Kudler Fine Foods
The objective of the preliminary phase is to gain a basic understanding of Kudler Fine Foods. Including, accounts available for its use, the types and volumes of transactions processed, and the systems and processes used in its operations.
The preliminary phase will allow the Internal Auditor to develop a clear understanding of the events and practices which may have a significant impact on the operation of Kudler Fine Foods.
The preliminary phase ultimately allows the internal Auditor to obtain a broad overview of the internal controls in place at Kudler Fine Foods. The preliminary phase also allows the Internal Auditor to identify any areas of the auditee's operations which may require special attention or consideration.
- Payroll time logs are managed electronically by a biometric system and are reviewed by the same employee who manages the bank reconciliations.
- "Separation of duties" an internal control problem that should be addressed to prevent fraud.
During the preliminary phase the Internal Auditor will:
Review correspondence files, prior work papers (if applicable), and budgetary information;
Identify significant changes in account balances over time or large variances from expectation or budget and perform an analytical review to determine the significance of these variances;
Review organizational charts and job descriptions and the nature of the auditee's activities and functions;
Evaluate the auditee's internal controls;
Discuss matters with the auditee that may impact the audit;
Determine the status of deficiencies noted during previous audits (if any);
Inquire about problem areas which the auditee would like the Internal Auditor to review;
Make arrangements with the auditee for the preparation of the date which will be needed during the audit; and