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I am interested in putting up a thread for all the internal auditors.. perhaps we could benefit from each other's experiences. I for one am a novice in the field as have recently been converted from external to internal.

It is a whole new concept I must say.. infact I think it would be a good idea for all external auditors to have a stint in internal audit... does get you thinking on different grounds.

My first question to the group is do companies that have established internal audit depts. comply with the Institiute of Internal Auditors guidelines / other local guidelines (and so include the same in their reports), who does u r head of internal audit report to ? are their internal audit manuals in place ?


"Allah does not change the state of people unless they change what is within themselves" Quran 1311
Dear Pracs,
Infact the in the pakistani environment internal audit function is not at that position where it is supposed to be, i havn't seen any company following the guidelines of Institiute of Internal Auditors, but i have seen various companies who have well established system of internal audit, they follow the guidelines provided by their head of insternal audit.
as far as the reporting is concerned, the head of I.A. dept. reports directly to chief executive / chairman of the co. or in some cases the head of I.A. circulates his internal audit report to board of directors and the same is discussed in upcoming BOD meeting.
Yes, there are internal audit manuals, if the company has its own internal audit dept. (i mean some companies outsource the same)


SMR
I can only tell you about the Internal Dep't that my Co has. It is more of a quality driven function - that is well established since 1986.

The IIA is more recent and an Internal Audit in the UK does not have to be qualified within the field. We are more driven by the regulataion of the quality certificates and their requirements.

Our Internal Audit Department reports to the MD and its function is to audit the processes of the Company. There are very comprehensive manauls in place relating to all unctions from Production to Finance.

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See Ya
-)
Visit www.accountancystudents.co.uk
Enlightening replies,

I think it undermines the independence and the objectivity of the Auidt function to report to an MD, Chief Executive or the Chairman; Perhaps the Chairman as he/she may not be involved in direct running of the Company. The most ideally and functionally correct reporting line would be perhaps to the non executive directors or/and to a An Audit committee of the BOD.

How do regulations in the UK address that,.. I think in Pakistan you are encouraged to have a direct reporting line to the BOD.

But ofcourse IA is one of the fastest and emerging offshoots of the assurance industry and is not bound by an international frame work,.. it may take some time to come to a common set of standards world wide


"Allah does not change the state of people unless they change what is within themselves" Quran 1311
I think the independance would be compromised if the Internal Audit Department reported to a particular function - Marketing/ Production/ Sales/ Finance but reporting to the MD would not necessarily compromise the independance as the MD is not a functional Manager/ Director and has the power to change the scope and to take on board reportig from Internal Auditors

--------------------------
See Ya
-)
Visit www.accountancystudents.co.uk
Agreed pracs,
'reporting to' is very important, as it keeps a moral check on the employees, like i have seen a company in which many people were fired on account of some remarks in the I.A. report, and some people were issued warning letters which became the part of their personal files.


SMR
Are Banks in Pakistan, UK, US, Canada allowed to

1)own property as an investment ?
2)own shareholding in a subsidiary as a holding company ?



"Allah does not change the state of people unless they change what is within themselves" Quran 1311
hmmm .. no answers...

"Allah does not change the state of people unless they change what is within themselves" Quran 1311
Are Banks in Pakistan, UK, US, Canada allowed to

1)own property as an investment ?
2)own shareholding in a subsidiary as a holding company ?

Salam

According to my knowledge, the answer to ur first questions is "NO"

Banks are not allowed to own property as an investment property, that is why the implementation of IAs 40 (Investment Property) has been deferred by the SBP (Central Bank) here in Pakistan
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Idrees
idrees,

and the answer to the second question ?? ahan ,, so IAS 40 is not in force yet.. for Banks, are other companies using it,, I mean is it enforced by ICAP (I know I should pay attention to my ICAP correspondence !)

another question,.. what is SBP Prudential regulations stance on property acquired by Banks in lieu of mortgage realisation...?? is there a cap on the period within which the Bank should dispose it??


"Allah does not change the state of people unless they change what is within themselves" Quran 1311
Salam!

yeah IAS 40, from its effective date is applicable to other companies . It is only for banks and financial institutions that the implementation of IAS 39 & IAS 40 has been deferred. SBP prudential regulations contain no express guidance on this matter. It provides guidance on calculating the value of collateral held against loans (for deduction against Provision). Surprisingly, i haven't come across any circular of SBP addressing this issue.



Idrees
Dear Friends
I am also doing job in an internal dept of a leading commercial bank & want to share my experience....Still in pakistan the Internal Audit dept.(IAD) is very weak in some areas that includes

* cant comments on policies made my top management/or any activity of top executives...I m talking about material & immaterial for both amount...the matter here is not money but to discurage the malpractices & procedure that may adopt the lower manegemnt on thier behalf & to develpe a transparent system.........

* There is no written down policies to appoint internal auditors in the dept......if there is no consideration is given to qualification & personal traits........Both are very important for an Internal Auditor..........

**No i agreed no body adopt or is following The IIA codes...

**Is there any Chief Internal Auditor who can creat object directly in audit comitte or BOD about President/MD of his company...?? no but it The IIA recomend stritcly to do this....

Now ther is answer of pracs.........

In banking companies ordiance , bank can involve in

1. managing, selling and realising any property which may come
into the possession of the company in satisfaction or part
satisfaction of any of its claims i.e.loan/fiance/advaces etc..

2. acquiring and holding and generally dealing with any property
or any right, title or interest in any such property which may
form security or part of the security for any loans or advances
or which may be connected with any such security;

Hence seperatly cant purchase/invest funds in property

Secondly , in pakistan a bank can own shares in subsidiary company..........

Regards

Kh. Ehrar Hasan
APA,ACMA,CIA,M.A(Eco),
CIMA(Inter)-IBP,Stage-I
Dear Friends

I am also doing job in an internal dept of a leading commercial bank & want to share my experience....Still in pakistan the Internal Audit dept.(IAD) is very weak in some areas that includes

* cant comments on policies made my top management/or any activity of top executives...I m talking about material & immaterial for both amount...the matter here is not money but to discurage the malpractices & procedure that may adopt the lower manegemnt on thier behalf & to develpe a transparent system.........

* There is no written down policies to appoint internal auditors in the dept......if there is no consideration is given to qualification & personal traits........Both are very important for an Internal Auditor..........

**No i agreed no body adopt or is following The IIA codes...

**Is there any Chief Internal Auditor who can creat object directly in audit comitte or BOD about President/MD of his company...?? no but it The IIA recomend stritcly to do this....

Now ther is answer of pracs.........

In banking companies ordiance , bank can involve in

1. managing, selling and realising any property which may come
into the possession of the company in satisfaction or part
satisfaction of any of its claims i.e.loan/fiance/advaces etc..

2. acquiring and holding and generally dealing with any property
or any right, title or interest in any such property which may
form security or part of the security for any loans or advances
or which may be connected with any such security;

Hence seperatly cant purchase/invest funds in property

Secondly , in pakistan a bank can own shares in subsidiary company..........

Regards

Kh. Ehrar Hasan
APA,ACMA,CIA,M.A(Eco),
CIMA(Inter)-IBP,Stage-I
I have begun to realise that Internal Audit takes you away from core financial / accounting issues and one may not necessarily be an accountant (least of all qualified accountant) to be a good internal auditor. What is required is a good understanding of the 'Systems' and the 'Operations' of the Company. Some one with operational experience and a certification such as CIA, would turn out to be more effective.

Any comments ?

"Allah does not change the state of people unless they change what is within themselves" Quran 1311
I am completing my articles in one of the best c.a firm in Pakistan and engage in internal audit from last 8 months and i think it's really a great experience for a person who is going to be a c.a in future. As in external audit u are just concerned with the figures and other assertions but u forget other important areas of business, but internal audit gives u a comprehensive knowledge of the client's business and u really understand the business and it's functions and especially u evaluate internal control systems and this gives a more knowledge than external. I have conducted internal audits of very large organisations and after this i feel if i have been on external audit of these clients then i may have forgotten other aspects of the business if i was on external audit.
any comments?

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