Inter-American Foundation Needs To Expand Internal Audit Scope and Improve Internal Acounting Controls

ID-79-49: Published: Aug 21, 1979. Publicly Released: Aug 21, 1979.

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An audit was made of the Inter-American Foundation, and several ways were found in which the Foundation could improve its internal controls. To be of maximum usefulness, an internal auditor's scope should not be restricted but should extend to all activities and relate to management controls and means it should encompass: (1) an examination of financial transactions, accounts, and reports, including an evaluation of compliance with applicable laws and regulations; (2) a review of whether resources are used efficiently and economically; and (3) a review to determine whether desired results are effectively achieved.

The scope of the internal audit work at the Foundation falls far short of these objectives. Audits were primarily limited to desk reviews of public accountants' audit reports on grantee operations. It appeared that the internal auditor's role at the Foundation has evolved into that of a compliance officer rather than that of an auditor. Problems were found in the Foundation's internal accounting controls which, if left uncorrected, could impair the reliability of the financial information contained in the accounting records. These problems were found in the areas of payroll, reconciliations, and journal entry adjustments.

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