Internal Audit in Pharma Industry BY AVNS

Transcript:Internal Audit in Pharma Industry BY AVNS:
Internal Audit in Pharma Industry BY AVNS NAGESWARA RAO M.COM L.LB ACS FCMA PRACTICING COST ACCOUNTANT CHAIRMAN-SIRC OF ICAI [2009-10] Internal Audit definition Chartered Institute of Management Accountants, UK (CIMA): ‘An independent appraisal activity established within an organization as a service to it. It is a control which functions by examining and evaluating the adequacy and effectiveness of other controls; a management tool which analyses the effectiveness of all parts of an organization’s operations and management.’ Institute of Internal Auditors (IIA): ‘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.’ Need for Internal Audit The Internal Audit will primarily concentrate on flow of data and justification of basis instead of vouching. The materiality of cost and product under consideration would always be borne in mind during Internal Audit process. Objectivity in approach would be a consistent feature in Internal Audit. Main thrust would always be on deviations and significance of deviations with impact of the same on the performance of the organization. Objectives of Internal Audit Develop and monitor control frameworks Establish reporting structures and formalize communication processes Aid the cost reduction and operational performance appraisals Develop and continuously monitor risk assessment and management Undertake workshops for training and awareness Assure compliance with all relevant rules and regulations Supporting corporate governance and developing resources for management information Functions of the Internal Audit As per the above definitions functions of the Internal Audit activity are: Internal Control: Internal controls direct, monitor, and measures the company's resources and help to detect and prevent fraud from occurring within an organization. It can be defined as a process which is performed by the employees of the company as well as the information technology systems that are used to assist the company in achieving its objectives. The management of a company is responsible for establishing the system of internal controls within the organization, but internal auditors test the controls to make sure they are working effectively. Management Tool: Internal Audit has been used as a management tool which monitors and evaluates the effectiveness of operational processes and risk management of a company. How an organization sets their objectives and responds to the risks associated with their objective is part