Internal audit is an audit initiated by the internal management. It is a continuous process which checks the internal functioning of a company. The main aim of this type of audit is to discover and rectify any shortcomings in the internal proceedings of the company.
The earlier companies act did not make internal audit compulsory. However, the new Companies Act, 2013 makes it compulsory for the following entities to appoint an internal auditor:
- Listed companies.
- All unlisted companies fulfilling certain criteria.
- Private companies with the turnover of Rs. 200 Crore or more or loans of Rs. 100 Crore or more.
The internal auditor must be a Chartered Accountant or a Cost Accountant. But the companies act allows the board of directors to appoint any other such professional as auditor too. Moreover, an internal auditor may or may not be an employee. This means that an employee can also be an internal auditor and there is no restriction on it.
PocketLawyer is India's leading platform for auditing services and we make the process of Internal Audit easy and hassle-free for you. In addition to Internal Audit, PocketLawyer can also help you with Statutory Audit, Forensic Audit, Tax Audit, Secretarial Audit, Audit of Cooperative Society, Audit of Charitable Trust and more.
Steps in Internal Audit
It involves the following steps:
- Issuing audit notification to senior management.
- Assessing the need and availability of resources for conducting an audit.
- Conducting an opening meeting with the management and understanding company policies.
- Making an audit plan as well as audit checklist.
- Collecting financial and other data for audit.
- Selecting audit samples.
- Deciding the procedure for testing.
- Analyzing the data.
- Drafting a preliminary findings report.
- Conducting a closing meeting with management.
- Having an in-house internal audit review.
- Preparing an audit report.
Documents for Internal Audit
You need the following documents and details:
- Previous year audit reports (if any).
- Consent letter from the previous auditor (if any).
- MoA and AoA of the company.
- Details of all payments, that is, cash, bank, or credit.
- All details of sales and purchase such as purchase and sale orders.
- Various invoices, vouchers, and receipts.
- All details of income as well as expenditure.
- Details about assets and liabilities of the company.
Moreover, we will need various other details before the audit and also during it. We will provide you with a list of additional details as and when the need arises.
Fee for Internal Audit
The professional fee varies according to the type of company and their turnover.
Timeline for Internal Audit
Since it is a round the year activity, there is no fixed timeline.
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- Experienced and qualified professionals with 12 years of average experience.
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What is more?
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