Economic activity has reached an unquestionable importance, which is why we often refer to it as the driving force of the economy of any country, hence the importance of our profession of accountants and that is why there is a need to improve methods of teaching, with the aim of achieving increasingly prepared and capable professionals.
Introduction
The Cuban educational system has been developing a series of changes since its inception with a view to the continuous improvement of study plans and programs.
All business activity is closely linked to the audit, which is in charge of controlling the veracity of the information issued by an entity. The audit has traditionally been oriented towards financial aspects, concentrating on the correction of accounting records and on the adequacy of the activities specified in said records. However, it has been changing over the years, now it responds to a demand for more useful information that cannot be found only in the financial statements.
Due to the importance that is given to the discipline of Auditing in the training of future professionals, in which the knowledge of other subjects of the career is integrated, we have given ourselves the task of developing a material for the enrichment of said subject that serves as bibliographic support for teaching, assuming as a problem the need to update and group the bibliography available.
For this reason, the present work aims to prepare an integrating material for the subject "Audit"; which leads us to the following hypothesis: if there is a bibliographic compendium of Auditing, then students will have a better chance of accessing an updated bibliography that allows them to improve their knowledge.
1. Evolution of the Audit
The history of the Audit is as old as the history of humanity itself. The date on which the Public Accounting Office was born cannot be precisely specified, the beginning of this profession is located in ancient Egypt where the use of materials used in the manufacture of fabrics was controlled.
Some historians point out that accounting records originated around 4000 BC, when ancient Near Eastern civilizations began to establish governments and organized businesses; concerned with keeping accounts of the inflows and outflows of money and the collection of taxes, establishing controls to reduce errors and fraud by officials.
Formerly, the great lords were accompanied by men of confidence when they dealt with important commercial operations, loans, financing, etc. The auditor owes its origin to the way in which the settlements of the accounts were received (heard) by their function of hearing, the name of Auditors was born.
At first this referred to the functions of public administration although there are indications that in a distant time it was used in the accountability of officials and agents, from which the auditor, the person who heard them, determined what form was going to proceed in the given situation.
Also known as a professional reviewer, the first news of his work come from Italy in the Middle Ages, where by the year 1164 AD there were different people who carried out this activity at the service of the Chair of Milan.
The first accounting treaty of 1494 offered the theoretical basis for the development of the verification of the accounts with a view to the accounting books. It was in the year 1589 from all this initial theoretical base, in Venice, where the first Association of Professional Reviews was officially created.
In the development of Public Accounting in the world, mainly in England, Germany and France, the economic and financial conventions that follow mankind in the 18th century as a result of the Industrial Revolution and after it that lasted until the 20th century had a great impact. XIX, situations that demanded of men specialized in economic, financial and accounting problems.
The process of development of Public Accounting in the world was slow in the early stages, and it can be said that it reaches maturity in the 20th century, specifically from the year 1916 when the preparation of a minimum program of procedures to follow in the audits thus establishing the first rules that governed the public accounting.
1.1 Development of the Audit in Cuba
Public Accounting At the beginning of the 19th century it was unknown to us, due to our condition as a colony of Spain.
In 1902 Cuba was subject to the political decisions of the imperialist government of the United States of America (North America); being evident the need to control from the technical point of view their interests by means of the audit, in our country there was not a level of technical accounting education to match their needs, junior staff with technical knowledge to perform auxiliary tasks leading to creating a university-level school.
The Cuban Public Accountant demonstrated his ability by quickly assimilating the most modern Accounting and Auditing techniques.
When the Revolution triumphed, a reliable auditing system was created, at the service of society's interests, making profound transformations in the country's socio-economic structure and in the state organization, favoring the disappearance of the Court of Accounts in 1960, transferring its functions to the Ministry of Finance promulgating in 1961, Law 943 of Verification of State Expenses. At that time, the teaching of accounting and auditing decreased in the country's universities, as well as in medium-level technology centers.
At the end of 1965, said Ministry was dissolved, passing to the National Bank of Cuba the function of directly supervising and verifying the economic management of state companies and their units or other state dependencies.
In 1967 the verification office was definitively dissolved, the external audit disappearing from the country and the internal audit remaining in very few organizations.
In 1976, by means of Law 1323 on the Organization of the State Administration, the State Finance Committee was created and fulfilled the leading role in matters of state auditing.
On November 25, 1994, the creation of the National Audit Office (ONA) was approved, through agreement 2819 of the Executive Committee of the Minister's Council
On June 8, 1995, the Council of State issued Decree Law 159 that regulates the audit activity in Cuba.
On April 25, 2001 in Decree Law 219; The Ministry of Audit and Control (MAC) is created as an organism of the Central State Administration, in charge of directing, executing and controlling the application of the state and government policy in matters of government audit, oversight and government control; to regulate, organize, direct and methodologically control the National Audit System.
2. Concept of Audit
The word audit comes from the Latin AUDITORIUS, and from this comes auditor, who has the virtue of hearing, and the dictionary considers him as a Collegiate Auditor, but it is assumed that this virtue of hearing and reviewing accounts is aimed at evaluating the economy, the efficiency and effectiveness in the use of resources, as well as their control.
There are different basic concepts in common use such as:
Control
"Activity aimed at verifying compliance with plans, programs, policies, rules and procedures, detecting deviations and identifying possible corrective actions."
Management
"Action and effect of managing the human, technological and financial resources of an organization, in order to meet its objectives and goals."
Internal control
"It includes the series of actions designed and executed by the active administration to provide reasonable security around the achievement of the organization's objectives, fundamentally in the following categories:
• Protect and conserve public heritage against any loss, waste, misuse, irregularity or illegal act
• Reliability and timeliness of information
• Efficiency and effectiveness of operations
• Comply with the legal and technical order. "
Management control
"Management activity that is carried out within organizations aimed at ensuring compliance with its mission and objectives; of your plans, programs and goals; of the regulatory provisions that regulate its performance; and that the management is effective and adjusted to quality parameters ”.
Audit
"Objective, systematic, professional and subsequent examination of financial, administrative and management operations, carried out with the purpose of verifying and evaluating them, in order to make the pertinent observations and recommendations."
Although there are various concepts of Auditing, in essence they coincide in the fundamental aspects; our country defines it in Decree Law 159 of the Audit of 1995 as: “A systematic process that consists of obtaining and objectively evaluating evidence on the claims related to acts or events of an administrative economic nature, in order to determine the degree of correspondence between these statements and the established criteria, and then communicate the results to the interested parties. It is practiced by qualified and independent professionals, in accordance with technical standards and procedures. ”
Resolution 100 of November 11, 2004 of the MAC defines the following as an audit concept: “A systematic process, practiced by the auditors in accordance with established technical standards and procedures, consisting of obtaining and objectively evaluating the evidence on the statements contained in legal acts or events of a technical, economic, administrative and other nature, in order to determine the degree of correspondence between these statements, the current legal provisions and the established criteria. ”
3. Classification
According to the auditor's affiliation, this is classified into:
External audit:
It is the examination or verification of the transactions, accounts, information, or financial statements, corresponding to a period, evaluating the conformity or compliance with the legal or internal provisions in force in the Internal Accounting Control System. It is practiced by empowered professionals, who are not employees of the organization whose claims or statements are audited.
In addition, it examines and evaluates the planning, organization, direction and internal administrative control, the economy and efficiency with which the human, material and financial resources have been used, as well as the result of the planned operations in order to determine if the proposed goals.
• Prosecutor:
The external audit that is carried out by the Ministry of Finance and Prices, its dependencies or other entities expressly empowered by it, is called fiscal to determine if the taxes to FISCO are carried out in the amount due and within the deadlines and established forms (corresponds to the National Tax Administration Office-ONAT to exercise these functions)
• Independent:
An independent audit is the external audit carried out by a civil society of services or other organizations to private, mixed entities, other forms of economic associations, the state and cooperative sector, organizations and associations, individuals and legal entities, that contract the service of the audit.
Internal audit:
Internal audit is the control that is developed as an instrument of the administration itself and consists of an independent assessment of its activities; which includes the examination of the internal control systems, of the accounting and financial operations and of the application of the corresponding administrative and legal provisions; in order to improve the control and degree of economy, efficiency and effectiveness in the use of resources; prevent the improper use of these and contribute to the strengthening of discipline in general.
Internal audit is practiced as an instrument of the administration itself; designed to add value and improve the operations of an organization, as well as contribute to the fulfillment of its objectives and goals; providing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control and direction processes.
The internal auditor can become the eyes and ears of the entity's management, taking into account, not only its qualification, professionalism, and its ethical-moral conduct; but because it is an officer who over time manages to obtain a high command of each and every one of the functions of the entity where he works, which allows him to become an adviser to the executives.
According to the fundamental objectives pursued, audits can be:
- Management or Operational
It consists of the examination and evaluation of the management of an entity, program or project, to establish the degree of economy, efficiency and effectiveness, of its performance in the planning, control and use of resources and in the conservation and preservation of the environment., as well as checking the observance of the legal provisions that are applicable to it.
- Financial or Financial Statements
It consists of the examination and evaluation of the auditee's documents, operations, records and financial statements, to determine if they reasonably reflect their financial situation and the results of their operations, as well as compliance with economic and financial provisions, with the aim of Legally rule on the financial statements or improve procedures related to economic and financial management and internal control.
- Special
It consists of the verification of specific issues and topics of a part or of all financial, administrative or special situation operations that may include various ranges of work and management elements.
This audit may refer to the following financial matters:
• Segments of financial statements, financial information (for example, statements of income and expenses, statements of cash received and spent, of fixed assets); budgetary modifications; and variations between planned and actual financial results.
• Internal controls over compliance with laws and regulations, such as those governing renditions and reporting of donations and contracts (including proposals, amounts billed, settlements, etc.).
• Internal controls over financial information and safeguarding assets, including security measures and control over computerized systems.
• Compliance with laws and regulations and fraud claims.
- Fiscal
It consists of the examination of the operations related to the taxes to the Treasury, to which the state entity or natural or legal person of the non-state sector is obliged, with the objective of determining if they are carried out in the corresponding amount, within the terms and established forms, and proceed according to law.
- Follow-up or recurring
It consists of the act of evaluating compliance with the deficiencies detected in previous audits, by executing a new audit of equal or greater complexity, where the control environment is evaluated
- Compliance
It consists of the examination and evaluation carried out with the aim of verifying compliance with the laws, decree-laws, decrees and other legal provisions inherent in the activity subject to review.
- Information technology
It consists of examining the policies, procedures, and use of computing resources; reliability and validity of the information, effectiveness of the controls in the areas, network systems and others related to computer activity, related to economic and financial management.
4. The auditor's ethics
According to the dictionary of the Spanish language the word ethics:
Etymology: from Latin ethicus, and from Greek ethikós (moral, relative to character)
General ethics comprises the norms by which an individual decides his conduct. In general, the demands imposed by society, the moral duties and the effects of the actions themselves are considered.
The ethics of the auditor is nothing more than a special case of general ethics, in which, as a professional, the person receives specific guidelines of conduct in matters that reflect his responsibility towards society, towards the auditors, towards his superiors, towards other members of the profession and towards himself.
The auditor's ethics are based on the generally accepted fundamental principles, which are the following:
* Integrity
You must keep your moral integrity intact in your professional practice. Probity, honesty, dignity and sincerity are expected of him in all circumstances.
* Objectivity
Represents impartiality, disinterest and acting without prejudice in all matters that correspond to the field of his professional performance. It must be fair, and it must not allow a prejudice or lack of impartiality, or a conflict of interest, or the influence of others to nullify its integrity.
* Professional competence
You must execute your jobs with due care, competence, diligence and have a continuing obligation to maintain your knowledge and skills internationally to ensure professional work based on up-to-date development in practices, legal and technical.
* Confidentiality
Respect the confidential nature of the information obtained during the course of their professional work and must not disclose for any reason facts, data or circumstances known to them during the course of providing professional services, unless it is a legal requirement or who should know them.
* Professionalism
Act in a manner that is consistent with the ethics of the profession and refrain from engaging in any conduct that could adversely affect your reputation. For this, you must always keep in mind that sincerity, good faith and loyalty are the basic conditions for the full and honest exercise of the profession and for friendly coexistence, as well as responsibility with the Ministry, the auditees, other specialists., hierarchical superiors and any other natural or legal person.
* Independence
Have and demonstrate absolute independence of mind and judgment with respect to any interest that could be considered incompatible with the principles of integrity and objectivity, keeping only obedience to the law, for which independence of judgment is essential and concomitant.
* Compliance with regulatory provisions
Carry out professional work complying with the generally accepted regulations and principles promulgated by the organs, state agencies and organizations empowered to do so. In addition, you must have the obligation to execute with due care the established instructions.
* Vocational training
As long as the professional remains active, he must consider himself permanently obliged to update the knowledge necessary for his professional performance.
It must contribute to the development, improvement and dignity of the profession through its own improvement and in the training of young professionals.
The aforementioned principles are extended to the other specialists who participate in the execution of audits, such as legal advisers, computer scientists, engineers or other professionals who, due to their specialties, are linked to a specific audit.
Conduct
Behaviors that at least the auditor must observe in order to maintain an attitude consistent with his responsibility and the ethical principles mentioned above.
* Maintain an attitude consistent with the guidelines of the revolution and be an uncompromising defender of the interests of the Socialist State.
* Comply and be the guardian of compliance with socialist legality and the established norms and procedures.
* Respect and apply the Auditing Standards and other provisions related to the activity.
* To constitute an example of labor discipline and seriousness. Always keep in mind that for the work it performs, it will be permanently observed by the leaders, officials and other workers of the audited entity, who identify the auditor as the personification of correctness and honesty.
* Keep absolute reserve of the knowledge that, in the course of the audit, it acquires on the operations, the leaders and the staff in general of the entity, and report it, only to those who must know it, in accordance with the provisions of this Manual..
* Verify the information you receive confidentially and observe discretion regarding the identification of the informant.
* Maintain a relationship of mutual respect and understanding with the auditee.
* Do not incur compromising relationships, or request or accept gifts that could affect your independence of judgment or put it into question.
* Do not use the advantages of your position for your own benefit or that of other people.
* Immediately inform their superiors of any offer that detracts from their prestige and professional ethics.
* Maintain adequate moral and social conduct, both during and outside the working day, so that their actions do not affect personal prestige, that of the Ministry, that of the work group to which they belong or that of their profession.
* Possess a recognized integrity, which implies rectitude, sincerity and honesty, which is essential for the performance of their work.
* Avoid making comments or judgments that undermine the personal and technical prestige of the other auditors, regardless of their work location.
* Be clear and precise in your report, which must be prepared in a constructive spirit and on the basis of fully verified facts and duly supported by the working papers, which constitute your source of evidence, and you must refrain from making points that you cannot show.
* Formulate criticism only when the solution of the problems is feasible at the level of the audited entity. Otherwise it will limit itself to raising the situation or detected fact, indicating the steps taken by the entity, aimed at its solution.
* Be imbued with a great interest in their cultural and technical overcoming, as a means of preparation to face the variable and complex tasks assigned to them.
* Be careful with your personal presence, cleanliness, neatness and avoid rude or vulgar expressions.
In addition, the auditor in the performance of his work must follow a set of standards of conduct related specifically to his activity that facilitate their relationships with the auditee, such as:
* Do not impose a work schedule other than that of the audited unit and avoid hindering their work routine and, if necessary, coordinate with the audited one.
* Do not talk loud.
* Avoid unnecessary questions and sterile discussions.
* Request information in a timely manner.
* Don't be unnecessarily absent from the workplace.
* Do not comment on the work, nor give an opinion on the capacity of the entity's leaders and workers who can be heard by people outside the group of auditors.
* Listen to the suggestions of the auditees and reserve the opinion until the matter has been well examined.
5. Generally Accepted Auditing Standards in Cuba
These standards refer to the professional capacity of the staff, the independence of the audit organization and its staff, the due professional care with which the audit must be carried out and the respective reports prepared, and the application of quality controls.
The general rules apply to all audit organizations that perform audits on entities of the state sector, cooperative, organizations and associations and any natural or legal person that receives resources from the State or benefits from subsidies, subsidies, advantages or exemptions, or that render services or carry out a preferential activity of the State.
Standards are the general principles that guide and guide audit work. These standards establish the conceptual framework within which the auditor decides the actions to be taken in the preparation, when carrying out the examination and the presentation of his report. These serve to measure the quality of the audit objectives and the actions taken to achieve them.
The auditing standards in Cuba are divided into three main groups:
Attribute rules
It refers to a series of attributes that internal auditors must possess in order to carry out their functions and report adequately and effectively to the authority empowered within the organizations to which they belong. Among them are:
1. Independence and objectivity.
The activity of Internal Audit must be independent and respond to the highest management of the Organization, it must be free from interference in determining the scope of said audit, in carrying out its work, in evaluating and communicating its results, they must have an impartial attitude and avoid conflicts of interest.
Internal auditors should refrain from evaluating specific operations for which they have previously been responsible. There is an impediment to objectivity if an internal auditor provides Audit and Consulting services for an activity for which he has had responsibility in the last three years of the fiscal year.
2. Professional ability.
Internal auditors must gather the knowledge, skills, and other competencies necessary to fulfill their responsibilities, in addition to staying up-to-date on information technologies, key risks and controls, and available techniques based on their use, that enable them to perform assigned work. The continuous professional training of these auditors is necessary, which contributes to the constant improvement of their knowledge and skills.
3. Due professional care.
Due professional care should be exercised by internal auditors when considering:
• The scope necessary to achieve the objectives of the work to be carried out.
• The complexity or level of relative importance of matters, operations, activities and resources, to which audit procedures are applied.
• The probability of the occurrence of errors, irregularities or fraud.
• The use of computer-aided auditing tools or other data analysis techniques.
• The adequacy and effectiveness of the risk management, control and management processes.
Due professional care must be exercised by the internal auditors during a Consulting service, taking into account the following:
• The needs and expectations of the organization, including the nature, opportunity and communication of the results of the work.
• The relative complexity and length of the task necessary to meet the objectives of the job.
4. Quality assurance.
The Audit Unit at any level must develop and maintain a quality assurance and improvement program that encompasses all aspects of the Internal Audit activity and continually reviews its effectiveness.
This program includes, at least, the establishment of policies and procedures regarding:
* General quality controls
* Controls during the development of the Internal Audit
* Controls after the completion of the Internal Audit.
The program as a whole should be designed to help the internal audit activity add value and improve the organization's operations, ensuring that these standards are met.
PERFORMANCE STANDARDS.
They refer to the nature of the Internal Audit activities and provide quality criteria against which the practice of these services can be measured.
They constitute the frame of reference for the execution of the actions related to the Audit and Consulting services. The results obtained when these standards are applied are the main source of the content of the corresponding report.
1. Planning.
* Planning considerations.
When planning Internal Audit, the internal auditor should define the objectives, scope, and methodology aimed at achieving those achievements.
Internal auditors when planning work should consider:
• The objectives of the activity being reviewed and the means by which it controls its performance.
• The significant risks of the activity, its objectives, resources and operations, and the means by which the potential impact of the risk is maintained at an acceptable level.
• The adequacy and effectiveness of the risk management and Internal Control systems for the activity.
• The opportunities to introduce significant improvements in the risk management and Internal Control systems of the activity.
* Work objectives.
Internal auditors must establish specific objectives for each engagement and these should reflect preliminary risk assessment, internal control and management, to the extent that it is deemed necessary by the internal auditor.
* Scope of work.
The scope of work must take into account relevant systems, records, personnel, and physical properties, including those under third-party control.
* Allocation of resources for work.
Internal auditors must determine adequate resources to achieve the objectives of the engagement. Staff must be based on an assessment of the nature and complexity of each task, time constraints, and available resources.
* Work programs.
They must establish the procedures to identify, analyze, evaluate and record information during the execution of the Internal Audit. The work program must be approved prior to its implementation and any adjustment must be duly authorized by the empowered person, they may vary in form and content depending on the nature of the work.
* Internal Audit in an environment of automated information systems.
When planning Internal Audit you should gain an understanding of the importance and complexity of the activities of the established automated information system and the availability of data for your use.
2. Supervision and review.
It is a technical process that consists of directing and controlling the Internal Audit from its beginning to the presentation of the report to the competent level; determines if the planned objectives are being achieved and direct efforts towards their fulfillment, The review of the work of the internal auditors should be carried out periodically depending on the progress in the different phases of the audit.
The work of the internal auditors grouped in an internal audit unit must be reviewed by the group leader and supervised by the leader or official empowered to do so; and the one carried out by the supervisors must be reflected in a written document as proof of this action, reflecting the technical insufficiencies or failures detected and the recommendations that derive from them.
3. Laws and other legal provisions.
The internal auditor has the obligation to know the legal provisions applicable in the organization to which he belongs to design the work program, in such a way that it allows him to obtain reasonable assurance about compliance with the legal provisions and contractual obligations, which are significant for the achievement of the objectives of the Internal Audit.
* Limitations of the Internal Audit.
As long as these standards are applied when carrying out an Internal Audit, we are reasonably sure that its objectives have been achieved, since it provides working conditions and procedures, however, they do not guarantee the discovery of acts of non-compliance.
The subsequent discovery of acts of noncompliance committed during the period of the Internal Audit does not mean that the performance of the Internal Auditors has been inadequate, as long as it has been carried out in accordance with these standards.
4. Quality of the evidence.
The results, conclusions and recommendations included in the audit report must be based on evidence that is sufficient, competent and relevant.
The evidence can be classified into:
• Physical evidence.
• Documentary evidence.
• Testimonial evidence
• Analytical evidence
• Computer evidence
The basic requirements of the evidence are related to:
- Sufficient: when by the results of the application of one or more tests, the internal auditor can acquire reasonable certainty that the disclosed facts are satisfactorily verified.
- Competent: refers to the fact that the evidence must be valid and reliable. The internal auditor should carefully consider whether there are reasons to doubt the validity and completeness of the evidence.
- Relevant: refers to the relationship between the evidence and its use. The information used to demonstrate or refute a fact is relevant if it is clearly and logically related to that fact. It is also closely related to the objectives established in the Internal Audit and the direct and clear link that must exist between them and the analyzed evidence.
* Findings of the Internal Audit.
When supporting the evidences detected in relation to the intended objectives and the established norms, the findings must contain elements such as the current condition, the applicable criteria, the effect and the cause.
* Errors, irregularities or fraud.
Errors refer to unintentional actions or omissions made by responsible officials, which do not significantly affect the reasonableness of the economic, financial or other information issued by the organization.
Irregularities or frauds refer to intentional acts or omissions on the part of one or more individuals among the administration, those in charge of the command, employees or third parties, which involves the use of deception to obtain an unfair or illegal advantage.
* Work papers.
They are the only link between planning work, execution, and the report that is produced. Therefore, they must contain the necessary evidence to support the findings, conclusions and recommendations presented in the report.
The working papers must be safeguarded and kept during the time established by the Law, and each agency must guarantee their compliance.
If in the course of said term a new Internal Audit has not been executed, the working papers must be kept until it is executed, at which time it will be analyzed the advisability of keeping or not all or a part of them.
5. Risk management.
* Audit Services.
The quantity and quality of the risk exposures related to the administration, custody and protection of the available resources, operations and information systems of the organization must be assessed by the internal auditors, taking into account the following objectives:
• Reliability and integrity of financial and operational information.
• Effectiveness and efficiency of operations.
• Control of resources of all kinds available to the entity.
• Compliance with laws, regulations, policies and contracts.
* Consulting services.
Internal auditors when performing consulting engagements should consider the risk consistent with the engagement's objectives and be alert to the existence of other significant risks.
They must incorporate the knowledge of risk obtained in the processes of identification, analysis and evaluation of significant risk exposures in the organization.
* Risks inherent in the environment of automated information systems.
The risks can come from:
• Deficiencies in general activities of the automated information system.
• Development and maintenance of programs.
• Technological support of systems software.
• Operations.
• Physical security.
• Control over access to programs.
The nature of the risks and the characteristics of the Internal Control integrated into the automated information system include the following:
• Lack of traces of transactions.
• Lack of segregation of duties.
6. Internal Control.
The Internal Audit activity must be present in the process of continuous improvement of the Internal Control System that is carried out in the organization for the evaluation and qualification of the efficiency and effectiveness of the implemented system.
The processes associated with the evaluation of the reliability, reasonableness and functionality of the implemented Internal Control System must be based on the knowledge and specific procedures associated with the main components of Internal Control; namely:
• Control environment.
• Risks evaluation.
• Control activities.
• Information and communication.
• Supervision or monitoring.
7. Support for the Strategic Management.
The Internal Audit activity must participate in monitoring the proper functioning of the Internal Control System, as well as in proposing the necessary recommendations to improve management processes.
The auditors must participate, along with the other members, in the processes related to the evaluation of the design, implementation and effectiveness of the objectives, programs and activities of the organization, related to ethics and organizational values.
INFORMATION RULES.
They establish the criteria for the presentation of the reports prepared as a result of the Audit and Consulting services executed at any level.
v Form and content.
Internal auditors must prepare written reports to communicate the results of each Audit and Consulting service performed at any level.
The report should include:
• The objectives of the Internal Audit, its scope and methodology.
• Clearly state significant findings and conclusions.
• Declare that the Internal Audit was carried out in accordance with these standards.
Written reports are necessary to:
• Communicate the results of the Internal Audit to the corresponding officers and officials of the management levels empowered to do so;
• Reduce the risk that the results will be misinterpreted; and
• Facilitate follow-up to determine if appropriate corrective measures have been taken.
General format of the Internal Audit reports.
* Heading
The report must contain, in its format, at least the following data:
• Name of the organization to which it belongs
• Work order No.
• Entity.
• Subordination
• Type of Audit.
• Start date.
• Finish date.
• Responsable.
After the above information, the document is titled with the name of "REPORT".
* Introduction.
The following is reported in this section of the report:
• A brief characterization of the audited organization.
• The objectives of the Internal Audit, as well as the causes of non-compliance of any of them.
• The scope should express the depth and coverage of the work.
• The statement in the report that the Internal Audit was carried out in accordance with these standards, if not, it must be stated that the standards were not complied with and the consequences it brought.
• Limitations on the scope of the audit.
• The methodology must clearly explain the work programs designed and the techniques used.
• The report is addressed to the highest level of management to which the internal auditor is subordinate.
* Conclusions
The following general criteria should be taken into account in this section:
• Logical deductions based on the findings of the internal auditors.
• They should not constitute a repetition of what is stated in the Results section of the report itself, but rather a synthesis of the fundamental facts and situations found.
• The fundamental causes that originated the error, irregularity or fraud raised must be reflected, in general, as well as the direct and indirect consequences that may derive from these findings.
• The rating given according to the results of the performed Audit service is exposed.
* Results.
The following general criteria must be taken into account:
• The group leader determines the most significant findings to be included in the report; from the sufficient, competent and relevant evidence gathered to meet the objectives.
• Whenever possible, internal auditors should include necessary background information on the most significant findings.
• Comments must be accurate and organized; reflecting, whenever possible, the legal provisions that are not complied with.
• Signs related to events that are not duly verified and included in the working papers are not included.
• All significant cases of non-compliance with laws, other provisions and internal control must be reported.
• Audit findings should be quantified in all possible cases.
• Tables that, due to their size, allow them to be included in the content of the report. In cases where these are extensive, they must be presented as annexes to the report.
• In the case of the Audit services, the result of the meeting of conclusions with the leaders and officials at the different levels at which they were held must be recorded.
• The following issues, among others, may also be included:
- The important achievements of the administration.
- When certain information cannot be disclosed, the nature of the omitted information and the reasons that justify its omission must be expressed.
- When appropriate, the results of each topic are compared with those obtained in the previous Audit service.
* Recommendations.
• The internal auditors must include their recommendations in the report, based on the errors, irregularities or fraud detected during the Internal Audit.
• Recommendations are more constructive when they are aimed at attacking the causes of the observed problems.
It is necessary that the recommended measures are feasible and that their cost corresponds to the expected benefits.
* Farewell.
• The term must be stated to present the discrepancies with the content of the report, if they exist.
• Likewise, you must express the term to send the Measurement Plan, as well as report to the higher level the situation presented by the deficiencies found during the execution of the service.
• When appropriate, a note of thanks should be presented to the leaders, officials and other workers for the collaboration provided in carrying out the Internal Audit.
• The names and surnames of the Internal Auditor, group chief, position, signature and number of the Registry of Auditors of the Republic of Cuba must be recorded. You should also record your half signature on each page of the report.
* Annexes.
• The annexes that accompany the report are listed.
• In cases where breaches of the law, other regulations, principles and established norms or any other actions or omissions that affect the good performance of the organization have been determined, the internal auditor must present a Statement of Administrative Responsibility.
Report analysis minutes.
During the execution, analysis meetings should be held with the heads of the verified areas or parties related to the events, to discuss the verified findings. As a record of the matters discussed at each meeting, a record must be drawn up, listing the names and positions of each participant, the matters discussed, the criteria set forth by the heads of the verified areas (whether reasonable or not) and the date in which it is carried out. Should modify your report, if you consider valid the received criteria.
The minutes must be signed by the person responsible for the area or subject analyzed and the internal auditor, who must each obtain a copy of said minutes.
The minutes of the final analysis of the report must be signed by the highest level of management in the area, topic or organization, as appropriate, and by the group's internal chief auditor.
Opportunity and presentation.
The reports should be issued as soon as possible so that their content can be used in a timely manner by the leaders or officials of the administration and the corresponding higher level, as well as by other interested parties.
The report must be complete, accurate, objective and compelling, as well as clear and concise enough to allow for the issues at hand.
Special and provisional or partial reports.
If, in the performance of their duties, the internal auditors detect irregularities or fraud related to alleged criminal acts, they are obliged to present a report considered Special to the competent authorities, to which are attached the original supporting documents previously occupied.
Internal auditors should consider submitting an interim report detailing important matters that require the immediate attention of leaders and officials, before finalizing the final report.
Communication of results.
The reports must be communicated in a timely manner to the leaders and officials who are authorized to receive them under the current legal provisions, in order for them to take action regarding the findings and recommendations. If Internal Audit covers confidential matters for security reasons or other causes, their distribution should be restricted to authorized levels.
When preparing the report, the following principles should be considered:
" Puntuality
" Accuracy
«Logic
"Clarity
" Purpose
6. Objectives of the Audit
To increase the efficiency of our economy, the country has undertaken various tasks, in which the auditors have a high responsibility to guarantee that progress in all sectors is carried out on a firm basis, based on reliable data, eliminating manifestations of theft. and diversion of resources; that in addition to the significant moral damage they cause, they make companies inefficient and uncompetitive.
The fundamental objectives of the Audit are:
«Evaluate the control of administrative activity and its results.
«Examine their accounting and financial operations and the application of the corresponding legal provisions, ruled on the reasonableness of the results presented in the financial statements, as well as evaluate other elements that, taken together, allow to increase the efficiency, economy and effectiveness in the use of the resources.
«Prevent the misuse of resources of all kinds and promote their correct protection.
«Strengthen the administrative and economic-financial discipline of the entities by evaluating and reporting the results to whom it may concern.
«Contribute to maintaining honesty in administrative management and preserving the moral integrity of workers.
7. Stages of the execution of the audit
Exploration
Exploration is the stage in which the study or examination is carried out prior to the start of the audit in order to know in detail the characteristics of the entity to be audited in order to have the necessary elements that allow adequate planning of the work to be carried out and direct it. towards the issues that are of greatest interest according to the intended objectives.
The results of the exploration also allow the selection and adjustments to the methodology and programs to be used; as well as determining the importance of the subjects to be examined.
It also makes it possible to assess the degree of reliability of internal control (accounting and administrative) as well as the fact that in the planning stage a more efficient and rational work plan is developed for each auditor, which ensures that the audit must be carried out with due quality., economy, efficiency and effectiveness; promoting, to a large extent, the success of its execution.
Once the Work Order is issued, the group leader proceeds to execute this stage, gathering information at his center and at the entity to be audited to know in detail the characteristics of the same in terms of its organizational structure, production flow or services. it provides, results of previous audits, etc.
It is convenient that this stage concludes before the rest of the staff is incorporated, which enables each auditor to have his or her individual work plan from the start of the audit.
In the entity, interviews must be carried out with the main leaders in order to explain the objective of the audit, and to know or update in detail the data in terms of structure, amount of dependency, development of the activity carried out, production flow or the services it provides and other essential information for proper planning of the work to be carried out.
It is impossible to foresee all the issues that may be of interest to know at this stage, for which reason the most important or general points to capture, review or update in the entity are indicated below; those that are not necessarily absolute, the group leader being able, as indicated, to eliminate or add some, according to circumstances or objective of the audit:
* Updated data of the entity, which includes, among others: name, address, telephone, fax, E-Mail, work hours and organizational structure.
* Organizational units that comprise it.
* Main activities that it develops.
* Licenses to operate in national currency and / or currencies.
* Banks with which it operates, (domestic and abroad), names, bank account numbers and firms authorized to operate the same.
* Names of the Director, Economic Deputy Director and Chief Accountant or equivalent positions, as well as the respective dates on which they took office.
* Personnel working in the Accounting and Finance area; summarizing the functions it performs.
* Status of the Single Audit File and its content; reviewing the latest audits, both internal and external, inspections, checks and tax verifications carried out in the entity.
* Provisions issued in relation to the conclusions, recommendations established in the previous reports and notifications of administrative responsibility.
* Degree of accounting decentralization, number of accounting centers it owns, bank accounts that operate the same and information they issue.
* Chart of accounts.
* Number of warehouses and their importance according to the number of lines, value of their stocks and characteristics of the products.
* Specific rules and procedures they use.
* The computer systems that are applied in the different subsystems and their evaluation within the context of internal control.
* Situation of the accounting records in use and date of the last entry in each one of them.
* Date of preparation of the last financial statements. If possible and necessary, specify financial results.
* Tax sworn statement.
* Budget and its modifications, as well as its execution.
In addition, a tour of the areas that make up the entity must be carried out in order to observe the operation as a whole.
In the corresponding cases, the following should also be examined:
* The company deed of incorporation, taking note of the date of incorporation, authorized capital, classes of shares, number of shares of each class and their nominal values, registration in the Registry of the Chamber of Commerce, Mercantile Registry, Taxpayer Registry, and other documents related to deposits of shares in custody by the bank, deed of capital modification, etc.
* Official documents that protect financial relationships or investments with or in other entities.
* Certifications of the legal area.
* Book of minutes of the Board of Directors or Board of Directors to specify what is related to:
* Statutes or regulations.
* Analysis and approval of monthly financial statements.
* Determination of the destination of the profits obtained, declaration of dividend, creation of reserve, etc.
* Declared bonuses.
* Main profit-sharing or other agreements (internal and external).
* Losses on subscription of shares.
* Authorization to increase or decrease capital.
* Purchase and sale of treasury shares.
As a result of this exploration the group leader may suggest to the supervisor to vary the objective of the audit or its scope.
It is possible that for certain reasons it is not necessary to carry out this stage in a specific audit, an issue that must be recorded in a document signed by the group leader, approved by the acting supervisor and filed in the audit file.
Planning
The fundamental work at this stage is to define the strategy to be followed in the audit to be undertaken, which entails planning the topics to be executed, so as to ensure that a high-quality audit is carried out and that it is achieved with the economy, efficiency, effectiveness and promptness.
Starting from the objectives and scope foreseen for the audit and considering all the information obtained and knowledge acquired about the entity in the exploration stage, the group leader proceeds to plan the tasks to be carried out and the necessary checks to achieve the objectives of the audit.
Likewise, it must determine the relative importance of the topics to be audited and reevaluate the need for personnel according to the elements available to it.
After the time to be used in the execution of each verification or verification has been determined, the overall or general audit plan is prepared, which must be included in a document that contains at least:
* Definition of topics and tasks to be performed.
* Name of the specialist or specialists who will intervene in each of them.
* Estimated start and end date of each task, considering from exploration to completion of work.
Likewise, the individual work plan of each specialist is prepared, considering as a minimum:
* Name of the specialist.
* Definition of topics and each of the tasks to be performed.
* Start and end date of each task.
Any extension of the planned term must be authorized by the supervisor or another higher level; leaving a record in the audit file.
At the discretion of the group leader, both the general audit plan and the individual plan for each specialist can be included in a single document based on the number of tasks to be performed, the number of subordinate specialists, etc.
Regardless of the variant used, the group leader must consider the essential columns to record the real execution period in each task, as well as the space necessary to record incidents in each task / specialist or the topic as a whole; Consigning the appropriate comments or non-compliance with the established term, if it exists.
In all audits these plans must be discussed with the supervisor, who must be aware of them. Likewise, specialists should be imposed on the general plan of the audit, which would help make the work of the group much more effective.
All this allows to follow the execution of each job and to be able to determine if they are completed in the scheduled time.
Supervision
The essential purpose of supervision is to ensure compliance with the audit objectives and reasonable quality of work. Adequate supervision and control of the audit are necessary in all cases and at all stages of the work, from exploration to the issuance of the report and its analysis with the factors of the audited entity.
Likewise, it must guarantee compliance with the Auditing Standards and that the final report correctly reflects the results of the verifications, verifications and investigations carried out.
Adequate supervision must ensure that:
All members of the audit group have understood, clearly and satisfactorily, the audit plan, and that they have no personal impediments that limit their participation in the work.
The audit is carried out in accordance with the Auditing Standards and generally accepted practices for this activity.
The audit plan prepared for this purpose is followed and the procedures foreseen are applied, considering the authorized modifications.
The working papers contain evidence that correctly supports the indications in the final report.
In the final report of the audit, the conclusions, details and recommendations that are considered pertinent according to the results of the reviews carried out are presented.
Supervision normally has two levels of execution: the one corresponding to that carried out systematically by the group leader and the one carried out by the official designated by the supervisor.
This allows the group leader to review the work of the rest of the auditors related to the audit and the supervisor, the work of the group leader; in addition, more generally, that of the audit as a whole.
Evaluation
The work of the personnel who directly work in an audit must be evaluated at the conclusion of the same; This task should be carried out as objectively as possible, deeply and fairly evaluating each of the indicators analyzed.
A correct evaluation contributes to the improvement of the work, at the same time that it stimulates the good individual results; On the other hand, allowing the evaluated person to become aware of the limitations that are pointed out and eliminate them.
8. The audit program
It is defined as the detailed relationship of the verification and investigation actions that the auditor must perform to respond to the objectives proposed in any type of audit, which plays a primary role, since the achievement or not of the objectives of an audit will be determined, among other factors, by the quality of the program that is designed to carry it out.
They constitute an instrument of vital importance in the audit profession, since it specifically indicates the guidelines on how the review should be organized and formulates a series of procedures; the auditor must select what he deems appropriate for each particular job, depending on the systems established in the entity, the policies implemented and the degree of compliance with them.
The planning stage closes with the preparation and approval of the detailed programs, which the auditor will prepare in order to establish the connection between the objectives and the procedures that will be followed in the execution or field work phase.
An audit program documents the logical relationship between the objectives and the audit procedures to be performed during the fulfillment of those objectives, they also ensure compliance with the auditing standards and provide a form of evidence about due care and professional judgment in the audit. planning of the examination stage. Written audit programs provide assurance that there is a consistent approach to auditing and clear communication of objectives and procedures.
Among the objectives are:
* Offer in detail the work to be done.
* Serve as an instrument for monitoring work development.
* Enable the distribution of work among the members of the audit group.
* Facilitate the replacement of one auditor by another in any circumstance that is necessary
Audit programs serve as:
* A guide to obtaining competent, relevant and sufficient evidence during the performance phase of the audit in a cost-effective manner.
* A framework for assigning work among members of the audit team.
* A means of transferring knowledge to new staff.
* A basis for documenting the work done and exercising due caution.
In developing an audit program, it is important that the procedures:
Count audit objectives and standards; that allow relevant evidence to be collected in cases that will maximize the impact of the audit.
They are clearly established and clearly include enough detail to allow them to be easily read and understood by those performing the audit.
They are organized in a logical manner, such that the audit examination can be conducted as efficiently as possible.
They form an efficient method of collecting enough evidence without superfluous proof.
They take into account any work or related research on the matter.
The order in which the steps of the audit program must be executed is a decision of the auditor responsible for the work, since there is no single methodology that establishes it; The following should be taken into consideration in their decision, among other aspects:
* Complexity of the procedures to be executed.
* Time of execution of the procedures.
* Type of verification: external or internal.
* Logical antecedent-consequent relationships between procedures.
* Risk levels evaluated.
* Available auditors and their level of experience.
Advantage:
* They are a guide or plan to follow with the minimum of difficulties or confusion.
* The head of the group of auditors can plan the tasks to be carried out by his assistants using their capacities to the maximum.
* Once the audit is completed, these programs serve to verify that no procedure was omitted.
* If the person in charge of the audit is assigned to another job, his successor can quickly and easily observe what has been done and what is pending.
* Serves as a guide for planning future audits. The auditor is empowered to increase or decrease the program before initiating the review in order to investigate special problems.
* The program trains the auditor to accurately determine the scope and effectiveness of the procedures to be used in the review.
* The audit program carried out will establish the responsibility that corresponds to each part of the review.
The disadvantages that come with the use of standardized audit programs disappear if it is taken into account that they must be flexible, that is, that they can be modified as circumstances require.
When the acting auditor considers that it is necessary to make modifications to the program steps, for any circumstance, either by adding or deleting any, as well as any modification regarding the sample size, selection method or verification period, he should consult previously the Group Leader or
Supervisor, who are in charge of analyzing the situation and taking the measures deemed appropriate.
Modifications to the program must be registered in it and be duly initiated by the Group Leader or Supervisor as proof of their approval.
It is the obligation of the Group Leader and the Supervisor to review the program each time they carry out a check on the progress of work in an entity under review, leaving their signature as evidence in addition to its operation, as part of the control mechanism or system.
Failure to complete a program step or the established procedures cannot be fully executed due to non-auditor situations, such as; the lack of supporting documents, considerable delays in the registration of operations, inability to carry out physical inventories of material means or cash amounts, etc., the acting auditor must immediately inform the Group Leader or Supervisor to determine the specific measures to be taken in each case.
If these situations cannot be resolved with the administration of the entity under review or that involve serious breaches of the work objectives, the Group Leader or the Supervisor must report it to the management of the auditing entity so that the corresponding decisions are made.
Work programs may vary in form and content depending on the nature of the work.
In general, an audit program must contain elements such as:
* Name of the audit organization.
* Title of the program.
* Program objectives.
* Introduction to the program. (where will the program be applied, characteristics of the entity to be audited, etc.)
* Number of the step or point of the program.
* Description of the step or point of the program.
* Sample size.
* Period to review.
* Sample selection method.
If the program is prepared by the auditor, it must contain, in addition to the above elements, the following: Signature of the acting auditor and Signature of the Group Leader and the Supervisor.
Audit programs need to be developed after gaining an understanding of the entity, identifying lines of inquiry, defining audit objectives and scope, and establishing audit standards, as these constitute key inputs to an audit program.
The audit program must be developed before proceeding to collect evidence in such a way that the evidence collection process is efficient and effective.
9. Mechanisms
In order to verify, expand, or analyze the compiled information, the auditor must use mechanisms made available to him, such as: visits, inspections, interviews, and information crosschecking.
To achieve a better understanding of the entity, you must take into account the following steps:
° Review the permanent file.
When the entity has been visited, the auditor may find information in the permanent file. Said revision becomes a basic input whose result is a general knowledge of the organization, its operations and communication channels.
° Collect information in the audited entity.
The foregoing analysis allows the auditor to request the body for information that covers the needs for knowledge, verification and updating of data.
° Classify the information by areas of interest.
You must organize the information in such a way that you acquire knowledge and understand the "task" of the entity.
These general lines are translated into inputs for the preparation of the Planning Memorandum or Audit Plan. The purpose of this work is to obtain a global vision of the organization, its operation and record of the sources.
Regardless of the type of control that is applied, carrying out an audit is taking into account a systematic process that has four fundamental phases: Planning, Execution, Communication of results and monitoring.
10. Auditing techniques
The auditor uses practical methods of investigation and evidence to achieve the necessary information and verification that allow him to express his professional opinion that constitute the audit techniques, among which are:
Inspection.
Thorough examination of physical resources and documents to determine their existence and authenticity of an asset or an operation recorded in accounting, or presented in the financial statements.
Observation.
Physical presence to appreciate specific operations involving personnel, procedures and processes, as a means of evaluating property or activities.
Confirmation.
Independent communication from a third party to determine the accuracy and validity of a figure or recorded fact:
- Positive. Negative. Blind.
Investigation
It is one of the most important techniques and consists of examining actions, conditions, accumulations of assets and processing of assets and liabilities, with the aim of seeing the reality of the subject under study and obtaining oral or written answers to specific questions related to the areas of audit importance. You can use any or all of the auditing techniques. Their goal is to obtain sufficient and competent evidence to support a predetermined position.
Confrontation.
Monitoring of the registration and transfer of specific transactions through the accounting process, as a means of ratifying the validity of the transactions and the accounting system.
Performing new calculations.
Repetition of the mathematical calculations necessary to establish its accuracy.
Review of documents and vouchers.
Examination of written evidence, such as a purchase invoice or order form received as justification for a transaction, entry, or account balance.
Counts.
Physical count of individual resources and documents, sequentially, as needed, to justify a quantity.
Exploration.
Evaluation of certain characteristics of the information as a method of identifying those items that require additional examination.
Analysis.
Collect and manipulate information in order to arrive at a logical deduction. It determines the relationships between the various parts of an operation, as well as the real impact on the organization of the actions of its parties, or the effect of agreements, contracts and regulations. It includes analytical processes such as: trend analysis, linear regression, relationship analysis and other methods.
Certification
Obtaining a document that guarantees the truth of a fact, generally legalized by signing an authority.
Evaluation.
It is the process of arriving at a decision based on the available information. The evaluation depends on the auditor's experience and judgment and constitutes the substance of the audit results. An evaluation prints the auditor's professional stamp.
Simulation.
It is a verification technique that consists of duplicating the real operations using the data of a determined period; Comparing the results with the real ones, it provides a basis for testing by comparison, reasonableness, reliability and legitimacy of the same.
11. Sampling
Determining the amount and type of evidence to collect is an important decision for auditors. An important aspect of this decision is the answer to the question: How large should the selected sample be?
Factors the auditor should consider when planning sample sizes include the following:
• Internal control.
• Importance of audit risk.
The determination of the operations to be verified and the scope of such verification is fundamentally the responsibility of the group leader, collegiate with the criteria of the supervisor and hearing the opinion of the acting auditors. The auditor selects the operations to be examined, taking into consideration his knowledge of internal control, the relative importance of the operations, the areas of risk and the types of errors found in this and previous audits; specifying the costs, risks and benefits represented by the type of sampling to be used in each case.
In conducting the performance audit and considering these risk factors, the auditor will have to decide the method for selecting the sample and the size; It would be impossible to cover in its entirety all the operations related to the management of the area to be used.
Inherent and control risks exist regardless of the sampling procedure, so the auditor should consider detection risks arising from uncertainties due to sampling, as well as those arising from other factors unrelated to it.
The sample size is conditioned by the degree of assurance that the auditor plans to obtain from the sampling results.
In the management verification, the auditor has to perform compliance tests to determine if the internal accounting and administrative control comply with the expected requirements that allow a reasonable reliability from the financial point of view for the former and an efficient administration for the former. second.
Auditors employ both approaches to sampling techniques, namely statistical sampling and non-statistical sampling.
In non-statistical sampling, the auditor subjectively incorporates the Internal Control, the relative importance and the risk in the audit, justifying his judgment in intuitive mechanisms. Although this method has disadvantages, its use has become widespread in the world, since the auditor relies on his expertise and professional judgment, which in many occasions have an acceptable level of success.
While statistical sampling can be considered as a tool that helps auditors to form judgments, but they require knowledge of certain statistical terms, since it determines the size of the sample, the items that comprise it are selected, and the Evaluation of the results is done using mathematical methods based on the calculation of probabilities.
The use of sampling procedures is one of the basic reasons why the auditor's report is seen as an expression of an opinion and not as absolute certification of the subject under review.
12. Work Papers
Working Papers are the set of documents that are prepared or obtained in the course of an audit and that constitute the fundamental evidence of the work carried out and its conclusions. They make up the registry of the different types of evidence accumulated at work, including the procedures used, the tests carried out, the information obtained and the conclusions formulated.
Job papers are a vitally important instrument in the auditing profession, hence the need for auditors to acquire expertise and good judgment in the design and use of these basic tools.
They are the set of documents where the auditor collects, analyzes and comments on the information and evidence captured during an audit, constituting the connection route between the records and the original documents, with the final report of the audit; and they are the only proof of accuracy of what is reported and the support of said report.
It is the mainstay of the auditors' report, being basic elements of the execution and allowing other auditors to review the quality, or to continue the audit by providing documentation of the evidence that supports the significant conclusions and judgments of the auditors.
They consist of the annotations, summaries and results of the investigative techniques practiced by the auditor, they also reflect the scope of the test carried out and the period subject to verification. They make up the registry of the different types of evidence accumulated at work, including the procedures used, the information obtained and the conclusions formulated.
The working papers should cover all the important aspects of the work being done; not including redundant or superfluous information, being necessary to leave a precise record of the type and scope of the checks carried out in each of the component items of the balance of an account or a type of operation, as well as its result and any limitations or restrictions if any.
Among the working papers are, among others, the following:
• Result of the verifications carried out.
• Summary of verified topics.
• Confirmation of accounts receivable and payable balances, bank accounts and other external evidence.
• Request for information, document or other certifications.
• Certificate; Request, Declaration, Occupation and Return of Documents.
• Original documents or photocopies of the audited entity itself. (includes lists of automated systems, balance sheets, financial statements, etc.).
• Result of physical observations.
• Data on accounting account adjustments.
• Written evidence of everything reviewed even if no deficiencies are detected.
They must fulfill the following purposes:
• Serve as a source of information for the preparation of the report, as well as for the observations and recommendations made in its discussion.
• Support evidence in case of legal action.
• Serve as evidence that the auditor has observed the applicable auditing standards and that the audit has been carefully planned, organized, and conducted.
• Determine the correctness of the records of the audited entity, their reliability and the relationship of the information in the financial statements with the auxiliary accounting records.
• Facilitate systematic supervision of the work by the group leader, supervisor or other official empowered to do so.
• Record the scope and limitations of the verifications and investigations carried out, as well as the period subject to verification; which allows setting the degree of responsibility assumed by the auditor. Likewise, to state that the Single Audit File that the audited entity must have has been reviewed.
• Allow another technically competent person to understand them and continue the work interrupted by any cause, by the auditor who initiated the audit, or to evaluate the facts in the event of possible discrepancies that the auditee may present regarding the results of the audit.
• Record the most important background and characteristics of the audited entity.
• Summarize the results of each verified topic in order to serve as a basis for future checks and the preparation of partial reports and the end of the audit.
• Analyze with the head of each area the results of the audited topic.
In its preparation, the fulfillment of the following requirements must be taken into account:
* Contain sufficient, relevant, competent and reasonable evidence of the verifications, verifications and investigations carried out by the auditor; those that must be truthful.
* Record the objectives and scope of the audit, as well as the programs, guides and methodology used in it; including the criteria and methods used to determine the sample and obtain it.
* Show the origin or source of the information, which allows determining the value of the evidence.
* Be organized by themes, which must be made up of a specific account, subject or purpose that is the object of the audit.
* Have an index and cross references between findings that relate to each other and to the summary of the topic, as well as the copy of the final report that is filed in the audit file.
* Record in each finding that is required by the regulations or procedures that are not complied with.
* Evidence, by signature or personal stamp and date, in the lower left margin, that the working paper has been reviewed by the group leader, supervisor or any official authorized to do so.
* Uniform marks that indicate the execution of certain activities.
Given the importance of the working papers, as well as the image they project of the auditor, they must be prepared with the greatest possible care and care, so the questions of form and content that must be taken into account below. are noted:
- Clear and precise writing; no smudges, amendments or erasures. Legible handwriting and without mathematical errors in the calculations made by the auditor. Proper use of the sign that identifies the type of currency and the stripes and double stripes. Use the appropriate paper for each issue; columnar, lined or unlined paper. Written on one side. Each topic should start a sheet. Do not include notes and comments on different topics or subjects on the same sheet. Neither should analysis of different accounts be included, unless they have a very close relationship and complement each other. They must be made in graphite pencil or ink, ink, ballpoint pen, typewriter or computational means, except for cash receipts, inventories and summaries of topics, or others that must be signed by those responsible,workers in the areas or external persons, which cannot be done in graphite pencil. Do not use acronyms that have not previously been declared, unless they are in common use, example: MP, MLP, UM, etc. Use conventional marks that indicate the checks and verifications carried out on books, records, forms and other documents that are reviewed.
Identification by means of a correct heading and adequate numbering is essential to achieve, in essence, the easy location of a specific topic or document.
The heading is common, including those that are originals or photocopies of documents obtained from the entity itself, located at least three centimeters from the top edge of the sheet and must contain the following information:
- Name of the audited entity. Title of the topic or issue in question. Date or period covered by the sample.
Complying with the following format:
They are numbered consecutively within each topic, identifying each sheet with its corresponding order number followed by a diagonal and the digit assigned to the last sheet of the topic.
In order for the working papers to be considered as competent or material evidence, they must have at least the following characteristics: Relevance, Authenticity, Reliability and Neutrality.
After the preparation of each file, all the sheets that make it up are numbered sequentially in the lower right margin with a ballpoint pen or colored pencil.
13. Auditor's Marks
They are made up of symbols used by the auditor in order to leave irrefutable record of the acts performed; allowing other authorized officials to know what actions were carried out.
It is obligatory to record in the working papers the marks that the auditor uses and their significance.
Auditors normally use marks that are placed next to quantities or annotations, both in the client's records and documents, and in their work papers to indicate the work done, or that a batch has been reviewed or verified in some way, serving of evidence of the work performed by the auditors.
The auditor should always be careful in handling the documents and records of the audited entity, making their marks with discretion, trying not to blur them or give them an image of disorder.
14. Audit File
The audit file consists of one or more files in which the working papers and other documents related to an audit are filed. Working papers are organized by topic; Avoid filing a topic in several files and must follow the logical order of work development, placing documents related to the general aspects of the audit first.
The audit file must have on its face the following data:
- Category. (As established in the State Secrecy Law) Work Order Number. Name of the audited entity. Organism to which it is subordinate or sponsors the same. Audit type. Start and end date of the audit. Organizational Unit that executed the work. Participating auditors and their positions. The consecutive numbering of the file is placed at the bottom right.
The documents that make up the audit file must be filed in the following order:
- Index. Copy of the report with its annexes. Draft report. Work order. Presentation letter. Exploration. Planning. Results of field supervision and table work. Summary of each topic and its working papers; It also includes the minutes, balance confirmations, occupation of documents, etc., related to this topic. Other documents considered of interest to keep on file. These documents can be originals or photocopies, depending on their use and destination.
The audit records are for the exclusive use of the organizational unit that carried out the work and access to them must be authorized by the highest level of it or another superior. Being responsible, in addition, to establish procedures to guarantee that the work papers are safeguarded and preserved during the time established by the Law.
If a new Internal Audit has not been carried out during said term, the working papers must be kept until it is carried out, at which time it will be analyzed whether or not to keep all or part of them.
Conclusions
* With the development of this work, we have tried to contribute, to some extent, to the fact that technical personnel are better prepared every day, offering them the possibility of accessing a large volume of updated information.
* A material has been prepared where the greatest amount of content is grouped, which facilitates the incorporation of the theoretical elements of the subject of Auditing.
* It can be used in the preparation and delivery of teaching by teachers, as well as reference material and self-preparation of students.
Bibliography
1. Council of State, Decree Law No. 159 of the Audit, June 8, 1995, Havana.
2. Ministry of Audit and Control, Auditor's Manual, Volume II, version modified in 2005, Havana.
3. ========================, Resolution # 40/2003, March 20, 2003, Havana.
4. ========================, Resolution # 100/2004, November 11, 2004, Havana.
5. ========================, Resolution # 26/2006, January 25, 2006.
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