AUDIT PROGRAM AND PROCEDURE

AUDIT ACTIVITY: FINANCIAL AUDIT - REVOLVING FUND

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A. AUDIT SCOPE:

The audit coverage are financial transactions for

the June 2022 to May 2023 and cash count for
the current transactions. In particular, the audit
will cover review of the revolving fund.

B. AUDIT OBJECTIVES:

1. Accuracy of Transactions:

Verify the accuracy of transactions recorded in

the revolving fund, ensuring that they are
complete and properly documented.

2. Reconciliation:

Confirm that the revolving fund account

balances agree with supporting documentation
and are reconciled regularly.

3. Authorization and Approval:

Confirm that all transactions are properly

authorized and approved in accordance with the
Company's policies.

4. Segregation of Duties:

Verify that there is an adequate segregation of

duties to prevent any single individual from
having control over all aspects of the fund.
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5. Timely Disbursements and Receipts:

Ensure that disbursements are processed in a

timely manner to support operational needs.

6. Internal Controls:

Evaluate the design and effectiveness of internal

controls in place to safeguard the revolving fund
against errors, fraud, or misuse.

7. Access Controls:

Ensure that access controls are implemented to

restrict access to the revolving fund only to
authorized personnel.

8. Documentation and Recordkeeping:

Assess the adequacy of documentation and

recordkeeping for all transactions within the
revolving fund.

C. AUDIT RISKS:

1. Misappropriation of Funds:

Unauthorized use or misappropriation of funds

by employees or other individuals involved in the
management of the revolving fund.

2. Inadequate Internal Controls:

Weaknesses in internal controls may lead to

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errors, fraud, or misuse of funds.

3. Lack of Segregation of Duties:

Insufficient separation of duties increases the

risk of errors or fraudulent activities going
undetected.

4. Poor Recordkeeping:

Inaccurate or incomplete recordkeeping may

lead to discrepancies in financial reporting and
mismanagement of funds.

5. Non-compliance with Policies and Regulations:

Failure to comply with internal policies,

procedures, and external regulations governing
the use of revolving funds.

6. Cash Flow Issues:

Insufficient cash flow within the revolving fund

may impact its ability to meet operational needs.

7. Accuracy of Transactions:

Errors in recording transactions may lead to

inaccuracies in financial reporting.

8. Fraudulent Activities:

Deliberate manipulation of financial records or

fraudulent activities within the revolving fund.
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D. AUDIT PROCEDURES:

1. Preliminary Procedures

1.1 Understand the Revolving Fund:

 Review the organization's policies and

procedures governing the revolving fund.

 Understand the purpose, objectives, and

key activities of the fund.

2. Financial Controls and Transactions

2.1 Transaction Testing:

 Select a sample of transactions from the

revolving fund.
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 Verify the accuracy and completeness of

transaction documentation.

2.2 Authorization and Approval:

 Review supporting documentation to

ensure transactions are properly
authorized and approved.

 Confirm compliance with internal

policies.

2.3 Reconciliation:

 Verify the accuracy of the fund's

reconciliations, comparing cash balances
with supporting documentation.

 Investigate any discrepancies.

2.4 Segregation of Duties:

 Assess the segregation of duties within

the fund's processes.

 Confirm that no one person has control

over all aspects of a transaction.

3. Operational Controls

3.1 Efficiency and Effectiveness:

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 Evaluate the efficiency and effectiveness

of processes related to the management
and utilization of the revolving fund.

4. Compliance Testing

4.1 Regulatory Compliance:

 Verify compliance with relevant laws and

regulations governing the operation of
revolving funds.

4.2 Internal Policy Compliance:

 Confirm adherence to internal policies

and procedures established for the
management of the revolving fund.

5. Control Environment

5.1 Internal Controls Review:

 Evaluate the design and effectiveness of

internal controls in place to safeguard the
revolving fund against errors, fraud, or
misuse.

5.2 Access Controls:

 Review access controls to systems and

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physical areas related to the revolving

fund.

 Ensure access is restricted to authorized

personnel.

6. Cash Flow Assessment

6.1 Cash Flow Analysis:

 Review cash flow statements to ensure

adequate cash is available for operational
needs.

 Investigate and document any signs of

cash flow issues.

7. Surprise Cash Count Procedure

7.1 Preliminary Steps:

Authorization and Planning:

 Obtain authorization from management

to conduct a surprise cash count.

 Plan the surprise cash count with key

stakeholders, such as internal audit or
compliance personnel.
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Select Date and Time:

 Randomly select the date and time for

the surprise cash count to minimize the
likelihood of preparation by employees.

7.2 On-site Surprise Cash Count:

Secure Cash Area:

 Ensure the cash area is secure and that

access is restricted to authorized
personnel.

Notify Key Personnel:

 Notify only essential personnel (e.g., the

custodian) immediately before or during
the count to avoid advance preparations.

Perform Initial Observation:

 Observe the general state of the cash

area and surrounding environment
before initiating the count.

Count Cash:
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 Conduct the cash count as outlined in the

standard cash count procedure.

 Use counting machines or other aids for

accuracy.

Verify Currency Authenticity:

 Verify the authenticity of currency notes

and check for counterfeit bills.

Record Denominations and Quantities:

 Record the denominations and quantities

of coins and bills counted through the
cash count form.

 Ensure detailed documentation.

Segregation of Duties:

 Identify segregation of duties during the

surprise count, involving at least two
individuals in the process.

Reconciliation with Records:

 Reconcile the physical count with the

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expected cash balance from accounting

records.

 Investigate and document any

discrepancies.

Document Observations:

 Document any observations or

irregularities during the surprise cash
count.

 Note the behavior and reactions of

individuals involved.