AUDIT MANUAL

1.

AUDIT OBJECTIVES
- Accuracy of Datas reported to Head Offfice :
a.)
b.)
c.)
d.)

Report of Collection & Remittances

CIAs Retentions
Collection Efficiency
CIA Arrears

- Posting & Remittance of Collection

- Providing Financial Statement for end users

2.

AUDIT SCOPE

3.

AUDIT PROGRAM
- Procedures
- Persons Involve
- Time Frame

4.

AUDIT PROCEDURES

5.

AUDIT REPORT

INTRODUCTION :

1.)

Purpose
The very purpose of this audit manual is to ensure a
uniform/ standard procedure in auditing CIAs to achieve
uniformity in all auditing procedures rather than following ones
own personal interpretations and opinions during the time of
audit. It is therefore a footprint to follow and adhere to the
procedures and steps provided rather than to rely on our
personal opinions in auditing. The purpose of audit is to
enable every CIA to efficiently carry out its various activities. It
is not aimed at finding faults but rather it is one way of
improving their operations.

2.)

Duties and Responsibilities of the Audit Team

a.)
The audit team shall complete the audit of the account of all
the CIAs per Division commencing _______________ of every
cropping period.
b. ) The auditors shall have the power to review all the accounts
stated in the audit.

AUDIT OBJECTIVES :
=
the auditors is to ensure that the prescribed standards of
accounting & recording of receivables and collections are observed and
that the transactions are properly/ accurately entered. It is further required
to see that :
1.)
2.)
3.)

The ISF-Receivables are accurately exist.

The beneficiaries of the water system were properly billed.
The posting & remittance of collection were recorded correctly.

4.)
The exemptions reflected in their books were properly approved by
the concerned authority.
5.)
The accuracy of the financial statements prepared at year-end.
AUDIT SCOPE :
= this refers to the activities covered by the an internal audit, which
includes, where appropriate audit objectives, nature and extent of auditing
procedure to be performed, time period and related activities.
= a determination of the range of the activities and the period of
records that are to be subjected to an audit examination.
= the audit will cover the accounts and operation of the entire CIAs
for every cropping. It will also include the evaluation of the extent of the
CIAs compliance with the existing laws, rules and regulations stated in the
memorandum of agreement between CIA and NIA. And a review of
financial & income statements of the concerned CIAs.

AUDIT PROGRAM :
= it is a step-by-step laid down that must be followed by the internal
auditors in conducting an audit.
= it is a set of instructions to assistants involved in the audit and as a
means to control and record the proper execution of the work.

Audit Assertions :

Financial
Statements/ Datas

PERSONS INVOLVE :
Internal Audit Team
= are NIA-MARIIS own employees who will review
and appraise
the effectiveness and efficiency of operations of the
CIAs.
= its main function is to assist the members of the
organization in
effective
discharge
of
their
responsibilities in the operations of the
CIAs.
TIME FRAME :

AUDIT EVIDENCE = are the means used by the auditor to obtain sufficient
appropriate evidence. Audit Evidence refers to the information
obtained
by the auditor in arriving at the conclusions on which the audit
opinions is based. It will comprise source documents and accounting records
underlying the
financial statement
& corroborating
information from other sources. This evidence will either prove or disprove
the validity of datas reported at Head Office.
Some of the Audit Procedures to be use to gather sufficient appropriate evidence
include :
1.) Inspection
tangible assets.
2.) Inquiry =
inside/outside

= involves examining of records, documents on

consist of seeking information from knowledgeable persons
CIA.

3.) Confirmation = consist of the response to an inquiry to corroborate

information contained in the accounting records.
4.) Computation = consist of checking the mathematical accuracy of source
documents and accounting records or performing independent calculations.
5.) Analytical Procedures = consist of the analysis of significant ratios and trends
resulting investigation of fluctuations and relationships that are
inconsistent with other relevant information or deviate from predicted amounts.

AUDIT PROCEDURES : = it is a means to attain audit objectives which are the

task of the internal auditors that undertakes for collecting, analyzing, interpreting
and documenting informations during an audit.
about the

= it enables the auditors to gather sufficient appropriate evidence

particular assertions.

A set of guideline was created to establish an organize procedures to

perform during the conduct of audit.

CASH = it is the most liquid asset of an agency. Because of tis liquidity, it is so

attractive that it is most susceptible to theft and misappropriations. To guard
against the loss of cash through theft/fraud, adequate cash management
mechanism and control must be in place .
audit procedure *
a.)
period

check individually the entries made in the cash book during the
under review against the source documents such as Official Receipts (
Ors)

b.)

Pay particular attention to the nature of collection/ transaction made,

erasures, alterations and others to ascertain that the amount actually
collected/transacted was the amount recorded.

c.)

Check the numerical sequence of ORs and other accountable forms

received and issued. Ascertain that the original and duplicate copies
cancelled Ors are submitted to the corresponding report.( Frequent
cancellations of Ors maybe an indication of irregularity.

of

d.)
Scrutinize the remittance documents presented during the
examination. Confirm their remittances to the collection-officer in charge. Tally
the
amount of CIAs remittances to the collection officer records.
e.)
unused

Establish and account all the accountable forms on hand. Inspect all
booklets to make sure that each of the serial number is complete.

f.)
remitted

As stated in the IMT Contact,CIAs cash collection should be

within seven working days & retentions of cash collection is strictly
prohibited. Management should pay attention to this as this may arise
fraud.

g.)
their

Check the recording of cash collections of the CIAs Bookkeeper in

cash book and tally to their collection reports/datas submitted.

RECEIVABLES = these are the legal claims of the entity from the beneficiaries
of the
water system rendered.
Audit Procedures *

a.)
Trace Receivable Report to General Ledger = trace the grand total to
the
amount in the accounts receivable account in the general
ledger/receivable
submitted in the Head Office. Check the journal entry
made by the
CIA bookkeepers.
b.)

Calculate the receivable report total. Verify that the total receivables
calculated /arrived is parallel to the general ledger.
= Basis of computing receivables =

1.)

Rice = Benefited Area x 75kgs. X P 17.00 ( government support price )

2. )

Fishpond
a.) Gravity = Benefited Area x 300kgs.X P17.00 ( government support price )
b.) Pump = Benefited Area x 750kgs. X P 17.00 (government support price)

c.)
Test Bills listed in Receivable Report. Compare the Accounts
Receivables
reported to see if they were billed in the correct amount ,to
the correct
farmers beneficiaries.
d.)
Reconcile the ISF-Recievables to the CIAs subsidiary ledger and
compare it to the records of the Billing clerk to verify if all the farmers were
billed
accordingly.
1.) NIA SHARE-Current Account = ISF-Receivable
2
2.) NIA-SHARE-BNA = ( if collected with legal means )
= 25% of the amount collected
3.) NIA-SHARE-BOA = this were the account of the farmers before
IMT was formed
= 75% of the amount collected
= if the farmers who has an arrears before IMT
was formed and directly paid to NIADivision
Offices CIA had no share .this full
amount will
be credited to NIA-Share.

e.)

If there are exemptions, verify it through the communications served

from the Head Office if it was duly approved by the concerned
authority.

PROPERTY & EQUIPMENTS :An assets of a company having physical

existence and expected to be used for a period exceeding one year.
audit procedures for PPE *
1.)

Determine whether the CIAs owns any assets which may either be
automobiles, office & farm equipments.

2.)

Determine whether a listing of all assets owned is maintained.

-Obtain a copy of the PPE
- Review for completeness
- Verify whether the assets are registered to the CIA; if not state the
reasons.

3.)

Check the source document for the valuation of PPE.Confirm that

the value mentioned in the valuation report matches the amount at
which the PPE is valued and shown in the financial statement.

INCOME : is the amount that is left for spending,investing or saving after

paying the necessities of the CIAs operations
* Audit Procedures *
1.)

Verify the summary of calculations.Review the details that contribute

to the figure.

2.)

Draw summary transaction reports from their subsidiary ledgers for

each revenue account. Review the over-all data on the summary
reports for accuracy.

3.)

Compare the transactions in the ledger that support the journal entries
to confirm that they were posted accurately.

EXPENSES : it is a cist relating to the operations of a accounting period or to

the revenue earned during the period on the benefits of which do not
extent beyond that period and can be considered as anything that the
company pays money for in return for income.
* Audit Procedures *
1.

Verify the establishment of expenses and general administrative

expenses
such as rent, travelling, printing & stationery, general
expenses to the
related agreements and the rules and regulations
followed by the entity.

2.)

Draw subsidiary ledger reports of transactions in the expenses

accounts Review the transaction detail reports for each expense
account to
confirm that the expense totals on the income
statement reports are accurate
compared to the ledger activity.
Compare the amounts of these expenses with the corresponding
figures.

3.)

Scrutinize the repairs and maintenance account to ascertain that new

assets and substantial improvements to existing assets have not been
included in repairs and maintenance. Exercise special care
particularly in cases of large
amounts to the profit and loss
amounts.

4.)

Check the calculations of the invoices or the payments vouchers and

verify that the entries made in the ledger matches the
documentation.Make
sure that the expenses are legitimate and
reasonable and have been properly classified and disclosed in the
financial statement.

AUDIT REPORT : the preparation of audit report is the last work of audit.
An
Auditor presents the weakness, strength and
details of
the CIAs operations by preparing audit report.
= an accumulation of all the facts of audit and it is a proof in
conducting the audit properly.

the audit team should prepare report by incorporating the facts

found
during the course of the audit.

audit team should prepare report considering the following facts:

a.)
b.)
c.)

summary of cash remittances

CIAs retentions ( PIK Collections)
CIAs arrears if applicable