Upload
shazil-ahmad
View
223
Download
0
Embed Size (px)
Citation preview
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
1/40
HWSMHaseeb Waqas Sugar Mills LTD
Presented by:
Shazil Ahmad
M.Naqeeb Arshad
Komal Ashraf
Ali Kamal Pasha
M.Saad Siddiq
Usman AshrafFahad Zakria
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
2/40
Acknowledgment
We would like to express the deepest appreciation for myteacher and mentor, Mr. Abdul Rafay, who has shown theattitude and the substance of a genius: he continually and
convincingly conveyed a spirit of adventure with regard toresearch, and an excitement with reference to teaching. He hasbeen the motivation behind our extensive research and withouthis guidance and persistent help this project would not havebeen possible. We are also very thankful to Mr Amir Hanif (Sr.
Manager internal Audit Group) in Haseeb Waqas Sugar Mills. Hegave us his important time to guide us all about the internalaudit activities of Haseeb Waqas Sugar Mills.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
3/40
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
4/40
Internal Audit
Internal auditing is an independent, objective
assurance and consulting activity designed to add
value and improve an organization's operations.
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
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
5/40
5
INTRODUCTION
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
6/40
Introduction
HWSML is one of the largest white refined sugarmanufacturer in Pakistan with a Sugar Cane CrushingCapacity Of 10,000 M.
HaseebWaqas SugarMill developed and used stateof the art technology for cane preparation with asplit cane carrier system for the first time in thecountry. This brought a revolution into the sugarindustry in Pakistan.
The Company is listed in Karachi and Lahore StockExchange.
The price of per stock is 20.95
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
7/40
HWSC
Internal Audit
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
8/40
Audit Department
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
9/40
Qualification
Appointment - AuditCommittee Chairman & CEO
Chartered Accountant
Starters assistant manager
Audit Head : 4year Articles, Post Experience of 5years
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
10/40
Audit Committee
M.Irfan Hussain Butt (Chairman)
Mr .Sohail Ahmed Butt (Member)
M
r RazaM
ustafa (M
ember)
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
11/40
Continued..
The statutory auditors or the persons
associated with them have not been
appointed to provide other services except in
accordance with the listing regulations and
the auditors have confirmed that they have
observed IFAC guidelines in this regard.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
12/40
Interviewee
Our interview was conducted onMonday the 22nd of
November 2010.
Our interviewee wasMr. Amir Hanif, whose
designation is the senior manager internal audit of
the Haseeb Waqas Sugar Mills Ltd.
He is a CA finalist and maintains a 13 year post articleexperience and has devoted the last 4 years of work
at Haseeb Waqas Sugar Mills Ltd.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
13/40
Statement of Compliance with the
code of Corporate Governance:
The Board has formed an Audit Committee. It
comprises three members, all non-executives
directors including the Chairman of the
Committee.
The meetings of the Audit Committee were held
at least once every quarter prior to approval of
interim and final results of the Company and asrequired by the Code. The terms of reference of
the committee for compliance.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
14/40
Continued..
The board set up an effective internal audit function managedby suitably qualified and experienced personnel who areconversant with the policies and procedures of the Companyand are involved in the internal audit function on a full timebasis.
The statutory auditors of the Company have confirmedthat they have been given a satisfactory rating under theQuality Control Review program of the Institute ofChartered Accountants of Pakistan (ICAP), that they orany of the partners of the firm, their spouses and minorchildren do not hold shares of the Company and that thefirm and all its partners are in compliance with theInternational Federation of Accountants (IFAC) guidelineson code of ethics as adopted by ICAP.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
15/40
Vision Statement
HWSM internal audit department is to provide
management with information, facilitation
and advice to ensure that there is an
appropriate balance of control, risk and
governance throughout the organization.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
16/40
Guiding Principles of Internal Audit
CONFIDENTIALITY
Shall be prudent in the use and
protection of information
acquired in the course of their
duties.
Shall not use information for any
personal gain
INTEGRITY
Work with honesty, diligence
and should observe law and
regulations. Should not be part
of illegal activity.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
17/40
Role of Internal Audit
To attain managements goals and objectives by
bringing disciplined and systematic approach to
enhance the following:
Risk management
Control processes
Governance
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
18/40
Use of Internal Audit toManagement
An effective Internal Audit Department can help
management to ensure that:
S
tandards goals and objectives are achieved. The companys policies, procedures and
instructions are being followed.
Records are reliable, so that managementdecisions are based on accurate information.
Legal requirements are satisfied.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
19/40
Key Areas of focus
Receivables
Payables
Reconciliations
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
20/40
Internal Audit Review
Not done by external auditor
But they have the coordination
They check internal audit reports
If theres any shortfall
That area is checked by external auditors
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
21/40
Who does internal auditor report to?
Internal Auditor must be independent of the
activities which it audits. Its direct
responsibility is to the Chief Executive/
Managing Director.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
22/40
Internal Audit Plan
Internal Audit Plan is prepared using a risk basedmethodology.
It identifies any significant changes in the
companys operations and the environment itoperates in.
Prepares a detailed risk analysis and determinedthe priority of coverage to be devoted to each
audit area.
These risk assessments are also discussed withrelevant levels of management.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
23/40
Types of Internal Audit performed by
Internal Auditor
COMPLIANCE REVIEW of existing systems ofinternal controls to ensure that they areoperating as planned.
OPERATION REVIEW which helps management toimprove productivity, efficiency andeffectiveness.
PRE AND POST IMPLEMENTATION REVIEW of
newly established systems to ensure adequacyand effectiveness of controls before and afterimplementation of the system.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
24/40
Characteristics of an Internal Auditor
Independency of an Internal AuditorIndependency is essential to ensure objectivity. Internal Auditor is
impartial when performing reviews because it has no vested interest in any
activity that it audits.
Internal Audit is usually an Chartered Accountant but internal audit can
also be done by a person who possess valuable knowledge and insight
about the functions of audit.
Internal auditor does not review the performance of an individual
operating in the organization but it reviews the operation of an entity.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
25/40
25
OVERVIEWOF AUDIT ACTIVITES
Planning and scheduling audit
Conducting document review
Conducting audit
Prepare audit report
Conducting follow-up
Preparing for on-site activities
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
26/40
26
Forming an audit team and assign roles andresponsibility and agreed on the scope
Conducting document review
Preparing for the on-site audit activities
Review documents (SOPs, audit findings,corrective action/preventive action, etc.),check the integrity of the quality systemand various controls are effective
Preparing audit plan Assigning work to the audit team
Preparing work documents
(eg. audit checklists, sampling plans, forms forrecording information; questionnaires)
AUDIT ACTIVITIES
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
27/40
27
AUDIT DOCUMENTATION
Audit report is an
official document to report the audit findings
Audit plan
should be sent to auditee prior to auditactivity
findings from the last audit should be alsomentioned
Audit note should include
an audit questionnaire all records and comments during the audit
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
28/40
28
EXAMPLE OF AN AUDIT CHECKLIST
General format for an audit checklist
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
29/40
29
Internal Control the 5 key components
5.
4.
3.
2.
1.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
30/40
30
Internal Control the 5 key components
Control Activities
Policies/procedures that ensure
management directives are carried
out.
Range of activities including
approvals, authorizations,
verifications, recommendations,
performance reviews, asset security
and segregation of duties.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Environment
Sets tone of organization
influencing control consciousness ofits people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
31/40
31
Internal Control the 5 key components
Monitoring
Assessment of a control systems
performance over time.
Combination of ongoing and
separate evaluation.
Management and supervisory
activities. Internal audit activities.
Control Activities
Policies/procedures that ensure
management directives are carried
out.
Range of activities including
approvals, authorizations,
verifications, recommendations,
performance reviews, asset security
and segregation of duties.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Environment
Sets tone of organization
influencing control consciousness ofits people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
32/40
32
Internal Control the 5 key components
Monitoring
Assessment of a control systems
performance over time.
Combination of ongoing and
separate evaluation.
Management and supervisory
activities. Internal audit activities.
Information and Communication
Pertinent information identified,
captured and communicated in a
timely manner.
Access to internal and externally
generated information.
Flow of information that allows for
successful control actions from
instructions on responsibilities to
summary of findings for management
action.
Control Activities
Policies/procedures that ensure
management directives are carried
out.
Range of activities including
approvals, authorizations,
verifications, recommendations,
performance reviews, asset security
and segregation of duties.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Environment
Sets tone of organization
influencing control consciousness ofits people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
All five components must be in
place for a control to be effective.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
33/40
33
Relationship withManagement
Challenge is balancing advising and counselling management with
fiduciary duty to monitor and oversee management
To build trust, need strong, open two way communication channels
Clear understanding on where managements responsibilities endand committees begin
Management should seek committees input in advance of key
decisions
Evaluate managements performance and assess bench strength
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
34/40
34
Relationship with external auditors
Auditors should report directly to the committee
Audit Committees have a role in
Selecting, or reappointing, external auditors Evaluating auditors performance
Ensuring auditors independence
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
35/40
Minutes:
As internal audit committee is the non-
executive member of the minutes.
They attend all the minutes so that they canknow the real position of the company.
The minutes are held very month.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
36/40
Where do Ideas come from?
There are many sources, both within and
outside the Internal Audit Department.
ExternalS
ources includes : Chief Executive/Managing Director
Managers at all Levels
External Auditors(Qadeer & Company)
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
37/40
Fraud as a risk to internal audit
Internal audit serves as a function to detect
fraud within an organization
Internal audit serves as a critical defenseagainst the threat of fraud, with a focus on
assessing and monitoring controls designed to
prevent and detect fraud.
Internal auditors can be part of fraud
deterrence by examining the adequacy of the
system of internal controls.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
38/40
Fraud management in HWSM through
internal Audit
HWSM being a sugar mill, faces minimal risk intheir type of business
Only fraud susceptible area is the buying of
sugar cane, as it includes 90 % of their productbuying
To minimize this, a committee is set up, which
includes a member from the internal audit,and two loyal members of the organization.
Who regulate and oversee a fair andtransparent process.
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
39/40
SWOT Analysis
OFInternal Audit Department
8/3/2019 Haseeb Waqas Group of Companies Internal Audit
40/40
Strengths