What Are the Most Common Audit Issues?

Internal audit is a symmetry of "external audit". Audits conducted by full-time auditors within departments and units. The purpose is to help department and unit managers to implement the most effective management. The coordination and complementation of internal audit and external audit is a major feature of modern audit. A sound internal audit system can provide reliable information for external audits and reduce the workload of external audits. In China, internal audit is not only an important part of the internal economic management of departments and units, but also serves as the basis for national audits and is included in the audit supervision system. ^[1]

Internal Audit

(One of the three major types of audits)

1. In the new version of the International Internal Audit Professional Practice Framework issued by the International Association of Internal Auditors (IIA) in January 2011, internal audit was newly defined as: Internal audit is an independent and objective confirmation and consulting activity. Added value and improved organization operations. It helps organizations achieve their goals by applying systematic and standardized methods to evaluate and improve the effectiveness of risk management, control, and governance processes.

2. In June 2003, the China Internal Audit Association issued the "Internal Audit Standards", which defines: "Internal audit refers to an independent and objective monitoring and evaluation activity within an organization. It reviews and evaluates business activities and internal controls. Appropriateness, legitimacy, and effectiveness to promote the achievement of organizational goals.

3. Internal audit, national audit (government audit), and social audit (firm audit, independent audit) are listed as three types of audits.

contact

Compared with external audit, the common point is to master the basic audit technology, and the audit results may exist for mutual reference.

the difference

1. Independence is different.

According to Sections 1100 and 1110 of the IPPF Internal Audit Practice Framework issued by the IIA International Institute of Internal Auditors in 2011, the independence of internal audit includes two aspects, one is that internal auditors are protected from threats when performing their duties, and the other is that The independence of the audit organization means the independence of the reporting relationship with the board of directors. Compared with the "Independent Auditing Standards" commonly used in external auditing, due to the different goals and different service objects of the two, their independence is different.

2. The audit objectives of the two are different.

The objectives of external audit are often limited by laws and service contracts, such as common operations-the goal of financial statement audit is to evaluate the legitimacy and fairness of financial statements, while the purpose of internal audit is to evaluate and improve risk management, control and corporate governance The effectiveness of processes that help companies achieve their goals.

3. The focus areas of the two are different.

The focus areas of external audit are specified by laws and contracts. For example, in the audit of financial statements, the main focus of external audit is

Description

Internal audit shows specific audit contents for different industries and fields:

For the healthcare industry

[Medical Charge Monitoring]

In the system, the medical charge price evaluation index standard is preset, and the medical charge system is tracked and supervised in real time. If the processing of the medical charging system deviates from the corresponding standard indicators, these data will send signals or messages to the supervisor during the monitoring process.

[Medical Equipment Monitoring]

The system can monitor the use of large-scale medical equipment, combined with medical fee monitoring, can control the charges of large-scale medical equipment, prevent leakage of medical equipment and private charges; at the same time, it is convenient for hospital leaders to Use and income situation to understand.

[Drug Price Monitoring]

The real-time monitoring of drug prices in the system is achieved by real-time tracking and supervision of daily accounting data in the inventory system through relevant monitoring programs. If the processing of the inventory accounting system deviates from the monitoring limits or parameters, these data will send signals or messages to the supervisor during the monitoring process.

For administrative institutions

[Budget Implementation Monitoring]

The system has the function of automatically reading the budget system. According to the corresponding relationship between the set budget items and financial data, the financial data and budget data, financial indicators and budget data, and comparative analysis and penetration query of financial indicators are found to find the differences The reason for this is to define the early-warning of the implementation of the budget, and realize multiple levels of early-warning prompts.

[Special Fund Monitoring]

Check the implementation of the sources and expenditures of special funds by setting the total and sub-amounts of special funding sources and total expenditures and sub-amounts; check whether the implementation of revenues and expenditures has an overrun, and check whether the special expenditures are linked or not. Standardize accounting.

For the manufacturing industry

[Inventory age monitoring]

By monitoring the inventory business of raw materials, semi-finished products, inventory goods and other inventories, the company's inventory structure, capital occupation, backlog quantity, and backlog time are timely reflected, so that the company's inventory management personnel can timely grasp and adjust the inventory turnover frequency and revitalize the backlog of funds. It not only guarantees the timely supply of production materials from inventory, but also prevents excessive backlogs and improves the efficiency of capital use.

[Monitoring of Sales Business]

By monitoring the sales business, the sales data is updated in the system in real time, so that sales data such as sales revenue, unit cost, and unit profit can be analyzed in time, so that enterprise management personnel can grasp the market situation in time, especially for the same product. Sales prices in different markets, etc., in order to make further market strategic adjustments.

[Financial monitoring]

The real-time monitoring of the financial system in the system is achieved by real-time tracking and supervision of daily accounting data in the financial accounting system through relevant monitoring programs. If the processing of the financial accounting system deviates from the audit boundaries or parameters, the monitoring program will automatically report to the Auditors issue early warning signals or messages.

[Financial regulatory controls]

Cash sitting balance monitoring: You can monitor according to the defined cash sitting balance checking formula.

Monitoring of abnormal vouchers: Auditors can define the subject correspondence in abnormal vouchers according to the requirements of the accounting system and the internal financial system. The system can promptly record and record these abnormal vouchers when the vouchers occur, and prompt the internal control involved in these abnormal vouchers. Institutional defects.

[Financial Analysis Monitoring]

Allows to set and combine the methods provided by the financial analysis tools, define the analysis standards, and conclude the violations of the standards to form a specific analysis plan, and each analysis can be set in advance of its analysis results, and the results of the analysis can be found in the management process What happened.

[Monitoring of economic indicators]

Through the system-defined economic indicators, you can set the control of the indicator value range, indicator value trend, indicator year-on-year, and indicator budget.

[Monitoring of large amounts of income]

By setting monitoring limits for large amounts of income and expenditures in cash and bank deposit accounts, the monitoring program will automatically send an early warning signal to auditors when the amount of income and expenditure is too large or excessive.

[Audit operation monitoring]

Help audit staff to conduct audit supervision operations in accordance with legal regulations and corporate authorization, real-time monitoring, timely warning and investigation and punishment of violations of laws and regulations.

[Major Doubts Monitoring]

By setting up a method for the classification and monitoring of doubts, the audit doubts found during the audit operation will be monitored according to the principle of importance, which will help the audit supervisor to clarify the direction of detailed audit investigation.

[Monitoring of major violations]

By setting a classification standard for the amount of violations, monitoring the amount of violations found during the audit operation, helping the audit supervisor to provide monitoring tips based on the principle of materiality, and reminding the audit supervisor of the significance of the project's violations. For example: when the amount of violation exceeds 100,000 yuan, the system sends monitoring and early warning information to the auditors.

[Monitoring of violations]

Through the method of setting importance standards for violations, monitoring the attributes and importance of violations during the audit operation, helping the audit supervisor to determine the severity of the problem, and prompting the audit supervisor to audit the severity of the violations of the project. For example, when the violation is a serious violation of laws or regulations such as corruption or a small vault, the system sends monitoring and early warning information to the auditors.

[Monitoring of progress of audit operations]

By comparing the actual progress of the audit operation with the planned progress, and setting the planned progress, completing the difference monitoring indicators, monitoring the progress of the audit operation, and prompting monitoring prompts when there are major differences, helping the audit supervisor to understand in time the audit Possible problems and severity in the operation. For example, when the actual progress is significantly behind the planned progress by 30%, the system sends monitoring and early warning information to the auditors.

Common audit objects:

Divided according to the form of audit object

1. Take the real object as the object. Audit the status or period of inventory, fixed assets, or monetary funds. Such as: inventory inventory audit, fixed asset construction and disposal audit, capital revenue and expenditure audit.

2. Take accounting as the object. Audit the basis of creditor's rights and debts arising from the provision and sale of goods or services, and the status of the process and point in time. Such as: audit of accounting period, audit of payment period, audit of bad debt approval.

3. Take rules as the object. Audit the implementation process and results of systems, plans, tasks, standards, processes, etc. Such as: target completion audit, procurement approval process audit, supplier shortlisting policy execution audit, discount authority and approval audit, budget execution audit.

4. Target the responsible person. Audit the period responsibility and period-end status of the economically responsible persons. Audit of the economic responsibility of the person in charge, and audit of the target cost of the person in charge.

Follow the law. Review and analyze accounting documents, accounting books, and

Basis and Objectives of China's Internal Auditing Standards

(I) China's internal auditing standards are based on the

Three turning points in the development of modern internal audit

The emergence and development of internal audit is a long historical process. So far, it has gone through three development stages: ancient internal audit, modern internal audit and modern internal audit. Modern internal audit began in the United States. 1941 is considered the beginning of modern internal audit. In the United States before 1940, internal auditing was an assistant to external accounting firms. In 1941, Victor.Z. Brink completed his

Internal audit standards

Manage internal audit functions

Internal audit professional practice standards

Management Needs-Working Methods of Internal Audit

Ethics

Internal audit and corporate governance

Internal Audit and Audit Committee

Organizational structure design of internal departments

Reporting schemes and rules of conduct

With external

Five major trends for future development

Under the new situation, there are five major development trends in corporate internal auditing: internal auditing has shifted from compliance-oriented to management-oriented; focus on management auditing; standardization of auditing work methods; centralized organization of audit functions; and training of corporate managers through internal auditing mechanisms.

Internal audit shifted from compliance-oriented to management-oriented. Enterprise surveys show that one-third of enterprise internal audits are management-oriented or management-oriented to increase the added value of internal audits; about 40% of enterprises define themselves as compliance-oriented audits And management-oriented auditing; pure compliance-oriented or partial compliance-oriented companies accounted for less than 30% of the total survey. It can be seen that large state-owned enterprises should strive to be in line with international standards, and change from traditional compliance-oriented internal audit to management-oriented internal audit to help enterprises increase their value.

The focus of internal audit changed from financial audit to management audit. Enterprise surveys show that nearly 70% of the company's internal audit departments attach importance to management audits, improve business efficiency through review processes and analysis systems, and ensure strategic shaping of business processes and structures. Only 6% of companies have yet to conduct management audits. It can be seen that financial reports and compliance audits have become less and less in the internal audit duties of large enterprises, and the business of managing audits will become the main responsibility of future internal audits. State-owned enterprises should refer to international experience to complete the transformation of their internal audit functions.

Internal audit work methods are gradually standardized across the enterprise. With the transition from enterprise internal audit to management-oriented and the continuous deployment of internal audit management tools, the internal audit departments of enterprises have become very similar to other professional service industry organizations (such as consulting companies), providing large-scale independent companies Comprehensive audit business. Enterprise surveys show that 67% of companies have an internal audit standardization at an average level, and those with a high standardization internal audit system have 17% more companies than those with a low level of internal audit standardization. At the same time, more and more companies use appropriate IT tools to automatically analyze financial reports and compliance audits. In this case, audit issues are often identified through systematic IT risk analysis. It should be noted that although more than 60% of enterprises are not equipped with integrated audit management tools, these enterprises usually only conduct small-scale internal audits; when enterprises involve large-scale internal audit work, they often introduce applicable Management software or internally developed corresponding management tools. Less than 40% of enterprises do not use any auditing software.

The internal audit function organization changed from decentralized management to centralized management. The centralized management of the internal audit function helps companies to implement simpler standardized audit processes, while ensuring that enterprises deploy internal resources more efficiently. Benchmarking shows that 75% of the respondents are basically centralized or completely centralized in internal audit functions, and only a quarter of them have adopted a decentralized or more decentralized internal audit function system. This shows that most of the large international companies have chosen to centralize their internal audit functions. This approach is not only conducive to the mobilization of internal audit resources, but also increases the independence of internal audit within the enterprise and the management and control of internal audit by the company's board of directors. Large state-owned enterprises should strive to move closer to international advanced practices, centralize the management of internal audit functions, and promote the transformation of enterprise internal audit.

Companies tend to train their managers by internal audit mechanisms. The company has completed a major change in the requirements for internal auditors. Internal audit has become an important step in the training of prospective managers, and auditors have become candidates for prospective managers in various business functions. The survey shows that most (more than 80%) companies have recruited auditors that meet the requirements of their positions, and through effective career development methods, they have eventually promoted auditors to become the internal auditing human resources strategy of the company's associate manager. This initiative of large international companies has increased the attractiveness of internal audit positions and recruited a large number of high-quality talents for internal audit work. Large state-owned enterprises should refer to their practices and adjust the career development direction of internal auditors in order to attract more high-quality talents to join the internal audit team.