Internal Control and Internal Audit

Overview:

Internal Control structure is critical for accurate financial reporting in any organization.  Internal auditing tests how well the control structure is being followed.  As MFIs grow, develop, and become more decentralized, assurance that an internal control system is structured and followed is essential.

 

Why engage in Internal Control and Internal Audit Consulting

MFIs with formalized internal controls and an internal auditor who verifies compliance have additional confidence that internally generated financial statements are accurate.  The presence of an internal auditor will also deter fraud.

 

Many MFIs begin lending money concentrating on attracting clients and managing transactions rather than focusing on internal control structure.  In a similar fashion, very few MFIs start out with an internal auditor.  In order to keep costs down, an internal auditor is usually hired when an institution reaches 2,000 – 5,000 clients, and branch offices have opened.  At this point, most growing MFIs realize that they need both an internal control manual and an internal auditor, but often don’t know where to start.

 

MFI Consulting can help your organization implement internal controls and internal auditing with formalized documents and processes.   I will help you document internal controls and provide your internal auditor with an appropriately detailed work program, creating the basis for an effective internal control environment.

 

The Consulting Process

As your internal control consultant, I will interview individuals from all areas of your MFI, focusing on field credit officers and branch office managers regarding consistency of how controls, procedures, and practices are actually working.

 

I will design a customized internal control manual for your MFI.  I will emphasize internal controls that prevent the unauthorized use of assets and make recommendations for additional controls.  Your internal audit manual will provide examples of tests the internal auditor should perform, the frequency they should be performed, and how they should be documented.

 

Experience:

Two MFIs in Bosnia and Herzegovina were provided with an in-depth study of their internal control structure.  An internal audit manual was also created for each institution, which guides the internal auditors in performing their audits.

 

As a CPA auditor, I evaluated dozens of internal control structures in industries ranging from banking, to non-profit, from heavy industry to software design.  I was able to make suggestions that streamlined procedures and created efficiencies.