internal-audit

name	internal-audit
description	Internal audit planning and reporting. Covers risk-based internal audit plan, process-level audit (procurement, payroll, cash, revenue cycle), control testing, Internal Audit Report (IAR) drafting, and follow-up on prior period recommendations.
when_to_use	When conducting or reviewing an internal audit. Use to plan the audit scope, document control testing, and draft the internal audit report.
effort	medium
model	claude-sonnet-4-6
allowed-tools	["mcp__memory_bank__get_client","mcp__memory_bank__get_firm_profile","Read","Write"]

Internal Audit — Planning and Reporting

FINANCIAL INTEGRITY: Internal audit findings must be objective and based on evidence. Recommendations should be practical and implementable. The audit report is shared with management and the Audit Committee — accuracy and tone are critical.

Internal Audit Plan (Risk-Based)

Universe of Auditable Areas (Standard Template)

Process	Risk Level	Frequency	Last Audit
Revenue / Debtors	High	Quarterly	[date]
Procurement / Payables	High	Quarterly	[date]
Payroll	High	Half-yearly	[date]
Cash and Bank	High	Monthly	[date]
Fixed Assets	Medium	Annually	[date]
Inventory	Medium	Quarterly	[date]
IT / System Access	High	Annually	[date]
Contracts & Agreements	Medium	Annually	[date]
Statutory Compliance	High	Quarterly	[date]

Revenue Cycle Audit

Objectives: Revenue completeness, accurate billing, proper approvals, timely collection

Key Controls to Test:

• All sales orders authorised before dispatch
• Dispatch = Invoice = Recording — no gaps or duplicates
• Credit limit approval for new customers
• Collection received matched to invoice, no unapplied credits
• Unusually large/round-number transactions reviewed by senior management
• Credit notes require approval — no unauthorised credits

Procurement Cycle Audit

Objectives: Authorised purchases, competitive procurement, correct recording, timely payment

Key Controls:

• Purchase orders raised against approved requisitions only
• 3-way match: PO + Goods Receipt + Invoice before payment
• Vendor master changes require separate approval
• Related party purchases disclosed
• Advance to vendors within approved limits; advances reconciled

Payroll Audit

Objectives: Payroll completeness and accuracy, authorised changes, PF/ESI/TDS compliance

Key Controls:

• Joiner/leaver list from HR matches payroll system
• Salary changes require HR approval letter
• PF/ESI deduction and deposit — amounts correct and timely
• TDS computation verified against Form 16 data
• Unclaimed wages transferred to unpaid wages account (not cash/bank directly)
• Overtime: approved and rate correct

Internal Audit Report Format

INTERNAL AUDIT REPORT
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
Client: [Name] | Period: [Q/FY] | Report Date: [date]
Audit Area: [Revenue / Payroll / etc.] | Conducted by: [Staff]
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
EXECUTIVE SUMMARY:
[2-3 line summary of overall findings and control environment]

DETAILED FINDINGS:

Finding #1: [Title]
Risk Level: HIGH / MEDIUM / LOW
Observation: [Factual description of what was found]
Impact: [Financial or operational impact]
Root Cause: [Why this happened — process / system / people]
Recommendation: [Specific, actionable recommendation]
Management Response: [Management's action plan + target date]
Status: Open

[Repeat for each finding]
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━
SUMMARY TABLE:
High Risk Findings: [N]
Medium Risk Findings: [N]
Low Risk Findings: [N]
Prior period items closed: [N]
Prior period items still open: [N]
━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━