INTERNAL AUDITNG TRAINING: DAY 2

Cash is also known as money, in physical form. Although cash typically refers to
money in hand,
the term can also be used to indicate money in banking accounts, checks, or any
other form of currency
that is easily accessible and can be quickly turned into physical cash.

Cash equivalent is a highly liquid investment that is so near maturity that there
is a little risk of a change in value.

Risk is the potential for uncontrolled loss of something of value.

Actual return may be different from the Expected return.

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THE FRAUD TRIANGLE

1. Pressure
2. Opportunity
3. Rationalization

HOW NOT TO STATE A RISK

CIRCULAR REFERENCE - Identifying a risk as simply the reverse of the objective/KRA

Ex. Objective. to travel by train from A to B for a meeting at a certain time.

::::Failure to get from point A to B on time for the meeting

Risks: Traffic, Late nagising, Natural Calamity, Road under construction, Sick

==== RISK IS NOT IDENTIFYING THE IMPACT. ====

Sample Cash Management Risk

1. Advance Disbursements are misappropriated

2. An authorized individual attempts to access or redeem fund from the company's
investment account
3. Authorization for appropriation of company cash is not
restricted to appropriate personnel, resulting in unrecorded transaction.
4. Banks accounts are set up using incorrect information.

How do we manage risk?

1. Identifying the related controls in place in order to mitigate the risk.

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DESIGNING AUDIT WORK PROGRAM

1. Understanding the Client Nature

2. Research - Company Profile
GIS
AFS
3. Organization Chart
4. Fieldwork
a) Walkthrough - Inquiries and Observation, Supporting Documentation
at the minimum:
-What are the processes? What are the inherent risk? Controls in place?
Residual Risk?
==Policies and procedures may be in the form of Memorandums.==

ENTRIES TO LOOK AT:

DR. EXPENSE
CR. ASSET

DR. INCOME
CR. EXPENSE

DR. INCOME
CR. ASSET

DR. EXPENSE
CR. EXPENSE