Internal Audit Procedure for Finance (NGO)
The internal audit of financial operations in an NGO starts with a comprehensive planning phase. The internal audit team identifies key financial processes such as donor fund management, grant disbursements, procurement, payroll, and financial reporting. Risk areas are assessed based on prior audits, funding agreements, and regulatory requirements. An audit plan is then developed, specifying objectives, scope, timelines, and required resources. The audit plan is communicated to finance and program managers to ensure full cooperation and timely access to records and documentation.
During the execution phase, auditors perform detailed reviews and tests of financial transactions, controls, and reporting systems. This includes verifying the accuracy of accounting records, ensuring that funds are used in accordance with donor restrictions, checking compliance with organizational policies, and assessing the adequacy of internal controls. Sampling methods are used to select transactions for testing, while interviews with finance and project staff help gather additional context. Any irregularities, control weaknesses, or non-compliance issues are documented along with supporting evidence.
Following fieldwork, the auditors prepare a draft report outlining key findings, risks, and recommendations for strengthening financial management. The draft is reviewed with management to validate findings and discuss corrective actions. After incorporating management responses, a final report is issued and shared with senior leadership and the audit committee. A follow-up audit may be scheduled to verify that corrective measures have been properly implemented and sustained, ensuring continuous improvement in financial accountability and transparency.
Author: Mohamed yasin
