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Internal Audit- A boon to the industry January 12, 2012

Posted by Khurana Khurana & Associates LLP Chartered Accountants in Internal Audit.
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Internal Audit is the growing demand of the industry these days. After a number of frauds disclosed by corporate, the need arises for having a strong and robust internal control environment in the organization. Internal audit not only assess the financial control but also focuses on operational controls.  Internal auditors are the best source of placing assurance on the operations of the company. They are considered to be the right hand of the audit committee, management and shareholders as they keep them well informed about the potential risk and material misstatements in the company. Apart from identifying the risk, they analyze the controls that are required as preventive, detective and corrective measures to mitigate the risk. Internal audit profession demands professional knowledge and experience thereby maintaining the standards and professional ethics, adding value to the company.

Is it the right time to hire the internal auditors is the question that management faces lot of time. Also the question arises on the feasibility of having internal audit department internally or outsourcing it to the accounting firm.

The earlier the company decides to hire the internal auditor the better it is, since they assess the controls in the organization, help in improving the productivity, better management of resources and complying with the regulations. With improved productivity, comes increased profitability and improved ways of doing the business.

Outsourcing Internal audit is the most economical practice followed by companies these days, which not only ensures the complete independence but also provide assurance on the control environment in the company. A group of professionals conducting an internal audit through outsourcing firm is always a better option as it includes assessment of systems with rich knowledge of professionals within reasonable cost than having a single internal auditor hired by the company.

Author: CA. Meena Lalchandani Khurana, Partner

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Compulsory outsourcing of internal audit functions December 9, 2011

Posted by Khurana Khurana & Associates LLP Chartered Accountants in Internal Audit.
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Let me begin this by saying the views expressed are purely personal in nature and no interpretation/view should be used in any manner.

It is important for the organisations/management to understand the role of Internal Audit function, who is a system reviewer with an ideology of continuous improvement in line with the business processes and latest in the compliance environment.

The Internal Audit function is best when managed internally in the sense they will be dedicated to one organisation and are exposed to the complete working however they may be additionally supported by an outside agency which brings in a different mind-set. If the  scale of operations is small the same may be outsourced completely.

It is the prerogative of the management how they feel this function can be used in the best interest of the organisation. Making it compulsory, may not be serve the core purpose since the results of this function are dependent on the skill set and approach of the Internal Auditors.

The team of Internal Auditors should be a composition of Finance and Legal Professionals and may constitute of Chartered Accountants, Cost Accountants, Lawyers.

The statutory auditors will always be held accountable for the figures presented in the annual financial statements. The scope of reliance on the Internal Auditor is for the Statutory Auditor to decide and same should not be a defence available to them.

CA. Varun Khurana, Managing Partner varun@kkaca.com

What can one expect from The Internal Auditors December 8, 2011

Posted by Khurana Khurana & Associates LLP Chartered Accountants in Internal Audit.
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Internal Auditors is a close group of seasoned professionals having an overall sense of the business process. They work closely with the management (across) with a clear mind-set of identifying the areas of risk, potential areas of risk, revenue leakages and recommending corrective measures to manage the risk, identifying the areas of revenue realisation and effective cost management.

In addition to the wholly owned companies, the Foreign Companies having/proposing to have joint ventures/subsidiaries/liaison office or venture capitalist should look at this Audit and Assurance function seriously. They can make a good use, not only to safeguard their financial interest but also grow it, by deploying Internal Auditors as Third Party Assurance Providers (TPA’s).

Internal Auditors with a forensic approach can be effective fraud risk managers. The benefits derived will far out way the cost to have good Internal Auditors.

For any clarification on how we could be of assistance reach us at varun@kkaca.com

CA. Varun Khurana, CEO & Managing Partner