Technical methods of internal audit evaluation

Technical methods of internal audit evaluation;

Because internal audit is to supervise and evaluate the authenticity, legality and efficiency of financial revenue and expenditure, financial revenue and expenditure and economic activities, the purpose is to strengthen organizational economic management and achieve economic goals. Therefore, the performance of internal audit evaluation function is the fundamental requirement to achieve organizational economic goals and serve them. However, the exertion and performance of internal audit evaluation function are influenced by the complexity of internal audit evaluation content, internal audit evaluation methods, means and methods, the demand of audited units for internal audit evaluation information, and the objectivity, scientificity and relevance of internal audit evaluation information. Therefore, the internal audit evaluation process is complicated and the specific operation is complicated. It is not a simple evaluation of the audited entity, but a certain technical method. The overall analysis, judgment and evaluation of the audited units reflect the problems existing in the management, decision-making, operation and efficiency of the organization, and reveal its future development trend, so as to better play the role of internal audit evaluation and create organizational value.

quantitative method

1. Total amount analysis and evaluation: it is a method to analyze, judge and evaluate the authenticity, legality and efficiency of the financial revenue and expenditure, financial revenue and expenditure and economic activities of the audited entity or project as a whole. Through the analysis of the amount of relevant accounts, the filling of accounting vouchers, the registration of accounting books and the preparation of financial statements, this paper analyzes and judges whether the accounting treatment of this institution conforms to the relevant provisions of accounting standards and accounting systems, whether it conforms to the provisions of relevant national financial laws and regulations, the changes in the proportion and total amount of assets, the liabilities and profits of the audited entity, the rationality of the cost range of the audited entity, and the efficiency of the use of funds. Comprehensive analysis and evaluation of the profitability and operational capacity of the organization, so as to make overall analysis and judgment on the financial revenue and expenditure, authenticity, legitimacy and efficiency of the audited unit or project, and form audit report opinions, so as to meet the decision-making needs of the management of the organization and give full play to the function of internal audit evaluation.

2. Difference analysis and evaluation: a method to analyze and judge the authenticity, legality and effectiveness of the audited entity's financial revenue and expenditure, financial revenue and expenditure and economic activities according to the difference between the actual value and the target value (set value), and to express audit opinions. By comparing accounting information (assets, liabilities, costs, income, expenses, profits, etc.). ) There is a difference (positive difference, negative difference) between the audited entity or project actually provided and the original set target value. By analyzing and judging the differences, we can reflect the authenticity of the financial revenue and expenditure, the change of financial status, profitability and operating ability of the audited unit or project. In order to evaluate whether the financial revenue and expenditure activities and economic activities of the audited entity or project have achieved economy, efficiency and effect, so as to make appropriate analysis and judgment on the audited entity or project, so as to strengthen economic management and achieve economic goals.

3. Ratio analysis and evaluation: a method used to compare several interrelated items in the financial statements of an organization in the same period, calculate the ratio, and analyze, judge and evaluate the authenticity, legality and efficiency of the financial revenue and expenditure, financial revenue and expenditure and economic activities of the audited unit or project through the change of the ratio, so as to reflect the financial situation and financial achievements of the organization and reveal the future development trend of the organization. There are three ways of ratio analysis: structural ratio analysis, efficiency ratio analysis and correlation ratio analysis. Among them, structural ratio analysis refers to the ratio of the constituent items of an economic indicator to the total items of an organization. Through the change of this ratio, it reflects the changing trend and existing problems of the organization's financial situation. For example, the ratio of current assets to total assets; The ratio of current liabilities to total liabilities and so on. Efficiency ratio analysis refers to the ratio of input to output of an economic activity of an organization. Through the change of this ratio, the profitability and economic benefits of an economic event of an organization are analyzed. Such as cost profit rate, sales profit rate, etc. Correlation ratio analysis refers to the ratio of two or more related economic matters of an organization. Through the change of this ratio, we can reflect the relationship between various economic activities and analyze the financial situation and future development prospects of the organization, such as current ratio and quick ratio.

4. Trend analysis and evaluation: it refers to a method by which an organization compares the same economic indicators in two periods or several consecutive periods, calculates the percentage, and analyzes, judges and evaluates the changes in the financial status of the audited entity or project and the effectiveness of economic activities through the percentage changes. Point out its existing problems, make an objective and fair evaluation of the organization's operating performance, profitability and future development trend, so as to promote the organization to strengthen economic management and achieve economic goals. Such as: comparative financial statement method, comparative financial ratio method.

5. Correlation analysis and modeling: Correlation analysis refers to the relationship between one variable and another variable of an organization, which can be positive or negative. Establishing a regression model means that when the change of one variable in an organization causes the change of another variable or several variables, we can analyze, judge and evaluate the change of variables by establishing regression model equations such as y=a+bx(a is a constant term and B is a regression coefficient), quantify the correlation analysis among organizational variables by establishing a regression model, and compare the estimated value of the regression model with the actual value for analysis and judgment. Internal auditors use correlation analysis to establish a regression model, check, analyze and judge the degree of correlation between related variables in organizational economic activities and the rationality and authenticity of the data, and point out the problems existing in the organization's production, operation, management, decision-making and benefits, so as to better strengthen the organization's management, improve economic benefits and achieve economic goals.

qualitative method

1. empirical judgment method: it refers to a method that internal auditors analyze and judge the authenticity, legality and effectiveness of the audited entity's financial revenue and expenditure, financial revenue and expenditure and economic activities according to their own work experience and relevant professional knowledge level. Obviously, this method is influenced by internal auditors' professional knowledge level, work experience, subjective consciousness and other factors, so the conclusions and opinions of internal audit evaluation are often one-sided, subjective, random and untrue, and cannot truly reflect the actual situation of financial revenue and expenditure, financial revenue and expenditure and economic activities of the audited unit or project. Therefore, this method is rarely used in actual internal audit work.

2. Inquiry method refers to a method used by internal auditors to analyze, judge and evaluate the authenticity, legality and effectiveness of the audited entity's financial revenue and expenditure, financial revenue and expenditure and economic activities by asking relevant financial leaders and parties, accessing relevant account books and materials, and consulting meeting minutes and relevant rules and regulations and documents. Similarly, this evaluation method can not comprehensively and objectively reflect the authenticity of the audited entity's financial revenue and expenditure, financial revenue and expenditure and economic activities, and there are certain limitations.

The relationship between internal audit evaluation and related technical methods;

(A) the relationship between internal audit evaluation and financial (statement) analysis

Internal audit evaluation is intrinsically related to the analysis of financial statements. The analysis of financial statements includes three aspects: balance sheet analysis, income statement analysis and cash flow statement analysis. By analyzing the financial statements, we can reflect the solvency, operational capacity and profitability of the organization and reveal the future development trend of the organization. Whether the evaluation conclusion of internal audit is true or not directly affects the usefulness and objectivity of the analysis results of financial statements. Similarly, the research on the changes of financial indicators provided by the analysis of financial statements will help internal auditors to analyze, judge and master the changes of the organization's financial situation, reveal the future development trend and better improve the internal audit evaluation.

(B) the relationship between internal audit evaluation and performance (performance) evaluation

There is a certain relationship between internal audit evaluation and performance evaluation. The content of internal audit evaluation is true, legal and beneficial. The effectiveness evaluation of internal audit has a certain relationship with the performance evaluation of management department, but it cannot replace the performance evaluation of organization management department. There are differences between them in evaluation procedures, standards and objectives. Internal auditors or institutions can provide relevant information for management, meet the relevant needs of performance evaluation of management departments, help management departments to conduct performance evaluation, and ensure the objectivity of performance evaluation results of management departments.

(C) the relationship between internal audit evaluation and comprehensive (comprehensive) evaluation

Internal audit evaluation and comprehensive (comprehensive) evaluation are inherently consistent. With the expansion of the scope of internal audit, the content of internal audit has also changed from a single financial audit field to internal control audit, quality audit, performance audit, economic responsibility audit, risk management audit and other fields. Internal audit evaluation has penetrated into many aspects such as organization production, operation, management, decision-making and service, and the information provided by internal audit evaluation is comprehensive and can meet the information needs of interested parties. By analyzing the internal audit evaluation information, the management department points out the problems existing in the organization's production, operation and management, and puts forward improvement opinions and suggestions to promote the strengthening of operation and management and the realization of economic goals.