Anal03e the Correcti%e Action 4lan for adeuac0 and document.

5. Ad%ise agenc0 management of an0 apparent inadeuacies in the Correcti%e Action

4lan & resol%e.

P"ep$"e $ *i'$) Repo"t:

6. Add the re%ised Correcti%e Action 4lan to the )raft *eport to prepare the 7inal *eport.

18. $ubmit report for re%ie & clear re%ie notes.

11. )istribute the final report.

REPORTIN+: D$te Cop)eted Ap"i) -, 010 Tot$) !ou":

AUDIT REPORT.


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#iscussion #ra!t t the conclusion of *eldwork, the auditordrafts the report" udit&s goal is to complete theaudit and issue a draft audit report within ./

days after the completion of *eldwork"udit management reviews the audit workingpapers and the discussion draft %efore it ispresented to the client for comment" This

discussion draft is su%mitted to the client forreview %efore the e+it conference"


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$%it Con!erence

nternal udit meets with the unit&smanagement team to discuss the *ndings,recommendations, and te+t of the discussiondraft" t this meeting, the client comments onthe draft and the group works to reach anagreement on the audit *ndings"


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$%it Con!erence s an opportunity for the auditor, department management, process

owners, and other to review and validate audit outcomes"

T'e $%it Con!erence s'ould accomplis' t'e !ollowing+

1) Present o%servations and determine if the current operating conte+tmight a2ect past transactions"

3) #on*rm facts, o%servations, and conclusions, e"g", that the *ndings areaccurate"

.) 4alidate the cause leading to *ndings and present recommendations"

5) 6stimate the e2ect of the *ndings on operations or its risk management"

7) Solicit draft management comments on the audit *ndings and determineif alternative recommendations ade-uately eliminate the cause of *ndings"

8) e*ne the timeline for issuing the *nal audit report and implementing

recommendations"


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Audit Finding Audit Findings

Reconciliation Supervisory Review (Urgent)

uring our sample review of account reconciliations, it was notedthat many account reconciliations were not %eing reviewed %y thesupervisor in tem Processing and eposit 'perations"

Recommendation 9e recommend management review all accounts at least monthly"

Action Plan The Supervisor of the tem Processing epartment was advised ofthis re-uirement and has implemented changes as re-uested"

The eposit 'perations anager will sign and review all accountreconciliations" secondary signature %y the %alancing associateand;or supervisor will also %e implemented" This procedure is

currently in place"


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$%it Con!erenceC'ecklist

Procedure

Set the date, time, and location of the e+it meeting"

The agenda should include the following:

< ccomplishment of the audit o%$ectives (theirs andours)"

< iscussion of potential audit *ndings andrecommendations"

< iscussion of when management=s responsewill %e due"

< udit reporting process"

< Follow up process"

ocument results of the e+it meeting"


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Audit $%it Con!erence "PAudit Location ,Faculty

#ivision-&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

Audit#ate&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

Lead

Auditor&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

Audit teamMem.er&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&&

The main purpose of this meeting is to immediately present audit o%servations to the senior management in atimely manner at the end of the audit and in such a manner so as to ensure that they clearly understand theresults of the audit"

List *.servations+

The lead auditor should present o%servations, taking into account their

perceived signi*cance and identifying key non!conformance areas"

/ey 0on&con!ormances+

JOSE


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Formal #ra!t The auditor then prepares a formal draft,

taking into account any revisions resultingfrom the e+it conference and otherdiscussions" This report is issued to theaudited re-uesting a written response to

any audit *ndings and recommendations"

9hen the changes have %een reviewed

%y audit management and the client,the *nal report is issued"


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AU#IT R$P*RT

'ur principal product is the *nal report inwhich we present the audit *ndings and discussrecommendations for improvements" 'nce the*eldwork is completed, nternal udit will draft areport to include the result of the audit includingrecommendations for improvement" fter thedraft report is completed, it will %e forwarded todepartment management for review anddiscussion at a scheduled e+it conference"

R t I C t l S' t


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Report Issuance Control S'eet

Spelling and >rammar #heck Performed %y: ??????P@A'????????????????????

Buality ssurance Review (BR) Performed %y: ??????4AR??????????????????

pproval of *nal draft with responses irector of udits: ???C?????????????????

6ngagement anager: ???D'S6 ????????????????????

#heck all reports (original and all copies)" 4erify the following:

1" They contain all pages, in the appropriate order ??????????

3 ll copies are straight and legi%leE and ??????????

." The signature page has %een signed" ??????????

Report #istri.ution1+President

#lient anagement#hief @usiness 'cer

irector of nternal udit

#hancellor

4ice #hancellor for cademic 2airs

6+ecutive 4ice #hancellor for Gealth 2airs

6+ecutive 4ice #hancellor for @usiness 2airs

nstitution #ompliance 'cer

'thers (list)

Reading File (un%ound hard copy H stamped and placed in Reading File)In%ound hard copy provided to 'ce ssociate

J s determined %y type of audit and institution where engagement is conducted (cademic, edical, or System dministration)"

#ompliance 'cer should %e included in report distri%ution if engagement involves a compliance issue"

$ngagement #istri.ution Timeline+

Aast ay of Fieldwork (;;KKKK) ?????????????

Report ssuance ate ?????????????

ays %etween Aast ay of Fieldwork and Report ssuance" ?????????????


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Final Report fter audited management has %een given an

opportunity to respond to the Preliminary raft, theFinal raft Report is presented to the ccounta%ility'versight #ommittee for approval" Ipon approvalof the Final raft the Final Report is issued"

uditor distri%utes the *nal report the #hiefFinancial 'cer, the #hief ccountant, thePresident, the @oard of irectors, and other

appropriate mem%ers of senior management" FinalReports are considered pu%lic information and will%e availa%le to anyone"

n epen en ors


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n epen en u orsReport

To t'e (oard o! #irectors and S'are'olders

Miami3Fort Lauderdale Area

9e have audited the accompanying %alance sheets of C*MM$RCIAL L$0#I04 PART0$RS5 LLC as ofecem%er .1, 3//L, 3//M and 3//N, and the related statements of income, retained earnings, and cashOows for the years then ended" These *nancial statements are the responsi%ility of the #ompany&s

management" 'ur responsi%ility is to e+press an opinion on these *nancial statements %ased on our audits"

9e conducted our audits in accordance with auditing standards generally accepted in the Inited States ofmerica" Those standards re-uire that we plan and perform the audit to o%tain reasona%le assurance a%outwhether the *nancial statements are free of material misstatement" n audit includes e+amining, on test%asis, evidence supporting the amounts and disclosures in the *nancial statements" n audit also includesassessing the accounting principles used and signi*cant estimates made %y management, as well asevaluating the overall *nancial statement presentation" 9e %elieve that our audits provide a reasona%le%asis for our opinion"

n our opinion, the *nancial statements referred to a%ove present fairly, in all material respects, the *nancialposition of C*MM$RCIAL L$0#I04 PART0$RS5 LLC as of ecem%er .1, 3//L, 3//M and 3//N, and theresults of its operations and its cash Oows for the years then ended in conformity with accounting principalsgenerally accepted in the Inited States of merica"

Dose #intron, @

pril 5,3/1/


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Client Response The client has the opportunity to respond to the

audit *ndings prior to issuance of the *nal reportwhich can %e included or attached to our *nal report"

n the response, the client should e+plain how report

*ndings will %e resolved and include animplementation timeta%le" n some cases, managersmay choose to respond with a decision not toimplement an audit recommendation and to acceptthe

risks associated with an audit *nding"


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$%ample

Client Response ,6- ! Treasury %alances are reconciledmonthly"

Treasury activity is reconciled daily" i2erences are isolated to theperiod of 'cto%er 1, 3//3 and prior, and have %een controlled sincethat date"

d$usting entries are made with proper documentation and review" oving the function to a private sector *nancial institution has %een

discussed and poses two ma$or o%stacles" The *rst o%stacle is the

negotia%ility of a private sector check versus a I"S" Treasury check"

This would o%viously cause pro%lems for account holders in remote

locations as I"S" Treasury checks are readily negotiated at localmerchants" private sector *nancial institutions checks would not %eas negotia%le" The second o%stacle is the *nancial resourcesre-uired to o%tain the services of a private sector institution"


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Client Comments

Finally, as part of nternal udit&s self!evaluation program, we ask clients tocomment on nternal udit&s performance"

This feed%ack has proven to %e very %ene*cialto us, and we have made changes in ourprocedures as a result of clients& suggestions"


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#lient #omment 6+ample

would highly recommend Schmidt Q ssociates to anycredit union currently searching for a -uality auditing *rm" have %een very impressed with the scope of the auditsand the level of detail employed %y representatives of the*rm during their monthly and -uarter contacts"Furthermore, always receive prompt attention whenever have -uestions regarding regulatory or compliance issues"

4reg /idwell

Mem.ers First Credit UnionColum.us5 *'io665777 Mem.ers5 89: Million in Assets


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udit Follow up

epending on the nature o! the audit orthe audit *ndings, the Follow!Ip procedure

may formal or informal"


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udit

ppro+imately one year of the *nal report,nternal udit will perform a follow!up reviewto verify the resolution of the report *ndings"

F'AA'9 IP R6469

F'AA'9 IP R6P'RT

IT CCIA R6P'RT T' TG6 @'R


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Followed up review

The actions taken to resolve the audit report*ndings may %e tested to ensure that thedesired results were achieved"


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Followed up Report

To resolve the original report *ndings"

Inresolved *ndings will include a %riefdescription of the *nding, the original auditrecommendation, the client response, thecurrent condition, and the continued e+posureto the %oard of company"


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udit nnual Report

emorandum to the senior manager that noti*es them that auditactivities are underway and descri%es the follow!up process"

T'is memo s'ould include+

timeframes for the pro$ect,

a copy of the outstanding *ndings relating to areas reporting"

a re-uest that they distri%ute the *ndings to these areas and askthe managers to provide nternal udit with the informationre-uested,

a statement that these comments were previously distri%uted aspart of an audit report or close!out letter

noti*cation that the results will %e reported to @oard of Trustees"

The nnounce emo report Findings ccess data%ase providessample wording for the noti*cation memo"

The noti*cation memo should %e sent


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Reference

udit Followed up" Retrieved on pril 3/1/"@y 6lectronic 4ersion"http:;;www"auditnet"org;process"htmi+/kG

S9gL

(3//5) nternal udit Polices and Procedures#hapter 15" 6lectronic 4ersion"http:;;www"unc"edu;depts;intaudit;uditan;udit3/Follow3/Ip"html

Documents

710auditprocess.pptx