This article shows the importance of the supervision process in the audit exercise, analyzing its fundamental elements, taking into account fundamental principles that govern this process and the risks assumed in its execution.
Supervision: a necessity in Organizations
Supervision is an old concept that has undergone various changes and has been viewed from different perspectives.
Knowing this background is essential to locate a function as important as the one discussed in this course, within the context of public auditing.
Therefore, it is of vital importance that the supervisor has knowledge of the way in which the techniques, procedures and compliance with the regulations are applied in the audit work, which will give him a broader vision and allow him to execute a more work. professional.
Introduction
Supervision of the work of the personnel assigned to the audit is necessary so that those working at all levels of the examination understand the overall objectives of the examination and the procedures necessary to achieve them.
Much of the information obtained during the planning stage related to the characteristics of the entity to be examined, especially possible accounting and review problems, and the timing with which the audit procedures should be applied, should be made known to the audit staff..
Because much of the detailed work is carried out by auditors, they must bring important auditing and accounting issues uncovered to supervisors during the review.
To this end, the working papers prepared during the audit are used to review the work carried out.
There may be variations in the way of preparing the work papers according to the skill and experience of each auditor, but always complying with the provisions of the Audit Manual on the presentation of these.
In no way should there be a lack of evidence in the working papers showing how the audit procedures and their results were actually carried out.
Staff will undoubtedly run into problems and need to seek the advice of the supervisor. These problems, including the solution, must appear on the working papers.
Thus, evidence is formed that proves that staff received proper supervision. On this matter it is necessary to make a special clarification:
The auditor should ensure that for each question reflected in the working papers a suitable solution has been fully presented and documented.
Otherwise the presence of questions without their corresponding answers could be indisputable evidence that staff supervision and due professional care were lacking.
If there are differences of opinions, when an auditor does not agree with the final solution, after the problem has been discussed, they must be recorded in the working papers.
Of course, the final solution given to the dispute must be properly founded and described in those documents.
Background
The supervision, like the administration, has a greater development since the Industrial Revolution, where profound changes take place that completely modify the social, economic and political structure of that time.
Among the main changes that were generated took place the substitution of manual work for mechanized, greater speed, quantity and quality of production and great demand for the workforce, which caused the creation and multiplication of manufacturing industries.
For the above to be possible, there was a need to shape the work organization in a different way, which led to the introduction of new concepts, among which were:
- The division of labor and the specialization of tasks; The standardization of functions; The unity of command and centralization in decision-making; yThe formalization of labor relations.
The application of these concepts to the industry resulted in the supervision of tasks adopting the following characteristics:
- Surveillance of work that was carried out in order to increase production and improve quality, at the lowest possible cost; Emphasis on results, without taking into account the worker as an individual; Surveillance of strict adherence to the rules.
To carry out this function, the assignment of a technically trained person was essential, who at that time was known as "foreman".
This person exercised complete authority over the personnel who performed the tasks: recruited, disciplined, and fired; Likewise, she selected materials, made inventories, organized the workplace, etc.
Over time and due to the rapid and disorganized growth of companies, as well as the need to increase efficiency and competitiveness in organizations, techniques, principles and theories were developed that transformed the supervisory function from an empirical practice to a labor technical and specialized. Implicit in this evolution is the recognition of human resources as the most important element in achieving the objectives.
Supervision is now a function that allows monitoring, inspecting, evaluating and conducting the work of a team, as well as promoting that it operates according to the criteria of economy, efficiency, efficacy, effectiveness, impartiality and honesty.
As can be seen, supervision has been necessary whenever the work has involved the joint effort of a team of people.
Therefore, the supervisor is the one who within the organization leads a group of people entrusted to him, towards the fulfillment of goals and objectives, and is directly responsible for the coordination, direction, verification, inspection and quality of work.
The word supervision is derived from the Latin words “super” and “visio”, which means “to see over”, which translates as looking at an activity from above. The term of supervision is traditionally used to define the act of vigilance that a person exercises over the work carried out by the personnel under his command.
However, in order to develop a definition of supervision of public audit work, it should be remembered that within the internal control bodies there are various “levels of supervision”, which are determined by the size of its organizational structure. According to Cameron C. Smith, in his book "Guides for Supervisors", at these levels they can be considered as managers, and his responsibilities consist of planning, organizing, directing and controlling the work of his unit, as well as coordinating resources, improving the group and individual work of his subordinates; promote communication to give instructions, receive information, transmit results and make decisions to make their work effective.
For such considerations, it can be said that:
Importance of Supervision
The success of each audit depends to a large extent on the effectiveness of the supervision of personnel at all levels.
Supervision is an essential element for the proper development of the audit function, since it allows controlling the activities carried out in it. For this reason it has been raised to the category of standard, in order to include it in a mandatory way in the work carried out in the internal control bodies.
In the section relating to work execution standards, the sixth standard called “Audit Work Supervision” establishes the following:
- Supervision involves directing the efforts of the auditors involved; instruct them, stay informed of significant problems encountered, review the work performed and provide training in the field Supervision should be exercised at all levels or categories of personnel involved in the audit work and in inverse proportion to experience, technical preparation and professional capacity of the supervised auditor.
In the event that the audit is so complex that it requires the services of several auditors, the supervisor will establish a command line with an auditor as supervisor, appointing the one with the greatest experience and professional capacity for that activity.
Objectives of supervision
The supervision pursues certain objectives that make it possible to promote actions to exercise it in the best way and evaluate the effectiveness of its application. These objectives are, among others, the following:
- Increase the quality of audits, through the periodic review of the auditor's work, based on the objectives set; Ensure that the reviews are carried out with maximum economy, efficiency, effectiveness, effectiveness, impartiality and honesty and in accordance with the General Public Auditing Standards and other applicable regulations; Prepare working papers in such a way that they adequately support the objectives set and provide objective information; In addition, obtain sufficient, competent, relevant and pertinent evidence in the audits; Ensure that the auditors develop the necessary capacity to carry out the public audit; Know immediately and at any time the progress of the audit;Determine if the specific audit procedures have been fully applied. Increase human and professional work relationships in the audit groups.
Internal control systems require supervision, that is, a process that verifies that the proper functioning of the system is maintained over time.
This is achieved through ongoing monitoring activities, periodic evaluations, or a combination of both.
Ongoing supervision occurs in the course of operations. It includes both normal management and supervision activities, as well as other activities carried out by staff in the performance of their duties.
The scope and frequency of the periodic evaluations will essentially depend on an assessment of the risks and the effectiveness of the ongoing monitoring processes.
Deficiencies detected in internal control must be reported to higher levels, while senior management and the board of directors must be informed of the significant aspects observed.
These components, linked to each other, generate a synergy and form an integrated system that responds in a dynamic way to the changing circumstances of the environment.
The internal control system is intertwined with the entity's operating activities and exists for fundamental business reasons.
The internal control system is most effective when controls are incorporated into the infrastructure of the company and are part of the essence of the company. Through built-in controls, quality and empowerment initiatives are fostered, unnecessary expense is avoided, and rapid response is allowed to changing circumstances.
Responsable:
The procedure will be executed by:
a) The Group Leader to the auditor.
b) The supervisor to the Head of Group
c) The supervisor to the auditor, if the Audit does not order the Head of the Group.
Risks:
1. That the auditors have impediments that limit a clear and precise understanding of the stage being supervised.
2. The recommendations left in previous supervisions are not fulfilled.
3. That the supervisions are not carried out at the necessary time required by the Audit and / or the auditor performing the work.
4. Little preparation of the supervisor to assess the development of an activity and / or audit.
