SRM University, N.C.

R Campus, Modinagar

Department of Hotel management

Course File

Subject: - Hotel Accounting

Subject code Name: - BHM 15406

SEMESTER:-V

BATCH -2016-2019

By:

RAJ KISHOR MISHRA

ASSISTANT PROFESSOR

DEPARTMENT OF HOTEL MANAGEMENT

SRM University, N.C.R Campus, Modinagar- 201204

 BHM 0406
HOTEL ACCOUNTANCY

S.N.O TOPIC

UNIFORM SYSTEM OF ACCOUNTS FOR HOTEL

01 A. Introduction to Uniform system of accounts
B. Contents of the Income Statement
C. Practical Problems
D. Contents of the Balance Sheet (under uniform system)
E. Practical problems

02 Aepartmental Income Statements and Expense statements (Schedules 1 to 16)

B. Practical problems

03 INTERNAL CONTROL

A. Definition and objectives of Internal Control

B. Characteristics of Internal Control
C. Implementation and Review of Internal Control

04 INTERNAL AUDIT AND STATUTORY AUDIT

A. An introduction to Internal and Statutory Audit

B. Distinction between Internal Audit and Statutory Audit
C. Implementation and Review of internal audit

05 DEPARTMENTAL ACCOUNTING
A. An introduction to departmental accounting
B. Allocation and apportionment of expenses
C. Advantages of allocation
D. Draw-backs of allocation
E. Basis of allocation
F. Practical problems

REFERENCE BOOK

Hotel Accounting & Financial Control-Ozi D’ Chunha & Gleson Ozi d’ Chunha
 HOTEL ACCOUNTING

Hotel or Hospitality is the largest industry in India as well as entire world .Most of
countries tries to attract the tourist through launching of attractive tourist places which
may able to fulfill their ambition of joy and peace both. This industry is soul of service
sector because this industry is cause of highest rate of return to the investors/potential
investors.

Hotel industry generates thousands jobs by way of room service, production of food,
restaurant service and at different managerial levels. So in hotel/hospitality industry
common accounting systems are followed. It is helpful to candidates at the time of
Selection as manager or other managerial posts. Same accounting system or uniform
accounting system helpful to understand the financial procedures and policies of the
administration.

Uniform system of accounts

Causes /reasons /objectives of adopting uniform system of accountancy:-

1. Existence of different systems of book-keeping: - indifferent countries different

methods of book-keeping were popular. For example : In UK double entry system was
popular on the other hand in INDIAN SUB CONTINENT
Indian Accounting System (Bhartiya Bhahi Khata Pranali) was Popular. But in USA
Accounting system is based on ACCOUNTING EQUATIONS. Under such circumstances
hotel industry needs an uniform accounting system become a must.

2. Size of business: - after induction of GATT and WTO most of big industrial houses
decide to open multinational chain of hotels. As a result size of business of hospitality
industry expanded crosses the boundaries of countries. So expansion of business,
administration needs a common system of accounting through which they can understand
the financial activities in the terms of turnover, cost and profitability.

3. Method Of Production Of Food and Services:-

In hotel industries food and service are the two main elements of activities of industry but
it is differ from manufacturing/construction/husbandry industry. Uniform accounting
system facilitates specialized system suited accordance with hotel industry.

4. Difference in Apportionment: - There can be a large degree of difference in the

accounting treatment of expenses, different bases of collection, absorption of overheads,
method of depreciation, etc. Moreover in departmental type hotel spend different
expenses combined and later distribute /allocate /apportioned the expenses in any logical
manner.
 Meaning of USA:

When several hotels and restaurants follow the same accounting principles and practices,
it is called the uniform system of accounting. It is not a separate system or method of
recording the transactions of a business enterprise like double entry system or single entry
system or cash system or mercantile system of accounting. It simply denotes a situation in
which a number of hotel units use the same accounting principles and practices. This system
is followed in hotels and restaurants to make meaningful comparison of cost, sales and
profit figures of one unit with another.

Advantages of USA:

1. In the uniform system of accounting, the staff members of a hotel unit can easily be
transferred to other unit because it will not take much time for the staff members to
adjust themselves in the new hotel.
2. It facilitates inter-firm comparison and identification of the causes for higher costs,
lower sales, lower profit etc., if any, to take suitable measures.
3. The proposed investors become able to compare the profitability and financial
position of different hotels in a comparative form for investment purposes.
4. It becomes easier to decide the amount of rent or royalty of a property to be leased
out.

Difficulties in implementing the USA:

1. There may be lack of proper co-operation, mutual trust and understanding

amongst the member units.
2. There may not be free exchange of ideas, knowledge and technology amongst the
member units.
3. There may not be free exchange of information regarding the method of valuation
of closing stocks, depreciation etc.
4. There may be rivalry and sense of jealousy amongst the member units.
5. There may not be use of common heads to record sales of hotels like room sales,
food sales, beverage sales, telephone income, laundry income, etc.
6. There may not be the use of common terminology and procedure regarding cost
apportionment and cost control.
7. The bigger units may not be prepared to share their experience with the smaller units in
order to improve the latter.

Removal of difficulties in implementing the USA:

1. There should be proper co-operation, mutual trust and understanding amongst the
 member units.
2. There should be free exchange of ideas, knowledge and technology amongst the
member units.
3. There should be free exchange of information regarding the method of valuation of
closing stocks, depreciation etc.
4. There should be no rivalry and sense of jealousy amongst the member units.
5. There should be the use of common heads to record the sales of hotels like room
sales, food sales, beverage sales, telephone income, laundry income, etc.
6. There should be the use of common terminology and procedure regarding cost
apportionment and cost control.
7. The bigger units should always be prepared to share their experience with the
smaller units in order to improve the latter.

Income Statement | Profit & Loss Account

Income Statement | Profit & Loss Account

Definition

Income Statement, also known as Profit & Loss Account, is a report of income, expenses and
the resulting profit or loss earned during an accounting period.

Example

Following is an illustrative example of an Income Statement prepared in accordance with

the format prescribed by IAS 1 Presentation of Financial Statements.

Income Statement for the Year Ended 31st December 2013

2013 2012
Notes
Rs. Rs.

Revenue 16 120,000 100,000

 Cost of Sales 17 (65,000) (55,000)

Gross Profit 55,000 45,000

Other Income 18 17,000 12,000

Distribution Cost 19 (10,000) (8,000)

Administrative Expenses 20 (18,000) (16,000)

Other Expenses 21 (3,000) (2,000)

Finance Charges 22 (1,000) (1,000)

(15,000)
(15,000)

Profit before tax 40,000 30,000

Income tax 23 (12,000) (9,000)

Net Profit 28,000 21,000

Basis of preparation

Income statement is prepared on the accruals basis of accounting.

This means that income (including revenue) is recognized when it is earned rather than
when receipts are realized (although in many instances income may be earned and received
in the same accounting period).

Conversely, expenses are recognized in the income statement when they are incurred
even if they are paid for in the previous or subsequent accounting periods.

Income statement does not report transactions with the owners of an entity.

Hence, dividends paid to ordinary shareholders are not presented as an expense in the
income statement and proceeds from the issuance of shares is not recognized as an
income. Transactions between the entity and its owners are accounted for separately in
the statement of changes in equity.

Components

Income statement comprises of the following main elements:

Revenue

Revenue includes income earned from the principal activities of an entity. So for example,
in case of a manufacturer of electronic appliances, revenue will comprise of the sales from
electronic appliance business. Conversely, if the same manufacturer earns interest on its
bank account, it shall not be classified as revenue but as other income.

Cost of Sales

Cost of sales represents the cost of goods sold or services rendered during an accounting
period.

Hence, for a retailer, cost of sales will be the sum of inventory at the start of the period and
purchases during the period minus any closing inventory.

In case of a manufacturer however, cost of sales will also include production costs
incurred in the manufacture of goods during a period such as the cost of direct labor,
direct material consumption, depreciation of plant and machinery and factory overheads,
etc.

Other Income

Other income consists of income earned from activities that are not related to the entity's
main business. For example, other income of an entity that manufactures electronic
appliances may include:

 Gain on disposal of fixed assets

  Interest income on bank deposits
 Exchange gain on translation of a foreign currency bank account

Distribution Cost

Distribution cost includes expenses incurred in delivering goods from the business
premises to customers.

Administrative Expenses

Administrative expenses generally comprise of costs relating to the management and

support functions within an organization that are not directly involved in the production
and supply of goods and services offered by the entity.

Examples of administrative expenses include:

 Salary cost of executive management

 Legal and professional charges
 Depreciation of head office building
 Rent expense of offices used for administration and management purposes
 Cost of functions / departments not directly involved in production such as finance
department, HR department and administration department

Other Expenses

This is essentially a residual category in which any expenses that are not suitably
classifiable elsewhere are included.

Finance Charges

Finance charges usually comprise of interest expense on loans and debentures.

The effect of present value adjustments of discounted provisions are also included in
finance charges (e.g. unwinding of discount on provision for decommissioning cost).

Income tax

Income tax expense recognized during a period is generally comprised of the following
three elements:

 Current period's estimated tax charge

 Prior period tax adjustments
 Deferred tax expense

Prior Period Comparatives

Prior period financial information is presented alongside current period's financial results
to facilitate comparison of performance over a period.

It is therefore important that prior period comparative figures presented in the income
statement relate to a similar period.

Purpose & Use

Income Statement provides the basis for measuring performance of an entity over the
course of an accounting period.

Performance can be accessed from the income statement in terms of the following:

 Change in sales revenue over the period and in comparison to industry growth
 Change in gross profit margin, operating profit margin and net profit margin over
the period
 Increase or decrease in net profit, operating profit and gross profit over the period
 Comparison of the entity's profitability with other organizations operating in
similar industries or sectors

PART I — BALANCE SHEET

Name of the Company…………………….

Balance Sheet as at ………………………

(Rupees in…………)

Figures as at
Figures as at the the end of the
Note
Particulars end of current previous
no
reporting period reporting
period

1 2 3 4

I. EQUITY AND LIABILITIES

(1) Shareholders’ funds

(a) Share capital

(b) Reserves and surplus

(c) Money received against share warrants

(2) Share application money pending

allotment

(3) Non-current liabilities

(a) Long-term borrowings

(b) Deferred tax liabilities (Net)

(c) Other Long term liabilities

(d) Long-term provisions

(4) Current liabilities

(a) Short-term borrowings

1["(b) Trade Payables:-

(A) total outstanding dues of micro

enterprises and small enterprises; and

(B) total outstanding dues of creditors other

than micro enterprises and small
enterprises.".]
(c) Other current liabilities

(d) Short-term provisions

TOTAL

II. ASSETS

Non-current assets
(1) (a) [Property, Plant and Equipment]

(i) Tangible assets

(ii) Intangible assets

(iii) Capital work-in-progress

(iv) Intangible assets under development

(b) Non-current investments

(c) Deferred tax assets (net)

(d) Long-term loans and advances

(e) Other non-current assets

(2) Current assets

(a) Current investments

(b) Inventories

(c) Trade receivables

(d) Cash and cash equivalents

(e) Short-term loans and advances

(f) Other current assets

TOTAL

PART I — BALANCE SHEET

Name of the Company…………………….
Balance Sheet as at ………………………
(Rupees in…………)
Particulars Note Figures as at the Figures as at the
No. end of current end of the
reporting previous
period reporting period
1 2 3 4
I. EQUITY AND LIABILITIES
(1) Shareholders’ funds
(a) Share capital
(b) Reserves and surplus
(c) Money received against share
warrants
(2) Share application money pending
allotment
(3) Non-current liabilities
(a) Long-term borrowings
(b) Deferred tax liabilities (Net)
(c) Other Long term liabilities
(d) Long-term provisions
(4) Current liabilities
(a) Short-term borrowings
(b) Trade payables
(c) Other current liabilities
(d) Short-term provisions
TOTAL
II. ASSETS
Non-current assets
(1) (a) Fixed assets
(i) Tangible assets
(ii) Intangible assets
 (iii) Capital work-in-progress
(iv) Intangible assets under
development
(b) Non-current investments
(c) Deferred tax assets (net)
(d) Long-term loans and advances
(e) Other non-current assets
(2) Current assets
(a) Current investments
(b) Inventories
(c) Trade receivables
(d) Cash and cash equivalents
(e) Short-term loans and advances
(f) Other current assets
TOTAL

What is Balance Sheet?

Balance Sheet is part of any financial statement which provides the financial condition on
a given date. An entity’s balance sheet provides a lot of information which can be used to
analyze the financial stability and business performance. The balance sheet is a report
version of the accounting equation that is balance sheet equation where assets always
equate liabilities plus shareholder’s capital. Investors and creditors generally look at the
balance sheet and infer as to how efficiently a company can use its resources and how
effectively it can finance them.

The three important sections of any balance sheet are:

 Assets – Anything that has value and owned by a company

 Liabilities – This provides a list of debts a company owes to others
 Capital or Equity- This is the amount invested by the Shareholders

Importance of Balance Sheet

Balance sheet analysis can reveal a lot of important information about a company’s
performance. Importance of balance sheet is listed below:

i. It is an important tool used by the investors, creditors and other stakeholders to

understand the financial health of an entity.
ii. The growth of an organization can be known by comparing the balance sheet of
different years.
iii. It is an essential document required to be submitted to the bank to obtain a
business loan.
iv. Stakeholders can understand the business performance and liquidity position of
the entity.
v. Ability to undertake expansion projects and meet unforeseen expenses can be
determined by analyzing a company’s balance sheet
vi. If the company is funding its operations with profit or debt can be known

Departmental Accounting

Department refers to activity centre (profit or cost centre) usually located in the same roof
but carrying distinct type of activities.

Departmental Accounting:

Department accounting or departmental accounting is a system of financial accounting

which is used in the organizations whose all works are done through their different
departments or departmental stores. Departmental accounts are prepared separately for
each department and trial balance will also be prepared. Departmental P&L Account is
prepared to ascertain the profit or loss of each department separately and at the end of the
year it is transferred to General profit and loss account of the whole organisation.

Objectives of departmental accounting:

The main objectives of departmental accounting are:

a) To have comparison of the results of a particular department with previous year and also
with the other departments of the same concern;
b) To help the proprietor in formulating policy to expand the business on proper lines so as
to optimize the profits of the concern;

c) To allow departmental managers’ commission on the basis of the profits of their

departments; and

d) To generate information, which may be helpful for planning, control, and evolution of
performance of each department and for taking various managerial decisions?

Advantages of Department Accounts:

The main advantages of Departmental accounting are as follows:

a) It provides an idea about the affairs of each department.

b) It helps to evaluate the performance of each department.

c) It helps to reward the Departmental mangers and staff on the basis of performance.

d) It facilitates control over the working of each department.

e) It helps to compare the result of one department with those of other departments.

f) It helps the management to formulate the right business policies for the various
departments.

g) It will help in the preparation of departmental budgets.

h) It helps to calculate stock turnover ratio of each department.

Basis for apportionment of some important expenses among various

departments.

Expenses Basis

1. Sales expenses as traveling salesman, salary and commission, Sales of each department
selling expenses after sales service, discount allowed, bad debts,
freight outwards, provision for discount on debtors, sales
manager’s salary and other benefits etc.

2.All expenses relating to building as rent, rates, taxes, air Area or value of floor space
conditioning expenses, heating, insurance building etc.

3. Lighting Light points

 4. Insurance on stock Average stock carried

5. Insurance on plant & machinery Value of plant & machinery

6. Group insurance premium Direct wages

7. Power H.P or H.P x Hours worked

8. Depreciation, Renewals & Repairs Value of assets in each

department

9. Canteen expenses, Labour welfare expenses No. of employees

10. Works manager’s salary Time spent in each department

11. Carriage inwards Purchases of each department

UNIT:-III
Internal Control

Internal controls are the mechanisms, rules and procedures implemented by a company to ensure
the integrity of financial and accounting information, promote accountability and prevent fraud.
Besides complying with laws and regulations, and preventing employees from stealing assets or
committing fraud, internal controls can help improve operational efficiency by improving the
accuracy and timeliness of financial reporting.

Various Types of Internal Control

The various types of internal control are as follows:

1. Organization:

Organization is concerned with placement of workers on their jobs. The authorities,

responsibilities and accountabilities of all persons must be clearly defined. Delegation of
powers must be in writing with the approval of superiors. The workers are responsible for
their activities. The head of department is responsible for looking after all the staff members
of his department.

2. Segregation or Division of Duties:

The segregation of duties is necessary. There are many employees. All aspects of a
transaction are not complete by one person. The involvement of many persons in recording
of transactions can reduce the risk of errors and frauds. The division of duties improves the
efficiency of individuals.

3. Physical Control:

The physical internal control is desirable to safeguard the assets. The access to the assets
must be limited. Only the authorized persons can be allowed to examine the assets. The
persons may visit the warehouse or they may release the assets through requisition slips.
The assets require lockers, iron safe possession of keys and use of passes of warehouse.

4. Supervision:

The supervisors must authorize or approve all the transactions of the hotel. All cuttings
must be duly signed by the authorized persons. The power of the supervisors must be
clearly stated to avoid any confusion.

5. Accounting:

The accounting control is concerned with approval of transactions, accurately processing

and correctly recording. The totals, arithmetical calculations, pricing of bills etc must be
checked to bring accuracy. At the end of every month, ledgers must be balanced and the trail
balance must be prepared. The bank reconciliation statement must be prepared on weekly
basis. There should beproper examination of vouchers so that every aspect of recording
transactions is not over looked so far this type of control is concerned.

6. Management:

The top-level management can apply certain controls beyond the routine working of
business. The management control, include internal audit review of management accounts
comparing actual result with budgets, supervisory control and many other review
procedure of business functions.

7.Approval:

All transactions in any business require proper approval of the responsible persons. The
limit for approval may be fixed. The credit recovery officer can approve credit sales. The
foreman must approve the overtime wages to be paid. Purchase officer must approve the
purchase of goods or any other items required by a department.

Instruments/Techniques used for the Food& Beverage Service Control

The various instruments or techniques that are used for the Food and Beverage Service
control are as follows:

1. Kitchen Order Ticket (KOT)

2. Visitor’s Tabular Ledger (VTL)
3. Guest Weekly Bill
4. Restaurant Check
5. Restaurant Sales summary Sheet
6. Kitchen Summary Sheet

Characteristics of Internal Control

1. Experienced, Qualified and Trustworthy Personnel

The personnel should be well qualified, experienced and trustworthy and this helps in
providing better services
than competitors. This also ensures in having a better internal control on
pilferages.

2. Division of Duty

The duties are segregated to improve the efficiency, quality and for controlling the
pilferage.
3. Leadership

Board of Directors, General Manager and other managers and supervisors must lead the
person by communicating the policies of the hotel to one and all and encourage the person
to have the best output and control.

4. Organisational Structure

The chain of hotels or hotel as the case may be must have a clear organisational structure
and the personnel must know from whom to take orders and whom to report.

5. Sound Practice

These are policy measures generally set up and implemented by the board of directors
and other senior executives in order to create an environment which facilitates internal
control.

6. Authorise Personnel

The management must authorise clearly the personnel for taking the certain decision. For
example a person should be authorised to extend the discount, cancel a bill, extend
complimentary food/room, etc.

7. Records

The records must be maintained to ensure internal control. The records like guest
registration cards, bills, K.O.T’s, control sheets, etc. Are not only maintained, checked,
verified but are also stored for future references.

8. Manual Procedures

Each job should be reduced to writing. Log books must be maintained in each department.
The manual procedures should list the details of each position including how and when to
perform each task.

9. Control

Control includes security services and measures for protecting assets, stores, guest’s
valuables, etc. The security services, as far as possible, must be hired from professionals.

10. Budget

The Budgets like short-term, long-term, specific budgets, etc. Must be made for sale, cost,
production etc. The budgets must be achievable but not achievable so easily. The goals of
the hotel must be clearly mentioned and the goals must be made not only for sale, cost etc.
but must also be made for controlling pilferages.

11. Reports

For each job reports, must be made and circulated among the executives of the hotel for
information and control.

12. Independent Checks

The personnel responsible for performing the jobs should not be asked for the internal
checks but internal checks must be performed by different personnel either from the
permanent personnel employed in the hotel or sometimes maybe hired from outside.

Implement Internal Control Activities

Control activities are the policies and procedures put into place to run operations, accomplish
goals, and prevent fraud. Basic internal control methods are:
1. Establish responsibility;
Assign each task to only one person.
Establish organizational structure.
2. Implement separation of duties;
Don’t make one employee responsible for all parts of a process.
Use compensating controls, such as additional monitoring or secondary sign-offs,
when separation is not possible.
3. Restrict Access;
Don’t provide access to systems, information, assets, etc. unless needed.
4. Create policies and procedures;
Implement written instructions with directives to follow them.
Assure controls cover all areas of compliance.
Assure controls cover security of assets and technology.
5. Establish record keeping;
Document all expenditures and the justifications for them.

Internal Control Review

Internal Control Review is an overall assessment of the internal control system and its
adequacy of each business area in an organization to address the relevant risks. Through
control review, an organization's resources are directed, monitored, and measured in an
effective manner. It plays an important role in protecting the organization's tangible and
intangible resources.

Monitor Internal Controls

Establishing controls is not enough. Once they are in place, managers need to verify the
effectiveness of the controls. Ways to accomplish this include:
Establish a system of quality control over all processes such as supervisory reviews,
approvals, and automated exception checks;
Conduct routine reviews of actual performance compared to goals and budgets;
Conduct separate management reviews of a function to determine whether it is
working as intended or controls need to be redesigned. Use the GAO Internal Control
Management and Evaluation Tool to evaluate your internal controls;
Arrange for external audits and be responsive to findings;
Track all corrective actions, and ensure that they are implemented and working as
intended;
Use monitoring to tie corrective actions back to improvements in Control

Environment and Control Activity standards;

Watch for signs of control problems.

Even strong controls do not always work. As you implement controls be mindful that all of the
controls systems are dependent upon people. The effectiveness of internal controls is directly
proportional to staffs’ willingness to adhere to them.

UNIT :- IV

INTERNAL AUDIT AND STATUTORY AUDIT

Statutory Audit

Statutory audit is an audit by a practicing Chartered Accountant which has its operations
exterior to the organization which it is auditing. Statutory Auditors are a part of the
external audit process is focused on the various financial accounts or risks associated with
the domain of finance and are appointed by the shareholders of the company. The chief
responsibility of statutory auditors is to perform the process of annual statutory audit of
the company’s financial accounts, providing opinions if they are an impartial and fair
reflection of the company’s financial position. As part of this effort, statutory auditors by
means of the statutory audit process often deal with the examination and evaluation of
internal controls to manage the risks that could possibly affect the financial accounts, to
decide if they are working as according to intended plans.

Internal Audit

Internal audit is a function that, even though operating independently from other
departments and involves reporting directly to the audit committee, the function remains
within an organization i.e. the company employees. It is essential for performing audits of
both financial and non-financial nature within a wide of areas of operation in a business,
as that are directed by the annual audit plan. Internal audit looks at main risks facing the
business and what action is being taken to manage those risks in an effective manner, to
help the organization achieve its various objectives.

Statutory Audit vs. Internal Audit

 Internal audit is limited to the governance of an organization, management controls over
the operations of an organization and risk management. External audit is related to the
reports on financial statements of the corporate entity.
 External audit is a legal requirement while internal audit is conducted based on the
personal resolve of the business owners to measure the operation’ efficiency as conducted
by the business.
 External audit is performed by an external auditor or audit firm while the process of
internal audit is performed by the firm’s employees, nevertheless, an audit firm can also be
selected and appointed to conduct the process of internal audit.
 Internal auditor is selected or appointed by the company while the selection of the external
auditor is at the shareholder’s annual general meeting.
 External audit is performed while maintaining in perspective the various requirements of
any acceptable financial reporting standards while no such rules hold for internal audit.

Distinction between Internal Audit and Statutory Audit

Developing an Internal Audit Framework
An internal audit framework defines the governance procedure for internal audit, determines how
internal audit will function in your organisation and deliver the benefits of internal audit, after
creation of an Internal audit function. It includes components such as:
I. Internal Audit Charter with Responsibilities for Internal Audit function.
II. Alignment to Standards of Professional Practice of Internal audit.
III. Audit Committee Charter, its Terms of Reference and responsibilities.
IV. Entity Wide Risk Assessment and Risk Profile.
V. Three Year Strategic Internal Audit Plan & Annual Audit Work Plan.
VII. Methodology of performing internal audits.
VIII. Quality control system.
IX. Self-assessment checklists. X. Internal Audit Protocol.
The first step is the establishment of an internal audit function. This includes formalising an
Internal Audit Charter. The internal audit charter defines the internal audit’s purpose, authority
and responsibilities, and lays out the ground rules for operations.
The next task while developing an internal audit framework is to create an Audit Committee. An
Audit Committee charter, once approved by Council and Board, outlines the Audit Committee’s
authority and purpose. The audit committee is responsible for monitoring compliance by your
organisation with proper standards of financial management and compliance with regulations and
the Accounting Standards.
Once these steps have been completed, a Risk assessment is carried out following which, a three
year strategic Internal audit plan is developed, and from the big picture strategy identified in that
plan, a more focussed Annual Internal audit plan is designed.