All the professionals linked to the exercise of the Audit as well as the businessmen know of the vital importance that has for the success of the business to have an Internal Audit team that responds to the interests of the same and that constitutes an allied factor of the senior leadership of The entity will thus guarantee to ensure the correct administration, use and control of human, material and financial resources. In this article we present important elements related to Internal Auditing.
The Audit is defined as:
A systematic process, practiced by the auditors in accordance with established technical standards and procedures, consisting of objectively obtaining and 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 legal provisions in force and the established criteria.
Consequently, Internal Audit must function as an activity 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 Audit services include the objective evaluation of the evidence, carried out by the internal auditors, to provide an independent conclusion that allows qualifying the compliance with the policies, regulations, standards, legal provisions or other legal requirements; regarding a system, process, sub-process, activity, task or other matter of the organization to which they belong.
In any well-organized entity, and in order to maintain vigilance over the management control chain, it is necessary to create a systematic review and evaluation program to verify that the delegated responsibilities have been well directed and that the established policies and procedures are have been carried as planned.
In addition, it is of utmost importance that there is a regular review by qualified personnel to determine that the internal control system in general is adequate, and through constant testing, to determine that they have been operationally effective. If there are failures, deficiencies or changes in the existing conditions, due to which the internal control system is ineffective, it must be modified appropriately, making the necessary changes to the new situations.
We must insist that regardless of the supervision exercised by the internal auditor over compliance with the responsibilities delegated by management to its executives, and the constant verification of compliance with the internal control systems in force, it is part of their responsibility to Obtaining sufficient and competent evidence that allows it to rule on the accuracy of the economic-financial situation presented by the entity and whose results are shown in the financial statements that are periodically issued.
We consider that an internal auditor can become the eyes and ears of the management of the company, taking into account, not only their qualification and moral ethics, but also because it is an official who over time manages to obtain a high command of all and each of his functions of the entity where he works, which allows him to become an advisor to or to the business management executives.
Definition
Internal Auditing is an activity whose main objective is to examine and evaluate the adequate and effective application of internal control systems, ensuring the preservation of the integrity of an entity's assets and the efficiency of its economic management, proposing to the management the pertinent corrective actions.
Responsibilities of the internal auditor
They are classified into:
- Nature Objective and scope Responsibility and authority Independence
Nature
Internal Audit is the name of a series of processes and techniques, through which management is given first-hand security regarding the employees of its own organization, based on observation at work regarding:
- Whether the controls established by the organization are adequately and effectively maintained If the records and reports reflect current operations and results adequately and promptly in each department or other unit, and whether these are being carried out outside of the plans, policies, or procedures which the Audit is responsible for.
Objectives and Scope
The objective of the Internal Audit is to assist the members of the organization, discharging them from their responsibilities effectively. To this end, it provides them with analysis, assessments, recommendations, advice and information regarding the reviewed activities. It includes the promotion of effective control at a reasonable cost.
The scope includes the examination and assessment of the adequacy and effectiveness of the internal control systems of an organization, and the quality of the execution when carrying out the assigned responsibilities. It includes:
- Review of the reliability and integrity of financial and operational information and of the judgments used to identify, measure, classify and report on it Review the systems established to ensure compliance with those policies, plans, procedures, laws and regulations, which can have a significant impact on operations and reporting, and determine if the organization complies with them Review asset safeguarding measures and, where appropriate, verify their existence Assess the economy and efficiency with which resources are used. Review operations or programs to ensure that the results are consistent with the established objectives and goals, and that the operations and programs have been carried out as planned.
Responsibility and Authority
The purpose, authority and responsibility of the Internal Audit department should be defined in a formal written document, approved by management and accepted by the board, specifying the unrestricted scope of its work and stating that the auditors have no authority or responsibility over the activities they audit.
Independence
To ensure the effective degree of independence necessary for the internal auditor, he will be subordinate and will report his work to the highest executive of the ladder; Only in this way can it ensure an adequate scope of responsibility and effectiveness in following up on the recommendations.
Internal auditor work items
The elements of the Internal Audit, except for special assignments, can be classified as:
- Compliance, verification, evaluation.
Compliance
Extent to which policies, rules, good business practices, generally accepted accounting principles, laws, government regulations and even common sense are followed.
check
The management should receive a permanent assurance of the validity of the current reports superior to that which is possible to obtain by the annual examination of the external auditor. Generally, the verification will include records, reports and accounts.
Evaluation
It is the most important responsibility of the internal auditor, he must constantly review the control system and be sure that it is adequate, and that it is maintained as expected by management.
Tasks to be carried out in the internal audit
Generals
- Verify compliance with the internal control systems in force and their authorized adjustments, as well as those that due to the characteristics of the entity it has been necessary to establish, determining their quality, efficiency and reliability, as well as the observance of the general principles in that are based Verify compliance with the accounting standards and the adjustments that have been established for the entity, based on the current account classifier, Verify the quality and timeliness of the accounting and financial information flow, and observe the fulfillment of the functions, authority and responsibility, in each case in which the movement of resources are involved; verify the quality, reliability and timeliness of the accounting-financial information provided by the entity,Carrying out the corresponding analysis of the fundamental economic indicators Check compliance with current economic-financial legislation Check compliance with all kinds of regulations, resolutions, circulars, instructions, etc. issued both internally and by higher levels of the economy and the State Verify the quality, efficiency and reliability of electronic information processing systems, with an emphasis on quality assurance of their internal control and validation Analyze through the application of the different techniques of Business Management Audit, with the aim of determining its economy, efficiency and effectiveness.Check compliance with regulations of all kinds, resolutions, circulars, instructions, etc. issued both internally and by higher levels of the economy and the State Verify the quality, efficiency and reliability of electronic information processing systems, with an emphasis on quality assurance of their internal control and validation Analyze through the application of the different techniques of Business Management Audit, with the aim of determining its economy, efficiency and effectiveness.Check compliance with regulations of all kinds, resolutions, circulars, instructions, etc. issued both internally and by higher levels of the economy and the State Verify the quality, efficiency and reliability of electronic information processing systems, with an emphasis on quality assurance of their internal control and validation Analyze through the application of the different techniques of Business Management Audit, with the aim of determining its economy, efficiency and effectiveness.with emphasis on the quality assurance of its internal control and validation. Analyze business management through the application of different Audit techniques, in order to determine its economy, efficiency and effectiveness.with emphasis on the quality assurance of its internal control and validation. Analyze business management through the application of different Audit techniques, in order to determine its economy, efficiency and effectiveness.
Specific
- Perform surprise physical counts on a regular basis to the inventories and fixed assets and other values of the entity, and verify their compatibility with the established controls and the corresponding accounting account Perform surprise cash counts periodically, and verify their compatibility with controls established, their movement and the corresponding accounting account Check the balance of the bank accounts, and verify their movement and compatibility with the established controls and the control account Check the balance of the liability accounts and their movement Check the payroll operations, its quality and control, as well as witnessing its physical payment. Verify the income produced in the entity and its collection in a timely manner, in accordance with the provisions, and its compatibility with the corresponding control account.Check the rationality of the charges made to the accounts corresponding to expenses of all kinds, their level of authorization, analyzing significant deviations Study and evaluate compliance with the established cost systems Check compliance with the Equity accounts, evaluating the correction and authorization of the operations Check the quality and reliability of the accounting records and books in accordance with the general principles of internal control Analyze the correct fulfillment of the contributions to the treasury, on time and within the established deadlines.Verify compliance with the Equity accounts, evaluating the correctness and authorization of operations, Verify the quality and reliability of accounting records and books in accordance with the general principles of internal control, Analyze the correct fulfillment of contributions to the Treasury, on time and within the established deadlines.Verify compliance with the Equity accounts, evaluating the correctness and authorization of operations, Verify the quality and reliability of accounting records and books in accordance with the general principles of internal control, Analyze the correct fulfillment of contributions to the Treasury, on time and within the established deadlines.
