GRADE 12 LESSON
WEEK 13 - Lesson 8 of 8 50
INTERNAL AUDIT
WHAT IS INTERNAL AUDIT?
The internal auditor creates and maintains control processes and recommends
improvements to the controls.
Internal auditing is performed by auditors within the business – therefore employees of the
business.
This process of investigating the internal control processes is called the internal audit
procedure.
The internal audit process is used to check the
effectiveness of the control processes.
INTERNAL AUDIT PROCESS
Gathering evidence
Information (evidence) must be collected in order to be checked.
The following means are used to gather the evidence:
1 Inspection
All records are examined: source documents, journals, ledger accounts and trial
balance.
2 Observation
By observing the process, flaws can be detected that could lead to fraud and theft.
3 Interviews with employees and management
This will assist the auditors about procedures.
4 Validating of entries
Select a set of procedures, for example daily banking.
Examine cash register tapes, duplicate receipts, bank statements, deposit slips.
5 Re-processing
Auditors perform tasks that have already been done to determine if it was done
correctly.
50 Accounting Grade 12 - CAPS 1
WEEK 13 - Lesson 8 of 8 50
INTERNAL AUDIT
WHAT IS INTERNAL AUDIT?
The internal auditor creates and maintains control processes and recommends
improvements to the controls.
Internal auditing is performed by auditors within the business – therefore employees of the
business.
This process of investigating the internal control processes is called the internal audit
procedure.
The internal audit process is used to check the
effectiveness of the control processes.
INTERNAL AUDIT PROCESS
Gathering evidence
Information (evidence) must be collected in order to be checked.
The following means are used to gather the evidence:
1 Inspection
All records are examined: source documents, journals, ledger accounts and trial
balance.
2 Observation
By observing the process, flaws can be detected that could lead to fraud and theft.
3 Interviews with employees and management
This will assist the auditors about procedures.
4 Validating of entries
Select a set of procedures, for example daily banking.
Examine cash register tapes, duplicate receipts, bank statements, deposit slips.
5 Re-processing
Auditors perform tasks that have already been done to determine if it was done
correctly.
50 Accounting Grade 12 - CAPS 1
