1. 1 1 Internal Audit Annual Planning, Engagement Planning and Execution

2. Annual Audit Planning, Engagement Planning, Engagement Execution. 2 Internal Audit Annual Planning, Engagement Planning and Execution 2

3. Calculation of Total Available Resources, Allocation of Total Available Resources among appropriate engagements, Assignment of staff to the appropriate engagements, Coordination of annual plan with other assurance providers Continued review of the Actual vs Annual Plan. Elaboration of Annual Plan 3 Internal Audit Annual Planning, Engagement Planning and Execution 3

4. Available ResourcesNecessary Resources < Integration of External Resources 4 Internal Audit Annual Planning, Engagement Planning and Execution 4

5. Should be derived from Internal Audit Strategic Plan, Details allocated time and resources for each engagement and provides more detailed information to the user compared to Strategic Plan, Resource allocation is made based on experience and competences of the team members. Allocation of resources and assignment of staff 5 Internal Audit Annual Planning, Engagement Planning and Execution 5

6. External Audit, External assessment of internal audit activity, Inspections undertaken by various public authorities. Coordination of annual plan with other assurance providers 6 Internal Audit Annual Planning, Engagement Planning and Execution 6

7. Engagement cannot be planned if not included in the annual plan, For non planned engagements, annual plan is revised, Changes made to the activity of the entity (auditee), Changes made to the assessed risks of the entity (auditee), Changes made to the resource plan, Errors/omissions identified in prior year annual plan, that should be included in the present annual plan. Actual vs Annual Plan 7 Internal Audit Annual Planning, Engagement Planning and Execution 7

8. 1 PLANNING 2 EXECUTION 3 REPORTING 4 FOLLOW UP ENGAGEMENT MANAGEMENT PHASES 8 Internal Audit Annual Planning, Engagement Planning and Execution 8

9. 1)Composition of audit team and kick-off meeting with the team and auditee, 2)Preliminary survey, 3)Audit objectives, 4)Audit scope, 5)Audit program. Engagement Planning: Phase 1 9 Internal Audit Annual Planning, Engagement Planning and Execution 9

10. Independence of auditors, Scope and nature of activities of the auditee, Risk grade of the auditee, Competence of the staff, Training needs. Composition of audit team 10 Internal Audit Annual Planning, Engagement Planning and Execution 10

11. Kick of meeting with the team Nature, stance and timing of the work Kick off meeting with auditee Demanded information, timing of the works Kick off meetings 11 Internal Audit Annual Planning, Engagement Planning and Execution 11

12. 1)Composition of audit team and kick-off meeting with the team and auditee, 2)Preliminary survey, 3)Audit objectives, 4)Audit scope, 5)Audit program. Engagement Planning: Phase 1 12 Internal Audit Annual Planning, Engagement Planning and Execution 12

13. Legal acts regulating activity of the auditee, Charter of the auditee, Prior period engagement files, Job descriptions of the auditee staff, Risk register provided by the auditee, External audit reports, Reports provided by other assurance providers. Preliminary survey 13 Internal Audit Annual Planning, Engagement Planning and Execution 13

14. Risk group Internal control risk grade Overall risk grade Risk Reassessment 14 Internal Audit Annual Planning, Engagement Planning and Execution 14

15. 1)Composition of audit team and kick-off meeting with the team and auditee, 2)Preliminary survey, 3)Audit objectives, 4)Audit scope, 5)Audit program. Engagement Planning: Phase 1 15 Internal Audit Annual Planning, Engagement Planning and Execution 15

16. Should be derived from annual plan, Should be based on risk assessments, Should be based on the internal controls of the auditee, Should be based on the risk grade of the auditee, Should provide link to auditee’s objectives Audit objectives 16 Internal Audit Annual Planning, Engagement Planning and Execution 16

17. 1)Composition of audit team and kick-off meeting with the team and auditee, 2)Preliminary survey, 3)Audit objectives, 4)Audit scope, 5)Audit program. Engagement Planning: Phase 1 17 Internal Audit Annual Planning, Engagement Planning and Execution 17

18. Audit team in charge should decide: Internal controls to be tested, Timing of tests, Stance of the tests. Audit scope should be sufficient enough to achieve the audit objectives Audit scope 18 Internal Audit Annual Planning, Engagement Planning and Execution 18

19. The audit program defines: Audit objectives, Audit procedures/tests, Audit assertions. Audit program 19 Internal Audit Annual Planning, Engagement Planning and Execution 19

20. Appropriate Sufficient Quantity Quality Audit evidence 20 Internal Audit Annual Planning, Engagement Planning and Execution 20

21. Completeness Existence Cut off Legality Presentation Obligations and rights Accuracy Valuation CEAVOP&LCEAVOP&L Audit Assertion 21 Internal Audit Annual Planning, Engagement Planning and Execution 21

22. Verification Observation External confirmation Inquiry Re-performance Recalculation Analytical procedures Audit techniques 22 Internal Audit Annual Planning, Engagement Planning and Execution 22

23. Audit tests Substantive testsControl tests Test of details Analytical tests Testing design and implementation of internal control Testing operating effectiveness of internal controls 23 Internal Audit Annual Planning, Engagement Planning and Execution 23

24. Audit techniques Verification Recalculation External confirmation Analytical procedures Inquiry Substantive testsControl tests Verification Observation Re-performance Inquiry 24 Internal Audit Annual Planning, Engagement Planning and Execution 24

25. Control systems Preventive control systems Detective control systems Intern control systems 25 Internal Audit Annual Planning, Engagement Planning and Execution 25

26. Audit techniques Audit tests Audit assertions Control system of the entity 26 Internal Audit Annual Planning, Engagement Planning and Execution 26

27. 1 PLANNING 2 EXECUTION 3 REPORTING 4 FOLLOW UP ENGAGEMENT MANAGEMENT PHASES 27 Internal Audit Annual Planning, Engagement Planning and Execution 27

28. 1)Testing design and implementation of controls, 2)Testing operating effectiveness of controls, 3)Substantive tests, 4)Preparing working papers, 5)Review of working papers, 6)Wrap up, 7)Closing meeting. Engagement Execution: Phase 2 28 Internal Audit Annual Planning, Engagement Planning and Execution 28

29. Internal control system documentation/description of the auditee, Walkthrough testing, Identification of internal control design weaknesses and conclusion on effectiveness of the system Testing design and implementation of control 29 Internal Audit Annual Planning, Engagement Planning and Execution 29

30. Public sector entity Department of cash operations of MoF (auditee) Central Bank of Armenia Contract Yes/No Payment Order Approved Invoice Payment Refusal Information Flow Chart 30 Internal Audit Annual Planning, Engagement Planning and Execution 30

31. 31 Internal Audit Annual Planning, Engagement Planning and Execution Engagement Execution: Phase 2 The second phase consists of the following steps: 1)Testing design and implementation of controls, 2)Testing operating effectiveness of controls, 3)Substantive tests, 4)Preparing working papers, 5)Review of working papers, 6)Wrap up, 7)Closing meeting. 31

32. The nature of the tests, The timing of the tests, The stance. 32 Internal Audit Annual Planning, Engagement Planning and Execution 32

33. During the organization of a sample the following points should be observed: Type of sampling, Sample size, Detected errors and extrapolation of the results. Sampling 33 Internal Audit Annual Planning, Engagement Planning and Execution 33

34. Statistical samples Random, Systematic, Sequential, Monetary Unit Sampling (MUS). Non-statistical sampling haphazard sampling, Snowball sampling. Sampling Types 34 Internal Audit Annual Planning, Engagement Planning and Execution 34

35. 35 Internal Audit Annual Planning, Engagement Planning and Execution Engagement Execution: Phase 2 The second phase consists of the following steps: 1)Testing design and implementation of controls, 2)Testing operating effectiveness of controls, 3)Substantive tests, 4)Preparing working papers, 5)Review of working papers, 6)Wrap up, 7)Closing meeting. 35

36. Substantive tests Test of details Analytical tests 36 Internal Audit Annual Planning, Engagement Planning and Execution 36

37. - Examination of supporting documentation, - Errors and omissions are detected, - The nature and extent of tests depends on: Risk grade of the auditee, Results of control tests, Fraud risk. 37 Internal Audit Annual Planning, Engagement Planning and Execution 37

38. 38 Internal Audit Annual Planning, Engagement Planning and Execution Engagement Execution: Phase 2 The second phase consists of the following steps: 1)Testing design and implementation of controls, 2)Testing operating effectiveness of controls, 3)Substantive tests, 4)Preparing working papers, 5)Review of working papers, 6)Wrap up, 7)Closing meeting. 38

39. Audit objective, Work done, Audit assertions, Results of the work, including errors, omissions and weaknesses identified, audit evidence, Auditor judgement fo achieving audit objective, Audit objective conclusion, Who has prepared the WP, Date of the WP. Preparing audit WP (working papers) 39 Internal Audit Annual Planning, Engagement Planning and Execution 39

40. 40 Internal Audit Annual Planning, Engagement Planning and Execution Engagement Execution: Phase 2 The second phase consists of the following steps: 1)Testing design and implementation of controls, 2)Testing operating effectiveness of controls, 3)Substantive tests, 4)Preparing working papers, 5)Review of working papers, 6)Wrap up, 7)Closing meeting. 40

41. All the WPs should be reviewed by both team in charge and Chief Internal Auditor, Appropriateness of reached conclusions, Conduct of on job training and supervision. Review of the WP 41 Internal Audit Annual Planning, Engagement Planning and Execution 41

42. 42 Internal Audit Annual Planning, Engagement Planning and Execution Engagement Execution: Phase 2 The second phase consists of the following steps: 1)Testing design and implementation of controls, 2)Testing operating effectiveness of controls, 3)Substantive tests, 4)Preparing working papers, 5)Review of working papers, 6)Wrap up, 7)Closing meeting. 42

43. Predefined format Criteria, Condition, Cause, Effect. Exception Report 43 Internal Audit Annual Planning, Engagement Planning and Execution 43

44. Exception report produced based on the WPs, Closing meeting with auditee – Discussing errors, omissions and internal control weaknesses, – Exception report. Wrap up and Closing Meeting 44 Internal Audit Annual Planning, Engagement Planning and Execution 44