Purpose Objective

And
And Of
OfInternal Audit
and
and Relationship between
between

Accounting Auditing and

 Topics
01 Definition

02 Purposes and Objectives

03 Relationship between
Accounting and Auditing

04 Internal vs. External Audit

Guideline to be followed in conducting the audit.
 Definition

It is an independent, objective assurance and consulting

activity designed to add value and improve an
organization's operation. 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.
Independence & Objectivity
: the freedom from conditions that
threaten the ability of the internal
audit committee to carry out
internal audit responsibilities in
an unbiased manner."

:the mental attitude which the

internal auditor should maintain
while performing engagements.
How to Achieve
Independence?
ORGANIATIONAL INDEPENDENCE
It is effectively achieved when the
Chief Audit Executive reports
functionally and administratively.

Individual Objectivity
It means that the internal auditor
performs the engagements in such a
manner that they have an honest belief
in their work product and there are no
significant compromises made.
Purpose and Objectives

Primarily "to function as a service unit

to assist all levels of management in the
effective discharge of their
responsibilities."
 Scope of Work of Internal Auditing
To provide reasonable assurance that:

Risk management Governance

system is process is

effective effective

System of internal control

is effective and efficient
 Objectives of Internal Auditing
Three main objectives:

Helping the organization achieve its

objectives
Evaluating and improving the effectiveness
of risk management, control, and governance
processes
Assurance and consulting activity
designed to add value and improve
operations
Helping the organization achieve its
objectives: Business objectives are stated,
measurable targets of how to achieve
business goal
Categories:
Strategic objectives
Operations objectives
Reporting objectives
Compliance objectives
 Evaluating and improving the
effectiveness of risk management,
control, and governance processes
Procedures:
Inquiring of managers and employees
Observing activities
Inspecting resources and documents
Performing trend and ratio analysis
Reperforming control activities
Assurance and consulting activity designed to
add value and improve operations

Internal Audit Group helps to identify

problems, make recommendations and helps
facilitate resolution.
 • Infographic Style
Accounting Vs. Auditing
is the recording,
classifying, and
summarizing of economic
events in a logical manner
for the purpose of
providing financial
information for decision
making.
PFRS
Accountant Performed by
Continuous Process
Is a systematic process of
Meaning objectively obtaining and
Meaning
evaluating evidence regarding
assertions about economic actions
and events to ascertain the
degree of correspondence between
these assertions and establish
criteria and communicating the
Standards
results to the intended users
PAS
Applied
Auditor
Period Period Process
 Accounting Vs. Auditing
Provide reasonable
Provide information
Provide information that Purpose assurance that Financial
will be
will be useful
useful for users in
Statements are prepared in
decision-making through
decision-making through
accordance with the
Financial Statements
Financial Statements
applicable standard
Output
Financial Statements Audit Report
Produced
Financial, Managerial, Categories External & Internal
Cost, etc.
 Similarities

• Aim to ensure the company's records accurately

reflect its financial position
• Accounting and Auditing need a thorough
knowledge of accounting basics and principles.
• Accountants and auditors must be able to
identify issues in documentation and suggest
solutions.
 Relationship
Accounting & internal auditing

• Accounting is responsible for the

fair presentation of Financial
statements.
• Internal Auditing is responsible for
the internal control applied in the
preparation of financial Statements.
 Relationship
Accounting & EXTERNAL auditing

Accounting is the preparation of

financial statements to be used in
making economic decision while
external auditing provides
credibility to the financial
statements prepared by the entity.
 COMPARISON
BETWEEN

INTERNAL EXTERNAL
AUDIT AUDIT
S S
I I
M M
I I
L L
A A
R R
I I
T T
I I
E E
S S
 Internal vs.
External Audit
Coverage

Objectiv
Nature of e
Audit
Legal
Status
 Internal vs.
External Audit
Report
Submissio
Focus n

Scope
Type of
Checking
 Internal vs.
External Audit
Appointment
Audit
Activity
Guidance
Professiona
l
Misconduct
 Internal vs.
External Audit
Shareholder
Meetings
Remuneration
Fixation
Remuneration
Type
Qualificati
on
The end,
thank you!