Benefits of Using an Internal Audit Checklist

Internal Audit Checklist:

An internal audit checklist serves as a tool for the internal auditor to help them ensure the essential requirements addressed by every internal audit. It is like a reference point during the whole internal audit process. When done accurately it provides lot of benefits to the business organization. It helps to determine the quality and efficiency of the management.

Benefits of Using an Internal Audit Checklist:

When used correctly and effectively, an internal audit checklist can provide with numerous benefits. These are –

  • They provide as a reference point for planning for the future internal audits.
  • It serves as a means of communication between the organization and the internal auditors.
  • Serves as reference for objective evidence.
  • It also ensures that the approach towards the audit is consistent.
  • It acts as evidence that the audit was done.
  • It ensures systematic and consistent approach for conducting the audit.
  • It acts like assistance for the whole audit process.
  • It provides and ensures a proper uniformity in the performance of all the auditors.

 

Detailed Internal Audit Checklist:  

There is a detailed checklist for internal audit to be done as per the laid laws. This checklist includes:

  1. Individual KYC- providing details regarding name, PAN card, AADHAAR card, business description, copy of last audited financial statement and type of engagement.
  2. Corporate KYC- providing details regarding name, business description, name of parent company in case of subsidiary company, copies of financial statement in the last audit, engagement type and regulatory information.
  3. Non Corporate KYC- providing details regarding name and address of business entity, parent’s name and there address, description of the business, type of engagement and PAN card number.
  4. Other than KYC- details regarding nature of assignment and copy of the engagement letter.
  5. Expenses/Statutory Compliance- details regarding any expenses incurred under section 40 A(2), section 40 A(3) and if any expense is disallowed under section 43(B).
  6. Statutory Compliance- details regarding any contravention in section 269S and 269T and whether TDS/TCS deposited on time or not.
  7. Compliance under Indirect Tax- details regarding central excise duty if any imposed, service tax paid and/or VAT/CST paid.
  8. Compliance Under Other Relevant Enactments- details regarding compliances given in ESI Act, 1948; Minimum Wages Act, 1948; Payment of Wages Act, 1936; Shops and Establishments Act, 1953 ; Payment of Bonus Act, 1965; Payment of Gratuity Act, 1972; Contract Labor Act (Regulation and Abolition), 1970; and Companies Act, 2013;
  9. Sales/Service/Revenue-details regarding documentation, legal compliances, authorization matrix, compliance with AS and SA, credit assessment including procedures and controls, sales or dispatch including procedures and controls, reconciliation including procedure and controls, segregation of duties including procedures and controls, IT controls, recording of all the transactions, reporting, good governance and suggestions.
  10. Purchase/ Procurement- details including documentation, legal compliance, authorization matrix, compliance with AS and SA, procedures and control, recording of transactions, quality or good governance, reporting and suggestions if any.
  11. Inventory and Stores Management- details regarding documentation, legal compliance, authorization matrix, compliance with AS, procedures and control, recording of transactions, quality or good governance, reporting and suggestions if any.
  12. HR and Payroll- details regarding documentation, legal compliance, authorization matrix, leave policy including procedure and controls, payroll and payment processing including procedure and controls, full and final settlements including procedure and controls, bonus and pension including procedure and controls, recording of transactions, quality or good governance, reporting and suggestions if any.
  13. Operational and Admin Expenses- documentation, legal compliance, authorization matrix, compliance with AS and SA, compliance with AS and SA with relevant aspects, procedures and control, recording of transactions, quality or good governance, reporting and suggestions if any.

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    Author: Anil Agrawal
    EZYBIZ India Consulting LLP, New Delhi. The firm is business and tax consultancy firm providing consultancy in Taxation, Regulatory, Transfer pricing, Valuation, Corporate funding and Business set up matters. He may be reached at 9899217778 or anil@ezybizindia.in.