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WAK MODEL – THE WAY OF BEST SOLUTION FOR AN ORGANIZATION INTERNAL AUDIT PROCESS, (PART – 03)

(B.) “WAK” Model (The way of best solution for an organization/ project internal audit process)

 

B/1. Abstract:

 

The internal audit is an essential and now much discussed part of business, the institute of internal auditors an international association of internal auditors, offers this definition – “Internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.” to this end internal auditing furnishes staff with analyses, appraisals, and recommendations relating to these activities Internal audit is a service its functions include examining and evaluating internal control and providing assurance to the management. It is a part of the organizations system of internal control and its scope includes .all aspects of internal control. Not just financial control. The scope of internal audit is much wider than external audit. It ideally covers all the organizations activities,

 

Although internal and external auditors have different and clearly defined roles they do share the same broad purpose of serving the public by helping to ensure the highest standards of regularity and propriety for the use resources and in promoting efficient effective and economic administration,

 

That would be helpful for management for understand and realize the company present position & situation so that an internal auditor can attentive the management about house organization, The internal auditor may be contracted to perform additional tests to determine whether such policies and procedures are operating effectively within the service organization.

B/2. Executive Summary of “WAK” Model:

This “WAK” model discus the internal auditing process for the professional auditors. Internal auditor provides information that helps people in business increase their chances of making decisions that will benefit their companies. Auditing is the language of business, and like other languages, it has its own terms and rules. Understanding this language and learning to interpret it is your first step to becoming successful in your own business and in your personal financial life as well.

 

In your personal life you can use business information to make decisions through internal auditing. About investing in the business, applying for a loan, and evaluating potential jobs. Banks use Auditing information auditing to make decisions about granting loans. Government agencies base their regulations on Auditing information.

 

Auditing information can even be useful to non-business entities with an interest in how businesses affect local, national, or foreign communities and community members. Businesses use auditing information for planning and budgeting and for making decisions about borrowing and investing.

 

Overall, Auditing aids businesses in the process of making better decisions. The basics of Auditing are the same regardless of the size or type of business. In this “WAK” model you will learn through the examination of a desire small business, for more complex businesses, the economic transactions become more varied and complex as does the process of reporting them to various users.

 

The foundation of it all, however, remains the same. This “WAK” model will give you a solid foundation you will be able to use in any business situation you encounter. Whether you own a business or do not, even if you’ve never had any experience with auditing I think this is the perfect model for you. I hoping that you will find from this “WAK” model useful in helping you to understand these auditing issues as they apply to your small business and to your personal life.

 

(C.) solution of Internal audit process!

 

 

The internal audit responsible for planning and implementing Individual audits, and for the overall internal audit plan. This includes defining the scope and resources required for an audit, establishing the methodology and approach, and delegating Specific responsibilities for the overall adequacy, quality, and reporting of such audit activity and the corridor to solution in actuality is

 

Solution = Wish > abilities > knack (WAK)

Or else

Wish > abilities > knack (WAK) = Solution

 

 

 

 

That means if you use your wishful ness from of the heart you can gain an actual ability, and apply this gain ability you can able to done your mission smoothly, also through your ability you can show your working knack, and that is the only path of internal auditing solution,

 

C/1.WISHFUL: I think wish means a frame or express desires concerning; to invoke in favor of, or against, any one; to attribute, or cal down, in desire; to invoke; to imprecate, Almost all human beings do have something to ask for from Almighty Some have a craving for some lawful worldly objects, some have to ask for solutions of their problems, some longing for remedy of illness and getting good health, while some have the far-sight of asking favours of the next world. Thus every one has something to ask from his/her own angle of view.

 

Only wish could make a man to achieve his goal, every man has his own dream and to make that happen he must be wishful, it will move to his desire for the dream bring to light,

 

Educational requirements may vary slightly depending on the company, the area you wish to work and your previous work experience. For most all Internal Auditor careers, the minimum educational requirement is the completion of a Bachelor’s degree.

 

Internal auditors are expected to have a thoughtful audit plan, an excellent working relationship with management, support from the audit committee, and state-of-the-art audit tools. But unless the right people are in place, many internal audit departments won’t be able to solution the audit process.

 

An Internal Auditor will perform various types of tasks depending on the industry and whether the hiring organization is public or private. The main role of an Internal Auditor is to verify the accuracy of all internal records, evaluate internal systems in order to detect any mismanagement, inefficiencies or fraud

 

Applicants who wish their work in these areas to be considered in relation to their total Practical experience must demonstrate that they are equipped to fully identify the purpose, Scope and required function of the system under review. They also need to show that they have acquired sufficient knowledge to practically test the system and its accuracy. They must demonstrate that they have the capability to recommend modifications (or alternative technical approaches) to ensure the efficiency and accuracy of the system. Provided that the experience is broad enough to meet the elements identified. The auditor performing the evaluation is concerned with the what, whom when, where, why, and how of running an efficient and effective operation.  This means that the auditor must have knowledge of the company’s operations

 

I think the solution is to work in the other direction. Instead of working back from a goal, work forward from promising situations. This is what most successful people actually do anyway.

 

Criteria examples:

 

•Ethics-: credibility, integrity and honesty,

•Open minded-: willing to listen, learn accept new ideas,

•Diplomatic-: polite with high manners to his colleagues – after all he is working with people and he is the representative of the top management,

 

C/2. Abilities:

 

The auditor’s ability to select the most appropriate strategy when conducting an audit. Auditors must be free to approach a piece of work in whatever manner they consider best. As a client company grows and conducts new activities, the auditor’s approach will likely have to adapt to account for these. In addition, the auditing profession is a dynamic one, with new techniques constantly being developed and upgraded which the auditor may decide to use. The strategy/proposed methods which the auditors intend to implement cannot be inhibited in any way.

 

In order to be a solution your Internal Auditor process, you will need to have various sets of abilities. You will often need to work alone on projects; therefore, you must have a strong work ethic and desire to perform highly. You will also need to have very strong computer skills as well as have current knowledge of auditing and accounting software available for your organization’s type of information system

 

 

Otherwise Abilities can be useful to almost the whole thing such

 

 

•what are the top 3 traits or skills every internal auditor must have to excel?

•Can you suggest any tips or insights to develop your internal auditor expertise?

•The three essential traits for an Internal Auditor are-Selling and communication skills and enthusiasm with leadership

 

(1) One should be able to sell one’s credentials and abilities and also be able to sell the recommendations to clients or management or process owners.

 

(2) The Internal Auditor should also be enthusiastic to read in between lines and go beyond the necessary Internal Audit program and documents when there is a need for the same.

 

(3) One should have great transformational and transactional leadership skills and be able to share knowledge, develop people and work toward a better controlled, compliant and profitable business conditions so that there is protection of everyone’s interest and assurance of good business practices

 

Internal Auditors are taught to learn and enforce the rules, for instance those governing internal controls, policies and procedures, laws and regulations. Although this work is clearly challenging, it does not usually involve creative thinking. Creativity is not a natural talent that one either has or doesn’t have. Creative thinking can be taught and learned, just like sales or public speaking. Of course, some people have more natural ability than others, but that’s true of almost everything in life.

 

Abilities can be applied to almost everything internal auditors do. For example, abilities can help in finding new ways to:

 

•Ability to use standard systems:

•Ability to learn new products fast.

•Ability to estimate person-hours, hence cost

•Strengthen the quality of audits.

•Improve efficiency.

•Provide value-added service to operating departments.

•Increase service to management and the audit committee.

•Enhance professional credibility.

•Improve working conditions.

 

Internal auditors need to have the ability to deliver a product that meets or exceeds the expectations of senior management. Internal auditors must also be able to tell their story to maintain their influence, relevance, and reliability within the organization.

 

Abilities assessment:

 

The following skills are helping an auditor for his /her self confident & ability

 

1. Explorer – The Explorer searches for new ideas — good or bad, rational or outrageous, serious or silly. Many, many ideas are needed to find innovative solutions to problems and challenges. As a famous philosopher once said, “Nothing is more dangerous than an idea when it is the only one you have.”

2. Artist – The Artist takes existing ideas, provided by the Explorer, and molds or transforms them into entirely new and unique ideas.

3. Judge. – The Judge weeds out bad ideas and attempts to find workable, feasible solutions.

4. Warrior – Finally, the Warrior implements the new ideas. Armed with a game plan, persistence, and diplomacy, the Warrior leads the battle against the many forces that resist change.

 

Each of the four steps is required if innovation is to occur. The most successful persons excel in all four areas, or they find others who complement their weaknesses

Criteria examples:

 

•Observer-: owns the ability to recognize what he sees and understand without interrogating,

•Perspective-: owns the ability to evaluate situations beyond appearance and with a wide systematic,

•View of things-: has the ability to understands the organizational consequences of his evidence,

•Versatile-: owns the ability to mobilize from one situation to another without losing direction

•Persistence-: must be persistence with his objectives and to not story away,

•Decisive-: ready to make decision

 

C/3. Knack:

Every audit solution is based on sound planning and an atmosphere of constructive involvement and communication between the client and the auditor. I see quite a few audit organizations that include how their clients to the audit service process works. It also is designed to provide a resource for sharing tools and techniques for each of the distinct phases of the audit process.

 

Internal Audit Procedures & knack

During the internal audit process, the Internal Auditor may employ one or more audit techniques. Such techniques include, but are not limited to:

 

I. Observation and Inquiry

The Internal Auditor may observe the operation of any College function, activity, department, or unit. The Internal Auditor may also make reasonable inquiries of any College employee in attempting to carry out the internal audit process.

 

II. Analysis and Review

 

A principal means by which the Internal Auditor administers the College’s internal audit function is through careful analysis and critical review of both financial and operating data. In some cases this will be accomplished through the comparison of current balances with those from prior periods. Another common technique which will be utilized while performing analysis and review activities is the breakdown of individual accounts into their most refined detail so that unusual or significant items are more likely to be highlighted and thus selected for investigation. Other techniques will be used as necessary to accomplish an appropriate level of analytical review during the internal audit process.

III. Inspection

 

At his discretion, the Internal Auditor shall have the authority to inspect physical assets, documents, and other evidence supporting relevant data of the auditor under review. This process is usually accomplished by verification of transactions employing the following basic audit techniques:

 

• Vouching—this is the verification of entries by comparing them to the original documents on which they are based. This technique helps ensure the accuracy, genuineness, validity, or truth of the entries under review.

 

• Recompilation—this is the process of recalculating selected calculations to determine their accuracy. In applying this technique an auditor’s footings, adding machine tapes, and spreadsheets shall never be assumed to be correct.

 

• Retracing of Bookkeeping Procedures—this includes tracing postings from original books of entry to ledgers and vice-versa.

 

• Physical Examination and Count—this technique is used to substantiate the reliability of the records under examination. In applying this technique, the Internal Auditor shall: (A) identify what is being examined; (B) determine the existence of the items being examined; (C) determine the condition of the items being examined; and (D) verify the quantity of the items being examined.

 

IV. Confirming

 

The validity of items shown on College records may be established by receiving confirmation directly from a third-party in a position to verify the validity of a given item. Requests for such confirmations must be mailed by the Internal Auditor and are to be accompanied by a return envelope addressed to:

 

V. Scanning

 

This is the process of quickly but carefully scrutinizing a ledger account, document, or any other record for questionable, unusual, or improper items. Scanning will be used in the internal audit process whenever it is determined that this process has a reasonable chance of adding value.

 

VI. Planning

 

During the planning portion of the audit, the auditor notifies the client of the audit, discusses the scope and objectives of the examination in a formal meeting with organization management, gathers information on important processes, evaluates existing controls, and plans the remaining audit steps.

 

VII. Fieldwork

 

This is very critical step as it allows auditor to determine the scope and extent of audit effort. It is done in advance of detailed testing and analysis work. The auditors can familiarize themselves with the system and control structure. Typically the audit team would consider:

 

• The organizational structure and the responsibilities of key members.

• Manuals of policies and procedures and applicable regulations.

• Management reports and minutes of meeting.

• Walkthrough of activity

• Discussions with key personnel

 

The field survey is the initial contact point and might take one or two days depending on the size of the audit. The completion of field survey helps the auditor to understand key systems and processes. If the information during preliminary audit planning is imperfect, the audit team can make adjustments to planned audit scope

 

VIII. Announcement Letter

 

The client is informed of the audit through an announcement or engagement letter from the Internal Audit Director. This letter communicates the scope and objectives of the audit.

 

IX. Initial Meeting

 

During this opening conference meeting, the client describes the unit or system to be reviewed, the organization, available resources and other relevant information. The internal auditor meets with the senior officer directly responsible for the unit under review and any staff members she /he wishes to include. It is important that the client identify issues,

X. Preliminary Survey

 

In this phase the auditor gathers relevant information about the unit in order to obtain a general overview of operations. She/He talks with key personnel and reviews reports,

 

XI. Internal Control Review

 

The auditor will review the unit’s internal control structure, a process which is usually time-consuming. In doing this, the auditor uses a variety of tools and techniques to gather and analyze information about the operation. The review of internal controls helps the auditor determine the areas of highest risk and design tests to be performed in the fieldwork section.

XII. Audit Program

 

Preparation of the audit program concludes the preliminary review phase. This program outlines the fieldwork necessary to achieve the audit objectives.

XIII. Transaction Testing

 

After completing the preliminary review, the auditor performs the procedures in the audit program. These procedures usually test the major internal controls and the accuracy and propriety of the transactions.

 

XIV. Advice & Informal Communications

 

As the fieldwork progresses, the auditor discusses any significant findings with the client. Hopefully, the client can offer insights and work with the auditor to determine the best method of resolving the finding. Usually these communications are oral.

 

XV. Audit Summary

 

Upon completion of the fieldwork, the auditor summarizes the audit findings, conclusions, and recommendations necessary for the audit report discussion draft.

 

XVI. Working Papers

 

Working papers are a vital tool of the audit profession. They are the support of the audit opinion. They connect the client’s accounting records and financials to the auditor’s opinion. They are comprehensive and serve many functions.

XVII. Audit Report

 

Our principal product is the final report in which we express our opinions, present the audit findings, and discuss recommendations for improvements. To facilitate communication and ensure that the recommendations presented in the final report are practical, Internal Audit discusses the rough draft with the client prior to issuing the final report.

 

XVIII. Discussion Draft

 

At the conclusion of fieldwork, the auditor drafts the report. Audit management thoroughly reviews the audit working papers and the discussion draft before it is presented to the client for comment.

 

XIX. Exit Conference

 

When audit management has approved the discussion draft, Internal Audit meets with the unit’s management team to discuss the findings, recommendations, and text of the draft. At this meeting, the client comment on the draft and the group works to reach an agreement on the audit findings.

 

XX. Formal Draft

 

The auditor then prepares a formal draft, taking into account any revisions resulting from the exit conference and other discussions.

 

XXI. Final Report

 

Internal Audit prints and distributes the final report to the unit’s operating management, the unit’s reporting supervisor, the Vice President for Administration, the University Chief Accountant, and other appropriate members of senior management.. The approval of the Internal Audit Director is required for release of the report outside,

 

XII. Client Response

 

The client has the opportunity to respond to the audit findings prior to issuance of the final report which can be included or attached to final report. However, if the client decides to respond after we issue the report, the first page of the final report is a letter requesting the client’s written response to the report recommendations.

 

XXIII. Client Comments

 

Finally, as part of Internal Audit’s self-evaluation program, we ask clients to comment on Internal Audit’s performance. This feedback has proven to be very beneficial to us, and we have made changes in our procedures as a result of clients’ suggestions.

 

XXIV. Audit Follow-Up

 

Within approximately one year of the final report, Internal Audit will perform a follow-up review to verify the resolution of the report findings.

 

XXV. Follow-up Review

 

The client response letter is reviewed and the actions taken to resolve the audit report findings may be tested to ensure that the desired results were achieved. All unresolved findings will be discussed in the follow-up report.

 

 

XXVI. Follow-up Report

 

The review will conclude with a follow-up report which lists the actions taken by the client to resolve the original report findings. Unresolved findings will also appear in the follow-up report and will include a brief description of the finding, the original audit recommendation, the client response,

 

XXVII. Internal Audit Annual Report to the Board

 

In addition to the distribution discussed earlier, the contents of the audit report, client response, and follow-up report may also communicated to the Audit Committee of the Board as part of the Internal Audit Annual Report.

XXVIII. The Process: A Collaborative Effort

 

As pointed out, during each stage in the audit process–preliminary review, field work, audit reports, and follow-up–clients have the opportunity to participate. There is no doubt that the process works best when client management and Internal Audit have a solid working relationship based on clear and continuing communication.

As a result, client can help evaluate the feasibility of making further changes or modifications in your operations.

 

Criteria examples

 

• Ensures that all incomes are properly computed and received as at when due

• Ensures that all payments are disbursed appropriately in accordance with laid down accounting procedures.

• Ensures that laid down limits of authority are consistent applied.

• Ensures that all deductions are accounted for as at when due

• Ensures that the Centre complies with all statutory and international regulations governing Non Governmental Organizations.

• Regularly seek improvements on the accounting process

• Ensure that all identified errors and/ or weakness are corrected without delay.

• Ensure that all stores items are received into the store after due ascertainment.

• Ensure that all stores cards are posted regularly and up to date

Solution: If an internal auditor follow the “WAK” Model way and he/ she can always worked smoothly and achieve the solution of audit program

 

Original auditors have a huge advantage over those who lack this expertise. Internal auditing departments should train auditors to be inspired and promote a culture where vision additions. On an individual basis, auditors can differentiate themselves by proposing new and innovative approaches to many aspects of their tasks

 

Auditors should be passionate, even obsessed, about planning. Unfortunately, most auditors do not naturally possess this enthusiasm, so adequate time needs to be budgeted for planning, and performance evaluations or incentive programs should reward those who devote time to planning, especially when time is limited. Internal auditors are expected to have a thoughtful audit plan, an excellent working relationship with management, support from the audit committee, and state-of-the-art audit tools. But unless the right people are in place, many internal audit departments won’t be able to solution

 

Conclusion: The internal auditor’s are provide a variety of examine of an organizations, but their  role of an organization is most major service contract with an self-determining auditing to Express an opinion on the adequacy of policies and procedures within the service Organization that may affect the internal control environment at the client organization

 

The Board appreciated the role of the Internal Auditor when auditing is a technique used by fulfills the organization to evaluate its effectiveness, efficiency, and nature of its operations and report to appropriate Persons the results of the evaluation along with recommendations for improvement. The objectives are to assure management that its goals are being carried out and whether or not they are able of being improved,

 

“WAK ” model is this process that express to whole internal auditing that is based on sound planning and an atmosphere of constructive involvement and communication between the client and the auditor. How the audit process works. It also is designed to provide a resource for sharing tools and techniques for each of the distinct phases of the audit process.

 

About the Author

MHOHAMMAD WAHID ABDULLAH KHAN

S/O MOHAMMAD SAADULLAH KHAN

Dhaka, Bangladesh

 

Mr. Mohammad Wahid Abdullah Khan is the Project director of MAX Textiles Ltd., Mr. WAK has been in accounting field since 1999. Prior to that he had completed over ten (10) years in various fields of Business like – Accounts, Finance, Internal & External Audit, project budgeting and project costing related positions in some of the largest group companies & the join venture companies in Bangladesh.

 

He consults with small- medium business owners and services professionals, about business consulting service and project process. He is most experience in Financial Risk Assessment, Financial analysis, Financial Advising and Project Cost Analysis. Mr. WAK also author of another “WAK” model for successful financial consulting: & PPBS model, Mr. WAK is the owner of WAM Associates and “WAK” business solutions; he can be reached at www.wakbs.350.com

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