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INTERNAL AUDIT PLAN FOR YEAR 2011
1 Introduction This is a one year plan that is intended to highlight the areas which will be audited for transactions of the period from January to December 2011. 1.1 Audit Procedures. The auditors will perform the following procedures in the course of audit: a. Inspection and observation, this will be in the case of; (i) (ii) (iii)
(iv)

Securities; Loan agreements; Collateral; Commitment agreements; and Cash Collateral. The value of assets and liabilities Securities held by third parties; Loan accounts; Deposit accounts; Guarantees; and

(v) (i) (ii) (iii) (iv) (v) (vi)
c.

b. Inquiry and confirmation wherever possible; this will be in the case of

(vii) Letters of credit. Computation will be applied to bank’s financial statements d. Analytical procedures for performance reviews 1.3 Audit Tools

In carrying out the audit work, the department will use policies of the bank relevant to the department auditing, Banking and Financial Institutions Act, BOT regulations, International Financial Reporting Standard and International Standard Auditing. 1.4 Staffing

Currently the department has two staff. 1.5 Annual Plan The Audit Plan for this year is as set out in the timetable below. The Audit Plan identifies Head office audits and branch audits together. This assists the planning and managing of both the audits and staff time. However the report will differentiate the head office functions and branch functions.
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monthly and quarterly will be a good source for audit. 2. weekly. The department will make follow up of the findings and recommendations given out by external auditors and BOT examiners on the other hand and management responses. Some areas appear once or twice as are seen to be not of very risk compared to those two areas above.2.0 AREAS OF AUDIT FOR 2011 The plan has identified areas of audit according to bank’s business operations. these areas will be audited each quarter to ensure early discovery of problems before they become big problems. The results of follow up for both reports will be communicated to BOT quarterly as required under Regulations of 2005.1 FIRST QUARTER 2.1 LOANS AND OVERDRAFT (i) Salaried loans (ii) Group loans (iii) Business loans 3 .1. The most risk areas the audit department has identified is the deposit and credit areas. However the department will not audit only areas identified in the plan but financial reports submitted to BOT daily.

This is meant to ensure that loans granted are collected and loss risks are minimised. (ii) Check collective agreements (iii) Check specimen signatures for authorised officers to sign loan application forms at employer’s side (iv) Check arrears reports (v) Check written off loans status 2) Group lending (i) Check recruitment procedures (ii) Check registration fees.(iv) Staff loans Audit Objective: The overall objective is to ensure that loans are granted in accordance with stipulated rules and regulations as well as laid down policies and procedures. Savings Account and Time deposits Manuals. These include Current Account.provisions (v) Check written off loans status 3) Business loans Check procedures for issuing loans (ii) Review loans disbursed (iii) Check securities and their legality (iv) Check arrears reports .2 DEPOSITS (i) Current accounts (ii) Saving accounts (iii) Time deposits (iv) Other deposits Audit Objective: The overall objective is to ensure that customer service related policies and manuals are being adhered to. Expected outcome It is expected that if compliance is followed properly during issuance of loans then bad loans will be minimal and therefore minimal loss and good income. The work plan will include the following: 1) Salaried loans (i) Check recruitment procedures. Other objective is also to check compliance with the Bank’s anti money laundering procedures.1.provisions (i) 2. Expected outcome 4 . insurance fund and loan application fee (iii) Visit sampled groups and check recruitment and training procedures (iv) Check arrears reports .

picture.4 SHAREHOLDERS REGISTER Audit Objective The overall objective is to ascertain that the amount received from members is properly received and recorded. VAT. these includes. ID. i. introduction letter. BALANCE INVESTMENTS (i) (ii) (iii) (iv) (v) WITH OTHER BANKS AND OTHER (vi) Cash at strong room Balance with other banks Investment in treasury bills Investments in bonds Investments in other banks (placements) ATM Audit Objective: The overall objective is to ensure that policies and manuals are being adhered to. The overall objective is to ascertain that the amount transferred upcountry or outside and inside the country are properly supported and due care is observed. check compliance to KYC (iii) Proper filling of accounts opening forms (iv) Check minimum opening balance (v) Check charges required for opening account such as ID charges on savings and cheque book on current account 2. TIN etc. The expected outcome 5 .3 CASH.It is expected that if compliance to the opening of these accounts is followed then we expect to have good deposits.1. The work plan will include the following: Check if there is temporary and permanent insurance for cash in hand (ii) Check cash limit for strong room and teller’s cubic (iii) Reconciliations of the balance with other banks (iv) Check interest accrual computation by the system (v) Check the documents used to transfer the funds if properly supported (vi) Check application of controls for anti money laundering transactions (vii) Check the whole procedures involved in cash and investments (i) 2. The work plan will include the following: (i) Check the procedure for opening account if are in line with bank policy (ii) Check the documentation required for opening of accounts.1. Memorandum of a company.e. good customers whom bank can extend other contract relationship of banking services.

2 SECOND QUARTER 2. (iv) Check capital adequacy requirement. (v) Check requirement of BOT over capital build up compliances 2. (ii) Check advance towards share capital if agreeing with General ledger.1 LOANS AND OVERDRAFT (v) Salaried loans (vi) Group loans (vii) Business loans (viii) Staff loans Audit Objective: 6 . The work plan will include the following (i) Check member’s register if agreeing with General ledger. (a) Core Capital. (b) Total Capital. (iii) Check Annual General meeting approval over movement of share capital.2.If all shares are properly received and accounted for paid up capital will be properly accounted for and share register will also be well prepared and registered as required by law.

good customers whom bank can extend other contract relationship of banking services. insurance fund and loan application fee (viii) Visit sampled groups and check recruitment and training procedures (ix) Check arrears reports .provisions (x) Check written off loans status 3) Business loans (v) Check procedures for issuing loans (vi) Review loans disbursed (vii) Check securities and their legality (viii) Check arrears reports . Expected outcome It is expected that if compliance to the opening of these accounts is followed then we expect to have good deposits. This is meant to ensure that loans granted are collected and loss risks are minimised. (vii) Check collective agreements (viii) Check specimen signatures for authorised officers to sign loan application forms at employer’s side (ix) Check arrears reports (x) Check written off loans status 4) Group lending (vi) Check recruitment procedures (vii) Check registration fees. 7 .The overall objective is to ensure that loans are granted in accordance with stipulated rules and regulations as well as laid down policies and procedures. Savings Account and Time deposits Manuals. These include Current Account.provisions 2. Other objective is also to check compliance with the Bank’s anti money laundering procedures. The work plan will include the following: 3) Salaried loans (vi) Check recruitment procedures. Expected outcome It is expected that if compliance is followed properly during issuance of loans then bad loans will be minimal and therefore minimal loss and good income.2 DEPOSITS (v) Current accounts (vi) Saving accounts (vii) Time deposits (viii) Other deposits Audit Objective: The overall objective is to ensure that customer service related policies and manuals are being adhered to.2.

introduction letter.3 INCOME (i) Interest income (a) Interest on loans (b)Interest on Treasury bills (c)Interest on placements (ii) Non interest income (a)Commitment fee (b)Registration fee (c)Tender fee (d)Foreign income (e)Income from western union (f) Other incomes Audit Objective: The overall objective is to ensure that procedures for income calculation and recording are being adhered to.2. Memorandum of a company.e. The work plan will include the following (i) Check registration fee (ii) Check application fee (iii) Check interest receivables/accruals (iv) Check reversals from income (v) Perform ratios and advice on the profitability of the bank (vi) Check other income 2. i.The work plan will include the following: (vi) Check the procedure for opening accounts if are in line with bank policy (vii) Check the documentation required for opening of accounts. VAT. Expected outcome It is expected that if procedure for recognition and collection of income are followed as per policy and tariff guide and computer is accruing income properly then there will be no loss of income. these includes.4 EXPENSES (i) Interest expense 8 .2. ID. picture. check compliance to KYC (viii) Proper filling of accounts opening forms (ix) Check minimum opening balance (x) Check charges required for opening account such as ID charges on savings and cheque book on current account 2. TIN etc.

best practices and law of the country. that within the Human Resource section. Expected outcome It is expected that if all payments were paid through authorised procedures as set out by the bank. control is in place and working effectively. interest calculation procedures are being adhered to. then bank’s growth and manpower will be managed.5 HUMAN RESOURCE (i) Company’s Policies and legal requirements on employment laws of the country (ii) Personnel Files (iii) Job descriptions (iv) Health and welfare plans (v) Training and development (vi) Employment contracts (vii) Health and welfare plans (viii) Other staff matters Audit objectives The overall objective is to provide an assurance.2. The work plan will include the following (i) Check recording procedures (ii) Check statutory remittances (iii) Check payroll expenses (iv) Check interest expenses on money deposited with bank (v) Check recording and postings non interest expense (vi) Check commission and fees payables (vii) Check recording and treatment of bad debts 2. and computer system is behaving good in accruing expenses. then there will be no bad loss and income is expected to be good. Expected outcome It is expected that if there is compliance to Company’s policies. Salary payment will be to the right people and right money at 9 .(a) Interest on saving accounts (b) Interest on current accounts (c) Interest on time deposits (ii) Non interest expenses (a) Payroll expenses (b) Other expenses paid/ payable Audit Objective The overall objective is to ascertain that all expenses are authorised before payment. regulations.

and proper charging for expenses for current assets like stocks and increase in cash for receivables. fraud issues and disputes will be managed.the right time.6 ASSETS VERIFICATION (i) Fixed assets (a) Computers (b) Fixtures and fittings (ii) Current assets (a) Stationery Stocks (b) Other receivables Audit Objective: The overall objective is to ensure that procedures related to the acquiring assets. vacant positions. benefits/salary administration (iii) Review for employment procedures/recruitment including employment contracts (iv) Review of orientation procedures (v) Review of terminations procedures (vi) Review for employment relations (vii) Review communications procedures within the bank in regard to awareness of the staff about the bank’s regulations. Risk will be identified and mitigated. The work plan will include the following (i) Check if acquisition of assets are properly authorised and within the budget (ii) Check if recording of assets are properly done and depreciation of values are in accordance with regulation set up by bank (iii) Check value of stocks and receivables are properly accounted for (iv) Check if physical assets can be traceable and value ascertained example stationery stocks 10 . relevancy of information and redundant information (ix) Review for Policies and procedures ( Including employee handbook if any) (x) Review for all aspect of human resources 2. All staff must have equal information about this information. Expected outcome It is expected that if recording of assets is properly done then there will be proper depreciation in case of fixed assets. important events etc. Staff turn-over. (viii) Review for proper set up of files/record maintenance. The work plan will include the following (i) Review for legal compliance (ii) Review for compensation.2. recording and disposals are followed. Balance sheet will show actual position.

This is meant to ensure that loans granted are collected and loss risks are minimised.1 LOANS AND OVERDRAFT (i) Salaried loans (ii) Group loans (iii) Business loans (iv) Staff loans Audit Objective: The overall objective is to ensure that loans are granted in accordance with stipulated rules and regulations as well as laid down policies and procedures.3.3 THIRD QUARTER 2. (v) 2. The work plan will include the following: 11 .Check if there is any insurance cover for assets for example computer (vi) Check all procedures related to fixed assets. Expected outcome It is expected that if compliance is followed properly during issuance of loans then bad loans will be minimal and therefore minimal loss and good income.

Memorandum of a company. i. (ii) Check collective agreements (iii) Check specimen signatures for authorised officers to sign loan application forms at employer’s side (iv) Check arrears reports (v) Check written off loans status 6) Group lending (i) Check recruitment procedures (ii) Check registration fees. TIN etc. Other objective is also to check compliance with the Bank’s anti money laundering procedures.provisions 2. Savings Account and Time deposits Manuals. Expected outcome It is expected that if compliance to the opening of these accounts is followed then we expect to have good deposits.provisions (v) Check written off loans status 3) Business loans (i) Check procedures for issuing loans (ii) Review loans disbursed (iii) Check securities and their legality (iv) Check arrears reports . insurance fund and loan application fee (iii) Visit sampled groups and check recruitment and training procedures (iv) Check arrears reports .2 DEPOSITS (i) Current accounts (ii) Saving accounts (iii) Time deposits (iv) Other deposits Audit Objective: The overall objective is to ensure that customer service related policies and manuals are being adhered to. introduction letter.3. ID. VAT. check compliance to KYC. The work plan will include the following: (i) Check the procedure for opening account if are in line with bank policy (ii) Check the documentation required for opening of accounts.e. picture. these includes.5) Salaried loans (i) Check recruitment procedures. These include Current Account. (iii) Proper filling of accounts opening forms (iv) Check minimum opening balance (v) Check charges required for opening account such as ID charges on savings and cheque book on current account 12 . good customers whom bank can extend other contract relationship of banking services.

3.4 SWOT ANALYSIS. 13 . The expected outcome It is expected that if compliance were properly followed there is high possibility of minimising risk to the bank resulting from ICT / BCM The work plan will include the following (i) Check compliance with BCM (ii) Verification of controls over computer facilities (iii) Verification of system access controls (iv) Verification of physical security equipment (v) Verification of disaster and backup planning procedures 2. policies and procedures are being adhered to. GOALS AS ANALYSED IN THE BANK’S PLAN AND BUDGET Audit Objective The overall objective is to determine whether expenditure is contained within targets.3 ICT / BCM MATTERS Audit Objective The overall objective is to ensure that controls over ICT and BCM matters do actually exist in accordance with stipulated rules and regulations as well as laid down policies and procedures.3.3. 2.5 FOREIGN EXCHANGE OPERATION (i) Letter of credit if any Money transfer including that of western Union (ii) Buying and selling foreign currency (iii) Audit Objective The overall objective is to ascertain that stipulated foreign exchange rules. This is meant to ensure that ICT procedures and BCM matters are properly followed and loss risks are minimized.2. The work plan will include the following (i) Review performance against budget (ii) Review goals (iii) Review SWOT analysis.

1 LOANS AND OVERDRAFT (i) Salaried loans (ii) Group loans (iii) Business loans (iv) Staff loans Audit Objective: The overall objective is to ensure that loans are granted in accordance with stipulated rules and regulations as well as laid down policies and procedures. The work plan will include the following (i) To verify accounts in operation (ii) To verify buying and selling procedures (iii) To examine adherence to approval requirements (iv) To examine operational procedures relating to foreign operations (v) To check compliances on BOT Regulation and other related policies. then good income and minimum loss is expected. Compliance to money laundering policy is expected to be high. 2. Expected outcome It is expected that if compliance is followed properly during issuance of loans then bad loans will be minimal and therefore minimal loss and good income. This is meant to ensure that loans granted are collected and loss risks are minimised. 14 . The work plan will include the following: 7) Salaried loans (i) Check recruitment procedures.4. making transfers and buying and selling of foreign currency.The expected outcome If compliance is followed during opening of letter of credits.4 FOURTH QUARTER 2.

2 DEPOSITS (i) Current accounts (ii) Saving accounts (iii) Time deposits (iv) Other deposits Audit Objective: The overall objective is to ensure that customer service related policies and manuals are being adhered to. i. VAT.e.4. these includes. introduction letter. ID. picture. Savings Account and Time deposits Manuals.provisions 2.provisions (v) Check written off loans status 3) Business loans (i) Check procedures for issuing loans (ii) Review loans disbursed (iii) Check securities and their legality (iv) Check arrears reports . Memorandum of a company. These include Current Account. good customers whom bank can extend other contract relationship of banking services. TIN etc. Other objective is also to check compliance with the Bank’s anti money laundering procedures. The work plan will include the following: (i) Check the procedure for opening account if are in line with bank policy (ii) Check the documentation required for opening of accounts. insurance fund and loan application fee (iii) Visit sampled groups and check recruitment and training procedures (iv) Check arrears reports . Expected outcome It is expected that if compliance to the opening of these accounts is followed then we expect to have good deposits. check compliance to KYC 15 .(ii) Check collective agreements (iii) Check specimen signatures for authorised officers to sign loan application forms at employer’s side (iv) Check arrears reports (v) Check written off loans status 8) Group lending (i) Check recruitment procedures (ii) Check registration fees.

3 SHARES Audit Objective The overall objective is to ascertain that the amount received from members is properly received and recorded.(iii) Proper filling of accounts opening forms (iv) Check minimum opening balance (v) Check charges required for opening account such as ID charges on savings and cheque book on current account 2. The overall objective is to ascertain that the amount transferred upcountry or outside and inside the country are properly supported and due care is observed. (a) Core Capital. (iv) Check capital adequacy requirement. The work plan will include the following (i) Check member’s register if agreeing with General ledger. BALANCE WITH OTHER INVESTMENTS (i) Cash at strong room (ii) Balance with other banks (iii) Investment in treasury bills (iv) Investments in bonds (v) Investments in other banks (placements) (vi) ATM BANKS AND OTHER Audit Objective: The overall objective is to ensure that policies and manuals are being adhered to. (iii) Check Annual General meeting approval over movement of share capital.4. (b) Total Capital. The work plan will include the following: Check if there is temporary and permanent insurance for cash in hand (ii) Check cash limit for strong room and teller’s cubic (iii) Reconciliations of the balance with other banks (i) 16 .4 CASH.4. The expected outcome If all shares are properly issued and accounted for paid up capital will be properly accounted for and share register will also be well prepared and registered as required by law. (v) Check requirement of BOT over capital build up compliances 2. (ii) Check advance towards share capital if agreeing with General ledger.

4.Check interest accrual computation by the system (viii) Check the documents used to transfer the funds if properly supported (ix) Check application of controls for anti money laundering transactions (x) Check the whole procedures involved in cash and investments (iv) 2.4 EXPENSES (i) Interest expense (a) Interest on saving accounts (b) Interest on current accounts 17 . The work plan will include the following (i) Check registration fee (ii) Check application fee (iii) Check interest receivables/accruals (iv) Check reversals from income (v) Perform ratios and advice on the profitability of the bank (vi) Check other income 2.2.5 INCOME (i) Interest income (a) Interest on loans (b)Interest on Treasury bills (c)Interest on placements (i) Non interest income (a)Commitment fee (b)Registration fee (c)Tender fee (d)Foreign income (e)Income from western union (f) Other incomes Audit Objective: The overall objective is to ensure that procedures for income calculation and recording are being adhered to. Expected outcome It is expected that if procedure for recognition of income is followed as per policy and tariff guide and computer is accruing income properly then there will be no loss of income.

interest calculation procedures are being adhered to. then there will be no bad loss and income is expected to be good. and computer system is behaving good in accruing expenses. Expected outcome It is expected that if all payments are paid through authorised procedures as set out by the bank.(c) Interest on time deposits (ii) Non interest expenses (a) Payroll expenses (b) Other expenses as per general ledger (c) Other sundry credits Audit Objective The overall objective is to ascertain that all expenses are authorised before payment. The work plan will include the following (i) Check recording procedures (ii) Check statutory remittances (iii) Check payroll expenses (iv) Check interest expenses on money deposited with the bank (v) Check recording and postings of non interest expense (vi) Check commission and fees payables (vii) Check recording and treatment of bad debts 18 .

2 Deposits (i) Current accounts (ii)Savings accounts (iii) Time deposits (iv ) Other deposits 12 days 21/2 – 4/3 2. 3 Cash.1.1. balance with other banks and 12 days other Investments (i) Cash in Strong room At once 19 7/3 – 18/3 least per .1. 1 FIRST QUARTER 2010 Loans and Overdraft (i) Salaried loans (ii) Group loans (iii) Business/Corporate loans (iv) )Staff loans 7/2 – 18/2 2.1 2.TIME TABLE FOR INTERNAL AUDIT PLAN FOR YEAR 2011 S/N AREA OF AUDIT TIME FRAME FOR AUDIT 12 days DATES 2.

2. 4 Shares (i) Share capital Register (ii) Advance Register towards share capital 5 days 21/3 – 25/3 2.2. 1 SECOND QUARTER 2010 Loans and Overdraft (i)Salaried loans (ii)Group loans (iii)Business/Corporate loans (iv)Staff loans 12 days 11/4 – 29/4 2.1.2. 3 Income (ii) Interest Income (a) Interest on loan (b) Interest on Treasury Bills (c ) Interest on placement 12 days 16/5 – 27/5 20 .2 2. 2 Deposits (i)Current accounts (ii)Savings accounts (iii) Time deposits (iv ) Other deposits 12 days 2/5 – 13/5 2.Month (ii) Balance with other banks (iii) Investment in Treasury Bills (iv) Investment in Placements (v) ATM 2.

3 THIRD QUARTER 21 . 6 Assets Verification (i) All fixed Assets (ii) All current Assets 12 days 27/6 – 8/7 12 days 13/6 – 24/6 12 days 30/5 – 10/6 2.2.2.2. 4 Expenses (i) Interest expenses (a) Interest to Savings account (b) Interest to current account (c ) Interest to Time deposit (ii) Non Interest expenses (a) Pay roll expenses (b) Other expenses paid/ payable 2.(ii) Non Interest Income (a) Commitment fee (b) Registration fee (c ) Tender fee (d) Foreign Income (e) Other Income 2. 5 Human resource (i) Personnel Files (ii) Job descriptions (iii) Training development plan (iv) Employment contracts (v) Human resource policy and governing laws (vi) Health and welfare plans (vii) Other staff matters 2.

4 2. and goals as 12 days analysed in the bank’s plan/budget (i) Review performance (ii) Review goals (iii) Compare plan/budget performance against 5/9 – 16/9 (iv) Review SWOT analysis 2.3.3. 1 Loans and Overdraft (i)Salaried loans (ii)Group loans (iii)Business/Corporate loans (iv)Staff loans 11 days 25/7 – 5/8 2.3.3.2.4. 4 SWOT analysis. 2 Deposits (i)Current accounts (ii)Savings accounts (iii) Time deposits (iv) Other deposits 11 days 9/8 – 19/8 2. 1 FOURTH QUARTER Loans and Overdraft 22 11 days 10/10 – 21/10 . 3 ICT / BCM (i) Internal control in ICT (ii) Compliance with BCM 12 days 22/8 – 2/9 2.3. 5 Foreign exchange operations (i) Letter of Credits (ii) Buying and selling of foreign currency (iii ) Money transfer 12 days 19/9 – 30/9 2.

4. 4 towards share capital 12 days 7/11 – 18/11 12 days 24/10 – 4/11 Cash.(i)Salaried loans (ii)Group loans (iii)Business/Corporate loans (iv)Staff loans 2.4. 2 Deposits (i)Current accounts (ii)Savings accounts (iii) Time deposits (iv ) Other deposits 2.4. 5 Income (i) Interest Income (a) Interest on loan (b) Interest on Treasury Bills (c ) Interest on placement (ii) Non Interest Income (a) Commitment fee (b) Registration fee 23 11 days 28/11 – 8/12 . 3 Shares (i) Share capital Register (ii) Advance Register 2.4. balance with other banks and 5 days other Investments (i)Cash in Strong room (ii)Balance with other banks (iii)Investment in Treasury Bills (iv)Investment in Placements (v) ATM 21/11 – 25/11 2.

4.(c ) Tender fee (d) Foreign Income (e) Other Income 2. 6 Expenses (i) Interest expenses (a) Interest to Savings account (b) Interest to current account (c ) Interest to Time deposit (ii) Non Interest expenses (a) Pay roll expenses (b) Other expenses paid/ payable 12 days 12/12 – 23/12 24 .