Page 99 - DCOM509_ADVANCED_AUDITING

Advanced Auditing

Notes “……. that under contemporary practices, a wide range of activities is being done by the internal
audit department. These activities may broadly be classified as financial and operational audits.
Under the former may be included:
1. A continuous review of internal accounting control;

2. The scrutiny of reports and statements, financial or operating, as prepared for management
purposes;
3. The ascertainment of the extent to which the assets of the organization are accounted for
and safeguarded from losses or damages;
4. The examination of balance sheet items, tests of balances and transactions as to their
authenticity through appropriate tests, etc.

Notes Internal audit shall also exercise vigilance for prevention of mistake having both
deterrent as well as reformative effect.

Under operational audit may include:

1. The study and assessment of operating practices to promote increased efficiency and
economy;

2. The carrying out of audits to determine whether operating objectives, targets and associated
control procedures are properly instituted and the degree to which the desired results are
achieved;
3. The examination and the ascertainment of the extent to which established policies, plans
and procedures are complied with;
4. The assessment of budgetary standard setting;
5. The assessment of the level of performance in successfully discharging duties and
responsibilities assigned.”
From the above discussion it is clear that internal audit is basically a review function. On the
basis of such review, the internal auditor should in his report, highlight the weaknesses observed
and give suggestions for improvement.

Task Visit Head office of any known company to you and meet the head of internal audit
department. Discuss with him about the scope and objectives of internal audit in his
company. Make a project report and try to find the weaknesses if any.

Self Assessment

State whether the following statements are True or False:
7. The main purpose of internal audit is to help the management to achieve its objectives.
8. Operational audit includes assessment of budgetary standard setting.

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