Reach me at 714-537-3177 or DrBobby@pacbell.net
You are here: Home / Archives for Internal Audits

The short & easy understanding approach of organizing the internal audit function

May 23, 2011 By rcrconge 18 Comments
../wp-content/uploads/21_6_orig.jpg

What is Internal Auditing?

 

Internal Auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations.  It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

 

 

The Internal Auditor’s responsibilities with respect to the internal audit function. The Internal Auditor describes audit planning and scheduling, and discusses, the internal audit function may be provided by in-house staff or an outsourced team. Whether internal audit is a part of the organization or not its structure would depend on:

 

Business of the organization

Geographical locations

Culture of the organization

Control risks

Environment

 

 

Scope of Internal Audits

 

The internal audit function’s scope of operations is by its very nature quite expansive. The internal audit function will assist the College in fulfilling its vision, mission, strategic initiatives, and objectives, while adhering to its core values, by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of enterprise-wide risk management, internal control systems, and governance processes.

 

Ultimately, the internal audit function will help ensure:

 

Risks are appropriately identified and managed;

Significant financial, managerial, and operating information is accurate, reliable, and timely;

Employees’ actions are in compliance with, standards, procedures, and applicable laws and regulations;

 

acquired economically, used efficiently, and adequately safeguarded;

Internal controls, good business judgment, and high ethical standards;

Quality and continuous improvement are fostered in the internal control processes; and

Significant legislative or regulatory issues impacting the addressed appropriately.

 

 

Effectiveness of internal audit function

 

The audit committee should annually assess the effectiveness of the internal Audit function. Internal audit should be assessed against the following Criteria:

 

I. Achievement of the annual internal audit plan;

ii. Compliance with IIA’s professional standards inclusive of quality assurance assessments on the level of compliance achieved;

iii. Achievement of reporting protocols through management to the audit committee;

iv. Timeliness of reporting of findings and activities;

v. Responsiveness to changing business/operational environment;

vi. Management’s acceptance of the internal audit findings;

vii. Quality and relevance of the annual assessment reports;

viii. Level of cooperation and interaction with other assurance providers within the agreed combined assurance approach;

ix. Maintenance of adequate staffing/sourcing levels to achieve the required to meet the requirements of this charter; and

x. Meeting the budget allocated to internal audit.

Types of Audits

 

Departmental Audits

Financial Audits

Operational Audits

Grant and Contract Audits

Fraud and Financial Irregularity Audits

Follow-up Audits

 

Internal Audit Procedures and Techniques

 

 

1. Observation and Inquiry

2. Analysis and Review

3. Inspection

 

I. Vouching

II. Recompilation

III. Retracing of Bookkeeping Procedures

IV. Physical Examination and Count

4. Confirming

 

Review of charter

 

This charter must be updated at least once a year but more frequently as circumstances may necessitate. It should be approved by the board and endorsed by the audit committee, in order to formally establish the authority of the internal audit function

 

 

SUMMARY:

Auditor and Finance Management person is a vital position in an organization as they are responsible for costing, pricing & profit of the organization. They take the sole responsibility of auditing the business process and activities in an organization which helps them to find non-conformances in activities & process and take corrective actions at appropriate time. These steps help the organization to grow and maintain its stability in today’s competitive market. It is also vital that the Finance management must take its place with the current growing technology; auditor and finance Management persons must be aware of latest technologies in Develop and maintain financial data bases, computer software systems and manual filing systems.

 

I am working as a “certified Management consultant” from several months and doing my work properly because I have 10(Ten) years of job experience in all fields of Accounting and Business Finance, I have become an expertise professional in business Finance, Management Accounting and efficient in Project Management. I have also expertise and vast professional experience in Costing & Pricing, Closing of Financial Accounts. I am also able to control the personnel and administration department by day to day follow upping.

Profile

Solid background in financial analysis and marketing, with strong emphasis in telecommunications account management. Consistently exceed sales goals and customer service expectations. Experienced in handling international accounts and in presenting results of consortium operations. Skilled in developing and implementing standardized policies and procedures.

Career Objective:

To work in a challenging professional environment and demanding position in the Financial Counseling field, dealing clients on face and developing compact financial strategy. My ability to lead projects has proven to be successful as demonstrated through product development and risk analysis measures. My practical knowledge of customer service, business research, organizational management, crystal financial concepts and more makes me a remarkable candidate for “the Management consultant opportunity”

Highly skilled and qualified with more than 10 years of experience in all the arena of Accounts, Auditing, Finance and Banking now looking for a challenging position of financial consultant to utilize my knowledge and my skills in a “part-time or contract basis.”

About me:

I am creative, a quick thinker, enthusiastic and have a high productivity. I am realistic and implement my assignment within the bounds, objectives and capabilities of the organisation. My quick understanding of strategic options helps find direction and supports management in decision making. I have a “doer” attitude and get things done on the technical and functional side. As a “business consultant” I am good in directing projects on “what” we are going to do; for large projects I prefer to work in concert with a project/program manager who oversees planning and manages policies. I generally meet time and budget constraints. But I still don’t know where IT ends and where business begins, nor where strategy stops and the hard work begins. Consequently I am available as a “business consultant” for all these areas in an organization.

Education:

• Master’s of commerce (Management)

• Master’s of business administration (MBA)

proof of additional skill: Also completed various certified & training courses on finance , auditing , budgeting, Management  & Economices  base

Business killed:

All This experience instilled in me the desire to own and manage my own business someday; it is very natural to ask “Why starts my own “Management consulting firm?”  As a consultant, would be working with upper management and owners of business to assist them in improving their business in a variety of ways. The value of the consultants’ role in business arena currently more exciting! Profession, But important to make it as successful as possible, I think that I could provided me with the knowledge to apply my business and analytical skills to different business scenarios, I am confident that my strong work ethic and analytical, creative mind would equip me to contribute meaningfully to as an Associate management Consultant.

Consulting service:

As a financial consultant with the following responsibilities and duties: mainly responsible for providing consulting service to the clients and customers on account, audit, project management service, and so on, responsible for financial reporting, planning and preparing various policies and plans; developing new methods for analyzing financial data; responsible for handling different financial projects; providing advices to the clients for the investment, Other Core Competencies include:

• Great presentation and organization skills

• Good analytical and statistical skills

• Excellent numerical skills

• Knowledge of financial principles

• Knowledge of customer relationship management

• Project management,

• Knowledge production coordinate


Article from articlesbase.com

Filed Under: Internal Audits Tagged With: , , , , , , ,

Successful Internal Audits are Certainly Doable

May 23, 2011 By rcrconge 49 Comments
../wp-content/uploads/20_6_orig.jpg

Article by James Smith

What does proper scheduling and scrutinizing documentation have to do with your achievement? Self audit’s a process. Prior to jumping in and taking on the job, you need to gear yourself and your staff for it. As you most likely know, government payers are not the only insurers who carry out audits. Private insurance companies too audit practices; therefore you should see to it that your gastroenterology office will be left hassle-free should an auditor pay a visit. Sense of purpose: If your gastroenterology practice does not conduct regular internal audits, you are probably losing money and overlooking billing mistakes that could end up in missed billing opportunities and wrong coding. Figure out areas where your practice’s inefficiencies may be delaying payment or allowing for missed charges, while also evaluating your compliance with payer regulation and coding guidelines by learning how, when, and why to carry out internal audits. Demythologize some important elements of self audit that are embedded within the following fabrications. Myth one: Internal audits Internal audits are a way to ensure you’re on track and nothing has gone awry; as such you need to let every member of your practice including physicians and non-physician practitioners – know why you are doing an internal audit. Owing to the stigma that the word ‘audit’ brings to most people, you’d most likely have to figure out whether they are helping to bring in the right amount of money and cutting out denials. Everyone in your practice should understand that there is light at the end of the tunnel: Internal audits can bring about opportunities for education, opportunities for the development of better forms, and opportunities to tune up the practice. What’s more, internal chart audits make it possible to find and correct coding errors and self report, rather than letting the payer find them. Reality: Internal audits are the main thing that’ll protect providers. Auditing is a method of determining which providers need education related to documentation and proper code selection. As a matter of fact, a large percentage of the audit focuses on the doctor’s documentation, and not how the coders and their managers are carrying out their tasks. If staff members are apprehensive of losing their jobs, they’re misinformed. Doctors are happy to improve documentation as it keeps them from a government audit by not raising flags, and it often brings in more money. Myth two: All audits have the same approach As a matter of fact, there are two types of internal chart audits your practice needs to look at prior to determining which work best in your office.

Prospective audit — Your practice examines new claims prior to filing them.Retrospective audit — Your practice examines paid claims. A prospective audit helps you identify and rectify problems prior to sending the claim, which could mean you will discover improper coding or charges that would otherwise have been missed. However, remember that this type of chart audit can potentially delay billing. Choice: Retrospective chart audits don’t delay billing, however causes your office to be reactive by refilling claims rather than proactive in finding problems prior to submitting the claim. Your practice must figure out itself what types of audits your staff can practically complete and what effects on claims submission timing and cash flow the practice can handle. When reviewing charts, most auditing specialists recommend that you review 10 to 15 records per physician during your audit – you should examine the documentation and figure out which ICD-9 and CPT codes you think apply to the chart, then check which codes were in reality assigned to the services. Myth three: End and start audits whenever you like Schedule gives life to the whole internal audit process; minus this, all your efforts might go to waste. Depending on the size and type of your practice, you should decide how often your practice carries out an internal audit. Think about the amount of resources the practice can devote to the audit when conducting day-to-day office business. Pointer: Bear in mind that the more often you can audit, the cleaner your claims will continue. At a minimum, you should carry out an internal audit at least two times a year. After you have prepared your staff for the auditing process and determined when you will carry out an audit, you will need to define and focus on the audit. First enquire what do we want to accomplish and then focus on these points: Figure out the audit’s scope. Which providers, services, date range and payers will it address? Figure out how to choose charts. Will you fix this process for each provider or will you randomize the chart selection? Pull charts and organize supporting documentation, say for instance a printout of physician notes, account billing history, CMS 1500 forms and explanations of benefits. For more on internal audits and for other medical coding updates, stay tuned to a medical coding guide like Supercoder!

About the Author

We provide you simple, instant connection to official code descriptors & guidelines and other tools for 2010 CPT code, HCPCS lookup that help coders and billers to excel in the work they do every day.

Filed Under: Internal Audits Tagged With: , , , ,

THE “INTERNAL AUDIT” VERSUS “EXTERNAL AUDIT” IN DETAILS

May 23, 2011 By rcrconge 100 Comments
../wp-content/uploads/19_6_orig.jpg

(A). Definition of the internal auditor’s & external auditors:

Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

 

.

Extension of external audit Internal audit developed as an extension of the external audit role in testing the reliability of accounting records that contribute to published financial statements. The external auditing standards are very much focused on the effectiveness of external audit (with efficiency being a secondary consideration). Emphasizing audit effectiveness can be sourced back to the imperative that the external auditor must be, and be seen to be, independent. From the perspective of the external auditor, internal audit is a component of the control environment of the entity,

 

 

(B). Renowned the internal auditor’s & external auditors:

 

A statutory audit is one required by a country’s laws, sometimes called an external audit, since it is carried out by independent external auditors. They are renowned from internal auditors for two main reasons:

 

(1) The internal auditor’s primary responsibility is appraising an entity’s risk management strategy and practices, management (including IT) control frameworks and governance processes, and

 

(2) They do not express an opinion on the entity’s financial statements. Besides providing audit services, external auditors also provide different other kind of services. Most common of them are reviews of financial statements and compilation

 

In review auditors are generally required to tick and tie numbers to general ledger and make inquiries of management. In compilation auditors are required to take a look at financial statement to make sure they are free of obvious misstatements and errors

 

(C). Objectives of internal auditor’s & external auditors:

 

The External Auditor: The external auditor seeks to test the underlying transactions that form the basis of the financial statements.

 

The internal Auditor: The internal auditor, on the other hand, seeks to advise management on whether its major operations have sound systems of risk management and internal controls.

 

(D). Involvements organizational Activities of Internal & External Audit:

 

I. Financial systems may be considered by the external auditor as a short-cut to verifying all the figures in the accounts to complete the audit process. The internal auditor will also cover these systems as part of the audit plan.

II. Overall risk management arrangements are the main preoccupation of the internal auditor who is concerned with all those controls fundamental to the achievement of organizational objectives.

III. The final accounts are the main preoccupation of the external auditor who is concerned that the data presented in the accounts present a true and fair view of the financial affairs of the organization:

 

 

(E). Relationship between internal audit and external audit:

 

 

The first relevant study regarding the interaction between internal audit and external audit the relationship with external audit is only ostensibly a very good one. This assessment was conducted of two groups: first group was represented by internal audit directors, and the second group was formed by staff auditors who work directly which external auditors. Both groups were asked to evaluate the overall performance of their organization’s external auditor and their perceived relationship with the external auditor. Next, we present the main results obtained through this assessment:

 

 

 

• 92% from internal audit directors appreciated that external auditors make full use of the expertise of the internal audit staff;

 

• 50% of internal audit directors perceived that relationship between internal audit and external audit is an “excellent” one, while 31% appreciate this relationship as “good”;

 

• Staff auditors differed substantially in their perceptions of the external auditors’ of the internal auditor’s expertise. Only 39% of staff auditors considered that the external auditors fully utilized their expertise;

 

• The majority of the respondent directors reported that they were furnished access to the letter of external audit either before or after presentation to the board of directors. They are also asked to comment on its findings;

 

• another conclusion of this survey was that, generally, individual external auditors do not recognize the contribution of individual internal audit staffs, internal auditors considering that that they perform more than one third of the external audit work;

 

• Internal auditing emphasizes operational auditing and may involve non-financial data, whereas financial auditing is concerned primarily with historical data, in order to be able to identify possible ways of improving future business operations. Internal audit staffs consider their external audit tasks to be less important that the work they perform as operational auditors.

 

• General conclusion of this assessment was that internal audit directors perceived a good

Relationship between internal and external auditors, and this perception could be the result of company policies which give internal auditing

 

(1) A direct reporting relationship to the audit committee of the board of directors, and

(2) The opportunity to respond to any criticism by the external auditors in the management letters

 

(F). Career Path

 

Many students are attracted to the IA profession by the idea of helping corporations keep on the straight and narrow when it comes to producing truthful information about a company’s financial health. Many are also interested in the systems and processes used throughout these giant organizations to keep their operations running smoothly on a day-to-day basis. a greater number of employers are seeking internal auditors. Growth in accounting and auditor positions is expected to increase 18% within a few years,

 

(G). Auditing Standards that Apply to Internal Auditors:

 

Members of the Institute of Internal Auditors (IIA) are required to comply with the International Standards for the Professional Practice of Internal Auditing. The requirements that guide the relationship with the external auditor are set out in:

 

•Performance Standard 2050: Co-ordination; and

•Practice Advisory 2050-1: Co-ordination.

 

“The chief audit executive should share information and co-ordinate activities with other internal and external providers of relevant assurance and consulting services to ensure proper coverage and minimize duplication of efforts.”

 

(H). Auditing Standards that Apply to External Auditors:

 

The relationship with internal audit is specified in the New Zealand Institute of Chartered Accountants (NZICA) Auditing Standard AS-604: Considering the Work of Internal Audit and the accompanying Auditor-General’s Statement AG-6041.

 

(I). Formal Protocols between Internal and External Auditors:

 

In recent times we have seen the development of formal protocols between internal and external auditors. Protocols can be useful if they contribute to improved audit transparency and an understanding of the respective roles of internal and external auditors.

 

Some protocols we have seen are unacceptable in that they are worded in the form of a contract or agreement that gives the appearance that the external auditor is not independent of the entity.

 

 

(J). “Hold Harmless” Letters

 

On occasions the external auditor is asked to sign a “hold harmless” letter before being given access to the internal audit files. This is often the case when the entity outsourcers its internal audit activity to a chartered accounting firm.

 

External auditors have no difficulty signing a hold harmless letter because the responsibility

To render an opinion on the financial statements rests solely with the external auditor. That responsibility is not divisible and cannot be reduced by internal auditor involvement irrespective of the existence of a hold harmless letter.

 

 

 

 

 

(K). Difference between external and internal auditors

 

External auditors can be government auditors or independent public accounting firms that Cornell hires. Government auditors focus primarily on compliance with government regulations and award terms. Since both federal and state governments fund a significant portion of the organizations activities, they want to make sure we use their money as they intended. Internal auditors sometimes look at the same data or perform some of the same steps as external auditors. If there is a problem, it’s better to find it and fix it before external auditors review our practices.

 

The main differences between internal and external audit functions is following

01. Position inside the organization:

Internal Audit: The internal auditors’ are part of the organization. Their objectives are determined by professional standards, the board, and management. Their primary clients are management and the board.

 

External audit: External auditors are not part of the organization, but are engaged by it. Their objectives are set primarily by statute and their primary client – the board of directors.

 

02. Objectives:

Internal Audit: The internal auditor’s scope of work is comprehensive. It serves the organization by helping it accomplish its objectives, and improving operations, risk management, internal controls, and governance processes. Concerned with all aspects of the organization – both financial and non-financial – the internal auditors focus on future events as a result of their continuous review and evaluation of controls and processes.

 

External audit: The primary mission of the external auditors is to provide an independent opinion on the organization’s financial statements, annually.

03. Independence:

Internal Audit: Internal audit must be independent from the audited activities.

 

External audit: External audit is independent from its client, the organization, its independence being specific to liberal professions.

 

04. Approach of internal control:

Internal Audit: Internal audit regards all the aspects regarding the organization’s internal

Control system.

External audit: External audit regards the internal control system only from the materiality Perspective, which permits them to eliminate those errors that aren’t significant, because they don’t have influences over the financial results.

 

05. Frequency of the audit:

Internal Audit: Internal audit performs during the entire year, having specific missions Established in according with the level of risks identified for each auditable entity.

External audit: External audit is an activity with a yearly frequency, as a rule, at the end of the year.

 

 

06. Approach of risk:

Internal Audit: The importance of risk for the planning of internal audit activity is very high

the assessment of risk being combined with other types of information like financial and operational.

 

External audit: External audit uses the information of risks for the determination of nature, period of time and necessary audit procedures that should be performed in the auditable area, taking into consideration only financial aspects.

 

 

 

(L).The Main Similarities:

 

The main similarities between internal and external audit are as follows

 

01. Both internal audit and external audit profession are governed by one set of international standards issued by the professional organism specific for each profession. This set of international standards includes the professional standards and the ethical code;

02. Both the internal auditor and the external auditor will be worried if procedures were very poor and/or there was a basic ignorance of the importance of adhering to them.

03. Risk is a very important element the planning process for both internal and external auditors;

04. Both are based in a professional discipline and operate to professional standards.

05. Both seek active co-operation between the two functions

06. For both professions, the independence of the auditor is very important;

07. Both tend to be deeply involved in information systems since this is a major element of managerial control as well as being fundamental to the financial reporting process.

08. Both are intimately tied up with the organization’s systems of internal control.

09. Both are concerned with the occurrence and effect of errors and misstatement that affect the final accounts.

10. Both produce formal audit reports on their activities.

 

 

(M).Conclusion:

According to IIA recommendations, the ideal situation is when the internal and external Auditors meet periodically to discuss common interests; although moving up in the field can involve some dues-paying work, IA also provides the opportunity to work with senior management and get involved in different areas of an organization. Benefit from their complementary skills, areas of expertise, and perspectives; gain understanding of each other’s scope of work and methods; discuss audit coverage and scheduling to minimize redundancies; provide access to reports, programs and working papers; and jointly assess areas of risk. In fulfilling its oversight responsibilities for assurance, the board should require coordination of internal and external audit work to increase economy, efficiency, and effectiveness of the overall audit process. Auditing processes for both internal auditors and external auditors have changed globalization of business, advances in technology, and demands for value-added audits have become very important figures in any corporation

 

MHOHAMMAD WAHID ABDULLAH KHAN

S/O MOHAMMAD SAADULLAH KHAN

Dhaka, Bangladesh

 

Mr. Mohammad Wahid Abdullah Khan is the Project director of “Max Textiles Ltd”.Mr. Wahid has been in accounting field since 1999. Prior to that he had completed over ten (10) years in various fields of Business like – Accounts, Finance, Internal & External Audit, project budgeting and project costing related positions in some of the largest group companies & the join venture companies in Bangladesh.

 

He consults with small- medium business owners and services professionals, business consulting service and project process. He is most experience in Financial Risk Assessment, Financial analysis, Financial Advising and Project Cost Analysis. Mr. Wahid also author of “WAK” Model - The way of best solution for an organization internal audit process,( 1st,2nd,& 3rd part) “WAK” Model- for successful financial resource , “Wahid khan“- cost analysis & PPBS Model, Mr. Wahid is the owner of “WAM” Associates and “WAK” business solutions; he can be reached at www.wakbs.350.com

 

Education:

• Master’s of commerce (Management)

• Master’s of business administration (MBA)

Proof of additional skill:

•Complete various certified & training courses in Finance, Financial risk management, Accounting, Auditing, & Project Management based,

 


Article from articlesbase.com

Filed Under: Internal Audits Tagged With: , , , ,