You are on page 1of 57


“Internal Audit Functions and its Performance in OIL, Duliajan”
As a partial fulfillment of the requirement for the MBA degree

Under the organizational guidance of:
Mr. M D Gupta
Chief Manager, Internal Audit

Submitted By:
Debashish Phukan
Wilson Kikon

School Of Management Studies (SMS)


We undersigned hereby declare that the project entitled “Internal Audit
Functions and its Performance in Oil India Limited” is the original piece of
work submitted by us under the guidance of Mr. M D Gupta, Chief Manager
(IA), for the partial fulfillment of the requirement of MBA Degree of “SCHOOL
exclusively prepared and conceptualized by us and the findings in this project
report are based on the data collected by us and to the best of our knowledge and
belief this report has not been copied from any research submitted by anyone,
anywhere earlier.

Debashish Phukan
Wilson Kikon
School of Management Studies (SMS),
Nagaland University

The MBA is not an end in itself, but a means to an end. It is a degree
designed to give us the ability to develop our career to its fullest potential, at an
accelerated pace. To become a successful manager in this competitive era the first
and foremost task is to have a real life experience about the corporate world. We
are very much fortunate that in our syllabus there is a provision for Summer
Training of eight weeks in the public sector or private sector. We have made our
summer training at Oil India Ltd. (OIL) Head Office, Duliajan, Assam. In OIL we
have been given the necessary training regarding their organization and working
also we have been given the necessary inputs regarding our project work. It is a
splendid experience to work with the professionals. In IOL we have come to know
a lot and I believe those will pave our way during our working in the corporate
I am very much glad to present our project report on “Internal Audit Functions
and its Performance in Oil India Limited”
This project is a sincere attempt to study and understand the overall Internal Audit
functions of Oil India Limited (OIL) and its prospects.

Debashish Phukan
Wilson Kikon
School of Management Studies (SMS)


We take this opportunity to thank all the person without whose constant
guidance, support and help, this project would not have seen completion.
We avail our self of the opportunity of offering our sincere thanks to all the
members of the Department of Business Administration, “School of management
Studies (SMS), Nagaland University for organizing the summer training in Oil
India Limited, Duliajan and also for their generous guidance and help in the
preparation of this report.
We would like to express our gratefulness to Ms. D.Borborah, Sr. Manager,
T&D and Mr. T K Das Gupta, GM (IA), OIL, for giving us the chance to carry
out our project in his organization.
We acknowledge our indebtedness to our project guide Mr. M D Gupta,
Chief Manager (IA), OIL for his insightful comments and guidance regarding the
manuscript of this report.
We also like to thank Mr. M B Chetri Sr. Manager (IA), Mr.Utpal
Kaushik Sarma Dy. Manager (IA), Mr. A K Sinha Sr. Audit Officer (IA) and all
the Officers and staff of Internal Audit Department, OIL for helping and
supporting us during the summer training.
Last but not the least, our thanks also extended to all the respondents of OIL,
who has taken the pain of filling up the questionnaire and helped us to carry out the
study on their inputs.

Debashish Phukan
Wilson Kikon

School of Management Studies (SMS),
Nagaland University


Project title: Project Report on Internal Audit Functions and its Performance in
Oil India Limited
Organization: Oil India Limited, Duliajan, Assam
Organizational Guide: Mr. M D Gupta, Chief Manager (Internal Audit)
Duration: 1st June – 31st July, 2011 (2 months)

Objectives of the study:

To measure the overall performance of Internal Audit Department in OIL,

• To study the functions and roles of Internal Audit Department in OIL,
Research Methodology:
The study is based on survey method. The primary data is collected by personal
interviews through structured questionnaires to knowing the views, comments and
confidence regarding the performance of Internal Audit functions in OIL, Duliajan.
For the purpose of the study executives of different departments were selected and
interviewed. The secondary data is collected from the books, magazines/ journals,
websites and including OIL’s Internal Audit Department office.

D. The sample was selected on the basis of Convenience Sampling. C1. H. magazines/journals. Care is being taken to prepare the schedule according to the structure and format.Research design : Descriptive and Exploratory type of Research Sampling plan : In OIL executive are graded in the increasing rank as A. (Duliajan). B. Schedule design : A well structured schedule comprising of close ended. The schedule is set according to the objective of the study. F. . G. Sample area : The questionnaire was distributed in 26 major departments of OIL. & I. Sample Size: 50 Data source : Both Primary and Secondary data. Sincere efforts were made to make the schedule simple and precise. C. multiple choice and dichotomous questions. E. This survey includes only grade E & F in the core departments of OIL. and websites. Method of data collection: Primary data were collected by face to face interview with the help of a well structured questioner and secondary data were collected from books.

• Since the report is based on the primary data and personal interview. • Sampling error might have occurred because no sample in perfect representation of a give population unless the sample size equals the population. occurrence of personal biased cannot be ruled out. • There is a possibility of occurrence of false judgment due to the biased responses by some of the executive’s staff while giving answers. • Unavailability of executives in their cabins as they were engaged in field work at that time. Recommendations were made on the basis of findings drawn from various data collected. . Pie charts and Bar diagrams were used to reach at the conclusion.Analysis Technique: The data collected from the respondents were analyzed using standard statistical methods and techniques. Findings were made on the basis of analysis. Limitation • The survey was limited to few departments in the organization.

5 2.2 1.4 2. Contents DECLARIATION PREFACE ACKNOWLEDGEMENT EXECUTIVE SUMMARY CHAPTER-1 (General observation of the Organization) 1.7 CHAPTER-2 (Introduction to Internal Audit) Internal Audit History Of IA Role In Internal Control Role In Risk Management Role In Corporate Governance Nature Of IA Activity IA Report CHAPTER-3 (Internal Audit in OIL) 3.5 1.7 1.1 1.3 3.3 2.1 3.6 1.4 Introduction Activities of IA Department IA Mission Statement IA Purpose I II III IV-VI 1-7 1 2-3 3 3-4 4-5 5-6 6 6-7 8-13 8-9 9-10 10 10 10-11 11-12 11 11-12 12-13 14-24 14 14 14 .6 2.8 Introduction History Of Oil Executive Profile Objectives Mission And Vision CSR List Of Departments Achievements 2.2 3.TABLE OF CONTENTS Page No.3 1.4 1.1 2.2 2.

3.9 3.10 3.1 4.2 4. Interpretation.3 CHAPTER-4 (Analysis.5 3.8 3.11 3.12 3.7 3.6 3. Findings and Conclusion) Analysis and interpretation of the Questionnaire Findings Conclusion ANEXTURE—I BILBOGRAPHY 24-40 41 42 42-46 47 .13 Scope and Objectives IA Independence Responsibilities Authority Relationship with Other Control Functions Approach and Methodologies Methodology of Risk assessment IA Organizational Structure and Staffing pattern Staffing 15 15 15 16 16-17 17-18 18 19-20 21 22-24 25-42 4.

1. OIL India Private Limited was incorporated to expand and develop the newly discovered OIL fields of Naharkatiya and Moran in the Indian North East.57% of the Equity capital is held by others. OIL also has participating interest in NELP exploration blocks in Mahanadi Offshore. The Government of India. Additionally. as well as various overseas projects in Libya. In 1981. Assam in 1889 to its present status as a fully integrated upstream petroleum company. At present. In a recent CRISIL-India Today survey. 1959. Gabon. Nigeria and Sudan. OIL has over 1 lakh sq km of PEL/ML areas for its exploration and production activities. In 1961. . 500 Cr. The balance 21. The Issued. Today. OIL is a premier Indian National OIL Company engaged in the business of exploration.45 Cr. most of it in the Indian North East. UK. OIL also provides various E&P related services and holds 26% equity in Numaligarh Refinery Limited. OIL became a wholly-owned Government of India enterprise.43% of the total Issued & Paid-up Capital of the Company. 240. which accounts for its entire crude OIL production and majority of gas production. Subscribed and Paid share capital of the company is Rs. it became a joint venture company between the Indian Government and Burmah OIL Company Limited. The Authorized share capital of the Company is Rs. On February 18. Mumbai Deepwater. OIL’s exploration activities are spread over onshore areas of Ganga Valley and Mahanadi.1 INTRODUCTION The story of OIL India Limited (OIL) traces and symbolizes the development and growth of the Indian petroleum industry. crossing many milestones. etc. OIL has come far. the Promoter of the Company is holding 78. Rajasthan is the other producing area of OIL. development and production of crude OIL and natural gas. contributing 10 per cent of its total gas production. Iran. transportation of crude OIL and production of LPG. Krishna Godavari Deepwater. OIL was adjudged as one of the five best major PSUs and one of three best energy sector PSUs in the country. From the discovery of crude OIL in the far east of India at Digboi.CHAPTER 1: OIL INDIA LIMITED’S PROFILE.

By 1920.1. by 1956 only 16 wells had been drilled. a public sector refinery was initiated in 1959 at Guwahati with help from Romania. Almost immediately on inception. In 1912 the rotary system was introduced. The drilling activities of AR&T progressed satisfactorily with 11 wells yielding OIL in 1894. Aftermath of Success (1953 – 1959) The Nahorkatiya OILfield was discovered in 1953. the region had the common blessing of commercial OIL. W L Lake. The decision to drill was taken by the Directors of the AR&T Co. Digboi Well No-1(1889-1890) The well. It was commissioned in 1962. started in September 1889.5 million tons of OIL per year with 45 million cubic feet of gas per day. the company expanded the concessional area of the field by purchasing the rights of the Assam OIL Syndicate. including the Digboi and Makum concessions. rising steadily to 247 bpd in 1911. fortified later in the year by new discoveries at Hugrijan and Moran. an employee of the company and an OIL enthusiast. and reaching a maximum of 435 bpd in 1917. only to be abandoned as dry at 720 ft. Well 47 being the first well to be drilled by this method. Production almost trebled from 43 bpd in 1901 to 120 bpd in 1902. On the basis of this assurance. in 1888 under the direction of Mr. A new firm . Lord Ribblesdale . was completed in November 1890 as a producer at a total depth of 662 ft.the Assam OIL Company (AOC).2 HISTORY OF OIL INDIA LIMITED The story of OIL exploration in India began in the dense jungles and swamps of Assam in the 19th century. However. and evidence suggested subsurface faults which could have acted either as barriers or conduits to OIL movement. Despite this meager evidence. with a total production of 50 barrels of OIL per day. with an initial production of 200 gallons per day. The AOC inherited 14 producing wells.was promoted in 1899 to take over the petroleum interests of AR&T. Uphill and Downhill (1890 – 1920) After the successful completion of the first well. United by geography with Burma and caught up in the cross-currents of history. led by the same Chairman. The success of Nahorkatiya Well No-1 set in motion a series of activities. The Burma OIL . the AOC announced in September 1956 that proved and probable reserves in the Nahorkatiya area were sufficient to plan a production target of nearly 2. the AOC had completed 80 wells with a total average production of 350 bpd. Digboi Well No-2 was started in February 1891 in the same area.

Arun Kumar Gupta Independent Director: Mr.T.Satchidananda Rath Government Nominee Director: Mr.Pawan Kumar Sharma 1.K Ananth Kumar Director (Exploration &Development): Mr. (Smt. dynamism. 1. Mr W P G Maclachlan. a key player in the negotiation. The Agreement assured Burmah OIL a dividend of 10% and Digboi Refinery 1. Growth. B.3 million barrels of OIL per year.3 EXECUTIVE PROFILE Chairman & Managing Director: Mr.Ghanshyambhai Hiralal Amin Independent Director: Mr.4 OBJECTIVES OF OIL INDIA LIMITED Basic Objectives: • To achieve self sufficiency in Hydrocarbon resources.N Talukdar Director (Human Resources and Business Development): Mr.NayanMani Borah Director (Finance): Mr. OIL was incorporated on 18 February 1959. • To get adequate return on capital. Narasimha Raju Government Nominee Director: Dr. became the first Chairman of OIL.D. Nripendra Kumar Bharali Director (Operations): Mr. .OIL India Private Limited (OIL) .N. adaptability and technological awareness have marked the activities of OIL from 1959 till take over the management of the AOCdiscovered fields of Nahorkatiya and Moran.Company signed a Promotion Agreement with the Government of India (GoI) in January 1958 to form a company .) Archana Saharya Mathur Independent Director: Mr.Sushil Khanna Independent Director: Mr. with two-thirds of the shares held by BOC and the rest by GOI. AlexanderK Luke Independent Director: Mr.Vinod Kumar Misra Independent Director: Mr.

Promote OIL related research and development activities. Ensure proper development and effective utilization of Human Resources Diversify into the field of OIL field services: indigenous and overseas. To built excellent management team. • To evolve a system of closer association in involvement of employees to encourage sports. Objectives towards people: • Social and community development • Development of ancillary and small scale industry • Promotion of population environment • Health interaction with the users and business associates OIL’s corporate objectives: OIL believes “Superlative efforts precede superlative results. development of OIL and material gas resources. Enhance safety measures in operations.5 MISSION AND VISION OF OIL Core Purpose: “The fastest growing energy company with a global presence value to the shareholders. culture and other activities. Speedy development of discovered fields and increase recovery from depleting and develop fields. To encourage technological advantage for import use of Non conventional energy resources. To built and project an efficient corporate image. OIL has set the highest challenges for itself to measure up to. • To provide training and development opportunities to enhance skills for optimum contribution. Maintain a professional and efficient corporate character.” To serve that very purpose. To augment crude OIL and Gas production. Its organizational agenda is to: • • • • • • • • • • • Accelerate exploratory efforts in order to increase Hydrocarbon reserves. 1. Maintain and promote environmental friendly measures. Ensure adequate return on capital by capacity utilization. • To induct and develop competent persons at all levels. cost effectiveness and optimum productivity.” . Objectives towards employees: • To establish personnel policies for the well being of its employees. Undertake overseas venture in exploration.• • • • To promote training and development in Hydrocarbon Exploration.

OIL India is a responsible corporate citizen deeply committed to socio-economic development in its areas of operations. OIL India is fully committed to safety. nurturing initiatives. OIL’s Mission: • • • • Balance between our investment in the E & P section and other low risk diversification opportunities with the objective of optimizing our asset portfolios.OIL's Vision • • • • • • OIL India is the fastest growing Energy Company with highest profitability. It is this twin objective of business and social commitment that has prompted OIL to embark upon massive programmes of educational. health and infrastructural development endeavors. OIL management understands that there is a need to strike a balance between the overall objectives of achieving corporate excellence vis-à-vis the corporate responsibility towards the community. transparency and mutual trust creating employee pride. OIL India is a team. committed to honesty. health and environment. by business becoming an integral part of societal process where people have access to resources to make informed choices and decisions towards a more humane and compassionate society. integrity. OIL India is a Learning Organization. OIL India delights the customers with quality products and services at competitive prices. Vision Statement “OIL is a Responsible Corporate Citizen deeply committed to socio-economic development in its areas of operations.6 CORPORATE SOCIAL RESPONSIBILITY: Since its inception OIL has always given top priority towards the all-round development of the people residing in and around the Company’s area of operation.” Strategy: . innovations and aspirations with best practices. Have unstinted faith in our employees to enable them to make quick and informed decision through adequate training and to improve then to do so.” Philosophy: “To promote the awareness and practice of Good Corporate Citizenship. Grow with unwavering concern for the community and all over stick holders. processes and technologies and thereby consistently improve operational and financial performance which adhering to the highest standards business conducts. Continuously upgrade manpower skills. an attempt to invest technology with a human face. 1.

received the special commendation award for Woman of the Year in The OIL & Gas Industry. No 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Departments Electrical Geophysics Employee relation Information technology Land Material Medical Personnel Mechanical engineering Planning Research and development Security Safety and Environment Training And Development Transport Field Engineering Vigilance 1.1 Sl.” 1.“To mobilize core competencies and resources of business. Instituted by Petrofed the OIL & Gas industry Awards were given away by the Hon'ble Union Minister of Petroleum & Natural Gas. Shri Jaipal Reddy at a packed function at New Delhi on May 10. 2011.8 ACHIEVEMENTS OIL India bags three Petrofed Awards OIL India Limited bagged three Petrofed OIL & Gas Industry awards for the year 2009.G Production OIL & GAS Pipeline Personnel R&D Well Logging Internal Audit Sl. public organisations and Government Institutions…to facilitate their working in partnership on projects that benefit communities.7 DEPARTMENTS OF OIL INDIA LIMITED Table 1. OIL India received the OIL & Gas Pipeline Transportation Company of the year award. in presence of Captains and leaders of the petroleum industry in India. Special Commendation award for Innovator of the Year-Team and Mrs Rupshikha Saikia Borah. No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Departments Administrative Civil Chemical Drilling Drilling TS Contracts Finance and accounts Geology and reservoir General engineering Instrumentation and Field Communication L. It is indeed a proud moment for all in OIL India limited . General Manager (Treasury). OIL India Limited.P.

the ceremony was attended by several dignitaries. OIL India Limited.424.M. by Hon’ble Union Minister of Steel. the scrip settled at Rs 1. The award was received by Shri N. OIL India Limited.84 crore shares changed hands on both the bourses. On the NSE.M.Borah.52 crore. 2009. the day of debut on the Bombay Stock Exchange.2010.M. Chairman & Managing Director. Shri Pranab Mukherjee in front of many PSU leaders and business magnates.156 and touched a low of Rs 1. The award was given taking into account the Company’s Net Sales. Net Profit and Balance Sheet size. with a valuation of Rs 27. the renowned Financial and Investment Journal. Oil India has joined the club of country's top 40 companies in terms of market capitalisation. from Hon’ble Finance minister of India. though it had opened marginally down.135.48%. The stock during market hours climbed to a high of Rs 1. ceremony at New Delhi on 6th April. 2010. at a glittering ceremony. Oil India Limited by the Hon'ble Minister of Heavy Industries and Public Enterprises.64 crore shares had been fixed at Rs 1. In its maiden have been recognized for their efforts. Oil India Limited received the certificate conferring the NAVRATNA Status Oil India Limited received the certificate conferring the NAVRATNA Status by Govt. The issue price for IPO of 2. Shri Virbhadra Singh at a glittering ceremony in presence of CEOs of other PSUs and dignitaries.70 and had also slipped to a low of Rs 1.019. OIL was conferred the Navratna Status in April.090 a share. Borah. Operating profit. The award was given away by the Hon’ble Chief Minister of Delhi Shrimati Sheila Dikshit at a glittering ceremony at New Delhi on 24th March. OIL bags India Pride Awards OIL India Limited received the silver award in the OIL & Gas category of India Pride Awards Dainik Bhaskar group. OIL Receives PSU award OIL India Limited received the “Heavyweight Miniratna” PSU award at the 2nd.140. The stock hit an intraday high of Rs 1. The scrip closed at Rs 1.11. Chairman & Managing Director. Chairman & Managing Director. TNN . Shri Vilasrao Deshmukh at a ceremony in new Delhi organized by ASSOCHAM. over 2. OIL bags "PSU with the highest Book Value" award OIL India Limited was conferred with the “PSU with the highest Book Value” award by Dalal Street. up 7.Borah. Of India at New Delhi on 16.050 per share. The certificate was presented to Shri N.156. With the debut on the stock market. Dalal Street Investment Journal PSU Award 2010. 2010. The award was presented to Shri N. Oil India lists at 8% premium New Delhi: Shares of staterun northeast explorer Oil India Ltd settled at over 8% over their issue price . The awards have strengthened the resolve of the Company’s employees to perform even better.

Internal auditing is a catalyst for improving an organization’s effectiveness and efficiency by providing insight and recommendations based on analyses and assessments of data and business processes. the reliability of financial reporting.CHAPTER 2: INTRODUCTION TO INTERNAL AUDIT Internal auditing is an independent. As a result of their broad scope of involvement. internal auditing involved measuring compliance with the entity's policies and procedures. With commitment to integrity and accountability. and may." The scope of internal auditing within an organization is broad and may involve topics such as the efficacy of operations. our codes of ethics and perspectives on enhanced professionalism. objective assurance and consulting activity designed to add value and improve an organization's operations. highly respected professional associations. internal auditors are not responsible for the execution of company activities. Internal Audit is not a discipline of Accountancy. a risk appetite is defined. of course. but Internal Audit is an entirely separate discipline more closely related to Enterprise Risk Management. and . However. Professionals called internal auditors are employed by organizations to perform the internal auditing activity. Significant misunderstandings in this area have resulted in many organisations recruiting accountants with external audit experience to staff an internal audit function. towards Risk Based Internal Auditing (RBIA) which results in monitoring and evaluation of the risk based control framework to manage enterprise risk. and quantifiable research mirror one another. and governance processes. each with members from all around the world. Internal Audit does. disciplined approach to evaluate and improve the effectiveness of risk management. safeguarding assets. in part. "The IIA and ACCA are both long-standing. this is usually detrimental to the quality and completeness of assurance provided to the Non-Executive Directors/Board. Traditionally. internal auditors may have a variety of higher educational and professional backgrounds. When IIA and ACCA signed the Global Memorandum of Understanding. cover financial risk amongst its portfolio. Developments in internal auditing have moved away from "compliance" which is a function of management control. Richards said. Although we represent two distinctly different professions. The modern approach seeks to ensure that key risks are identified. deterring and investigating fraud. have contributed to corporate failures where key operational risks that were not directly related to financial statements remained unidentified and/or unmanaged by the Executive Management. they advise management and the Board of Directors (or similar oversight body) regarding how to better execute their responsibilities. External Audit is related to Accountancy. control. ongoing education. and compliance with laws and regulations. IIA President David A. but this is one very minor element of the role. It helps an organization accomplish its objectives by bringing a systematic. internal auditing provides value to governing bodies and senior management as an objective source of independent advice.

the profession's growth accelerated. 2. quality assurance and banking compliance activities. Internal auditors have to be independent people who are willing to stand up and be counted. Its functions include. objective and constructive view. Much of the theory underlying internal auditing is derived from management consulting and public accounting professions. Internal auditor’s deal with issues that is fundamentally important to the survival and prosperity of any organization. led by a Chief Audit Executive ("CAE") who generally reports to the Audit Committee of the Board of Directors. To do this they need a remarkably varied mix of skills and knowledge. the look beyond financial risks and statements to consider wider issues such as the organizations reputations. They might be advising the projective running a difficult change programme one day. with administrative reporting to the Chief Executive Officer. Publicly-traded corporations typically have an internal auditing department. examining. its impact on the environment and the way it treats its employees. Other definitions The definition above (first sentence of this page) is in essence the IIA's definition.2 History of internal auditing The Internal Auditing profession evolved steadily with the progress of management science after World War II. amongst other things.3 Role in internal control The role of internal audit is to provide independent assurance that an organization’s risk management. A similar definition has been developed by the accounting profession and adopted by the government auditors: the ISA 610 and the INTOSAI’s standard ("ISSAI") 1003 define the Internal audit function as "An appraisal activity established or provided as a service to the entity. growth. governance and internal control process are operating effectively. Unlike external auditors. It is conceptually similar in many ways to financial auditing by public accounting firms. Their employers value them because they provide an independent.controls are instigated in a fit for purpose way to manage risk according to the risk appetite of the organisation. as many internal auditors possess the skills required to help companies meet the requirements of the law. evaluating and monitoring the adequacy and effectiveness of internal control. ." 2. With the implementation in the United States of the Sarbanes-Oxley Act of 2002. or investigating a complex overseas fraud the next.

management. Risk management relates to how an organization sets objectives. strategic issues. Managers establish policies and processes to help the organization achieve specific objectives in each of these categories. Compliance with laws and regulations. major strategic initiatives are implemented to achieve objectives and drive changes. Corporate governance is a combination of processes and organizational structures implemented by the Board of Directors to inform. and responds to those risks that could potentially impact its ability to realize its objectives. direct. then identifies. In larger organizations. Reliability of financial reporting. As a member of senior management. the other pillars being the Board of Directors. management. Internal auditors perform audits to evaluate whether the policies and processes are designed and operating effectively and provide recommendations for improvement. and other personnel. designed to provide reasonable assurance regarding the achievement of objectives in the following internal control categories: • • • Effectiveness and efficiency of operations. The internal auditor is often considered one of the "four pillars" of corporate governance. the Chief Audit Executive (CAE) may participate in status updates on these major initiatives. and monitor the organization's resources. Management is responsible for internal control. Under the COSO Framework. manage. and the external auditor. . 2. This places the CAE in the position to report on many of the major risks the organization faces to the Audit Committee. accomplished primarily through participation in meetings and discussions with members of the Board of Directors. or ensure management's reporting is effective for that purpose. 2. they talk to executives at the very top of the organization about complex. analyzes.From very early on in their careers. which is one of the most challenging and rewarding parts of their role Internal auditing activity is primarily directed at improving internal control. strategies and policies towards the achievement of the organizations objectives. affected by an entity's board of directors.4 Role in risk management Internal auditing professional standards require the function to monitor and evaluate the effectiveness of the organization's Risk management processes. internal control is broadly defined as a process.5 Role in corporate governance Internal auditing activity as it relates to corporate governance is generally informal.

Report problems identified and negotiate action plans with management to address the problems. 4. Internal auditing activity is generally conducted as one or more discrete projects. Develop and execute a risk-based sampling and testing approach to determine whether the most important controls are operating as intended. Follow-up on reported findings at appropriate intervals. 6.A primary focus area of internal auditing as it relates to corporate governance is helping the Audit Committee of the Board of Directors (or equivalent) perform its responsibilities effectively. Establish and communicate the scope and objectives for the audit to appropriate management. 7. Identify control procedures used to ensure each key risk and transaction type is properly controlled and monitored. 2. suggesting questions or topics for the Audit Committee's meeting agendas. By analyzing and recommending business improvements in critical areas. and any responses or action plans from management.6 Nature of the internal audit activity Based on a risk assessment of the organization.7 Internal audit reports Internal auditors typically issue reports at the end of each audit that summarize their findings. 2. management and oversight Boards determine where to focus internal auditing efforts. internal auditors. This may include reporting critical internal control problems. specialists called Information Technology (IT) Auditors review information technology controls. Internal audit departments maintain a follow-up database for this purpose. recommendations. A typical internal audit project [14] involves the following steps: 1. 5. Describe the key risks facing the business activities within the scope of the audit. auditors help the organization meet its objectives. and key transaction types. This includes objectives. In addition to assessing business processes. 2. Flowcharts and narratives may be created if necessary. informing the Committee privately on the capabilities of key managers. An audit report may . This involves review of documents and interviews. measurements. Develop an understanding of the business area under review. Project length varies based on the complexity of the activity being audited and Internal Audit resources available. 3. and coordinating carefully with the external auditor and management to ensure the Committee receives effective information. Many of the above steps are iterative and may not all occur in the sequence indicated.

completely processed. and appendix information such as detailed graphs and charts or process information. updated at least annually. 2. financial reporting or legal/regulatory compliance.e. Each audit finding within the body of the report may contain five elements. sometimes called the "5 C's": 1.have an executive summary. how can the Internal Audit Department assist the organization in achieving these goals? Internal auditors often conduct a series of interviews of senior management to identify potential engagements. whether goals were met or compliance with standards was achieved) or efficiency (i. whether the outputs were generated with minimum inputs). what goals are the organizations trying to accomplish in the upcoming period? Second. 2. a body that includes the specific issues or findings identified and related recommendations or action plans. Audit findings and recommendations also relate to particular assertions about transactions. such as whether the transactions audited were valid or authorized. among other elements. processed in the correct time period.8 Developing the plan of engagements Internal auditing standards require the development of a plan of audit engagements (projects) based on a risk assessment. which may relate to operations.. and properly disclosed in financial or operational reporting. The input of senior management and the Board is typically included in this process. accurately valued. Corrective action: What should management do about the finding? What have they agreed to do and by when? The recommendations in an internal audit report are designed to help the organization achieve its goals. or systems often generate audit project ideas. Consequence: What is the risk/consequence (or opportunity foregone) because of the finding? effectiveness failure.e. . Condition: What is the particular problem identified (difference between criteria and actual status)? 3. They may relate to effectiveness (i. Criteria: What is the standard? The standard may be a company policy or other benchmark. This effort helps ensure the audit activity is aligned with the organization’s objectives. by answering two key questions: First. processes. Cause: Why did the problem occur (which control over risk was missing . Many departments update their plan of engagements throughout the year as risks or organizational priorities change. or which control did not execute as planned -operating effectiveness failure)? 4. Changes in people..

Further.Various documents are reviewed. such as strategic plans. financial reports. Audit resources and expertise are then considered and a final plan is presented to senior management and the Audit Committee. . consulting studies. The preliminary plan of engagements is documented and prioritized. the results of prior audits and resolution of open issues are considered. etc.

income tax and deposit thereof. Audit Committee may also play a significant role in the oversight of the company’s risk management policies and programs. LPG and scrap sale. Audit Committee provides an ‘independent’ reassurance to the board through its oversight and monitoring role. effectiveness of anti-fraud. Documentation and payment of advances and recovery. natural gas. the same is outsourced through Chartered Accountants Firms.Internal audit who reports to the Director (Finance). Kolkata Office. etc.1 INTRODUCTION In OIL. robustness of the systems of internal audit and internal controls. internal audit of pipelines. Internal Audit is an independent department having executives & staff of Finance and Accounts discipline. effectiveness of external and internal audit functions. Establishment payment like. The main areas covered by Internal audit are as follows:a) b) c) d) e) f) g) h) Scrutiny of Contracts and Purchases Proposal awarding contracts and purchase orders. Presently the department is headed by GM.2 Activities of Internal Audit Department The scope and areas to be covered by Internal Audit is decided at the beginning of the year through Annual audit program which is approved by audit committee.salary/ wages. tour claims. . BEP & KG and partly the fields headquarter Duliajan are carried out by Internal Audit Department located at Duliajan. In respects of rest of the project/ offices of the company. review of the functioning of the whistleblower mechanism. Among many responsibilities the boards entrust the Audit Committee with are the transparency and accuracy of financial reporting and disclosures. medical bill claim. Payment of contractors and suppliers bill.CHAPTER 3: INTERNAL AUDIT IN OIL 3. Audit of billing of crude OIL. Physical verification of assets. 3. Assam. Monitoring of capital work-in-progress. Liaise with Comptroller and auditor General (C&AG) and statutory Auditor Audit Committee The audit committee is established with the aim of enhancing confidence in the integrity of an organization’s processes and procedures relating to internal control and corporate reporting including financial reporting. ethics and compliance systems. Deduction of sales tax.

boards are going to need strong leadership from their audit committees. all being nonexecutive directors. Expanding the field of vision. with at least one director having financial and accounting knowledge. provides for the formation and functioning of audit committees (section 292A). clearly defining who’s tracking the company’s risk radar. Clause 49 requires a minimum of three members. In steering companies through today’s complex business environment. Section 292A of Companies Act Vs Clause 49 of Listing Agreement The Companies (Amendment) Act (2000). listed companies Constitution and independence of the audit committee Section 292A requires that the audit committee shall consist of not less than three directors and such number of other directors as the board may determine. Two-thirds of the total number of the audit committee shall be directors other than the managing or whole-time directors. Below is a comparison between the regulations governing the audit committee. The . Base of Diff. and taking a step back to reevaluate its own performance are some of the important steps every Audit Committee should consider. The audit committee has full access to information Clause 49 gives specific powers to the audit committee to investigate any activity within its terms of reference. these scams and corporate failures have shaken investors’ confidence and the whole world is watching intently the steps being undertaken by the various statutory authorities in this respect. perhaps the 1992 stock market scam and liberalizations of the economy contributed more to the introduction of these requirements than did Enron. Be that as it may. with the majority of them being independent directors*. and obtain outside legal or professional advice. Section 292A Clause 49 Applicability Section 292A applies to all pubic Clause 49 of the Listing companies with a paid-up capital of Agreement covers most of the Rs. 5 crore or more. This section of the site includes a range of useful publications relating to the audit committee’s operations and oversight responsibilities. It points to a few prominent differences between the regulations in both. Role and powers Section 292A gives the audit of the audit committee the authority to investigate into any matter in relation to the items committees specified in this section or referred to it by the board. Similar requirements for audit committees are prescribed under clause 49 of the Listing Agreement issued by SEBI. seek information from any employee. among other things. In India.Audit Committee has thus become one of the main pillars of the corporate governance system in Indian public companies.

K. (Govt. its promoters. (Independent Director) 2. do not have any other material pecuniary relationship or transactions with the company. The outsourced portion of the audit is being presented by the concerned auditors however the in-house audit reports is being presented by the HOD (IA). Minimum four meeting is required to be held during a financial year. Internal Audit department arrange the presentation of the audit reports of different spheres of the OIL. Members: 1.contained in the records of the role of audit committee has also company and may take external been clearly defined under the professional advice.3 Internal Audit Mission Statements . The other issues raised during the audit committee meeting is also been conveyed to the concerned departments and the action taken on the matters are reported to the committee. Shri T. 1. * Independence of audit committee members: Clause 49 defines ’independent directors’ as directors who.R. member. Generally HOD of Internal audit department is also invited in the meeting. if it deems clause 49. It may be noted that clause 49 has listed the powers of the audit committee while section 292A has left it to the discretion of the board. OIL Audit Committee. necessary. 3. its management or its subsidiaries. member. CA Pawan Kumar Sharma. Vinod K Misra.Krishanan) is the secretary to the audit committee who convinced the meeting of the audit committee in consultation with the chairman audit committee. Director) Permanent Invitee. (Smt) Archana S Mathur. Sri. which in the board’s view may affect their independent judgment. Whenever directed by the audit committee. Ananth Kumar D (F) Secretary of the meeting Company secretary (presently Sh. apart from receiving directors’ remuneration. S. Dr. (Independent Director) 3. Chairman.

The head of internal audit- .Resources are acquired economically. recommendations and pertinent comments concerning the activities reviewed.Reviewing and appraising the correctness.plans and procedures .Plans and objectives are achieved . The internal auditor is concerned with any phase of business activity where he/she may provide service to the organization. used efficiently and adequately protected . risks management and governance process.Interactions with the various governance groups as needed .Recommending operational improvements 3.Quality and continuous improvement are fostered in the OIL’s control process . . risk management and governance processes. managerial and operating information is accurate.4 Internal Audit Purpose The purpose of OIL’s internal audit is to determine whether its controls. disciplined approach to evaluate and improve the effectiveness of control.Financial.Risks are appropriately identified and managed . .Ascertaining the quality of performance in carrying out assigned responsibilities .Ascertaining the extent of compliance with established policies . as designed and implemented by management are adequate and effective and functioning to ensure. financial and other operating controls and promoting effective control at reasonable cost .5 Scope and Objectives: The objective of internal auditing is to assist all members of the organization in the effective discharge of responsibilities by furnishing them with analysis.Significant legislative and regulatory issues having impact in OIL’s operations are recognized and timely addressed appropriately 3. The attainment of this overall objective involves such activities as.Ascertaining the extent to which company assets are accounted for and safeguarded from losses of all kinds . reliable and timely .6 Internal Audit Independence: Internal auditing is an advisory function having independent status within the organization.Employees actions are in compliance with OIL’s policies and procedures and applicable laws and regulations . This scope involves going beyond the accounting and financial records to obtain a full understanding of the operations under review. The internal audit accomplishes its objectives by using a systematic. appraisals.The mission of the internal audit is to provide independent and objective assessment and consulting services to add value and improve the OIL`s operations. 3. adequacy and application of accounting .

. in any way substitute for or relieve any officials or staff of OIL from their assigned responsibilities. and be advised of approved variations or new developments 3. Internal auditors do not develop and install procedures.7 Internal Audit Responsibilities: The head of internal audit shall be responsible functionally to the audit committee and administratively to the chief executive /director (finance) of OIL. In performing their work.Development and control of an efficient internal audit program .Scope and boundaries of audits .- - Shall be directly responsible to the chief executive/director (finance) and be independent of any other section. for the functional control of audit activities in relation to: . and shall have direct access to all documents. internal auditors have neither direct authority over/ nor responsibility for any of the activities reviewed. JV) is exempt from audit and review. functions or duties except those relating to the management of the internal audit office Shall not be responsible for the detailed development and/ or implementation of new systems but should be consulted during the system development process on the control measures to be incorporated in new or amended systems . No officer or staff member should interfere with or prohibit internal auditors from examining any record of OIL or its subsidiaries/ JVs or interviewing any employee that auditors believe is necessary to carry out their duties. or engage in any other activities that could be reasonable construed to compromise their independence or impair their objectivity. records and departments/ operations for which a suitable authority letter is to be issued by the chief executive so that the assignments can be carried out independently Shall have no executive powers . make management decisions.Maintenance of appropriate auditing standards 3.Development. Therefore. or unit of the OIL or a related organization with OIL (like joint venture. internal audit reviews do not. branch or officer.8 Internal Audit Authority: The general scope of audit coverage is organization-wide and no function. activity. Additionally the head of internal audit has the authority to review and audit the accounts and financial reports submitted to the management for its reliability and genuineness. implementation and oversight of internal audit methods and procedures . prepare records.Fulfilling the objectives of internal audit .Utilizing the internal audit resources to maximize the efficiency and effectiveness of the internal audit function and .

Such access is important in order for the internal auditor to be satisfied as to the propriety for internal audit purposes of relying on the external auditors work and for the external auditors to be satisfied as to the propriety. . accounts.Have access at all reasonable times to all books . minimize duplication of audit efforts and achieve synergy of the efforts. Co-ordination of audit efforts involves. adequacy of systems and/ or of controls. property . and work papers. Access to each other’s detailed audit programs.Internal auditors of the organization shall: . during the conduct of the proposed audits if the internal audit department personnel come across any cases where a mollified intention is suspected the same should be reported to the audit committee/CMD who should decide whether to report the same to the vigilance department.Have the right at reasonable times to enter any premises of the organization and to request any officer to furnish all information and such explanations deemed necessary for them to form an opinion on the probity of action. of relying on the internal auditors work. 3. . Only the audit committee/ CMD should give copies of the internal audit reports to the vigilance. . However. The officer concerned shall respond promptly to such inquiries.Periodic meeting`s between head of internal audit . audit committee and statutory auditors regarding the plans of the statutory auditors and the desired level of direct or indirect assistance to the audit committee that may be required. documents. It is incumbent on all the officers and staff that they shall render assistance to the internal auditors in carrying out their audit duties. Relationship with statutory auditors: The head of internal audit is responsible for liaisoning with the audit committee for coordinating internal and statutory audit efforts to ensure adequate audit coverage. vouchers . audit plans and the annual audit schedule.9 Relationship with Other Control Functions: Relationship with vigilance department: The internal audit department shall have no formal relationship with the vigilance department. internal controls documentation. risk assessment updates.Periodic meetings with audit committee and statutory auditors regarding the company`s audit universe.Communications regarding announcements when audits are scheduled to begin and the specific audit objectives that have been established. . for external audit purposes. correspondence and other data of the organization which are necessary for the proper performance of the internal audit function and .records .

Share annual audit plan.- Exchange of information related to audit observations that may have an impact on the financial statement of the company and which need to be reported to the company’s audit committee. .Whether the coverage of the group was adequate and whether they were able to perform all audits that had been planned. Relationship with technical operations auditors: Considering that there is an already existing group of technical officers in OIL that reports to the directors in respect of technical issues. 3. They need to share their respective audit plans with one another and identify areas where duplicity of work could be avoided.Level of implementation of the recommendations made by the technical audit group .the internal audit department should meet the above two agencies at least once in six months to discuss their plans for the next six months to ensure that there is no duplication of efforts . the internal audit department should review the following in respect of the technical audits conducted by this group and comment on the same. . . This exercise will basically provide internal audit with an audit universe detailing areas that need to be audited and their frequency. the purpose of auditing the technical audit group is not to review their decisions or the quality of work that has been done by them but to ensure that their working is effective and efficient for operational improvement in OIL as a whole. This exercise is termed as risk assessment. . Further.Share audit issues.10 Approach and methodologies To identify the areas that used to be audited by internal audit. it should be necessary for the internal auditors to coordinate their efforts with this group. . it is essential to carry out a relative risk ratings.How is the group keeping itself updated in respect of the advancements in technology in respect of operational methodologies? As with the review of safety auditors.during the meetings all three agencies should exchange major audit issues that they may have observed in the past to help others appreciate the same when they cover the area in the future. Relationship with government auditors: The internal audit department should perform the following tasks while coordinating their work with the government and statutory auditors.

number of auditors required based on skills and number of audits required to be carried out in a year. the head of internal audit is well aware of the existing systems.Control environment . reports issued by internal audit/technical audit.3. auditors and frame up his perception of various risks associated in each function. (iii) Finalization of the audit universe.To review of the existing process manuals and available documentations which will help to develop the risk assessment systems.he should also visit to projects /sites and regularly interact with senior key functionary or process personnel to assess the risk involved in each project.Suggested areas of focus for internal audit Based on the responses the audit universe is modified along with a risk rating for each audit area. (i) Understanding the business objectives. the audit universe of the OIL may be finalized. frequency of each skill set required for conducting the audits. Based on the experience and understanding gained during the visits of various locations/ activities and discussions with senior managerial personnel.11 Methodology of risk assessment The risk assessment methodology includes the following. he has access to various reports of OIL. . statutory auditor’s govt. is ascertained. Risk rating is used to prioritize auditable entities and to estimate the internal audit hours considered necessary for an internal audit function to address the identified risks.with the objective of preparing risk based strategy for internal audit interaction with senior management is necessary in order to obtain an understanding of their perception of the nature of risks and exposures that OIL faces today and in time to come or in due course. (iv) Assigning a risk rating to each audit universe process/area. On the basis of the audit universe. Risk rating is allotted to each audit area in the audit universe based on interaction with key personnel. understanding the systems and controls. materiality mapping.Technology issues . . the control environment and risk factors of each operation / activity in OIL.being a senior management team of OIL. The audit universe contains the list of audit areas to be covered by the internal audit department/ technical audit department.Critical challenges faced by OIL. The areas normally discussed with senior key personnel are. . (ii) Interaction with senior management. internal publications. . As a head of the function.Significant risks and exposures . .

Likelihood Rating Materiality Rating Frequency of Audit 1 high High Yearly 2 high Medium Every alternate year 3 high Low Every 2nd alternate year 4 medium High Every alternate year 5 medium Medium Every 2nd alternate year 6 medium Low Every 3rd alternate year 7 low High Every 2nd alternate year 8 low Medium Every 3rd alternate year 9 low Low Once in four years (vi) Assigning number of auditors. While carrying out such study. The number of auditors. The materiality rating represents the exposure to the organization should the event or risk occurs. No. . locations / activities to be covered. nature of complexity involved. .identify business objectives of the department . The frequency of each audit is determined based on the likelihood and materiality rating of each audit.1 SI. (v) Assigning frequency for each audit area. time and skills required for each audit.understand existing systems and procedures in the department . time required for planning the commencement of audit and report writing. The assessment is to be based on the understanding of the business of the company. which may occur. estimated time required for collection of data.Identify critical areas that needed to be audited . time and skill sets required for carrying out each audit should be assessed appropriately at the time of preparing audit universe. (vii) Estimating systems understanding and documentation.perform risk analysis of the functions performed in the department . The following parameters are normally used for arriving the frequency of each audit area.understand the level of information technology risk in the functions.identify the level of assignment of authority and responsibility . the following should be looked into.the auditor should assess the existing systems and documentation work before begins/commencing the audit work of the department. Table 3.understand departmental philosophy and operating style. A risk assessment rating for both likelihood and materiality is determined for each audit area included in the audit universe.The likelihood rating represents the likelihood of an event or risk.

Reporting structure of internal audit department. Auditors . Officers Deputy General Manager (Tech. Tech Auditors/ Auditors/ Asst. Internal audit structure and reporting relationships IA is an independent appraisal activity established by the management. It must be independent of management who has direct responsibility for developing and/or implementing control systems. IA will not have any line responsibility for the activities it reviews. Managers/ Officers/ Asst. Chart 3.12 Internal Audit (IA) Organizational Structure and Staffing Pattern 1. This will serve both to maintain the profile of IA and to ensure that IA is working alongside management to achieve the objectives of the organization. Dy.with senior management. There should be regular meetings. The head of IA department (HOD) should report to the CEO/Director (Finance) administratively and to the Audit Committee functionally. Given below is the proposed organization structure of the internal audit department. Managers/ Sr. both formal and informal. The HOD should meet the Audit Committee and its chairman on a regular basis and have the opportunity to communicate without management being present. 2.3.1 CMD/Director (Finance) Audit Committee General Manager (IA) Head Internal Audit Managers/Dy. Suptding/ Sr. Chief/ Suptding/ Sr.

Table 3. .2 Level of Officers General manager Sanctioned Strength as at year 2000 - Head (IA) Present Status 1 - 1 Chief Manager 1 Sr. number of employees in the various work centers/ Projects.3. number of auditable sites. The corporate Governance is also become mandatory.13 Staffing The staffing of the IA department is based on factors like quantum and nature of operations. IA will be playing a major role to ensure appropriate implementation of corporate Governance in the company. Manager 1 9 Sr. Manager 2 1 Manager 2 - Dy. Officers/ Officers 5* Secretary - - Steno 2 2 Office Staff 3 2 Office Boy 2 1 Tea Boy 1 0 Total 22 14 *One Audit Officer has been posted at corporate office Noida. The following staff strength is estimated based on the nature and volume of operations carried out by OIL and various changes made in the company’s act and the accounting standards made mandatory applicable to the company. number of areas required to be covered by IA department and number of audits to be conducted in a final year.

1. .625 % 84. of Respondent 5 27 32 Percentage of respondent 15.63% Yes No 84.375% 100% Percentage of Respondent 15. INTERPRETATION INTERPRETATION. Have you ever requested sp specific ecific services of the Internal Audit function? Option Yes No Total No.1 ANALYSIS OF THE QUESTIONNAIRE Q.38% INTERPRETATION  Nearly 85% respondents said No  Only 15% respondent reques request service of IA function.CHAPTER 4: ANALYSIS. FINDINGS AND CONCLUSION 4.

625% 6.13% Good Respondents Average Poor INTERPRETATION     Only 25% of respondent response as Good Nearly 66% said Average Only 6% response comes as Poor Rest 3% did not comment anything Does not Comment .25% 3.2.Q.125% 32 100% Percentage of Respondents Good 80% 65. How will you judge OIL’s present Internal Audit activities towards improving the performance of the organization? Option Good Average Poor Does not Comment Total No.63% Average 60% 40% Poor 25% 20% Does not Comment 6.25% 0% 3. of Respondent 8 21 2 1 Percentage of respondent 25% 65.

63% 10.Q.625% 100% Percentage of Respondents 80.3.00% 0.00% Meet Expectations 71.875% 12.88% 70.5% 5 32 15.00% 12. of Respondent 23 4 Percentage of respondent 71.50% 20.00% Meet Expectations Does not meet expectations Does not comment INTERPRETATION  72% respondents said that IA Meet Expectations Does not comment .00% 30.00% 60.00% Does not meet expectations 50. Taking into consideration the scope/objecti scope/objectives/structure ves/structure and responsibilities of the internal Audit functions.00% 40.00% 15. to what extent do you feel that Internal Audit meets expectations? Option Meet Expectations Does not meet expectations Does not comment Total No.

875% Not at all confident 0 0% Does not comment 1 3.125% Total 32 100% Percentage of Respondent 96. .  Rest 3% respondents did not comment anything. Only 12% said that IA Does not Meet Expectations  The rest of 16% did not comment anything. of Respondent Percentage of respondent Completely Confident 0 0% Somewhat confident 31 96. Q. How confident are you u relying on the conclusions reached or recommendations made by the Internal Audit function? Option No.4.13% Not at all confident Does not comment INTERPRETATION  97% respondents were somewhat confident.88% 100% Completely Confident 80% Somewhat confident 60% 40% 20% 0% 0% 0% 3.

25% 28.625% 6. To what extent do you believe that the work of internal Audit improves the overall internal control trol of the organization? Option Greatly improves Somewhat improves Does not improve Don’t know/ not sure Total No. of Respondent 0 21 2 9 Percentage of respondent 0 65.25% 0% 0% Greatly improves Somewhat improves Does not improve Don’t know/ not sure INTERPRETATION     No one comment as Greatly Improve on above statement.Q. Only 6% of them comment as Does not improve The rest 28% respondents have no idea or not sure.63% 70% 60% 50% 40% 28.13% 30% 20% 10% 6. Greatly improves Somewhat improves Does not improve Don’t know/ not sure .125% 32 100% Percentage of Respondents 65. 66% respondent comment as somewhat improves.5.

 44% respondents remains neutral  22% respondents Disagreed .75% INTERPRETATION  34% respondents Agreed with the above statement.Do Do you believe that the work of Internal Audit helps in identifying identi and improving the overall risk of the organization? Option Agree Neutral Disagree Total No.6.375% 43.38% Neutral Disagree 43. of Respondent 11 14 7 32 Percentage of respondent 34.88% 34.Q.75% 21.875% 100% Percentage of Respondents Agree 21.

125% 12.00% Disagree 40.00% Agree Neutral Response Disagree Did not respond INTERPRETATION     Did not respond 12.00% 20.Q.125% 78.7.25% 0.25% 100% Response Agree 78. Do you appreciate that internal audit team is proactive? Option Agree Neutral Disagree Did not respond Total No.5% 6.50% Only 3% respondent Agreed with the statement 78% respondent remains Neutral 13% respondent Disagreed Rest 6% did not comment anything. .00% 3.00% Neutral 60.13% 6. of Respondent 1 25 4 2 32 Percentage of respondent 3.13% 80.

88% Not respond 20.00% Neutral 40.875% 53.Q.00% 0.00% 3.13% Agree 50.00% 30.125% 100% Percentage of Respondents 60.13% 10.00% 53.00% Disagree 25% 21.125% 25% 3. Do you feel that Audit report issu issued ed by Internal Audit department help the department to improve the work of department? Option Agree Neutral Disagree Not respond Total No.00% Agree Neutral Disagree INTERPRETATION  Only 22% respondent agreed the statement  53% respondents remains neutral  25% respondents Disagreed  3% respondents did not comment anything Not respond . of Respondent 6 17 8 1 32 Percentage of respondent 21.8.

50% 60% Good 50% Average 40% 31.Q.25% 62.9. How do you rate the quality of Internal Audit report issued by Internal Audit Department? Option Excellent Good Average Poor Very Poor Total No. of Respondent 0 10 20 2 0 32 Percentage of respondent 0% 31.25% 10% 0% 0% Excellent Good INTERPRETATION     No one comment as Excellent 31% respondents comment as Good 63% respondents said Average The rest 6% respondent said Poor Average Poor .25% Poor 30% 20% 6.5% 6.25% 0% 100% Quality of IA Report 70% Excellent 62.

Do Do you think that Internal Audit have the right reporting structure? Option Agree No.625% Neutral 21 65.63% 60.625% Disagree 5 15.63% 15.Q.125% 100% Percentage of Respondent Agree 80.00% 65.13% 16% respondents agreed 65% respondent remains Neutral 16% respondents Disagreed Rest 3% did not comment anything Not respond .00% Disagree 15. of Respondent 5 Percentage of respondent 15.63% 0.00% Neutral 40.10.00% Agree Neutral Response Disagree INTERPRETATION     Not respond 3.625% Not respond Total 1 32 3.00% 20.

38% 3.13% 0. of Respondent 3 23 5 1 32 Percentage of respondent 9.Q.875% 15.63% 20.Do Do you appreciate that audit work was efficiently performed performe according to planning period? Option Agree Neutral Disagree Not respond Total No.00% 10.375% 71.88% Agree 70.00% Not respond 30.00% Disagree 40.125% 100% Percentage of respondent 80.11.00% 71.625% 3.00% Agree Neutral Disagree INTERPRETATION     Only 9% Agreed 72% respondentt remains Neutral 16% respondents Disagreed Remaining 3% did not comment anything Not respond .00% 50.00% 9.00% 15.00% Neutral 60.

25% Neutral 31. Not respond .12. of Respondent 20 10 2 32 Percentage of respondent 62.Q.50% INTERPRETATION  63% respondents remains Neutral  31% respondents Disagreed  6% did not comment anything.Do Do you consider that internal audit report was issued in a useful time? Option Neutral Disagree Not respond Total No.25% 6.25% Disagree 62.25% 100% Percentage of respondent 6.5% 31.

00% 60.5% 100% Percentage of respondent 75% 80.13.00% Disagree 40.25% 12.25% 75% 6. of Respondent 2 24 2 4 32 Percentage of respondent 6.50% 6.00% 12.Q.00% Neutral 50.25% 0.00% 10.25% 6. Do you appreciate that internal Audit department is maintaining the appropriatee auditing standards? Option Agree Neutral Disagree Not respond Total No.00% Not respond 20.00% 30.00% Agree Neutral Disagree INTERPRETATION     Only 6% Agreed 75% remains Neutral 6% Disagreed Remaining 13% did not comment anything Not respond .00% Agree 70.

25% 46.14. performance  Nearly 47% respondent remains neutral with the statement statement.875% 46. .88% Agree 46.875% 100% Percentage of respondent 6.25% 46.Do Do the Auditors motivate you to improve on your performance with their suggestions? Option Agree Neutral Disagree Total No.Q.  Rest 47% disagree the statement.88% Neutral Disagree INTERPRETATION  Only 6% respondent agrees that Auditors motivate them in improving their performance. of Respondent 2 15 15 32 Percentage of respondent 6.

88% Disagree INTERPRETATION  Only 34% of the respondents Agree that IA functi functions ons has appropriate status in OIL  Nearly 47% of the respondents remain Neutral  18% respondent don’t believe that IA functions has a appropriate status in OIL .Q.75% 34.375% Neutral 15 46.15. Does IA function has appropriate status in OIL? Option No.75% Total 32 100% IA function has appropriate status in OIL 18.38% Agree Neutral 46.875% Disagree 6 18. of Respondent Percentage of respondent Agree 11 34.

375% Total 32 100% Percentage of respondent 9.Details of respondents- SEX No.625% Female 3 9.63% INTERPRETATION  More than 90% of the total respondents were Male Female . of Respondent Percentage of respondent Male 29 90.38% Male 90.

.625% Total 32 100% Service length of Respondents in OIL 3.125% 5-10 years 2 6.25% More than 10 years 29 90. of Respondent Percentage of respondent 1 3.Length of Service in OIL 1-5 years No.63% More than 10 years INTERPRETATION  More than 90% of the total respondents have an experience of more than 10 years of service in OIL.25% 1-5 5 years 5-10 10 years 90.13% 6.

The executives of different departments have only few knowledge on the functions of Internal Audit Department Respondents are not fully confident to rely on the conclusions reached or recommendations made by the Internal Audit function 4.2 FINDINGS Major findings based on primary data collected from the respondents are stated as follows:     Internal Audit Department is an independent department Internal Audit activities averagely improves the performance of the organization The expectations of the internal customers were meet by the internal audit functions     The overall internal control of the organization is improves to some extent by work of Internal Audit The report issued by IA department helps in improving the performances of the departments The quality of IA report can be rated as average. From the report it can be well identified that the organization has adopted a well and distinguish Internal Audit functions. The IA department working independently and reporting to the Audit Committee in a regular basis. The project work is very beneficial for us and the guidance and support receive from all during the course of my project was very encourage . It is a brief study of understanding about the IA functions of the organization.3 CONCLUSION A Project report on “Internal Audit Functions and its Performance in Oil India limited” is the topic for my study. We have felt that the company has come forward to apply new skills and techniques in order to improve the Functions of IA.4.

in this regard. We assure you that the information provided by you shall be kept strictly confidential and shall be used for academic purpose only. Thanking you.ANEXTURE I Questioner Respected Sir/ Madam. Nagaland University . we need your kind cooperation and support with your valuable views on the topic to do the research. Debashish Phukan Wilson Kikon School of Management Studies. Nagaland University. Your help will go a long way in assisting us to complete our project. As a part of the partial fulfillment of MBA Degree. we the student of School of Management Studies (SMS). Yours sincerely. are in process to carry out a study on the topic “Internal Audit Functions and its Performance in Oil India Limited” So.

Have you ever requested specific services of the Internal Audit function? a) Yes b) No 2. to what extent do you feel that Internal Audit meets expectations? a) Exceeds Expectations b) Meets Expectations c) Does not meet expectations 4) How confident are you relying on the conclusions reached or recommendations made by the Internal Audit function? a) Completely confident b) Somewhat Confident c) Not at all confident 5) To what extent do you believe that the work of internal Audit improves the overall internal control of the organization? a) Greatly Improve b) Somewhat improves . How do you judge OIL’s present Internal Audit activities towards improving the performance of the organization? a) Excellent b) Good d) Poor e) Very poor c) Average 3) Taking into consideration the scope/objectives/structure and responsibilities of the internal Audit functions.Please tick off only one answer of the following questions. 1.

c) Does not improves d) Not sure/ don’t no 6) Do you believe that the work of Internal Audit helps in identifying and improving the overall risk of the organization? a) Strongly agree d) Disagree b) Agree c) Neutral e) strongly disagree 7.Does Internal Audit have the right reporting structure? a) Strongly Agree d) Disagree b) Agree e) Strongly Disagree c) Neutral . How do you rate the quality of Internal Audit report issued by Internal Audit Department? a) Excellent d) Poor b) Good c) Average e) Very Poor 10. Do you feel that Audit report issued by Internal Audit department help the department to improve the work of department? a) Strongly Agree d) Disagree b) Agree c) Neutral e) strongly disagree 9. Do you appreciate that internal audit team is proactive? a) Strongly Agree d) Disagree b) Agree c) Neutral e) strongly disagree 8.

Do you appreciate that internal Audit department is maintaining the appropriate auditing standards? a) Strongly Agree d) Disagree b) Agree c) Neutral e) strongly disagree 14.11.Do you appreciate that audit work was efficiently performed according to planning period? a) Strongly Agree d) Disagree b) Agree c) Neutral e) Strongly disagree 12.Do you consider that internal audit report was issued in a useful time? a) Strongly Agree d) Disagree b) Agree c) Neutral e) Strongly disagree 13.Does IA function have appropriate status in OIL? a) Strongly Agree d) Disagree b) Agree e) Strongly Disagree c) Neutral . Do the Auditors motivate you to improve on your performance and with their suggestions? a) Strongly Agree d) Disagree b) Agree c) Neutral e) Strongly disagree 15.

................ .................... b) 1-5 years.............................................................................If any Suggestions: ……………………………………………………………………............... .. c) 5-10 years.......................... Details of the Respondent: Name (Optional):________________________________ Sex: a) M b) F Department: ______________________Designation:______________________ Length of the service in OIL: a) Less than 1 year.........................16........................................................................................................ d) More than 10 years _______________________ Signature of the respondent Thank you for your time and the honesty of your answers........... ..... www.BIBLIOGRAPHY Books: C R Kothari.Research Methodology (New Age International Publishers) Annual Report OIL Audit Manual OIL OIL magazines Internet: www.