AUDIT.pptx

iv th yr

1. NURSING MANAGEMENT Audit And Its Process Prepared by : Mrs BeminaDinesh Assistant Professor ESIC college of nursing

2. The term “Audit” is borrowed from the Latin word “ Audire ”, i.e. to hear. Audit is Latin word. *Meaning of audit is official examination of the accounts. * In today’s global health industry organizations or service providers are required to demonstrate that they have adequate financial controls and safeguard when they host or process data of their customers. *Auditing is originated from accounting practices and the development of accounting audit was motivated by the capitalist production concept, which used it as tool for financial control. *In health field, auditing was introduced in the early 20th century, as a tool to verify the quality of care, by analyzing the registers on medical record. INTRODUCTION

3.  Auditing is the procedure by which proficient liberated person accumulate and examine the evidence to form an assessment and convey their point of view to the individual concerned with their audit report.   •Audit is defined as “it is the process of evaluation or analysis of something to determine its accuracy or safety, or is the document that declares the result of such an analysis or evaluation.” *Audit is defined as, “it is a process to analyze and evaluate something.” *Audit is defined as, “it is an independent review and examination of records and activities to assess the adequacy of system controls, to ensure compliance with established policies and operational procedures, and to recommend necessary changes in controls, policies, or procedures.” Definition:

4. It makes sure that all the financial statement of concern is presented fairly. Audit gives a fair and true picture in accordance with financial reporting framework. It enhances the degree of confidence of intended users in financial statement. PURPOSES

5. Audit is a vital part of accounting. Audits were mainly associated with gaining information about financial system and financial records of company or business. Recent audit includes non financial subject areas such as, safety, security, information system performance. It is process of verifying cost of manufacturing or producing of any articles. A systemic and accurate verification of cost accounts and records. An audit must adhere to generally accepted standards established by governing bodies. CHARECTERESTICS

6. • An external audit is review of financial statement or report of an entity, usually a government or business, by someone not affiliated with organization or agency. It is independent review of financial documents provided to auditor. The audit is conducted by regulatory agency hired by the entity and the auditors are generally the public account. For government or public sector, an external audit will include review of budget, the allocation of funds and the actual expenses to ensure the budgeted revenues and expenses were correctly complied and used and in a private sector. It includes a review of organization’s quarterly or monthly financial reports as well as statements on revenues and expenditures to ensure they are correctly tabulated and reported. These are usually conducted once a year at the end of fiscal year. • A year end financial report is prepared by entity, which is one of the documents verified in external audit. Types of external audits: • Financial audit • Operations audit • Compliance audit External audit:

7. T o ensure that internal control, processes, guidelines are adequate and in line with the government requirements. To provide an independent and unbiased assessment of an organization’s internal governance and financial matters. To verify internal procedures. To evaluate adherence of the organization to standards and principals. To evaluate the adequacy and effectiveness of existing internal control . PURPOSE OF EXTERNAL AUDIT

8.   Internal audit has been recognizing as an aid to management for monitoring the financial performance and effectiveness of various departments/ units in the execution of various program, schemes and activity.   Internal audit is an independent management function, which involves a continues and critical appraisal of the functioning of an organization with a view to suggest improvements and add value to and strengthen the overall governance mechanism of organization or entity, including the entity’s risk management and internal control system. The internal audit activity evaluates risk exposure relating to organization’s governance, operation and information system in relation to effectiveness and efficiency of operation, reliability and integrity of financial and operational information, safeguarding of assets, and compliance with laws, regulation and contract. 2. Internal Audit:

9. OBJECTIVE OF INTERNAL AUDIT • To suggest improvements to the functioning of the entity organization • To strengthen the overall governance mechanism of the entity organization including its strategic risk management as well as internal control system • To prepare for the external audit PURPOSE OF INTERNAL AUDIT • To establish standards and to provide guidance in respect of internal planning. ROLE OF INTERNAL AUDIT Regulatory and compliance role •Quality of public expenditure •Proper implementation of rules and regulation •Maintenance of proper records •Accuracy in expenditure reporting Efficiency cum performance roles •Efficiency and economy in public expenditure •Propriety of expenditure •Effectiveness of expenditure •Proper realization, accounting and reporting of revenue receipts. INTERNAL AUDIT

10.   1. Financial audit : • Financial audits typically involve a focus on financial controls as they relate to reporting. These audits focus on accounting controls present in the general ledger or sub-ledger systems. Financial statement auditing is the focus of our external auditors. Internal Audit will complement the work they perform based on an agreed plan.   2. Operational audit : • Operational audits focus on the review and assessment of a business process. • The activities of the business process may result in a direct or indirect financial impact to the organization such as the collection of student tuitions or patient account balances. • Internal Audit primarily focuses on operational audits but can extend the scope to include accounting procedures that can impact financial reporting. 3. Compliance audit: • Compliance audits review the level of compliance with internal policies or external regulatory requirements. TYPES

11. 4. Information Systems: • Audits of Information Systems look at the overall infrastructure and network of the University and the controls that relate to the security of the network and the systems that are maintained in support of the goals of the University. They also include technical operations, data centre operations, project management procedures, and application controls. 5. Integrated Audits: • Integrated audits look at controls that address financial, operational, compliance and information systems risks. These audits are typically centred on a business cycle or a specific part of a cycle or process TYPES

12. 6. Administrative audits: • Assess issues related to the efficiency of operational productivity within an organization. 7. Specialized audit: • There are number of specialized reviews that examine areas such as services performed by third parties and forensic auditing. 8. Forensic audit: • Traditionally forensic audit has been defined as an audit specialized in discovering, disclosing and follow up on frauds and crimes. In recent years the forensic profession has been called upon to participate in investigations related to corporate fraud and cybercrime. TYPES

13. The audit process is similar for most engagements and normally consists of four stages: Planning (sometimes called Survey or Preliminary Review), Fieldwork, Audit Report, and Follow-up Review. Client involvement is critical at each stage of the audit process. As in any special project, an audit results in a certain amount of time being diverted from your department's usual routine. One of the key objectives is to minimize this time and avoid disrupting ongoing activities. AUDIT PROCESS

14. During the planning portion of the audit, The auditor notifies the client of the audit, Discusses the scope and objectives of the examination in a formal meeting with organization management, Gathers information on important processes, Evaluates existing controls, and plans the remaining audit steps. Planning

15. Announcement Letter: The client is informed of the audit through an announcement or engagement letter from the Internal Audit Director. Initial Meeting: The client describes the unit or system to be reviewed, the organization, available resources (personnel, facilities, equipment, funds), and other relevant information. Preliminary Survey: In this phase the auditor gathers relevant information about the unit in order to obtain a general overview of operations. Internal Control Review: The auditor will review the unit's internal control structure, a process which is usually time-consuming. Audit Program Preparation of the audit program concludes the preliminary review phase. This program outlines the fieldwork necessary to achieve the audit objectives. Planning

16. Transaction Testing Advice And Informal Communicaion Audit Summary Working Papers FIELDWORK

17. Discussion Draft At the conclusion of fieldwork, the auditor drafts the report. Audit's goal is to complete the audit and issue a draft audit report within 30 days after the completion of fieldwork.  Audit management reviews the audit working papers and the discussion draft before it is presented to the client for comment. This discussion draft is submitted to the client for review before the exit conference. AUDIT REPORT

18.   Exit Conference Internal Audit meets with the unit's management team to discuss the findings, recommendations, and text of the discussion draft. At this meeting, the client comments on the draft and the group works to reach an agreement on the audit findings. Is an opportunity for the auditor, department management, process owners, and other to review and validate audit outcomes. The Exit Conference should accomplish the following: 1) Present observations and determine if the current operating context might affect past transactions. 2) Confirm facts, observations, and conclusions, e.g., that the findings are accurate. 3) Validate the cause leading to findings and present recommendations. 4) Estimate the effect of the findings on operations or its risk management. 5) Solicit draft management comments on the audit findings and determine if alternative recommendations adequately eliminate the cause of findings. 6) Define the timeline for issuing the final audit report and implementing recommendations. AUDIT REPORT

19.   Audit Finding Reconciliation Supervisory Review (Urgent) During our sample review of account reconciliations, it was noted that many account reconciliations were not being reviewed by the supervisor in Item Processing and Deposit Operations. Recommendation We recommend management review all accounts at least monthly. Action Plan The Supervisor of the Item Processing Department was advised of this requirement and has implemented changes as requested. The Deposit Operations Manager will sign and review all account reconciliations. A secondary signature by the balancing associate and/or supervisor will also be implemented. This procedure is currently in place. AUDIT REPORT CONTINUED

20.   Exit Conference Checklist Procedure Set the date, time, and location of the exit meeting. The agenda should include the following: • Accomplishment of the audit objectives (theirs and ours). • Discussion of potential audit findings and recommendations. • Discussion of when management’s response < br /> will be due. • Audit reporting process. • Follow up process. Document results of the exit meeting. Exit Conference This section of the report summarizes the pertinent information regarding the Audit Exit Conference. It includes: The date the conference was held. The persons in attendance and their titles. A statement that a summary of the Findings and Recommendations was discussed. AUDIT REPORT CONTINUED

21. Formal Draft The auditor then prepares a formal draft, taking into account any revisions resulting from the exit conference and other discussions. This report is issued to the audited requesting a written response to any audit findings and recommendations. When the changes have been reviewed by audit management and the client, the final report is issued. Our principal product is the final report in which we present the audit findings and discuss recommendations for improvements. Once the fieldwork is completed, Internal Audit will draft a report to include the result of the audit including recommendations for improvement. After the draft report is completed, it will be forwarded to department management for review and discussion at a scheduled exit conference. AUDIT REPORT CONTINUED

22. Final Report After audited management has been given an opportunity to respond to the Preliminary Draft, the Final Draft Report is presented to the Accountability Oversight Committee for approval.   Upon approval of the Final Draft the Final Report is issued. Auditor distributes the final report the Chief Financial Officer, the Chief Accountant, the President, the Board of Directors, and other appropriate members of senior management. Final Reports are considered public information and will be available to anyone. AUDIT REPORT CONTINUED

23. Client Response The client has the opportunity to respond to the audit findings prior to issuance of the final report which can be included or attached to our final report. In the response, the client should explain how report findings will be resolved and include an implementation timetable. In some cases, managers may choose to respond with a decision not to implement an audit recommendation and to accept the risks associated with an audit finding. AUDIT REPORT CONTINUED

24. Client Comments Finally, as part of Internal Audit's self-evaluation program, we ask clients to comment on Internal Audit's performance. This feedback has proven to be very beneficial to us, and we have made changes in our procedures as a result of clients' suggestions AUDIT REPORT CONTINUED

25. Depending on the nature of the audit or the audit findings, the Follow-Up procedure may formal or informal”. Approximately one year of the final report, Internal Audit will perform a follow-up review to verify the resolution of the report findings Followed up review The actions taken to resolve the audit report findings may be tested to ensure that the desired results were achieved. Followed up Report To resolve the original report findings. Unresolved findings will include a brief description of the finding, the original audit recommendation, the client response, the current condition, and the continued exposure to the board of company. Audit Follow up

26. Audit Annual Report Memorandum to the senior manager that notifies them that audit activities are underway and describes the follow-up process.  This memo should include: timeframes for the project, a copy of the outstanding findings relating to areas reporting a request that they distribute the findings to these areas and ask the managers to provide Internal Audit with the information requested, a statement that these comments were previously distributed as part of an audit report or close-out letter notification that the results will be reported to Board of Trustees.  The Announce Memo report Findings Access database provides sample wording for the notification memo. The notification memo should be sent. Audit Follow up