Defence Health Maintenance Limited Induction/ Training Program of Newly Employed Staff. 3rd 12th December 2012 INTERNAL CONTROL & COMPLIANCE

By

Mrs A.F.E Bello23/10/2013

Defence Health Maintenance LimitedThird Quarter Training Week Program 21st 25th October 2013

AUDIT PLANNING IMPLEMENTATION AND CONTROL

OUTLINE

Definition of Audit PlanEnumerate activities involved in compiling an audit planList the advantages of audit plan to relevant usersAdopt some strategies for audit implementation in their respective organization

INTRODUCTIONOrganizations can only achieve desired objectives with institution of procedures, policies, rules and regulations which will bring about the 3Es that the managers aim for. The 3Es are also part of the internal Audit objectives.The 3Es are:a.Economy (Input); This is a relationship between production, trade and the supply of money in a particular entityb.Efficiency; process of doing things right with no waste of time, money and resourcesc.Effectiveness (Output); producing the result that is wanted or intended

PlanThings to doAlternative ways of performanceResources requiredThe auditor should be concerned with how to organize his work as any other manager. This how is often described as audit planning and programming.Adequate planning for information and evidence to be gathered on the audit objective during each phase of the audit function with the proposed procedures to accomplish the plan

DEFINITIONAudit plan could be described as a formal documents which specifies the areas of audit activity to be carried out, the resources required and available to cover the work over a set time period in order that the objectives of the internal audit section can be met.Audit plan can also be described as a statement of objectives to be attained in the future and an outline of the steps necessary to teach them.Audit planning involves balancing the work to be done against the resources available in order to achieve adequate coverage each year and full coverage in the minimum period of time.

Consideration should be given to:Pre-plan ActivitiesAudit objectivesArrears and servicesThe extent to which departments are involved in financial administration, changes in services, methods and systems.

New areas or RisksFlexible approach to respond to dynamic and emergency situationsAreas to be covered by auditFrequency of auditMan days of auditEvaluation of changes within the organization

OBJECTIVES OF AUDIT (Internal)

Appraise and report on: a.The soundness, adequacy and application of financial and other management controls and the extent of compliance with established plans and procedures, policies etcb.The extent to which the organization assets and interest are accounted for; the suitability and reliability of financial and other management data develop within the organization.

TYPES OF PLAN

a.The Strategic Plan:This plan sets out the audit objectives in broad terms, the areas to be covered, the frequency of coverage and the organizational structure needed to achieve these general targets over a period of perhaps 2-5 years.b.The Tactical Plan:This plans sets out the strategic plan areas to be audited in the immediate future perhaps 3-12 months. It includes detailed definition of the objective for each audit, e detailed allocation of resources to meet any contingencies during the period.c.The Operational Plan:This involves what should be prepared for each audit prior to commencement. This sets out the audit tasks,. The staff allocated thereto, the tests to be applied and the acceptable levels of error involved. Where audit programmes exist, the operation plan may be not more than the tailoring of these to the specific audit in question.SOURCES OF INFORMATION

-Financial Regulations-Financial informationOverheadCapitalManpower budget-Audit control files-Results of previous audit plans-Other sourcesPublished statisticsCommittee reports/meetingsExperience of senior audit staff in assessing

PREPLAN ACTIVITIESDetermine the magnitude of the assignmentAssesses the resources neededObtain approval/instruction to commence auditFamiliarize with the operations of the department/unitsDetermine the focus of auditObtain background information

PLANNING PROCESSES

Match objectives (in terms of audit activity with staffing resources)Personnel assessment of the auditorTranslate the available audit resources into a suitable unit measurementMan days computationMan hoursAnticipate; Lost time, Public holidays, annual leave, sick leave, examination/study leave, audit training, courses and conferences.

AUDIT ADMINISTRATIONTime allocationContingenciesSeparate allocation is desirableGENERAL ALLOCATION OF DUTIESRegular auditsSpecial projectsAudit administration and contingenciesApproval of audit planADVANTAGES OF AUDIT PLAN

To the Chief AuditorPlanning exercises necessitates the critical assessment of the audit activity by ascertaining the basic objectives of the audit functions and specifying the steps necessary to achieve themMotivates by providing predetermined targets for both senior and junior staffHelps to exercise controls by providing a yardstick against which he can measure actual performanceMeans of conveying the objectives of the audit section and ultimate achievement to chief executives (and other interested parties)May help avoid the use of audit resources for non-audited duties.

To the External AuditorAssistance in assessment of the adequacy of internal auditAssist in determining the areas for his own audit investigationsProvide free exchange of information and ideas likely for better relationships between internal and external audit.To the Chief ExecutiveHe is provided with an opportunity to direct and approve the basic objectives and detailed audit plan. RESERVATIONS/PROBLEMS

There may be a danger in regarding the audit plan as an end in itself rather than as a means to an end. The following should be noted in production of an audit plan. Rigid adherence to the predetermined plan may create its own problems. A plan must have an adequate degree of flexibility but into it with appropriate allowances.Staff targets should be feasible and should constantly be kept under review especially if staff turnover is high.A degree of independence must be maintained over publication and over involvement of service departments in the preparation of the plan could be detrimental to audit functionsIn view of criticism and need for justification, it is particularly important to be able to demonstrate that the procedures and decisions of the audit section have developed objectively.

IMPLEMENTATION

Following approval, the plan will need to be analysed on a quarterly, monthly or weekly basis to provide the facility for continuous programming controls and reviews. The success of an plan depends upon discipline, cooperation and commitment. The following should be noted:Motivation of audit staffAdequate working papers and other supporting documentation (Audit files, accounting instructions)Define responsibility for maintaining and controlling the audit planFormulate lines of communication to ensure that resources are effectively allocated within the guidelines of the planAudit staff and made aware of the targets objectives and priorities at the pre-audit stage.Audit management may continuously assess performance, re-appraise priorities and review plans as necessary.Control documents should be carefully designed with a view to clarity, ease of completion and relevance.Device a logical coding system to facilitate ready reference. The audit file reference may be incorporated in the code.

AUDIT CONTROL

Effective implementation of the audit plan requires control over both the quantity and quality of the work produced by the audit staff. There is a little point in the meticulous preparation of a plan if staff is subsequently allowed to exceed targets times without adequate explanation or to produce poor quality work because of time constraint or in-experience.

QUALITY CONTROLThe auditor in charge of each audit task should submit regular reports to his superior showing actual progress against target time and informing the latter immediately on time.Staff must be motivated, because the extent of motivation will inevitably be reflected in the quality of the work produced. The chief auditor can therefore identify staff problems and ensure effective audit planning by introducing quality control measures along the following linesDetailed working papers should be prepared for all audit tasks showing the purpose of the working papers, the work to be carried out, the results of the work and field of auditors.

CONCLUSIONThank youFor Your Attentionand God Bless