Internal Audit Engagements

Recently we have been undertaking more and more internal audit engagements by larger companies which aim to improve their internal control systems, procedures, processes and accountability of their employees.

Having strong internal control systems is also a great way to secure growth and scalability

This is a great opportunity to explain what an internal audit engagement is and how useful it is to organisations and companies usually with more than 5 employees:

What is an internal audit engagement?

An internal audit engagement is an independent 3rd party review of the organisations systems and controls by a regulated audit and assurance firm. This review could be compulsory - which is the case for regulated entities such as funds and investment firms or ad hoc based on management needs.

Why would the management of a company request for an internal audit?

As explained above, the purpose of the internal audit is designed based on the objective of the audit but to a great extent its purpose is to firstly ensure the systems and controls are appropriately designed and implemented by the business and to report any irregularities.

Areas Examined by the Internal Auditors

a) Department procedures.

b) Execution of department procedures.

d) Sales and Purchases Cycles - from start to end, how are initiated, by who, appropriate signatures, hierarchy adopted, who raises the invoices, who files them , where, who updates the accounting software amongst others.

e) Receipts and Payments Cycles - from star to end, who collects money, how are the systems informed, by who, hierarchy applied, to accounting and issuance of receipts and payments amongst others.

f) 3rd Party- agreements are reviewed, process for selection of suppliers and contracts is scrutinised, selection criteria assessed, qualitative factors ascertained and many more.

g) Infrastructure

1. Security access through the organisation and computerised software.
2. Fixed assets register nicely organised and updated; how, by who, what is the policy.
3. Logs - shipping logs, dispatch logs, sick leave locks, annual leave, orders, consignment goods any many more. Who keeps track, how, is it sufficient.
4. Website and IT Systems assessed and scrutinised (assistance by experts usually obtained).
5. Personnel and Infrastructure (who does what, why, how, objectives, achievements, change needed, does it work).
6. Back Office Operations and Systems (set up, structure assessed, controls, systems, operations, objectives met, targets met)

h) Compliance matters

1. With regulations affecting your company; if for instance you are an investment firm we would assess whether you comply with MIFID II requirements and relevant provisions and requirements such as the preparation of Capital Adequacy Reports, ICAAP Reporting, Handling Clients Own Funds, Internal Audit Engagement, to mention a few.
2. With Tax - Assessment of Tax and VAT return preparation and Company submissions to the authorities
3. With GDPR Regulation
4. Payroll and Employee remuneration and company obligations
5. Insurance required by the Cyprus Republic
6. Health & Safety
7. Any other compliance laws, regulation or directive applicable to the specific business.

h) Statutory Compliance

1. Review of board and directorships
2. Review of committees and how they operate
3. Authorised bank signatories; who actually signs, are protocols followed
4. Submissions to regulators; for instance Investment Firms must submit on a monthly, quarterly and annual basis a plethora of reports and workings to CySEC.

i) Accounting Matters

1. Processing of accounting records
2. Reconciliations of banks, creditors and debtors statements
3. Own funds preparation and reconciliation by investment firms
4. Submissions of tax forms, audited financial statements, issuance of payslips

j) Many more

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The process

1. The board assigns to an Audit and Assurance Firm this Internal Audit Engagement.
2. The Internal Auditor Designs the Internal Audit based on the requirements of the Regulator or the Client.
3. The internal audit usually takes 5 - 8 working days to be completed and includes several visits at clients premises and the examination of a significant amount of paperwork, discussions with management and visits onsite and offsite.
4. At the end of the fieldwork, once all clarifications and assertions are collected the internal auditor issues the internal audit report.
5. The Internal Audit Report contains an extensive checklist of the areas mentioned above together with the Findings of the Internal Auditor. For each finding the client (the organisation) is required to respond for the weakness or deficiency identified.

Is an Internal Audit For Me?

Rest assured that the Purpose of the Internal Audit is to Add Value to the organisation under review. Consequently, an internal audit is a prerequisite for all companies and businesses especially if they are employing more than 5 employees as it would add tremendous value in their systems and controls and minimise the risks of fines, irregularities, potential fraud as well as improving the efficiencies within the organisation.

This is because the persons carrying the internal audit function are experienced, qualified Chartered or Certified Accountants who serve hundreds of different businesses in various fields and who can add value in every segment, department or operational cycle they investigate.

If you are interested for an internal audit engagement or would like to discuss the possibility of having such a function within your organisation feel free to contact us at [email protected] or at + 357 22 33 63 21.

CYAUSE Audit Services Ltd | Kyriakos Tramountanellis | Audit - Consulting - Tax - Company Formation - Bank Account Set Up | Nicosia & Limassol |

CYAUSE Audit Services Ltd

CYAUSE Audit Services Ltd is performing Statutory and Internal Audit Engagements on a daily basis as this is our core, day to day business. Whether an investment firm regulated by the Cyprus Securities and Exchange Commissions (CySEC ) or a limited by shares company we can perform the internal audit engagement tailored to your needs with ultimate purpose to add value to your organisation.

CYAUSE Audit Services is an Audit & Assurance firm with offices in Nicosia and Limassol. During 2015 we have been awarded by I.C.P.A.C and the A.C.C.A (local and international association of Chartered Certified Accountants) for the Quality of our Audit Services and our Office's Procedures.

Being a Truly International Audit & Assurance firm, we have associates from all over the world and we are constantly looking for new associates to expand our network further. At present, CYAUSE Audit Services ?operates internationally as?Accace Circle , a co-created business community of like-minded BPO providers and advisors who deliver outstanding services with elevated?customer experience. Covering almost 40 jurisdictions with over 2 000 professionals, we support more than 10 000 customers, mostly mid-size and international Fortune 500 companies from various sectors, and process at least 170 000 payslips globally.

CYAUSE Audit Services Ltd is also member of the 3E Accounting Network , an international accounting network which originates from Hong Kong and has more than 80 members from all over the world.

If you would like us to assist you with an internal or external audit engagement please contact us at [email protected] or call us at +357 22 336 321.

Information about CYAUSE Audit Services and the Cyprus Corporate & Tax System can be obtained from our Website or our YouTube channel which provides valuable information about the Corporate & Tax Environment of Cyprus.