FACULTY OF BUSINESS

ACCOUNTING SCHOOL

INTERNAL AUDIT

COURSE:

PRE-PROFESSIONAL INTERNSHIP I

AUTHOR:

RENGIFO ASTETE, KRISTEL DAYANA

TEACHER:

ORIHUELA RIOS NATIVIDAD CARMEN

Los olivos – Perú

(2023)
INDEX
I. INTRODUCTION ........................................................................................ 3
II.DEVELOPMENT ........................................................................................ 5

III.AUDIT PHASES

3.1. Administrative Audit ................................................................................ 9

3.2. Financial Audit ........................................................................................ 9
3.3. Audit of information systems or technologies ......................................... 9
3.4. Quality authority ...................................................................................10
3.5. Operational audit .................................................................................. 10

IV. CONCLUSIONS .................................................................................... 11

V. BIBLIOGRAPHIC REFERENCES ............................................................ 12

VI. EXHIBIT ................................................................................................... 13

 I. INTRODUCTION

Internal audit is a comprehensive and systematic process that aims to assess and
improve the effectiveness of internal controls, risk management, and operational
processes within an organization. This is a crucial function that contributes to
strengthening an entity's governance, regulatory compliance, and operational
efficiency.

At its core, internal audit focuses on critically examining and analyzing internal
procedures, policies, and business practices to ensure they are aligned with the
organization's strategic goals. Through the evaluation of accounting systems, the
review of financial management processes, and the identification of potential risks,
internal auditors play a critical role in protecting the company's assets and
continuously improving its operations.

This process involves the thorough review of financial records, business

transactions, and operational activities in order to provide an unbiased and objective
view of the organization's internal situation. Internal auditors, who must possess
deep technical knowledge and a comprehensive understanding of the industry in
which the entity operates, play a vital role in providing recommendations to improve
efficiency, effectiveness, and transparency.

Internal audit not only focuses on financial aspects, but also encompasses areas
such as regulatory compliance, risk management, and the evaluation of key
operational processes. By working closely with senior management, internal
auditors can contribute significantly to the achievement of the organization's
strategic objectives by identifying opportunities for improvement and mitigating
potential risks.

According to Gomez. M & Lazarte.C (2019) tells us that:

Internal Control is a process carried out at all levels of an organization, with

the aim of reasonably guaranteeing the fulfillment of corporate objectives. This
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 process is essential to protect assets, verify the accuracy and veracity of
administrative and financial information, promote the efficiency of its directors,
measure the efficiency of operations and economy in the use of resources,
and achieve compliance with corporate goals and objectives.

The effective implementation of an internal control system is a crucial component

for modern business management. In a dynamic and challenging business
environment, the ability to safeguard assets, ensure the integrity of financial
information, and mitigate operational risks has become critical. This report seeks to
explore and evaluate the current state of internal control within our organization,
highlighting its importance in protecting resources, promoting operational
efficiencies, and ensuring transparency in decision-making. Through a detailed
analysis of policies, procedures and organizational structures, we seek to identify
areas of strength and opportunities for improvement, thus contributing to the
continuous strengthening of our internal control framework.

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II.DEVELOPMENT

TYPES OF INTERNAL AND EXTERNAL AUDITS

An audit can be both internal and external and their main differences lie in the
nature of the auditor. In addition, there is a third type of audit, which are public
audits, carried out by public bodies

INTERNAL AUDIT

The main objective of internal audit is to improve the company's performance by

carrying out an analysis of all its components, departments and its operation.

Internal audits are carried out by resources of the company itself and their
conclusions must be useful for managers, executives and business partners, as
they are the ones who will intervene in the decision-making. However, internal
audits can be carried out by external specialists if the company does not have
specific staff to whom it can entrust this task. Regardless of who conducts the
company's internal audit, they must stick to impartiality and objectivity.

A well-executed internal audit helps to meet the following objectives:

• Optimize the internal functioning of the organization

• Promote business safety and productivity
• Plan action protocols according to each area or at a general level
• Evaluate operational, accounting, and financial controls

EXTERNAL AUDIT

External audits are carried out by auditors outside the company. These can be
from other companies within a business group or external auditors hired by the
same company.

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 The main objectives of an external audit are:

Identify and report possible negligence and non-compliance of the company,

within the regulatory framework.
Propose improvements that optimize the management and development of
business activities.

SCOPE OF THE INTENRNA AUDIT

The scope of internal audit encompasses the examination and evaluation of the
adequacy and effectiveness of the internal control system of companies and the
effective fulfilment of the responsibilities assigned by them. In addition:

• It allows reviewing and evaluating the validity, sufficiency, quality and application
of a company's accounting, financial and operational controls, promoting
effective control at a cost-effective cost.
• It helps to ensure that the policies, programs, and procedures established by the
organization are adhered to.
• It seeks to ensure that assets are properly recorded and sufficiently protected
from losses of all kinds.
• Try to make sure that the information used is useful for management.
• It seeks to assess the quality and effectiveness of the execution of the assigned
responsibilities.
• He advises on operational improvements within the organization.
• It helps to identify potential savings, properly valued, in terms of the impact they
may have on the bottom line.
• Reviews and pursues the correct and effective implementation of the audit
recommendations and suggestions raised by the organization.

PURPOSE OF THE INTERNAL AUDIT

Internal audit becomes necessary as a company grows. Otherwise, the review and
control by management would be very complicated and the analysis and study of

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the company's progress would be done, possibly, in a way that is not objective and
far from reality.

An internal audit should be done based on a previously drafted and designed plan,
based on the policies and procedures of the company in question. Likewise, the
internal audit is aimed at complying with the following points:

• To what extent the plans and procedures derived from management are
complied with.
• Review and evaluation of the application of operational, accounting and
financial controls.
• Carry out inventory control so that all the assets owned by the company are
registered, protected and subject to the relevant regulations.
• Verify and evaluate the accounting information, that it is truthful and
responds to the economic reality of the company.
• Carrying out special and extraordinary investigations as required by
management.
• Preparation of audit reports on irregularities that may be found at the end of
investigations, also determining possible recommendations to solve them.
• Monitoring compliance with recommendations identified in reports and audits

RISK ASSESSMENT

Identifying, assessing, and responding to each individual client's risk is crucial to a

quality audit. As a result of the risk assessment, we determine the nature, extent,
and timeliness of both substantive and control testing that lead us to obtain
sufficient and appropriate evidence to support the opinion. What's more, we might
conclude that the customer is not auditable.

All this without taking into account the obligation of the independent auditor to
comply with two international standards that require it:

ISA 315: Identification and Assessment of Risks of Material Misstatement through

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Understanding the Entity and its Environment
ISA 330: Conduct Audit Procedures in Response to Assessed Risks and Evaluate
Audit Evidence Obtained.

POLITICAS Y PROCEDIMIENTOS

Internal control policies and procedures are critical to safeguarding assets and
ensuring the integrity of financial information. These include segregation of duties,
regular reviews, proper authorizations, and clear documentation of transactions. In
addition, it is essential to establish controls over access to sensitive systems and
data to prevent fraud and ensure compliance with regulations.

STEPS TO CONDUCT AN INTERNAL AUDIT

PLAN

In this phase, the scope, objectives, and resources required for the internal audit
are established. Key areas to examine are identified and a detailed plan is
developed that will guide the entire process. Planning is crucial to ensure that the
audit is effective and efficient

EXECUTION
During execution, the audit is carried out according to the previously established
plan. Data is collected, interviews are conducted, documents are reviewed, and
testing procedures are applied. This step involves a thorough evaluation of internal
controls and operational practices to identify potential risks and areas for
improvement.

REPORT
Upon completion of the audit, a detailed report summarizing the findings,
conclusions, and recommendations is generated. This report provides a clear view
of the effectiveness of internal controls and highlights areas that require attention.
The presentation of results is essential for informed decision-making by senior
management.

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ACTION PLAN
The last step involves formulating an action plan based on the audit
recommendations. This plan addresses identified deficiencies and sets out
corrective actions. Implementing this plan not only improves internal processes, but
also strengthens the organization's ability to manage risks and meet its goals.

Effectively performing these steps ensures that internal audit is a structured and
beneficial process for the organization, providing valuable information for continuous
improvement and effective resource management.

III. TYPES OF INTERNAL AUDIT

3.1. ADMINISTRATIVE AUDIT

It focuses on analyzing the internal control of financial and administrative activities.

It also reviews the policies, procedures, organizational structure, control methods,
financial management, goals and objectives of the company. Its main goal is to
increase profitability and decrease weaknesses and inefficiencies.

3.2. FINANCIAL AUDIT

This type of audit focuses on a company's financial statements and is performed by

a CPA at the end of each accounting year. It verifies the annual accounts in order to
determine whether they give a true and fair view of the assets, financial situation
and results of the audited entity.

3.3. AUDIT OF INFORMATION SYSTEMS OR TECHNOLOGIES

This process consists of verifying the entire computational structure of a company.

This audit evaluates the effectiveness and performance of the teams and aims to
seek technological improvements according to the needs of each area. In addition,
it ensures that companies comply with data security and compliance with data
protection laws.

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3.4. QUALITY AUTHORITY

This type of internal audit evaluates a company's activities, procedures, and results
to ensure that they meet certain quality standards in their inventory or their service
in general. The purpose is to avoid internal malpractice or to develop products that
may affect consumers.
Quality auditing can be divided into different types depending on your approach, for
example: quality management systems, processes, product quality, compliance, or
external

3.5. OPERATIONAL AUDIT

This type of internal audit focuses on a company's key processes, internal control,
and systems. Its goal is to improve productivity and efficiency in operations.
Likewise, it is an excellent option to detect the misuse of resources and provide
solutions and recommendations for improvement.

3.6. COMPLIANCE AUDIT

As the name implies, this audit ensures that companies comply with their internal
policies and procedures. Each company has its own rules and codes of conduct that
each employee must abide by. The compliance audit monitors that these points are
effectively respected and complied with.

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IV. CONCLUSIONS

In conclusion, I can say that internal audit is not only a function of regulatory
compliance, but also an essential pillar in the modern enterprise architecture. Through
the systematic and objective assessment of internal processes, internal audit not only
identifies potential risks and vulnerabilities, but also proposes tangible solutions and
improvements. It is more than a mere examination of figures and transactions; He is a
proactive change agent that drives operational efficiency and organizational
transparency.

Internal audit's ability to adapt to today's business dynamics, relying on advanced

technological tools and innovative approaches, reinforces its relevance in an
increasingly complex business world. It's not just about ensuring compliance with
regulations and standards, but about strategically guiding organizations towards
achieving their goals and effectively managing emerging challenges.

In addition, internal audit plays a crucial role in strengthening trust, both internally
and externally. It provides stakeholders, from senior management to investors and
customers, with the assurance that the entity operates ethically, efficiently and with
adequate risk management. This trust, in turn, contributes to the organization's
prestige and reputation in the marketplace.

Internal audit goes beyond being a control mechanism; It stands as a strategic

partner that, through rigorous evaluation and suggestion of improvements,
contributes to the growth and sustainability of organizations. In a business
environment characterized by uncertainty and the speed of change, internal auditing
is presented as a beacon of stability, guiding companies towards more efficient,
transparent and ethical practice

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V. BIBLIOGRAPHIC REFERENCES

Gómez. M & Lazarte.C (2019) control interno

http://repositorio.face.unt.edu.ar:8920/bitstream/handle/123456789/
766/Control%20Interno.pdf?sequence=1&isAllowed=y

Verum ,M (2016) Alcance y objetivos de la auditoria interna

https://www.verumasesores.com/auditoria-interna/

Unir ,R(2021) que es una auditoria y que objetivo tiene revista

https://www.unir.net/empresa/revista/auditoria-interna/

SORFER. A (2021) Que es la auditoria interna y cuales son sus tipos

https://blog.hubspot.es/marketing/auditoria-interna

Nuño.P (2023) la auditoria interna

https://emprendepyme.net/auditoria-interna.html

Perez H (2021) Porque es importante evaluar el riesgo

https://www.auditool.org/blog/auditoria-externa/por-que-es-
importante-evaluar-el-riesgo-de-auditoria

Global S (2023) Principales diferencias entre auditoria interna y externa

https://www.globalsuitesolutions.com/es/principales-diferencias-entre-
auditoria-interna-y-auditoria-externa/

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VI. EXHIBIT