Clause 4(vii) of CARO, 2003 requires the auditor to comment whether the company has an internal audit system commensurate with the size and nature of the business. The clause is required to be commented upon by the auditor in case of companies having a paid-up capital and reserves exceeding rupees 50 lakhs as at the […]
Requirements of CARO, 2003 Read Post »
Having decided in principle that the external auditor intends to rely upon the work of the internal auditor, it is desirable that the external auditor ascertains the internal auditor’s tentative plan for the year and discusses it with him at as early a stage as possible to determine areas where he considers that he could
The external auditor’s general evaluation of the internal audit function will assist him in determining the extent to which he can place reliance upon the work of the internal auditor. The external auditor should document his evaluation and conclusions in this respect. The important aspects to be considered in this context are : Organisational Status
General Evaluation of Internal Audit Function Read Post »
The function of an internal auditor being an integral part of the system of internal control, it is obligatory for a statutory auditor to examine the scope and effectiveness of the work carried out by the internal auditor. As a matter of information, the students may note that under the Companies (Auditors Report) Order, 2003
RELATIONSHIP BETWEEN THE STATUTORY AND THE INTERNAL AUDITORS Read Post »
It is a review of the operations and records, sometimes continuously undertaken, within a business, by specially assigned staff. But internal audit must not be confused with internal check. Internal check consists of a set of rules or procedures that are part of the accounting system, introduced so as to ensure that accounts of a
(1) No single person should have an independent control over any important aspect of the business. All dealings and acts of every employee should, in the ordinary course, come under the review of another. (2) The duties of members of the staff should be changed from time to time without any previous notice so that
General Considerations in Framing a System of Internal Check Read Post »
Internal check has been defined by the Institute of Chartered Accountants of England and Wales as the “checks on day-to-day transactions which operate continuously as part of the routine system whereby the work of one person is proved independently or is complementary to the work of another, the object being the prevention or early detection
Changes in hardware and software, have changed the conceptual approach to auditing. An early approach consisted of essentially ignoring the computer, treating it as a black box, and auditing around it. The increasing sophistication of computers, however, has since led to computers being used in two ways; (1) as a tool of the auditor aiding
Approaches to Audit in CIS Environment Read Post »
Review of General CIS Controls – The general CIS controls which the auditor may wish to test are described above. The auditor should consider how these general CIS controls affect the CIS applications significant to the audit. General CIS controls that relate to some or all applications are typically inter-dependent controls in their operation is
Review of Internal Controls Read Post »
The internal controls over computer processing, which help to achieve the overall objectives of internal control, include both manual procedures and procedures designed into computer programs. Such manual and computer control procedures comprise the overall controls affecting the CIS environment (general CIS controls) and the specific controls over the accounting applications (CIS application controls). General
Internal Controls in an CIS Environment Read Post »
In an CIS environment, an entity will establish an organizational structure and procedures to manage the CIS activities. Characteristics of an CIS organizational structure include: Concentration of functions and knowledge—although most systems employing CIS methods will include certain manual operations, generally the number of persons involved in the processing of financial information is significantly reduced.
Organizational Structure in an CIS Environment Read Post »
The principal object of an audit is to ensure that the accounts on which the auditor is reporting to show a true and fair view of the state of affairs at a given date and of the results for the period ended on that date. The essential features of an audit, appropriate for medium or
INTERNAL CONTROL AND THE COMPUTERISED INFORMATION SYSTEM (CIS) ENVIRONMENT Read Post »
