Audit program designed for any San Miguel charitable institution - this program will enable any organization to easily be audited internally without expending funds - it can be done by independent volunteers, in other words, volunteers independent of and from the work that they are auditing.
copyright Michael Wein, cpa 1996-2010 - all rights reserved - copying of this document is expressly forbidden without the written permission of the copyright owner
1-review minutes of meetings of the board and all other committees for financial aspects; make written notes for later use.
2-for every item on the annual statement of financial condition AND on the statement of receipts and expenditures, trace the totals back to the treasurer's original source documents.
3-for all items appearing on the above financial statements, re-add the amounts in the listing of items totaling to that amount.
4-where appropriate, get copies of any listings for your audit files.
5-decide on audit procedures for each listing (i.e., test various calculations, test-audit underlying original documents for authenticity, for appropriateness, for proper approvals, etc.). Notate tests and results on your audit papers.
6-re-compute (on a limited test-basis) every accounting book, schedule, listing, form, invoice, etc., that enters into the year's accounting.
7-review answers to review of internal control questionaire and make tests to ascertain complete compliance accuracy. see InternalControl
8-consider the possibility of an additional (or the next) audit to be one performed on a surprise (i.e, other than year-end) basis.
9-compare the above financial statements to ones provided to non-board members for appropriateness.
1-list and reconcile all items in cash funds (cash plus unreimbursed vouchers) and prove to expected balance.
2-see item #15 under "cash in banks" below, and do similar tests for all cash funds.
CASH IN BANKS:
1-obtain from the board all lists of individuals authorized to sign and/or counter-sign checks.
2-obtain copies of bank reconciliations for beginning of year, end of year, and also test-month(s) selected below.
3-obtain bank statements and cancelled checks for one (or more) test-audit months (February thru November), for the month of December, and for the month of January (and perhaps even February) for the year following this year-end audit.
4-obtain and test arithmetic accuracy for cash receipts and expenditure records for months selected in #2 above.
5-prove arithmetical accuracy of entire end of year bank reconciliation.
6-trace year-end bank balance to bank statement and book balance to financial statements (or your workpapers)
7-trace outstanding checks, deposits in transit, and any other reconciling items, to the following month's bank statements; note need for additional follow-up for items not found in following month's bank statement; follow-up as necessary.
8-reviewing test-month(s)' receipts book, trace receipts to deposits on bank statements and vice versa.
9-ascertain reasons for any receipts not reflected on bank statement and deposits not reflected on books.
10-test all additions in the receipts books; cross-add the totals; trace totals to the books of account.
11-trace on a test-basis, records of collections both in cash and by check, to the receipts books.
12-if more than one bank account, prepare a schedule of all interbank transfers for (at least) the two week period both before and after the end of the year; see that all such transfers are handled correctly and in the same year.
13-test all additions in the expenditure books; cross-add the totals; trace totals to the books of account.
14-for test-month(s), compare all cancelled checks with the expenditure records as to number, date, amount, and endorsements (which should be identical to the payees). List, for later follow-up, all checks that are not endorsed by their payees, by business concerns endorsed manually, and other endorsements deemed irregular.
15-for test-month(s), examine invoices, etc., supporting expenditures as to evidence of receipt of goods or services, appropriateness of price, approval by authorized personnel, appropriateness of bookkeeping categorization, arithmetical accuracy of invoice, and cancellation of invoice or other support so as to prevent re-use.
16-follow-up all irregular endorsements, large or unusual checks not cleared by bank in subsequent months, old or unusual items on bank reconciliation, receipts not promptly deposited, and all exceptions noted in #15 just above
SECURITIES AND OTHER INCOME-PRODUCING ASSETS:
1-physically verify each asset and compare to a list of assets prepared by the treasurer.
2-examine documentation supporting (purchases and/or sales) of security or other asset transactions this year.
3-satisfy yourself that all appropriate income from such assets have been recorded on the books this year.
1-satisfy yourself that all assets purchased during the year are physically present, that all previous assets are also present or otherwise accounted for, and that the appropriate approvals for purchase have been obtained.
2-review invoices for all assets purchased during year.
3-see that all assets disposed of during the year have been sold or discarded under appropriate circumstances.
4-for any special funds disclosed while reading minutes (see General #1 above), do audit tests as necessary.
1-examine checkbooks and paid invoices for a period (from end of audit year thru the day of your audit) after the close of the year to find which, if any, liabilities for the audit year have been paid in the subsequent months of the subsequent year. If the organization prepares financial statements on a "cash basis", see that any significant transaction in the subsequent year that applies to the current year, is shown in a note or other disclosure on the financial statements.
RECEIPTS AND EXPENDITURES - in general:
1-compare all categories of receipts and expenditures with prior year(s) and/or budgeted amounts; ascertain reasons for variances with both the treasury personnel and the members of the board.
2-obtain, where feasible, listings of details supporting any significant category of receipt and/or expenditure.
3-review these listings and test-audit any item of an unusual, strange, or peculiar nature.
4-see that where dues, initiation fees, or pledges have been made, reasons exist for the lack of receipts thereon
5-test, where appropriate, conversions of dollars into pesos and vice versa
6-ascertain existence of other income (rents, special events, etc.) by inquiry and other methods.
7-see that, where appropriate, signatures for receipts of monies have been obtained.
8-be sure that all audit tests are recorded on some audit workpaper, in addition to the "sign-off" on this program.
9-review methods of raising funds, so as to make suggestions for improvements in collections, etc.
RESPONSIVENESS TO MISSION AND PURPOSE AND TO MEMBERS:
1-ascertain purpose of organization by obtaining past and present documents including minutes of meetings, by-laws, rules, regulations, procedures, policies, publications printed for the public, etc.
2-ascertain the various constituencies of this organization (donors, beneficiaries, members, employees, etc.). Note that the governmental constituencies have their own methods of audit and you need not concern yourself about them other than if you uncover a material or significant problem, then said problem should be brought to the attention of the board so that you know they are aware of that problem.
3-ascertain directors and officers' responsiveness to ALL of its constituencies.
4-test that persons conducting this current audit function are independent of the current financial function.
5-test that this review of responsiveness is completely independent from all pressures within the entire organization.
6-review the budget preparation process and ascertain its appropriateness as to both accuracy and completeness. Where a cash-flow projection is made, test it as well.
7-review the financial presentation process and ascertain its appropriateness as to completeness of details and disclosures.
8-review the methods and appropriateness of monetary or non-monetary compensation of employees and volunteers.
9-be sure that your report of your audit is submitted independently to either independent members of the board of directors, or submitted directly to the entire membership at the annual meeting.