Internal Auditing

Governance and control

The purpose of internal auditing is to support the establishment and control of internal management and regulatory systems; such systems are designed to ensure the accuracy and completeness of financial reports, the legality and compliance of the transactions underlying these reports as well as the efficiency and success of activities and operations.

Internal auditing is also designed to contribute value to the operations of the organisation by means of independent and objective audit and advisory tasks, thereby enhancing the efficiency of the organisation's activities and improving its operations.

We provide substantial technical support with regard to the practical implementation of the organisation's internal audit system and to performing the reviews and efficiently applying electronic audit procedures.

Internal audit support for budgetary bodies and EU institutions 

In Hungary, based on Act CXCV of 2011 on the State Budget as well as Government Decree No. 370/2011 (XII. 31.) on the internal auditing of public budgetary organisations, all budgetary organs participating in the use of public funds shall operate an internal auditing system to provide assurance to the heads of such organisations regarding the compliance of the (financial) management and control systems they have constructed and are operating.     

Government Decree No. 370/2011 (XII. 31.) provides that internal audit activities may be performed by external experts, and thus in a cost-efficient manner public budgetary organisations outsource their internal audit activities and certain related tasks for which they do not have the resources.

We perform our work in accordance with International Internal Audit Standards. Our services cover the following main areas:

• Supporting the establishment and operation of EU-compliant internal audit systems (preparation of audit manual, audit strategy, internal procedures)
• Design and operation of risk management system
• Planning, executing and documenting control tests
• Preparing and updating audit trails
• Establishment of pre-/post management control system, support/review of operation
• System audit
• Compliance audit
• Performance control
• IT audit
• Examination of suspected irregularities
• Control of Structural and Cohesion Funds
• On-site inspection of EU-funded projects

Internal audit of business organisations

Experienced, well-trained internal controllers and IT auditors can provide an invaluable competitive advantage in any business activity by managing risks and providing reliable business advice.

Today, efficient internal auditing is inconceivable without the support of an IT audit, because:

• Manual sampling on large data populations is no longer efficient and often meaningless
• Without an appropriate, regular review of the general IT risk and control environment, an internal audit is not capable of fulfilling its role.

The Main elements of our service comprise:

• Development of audit strategy
• Development and due diligence of internal audit system
• Development of risk analysis and risk management system, loading with content
• Review of reports to be sent to the Hungarian Financial Supervisory Authority
• Internal IT audit
• Compliance audit
• Planning, executing and documenting control tests
• Performance of other special-purpose reviews
• Complete or partial outsourcing of internal audit activity.

Our methodology complies in all respects with relevant directives of the European Union and the guidelines of the international Institute of Internal Auditors (IIA).

SOX compliance

Transparency and accuracy in reporting.This is the motto of the Sarbanes-Oxley Act of 2002 ("SOX").It is ensured by applying painful penalties, the drastic rise in corporate management responsibility, the pressure exerted on auditors, and the tightening of regulations regarding accounting practices. The requirements of investors leading to the creation of the law were unambiguous: accountable corporate management, transparent reports and financial statements, assessable corporate performance and financial situations. SOX and the detailed regulations related to it opened up a new chapter in respect of requirements made of financial statements. It is not easy finding one's way among the vast amount of new regulations. Most of the problems are caused by having to comply with the provisions of paragraphs 302 and 404. Given that the problems which arise are very complex, the creators of the SOX law expressly recommend that companies make use of the services of experts and introduce special-purpose applications (special-purpose software).

We are familiar with, have interpreted and can apply the SOX law along with the important related regulations and standards that lay down the detailed requirements. With the help of our fully-fledged, computer-aided D-RISC® risk-management methodology and in compliance with COSO provisions we can make an efficient contribution to setting up / redesigning / customising systems prescribed by parent companies, producing documentation and performing tests, which generally contain the following important steps:

• Identifying significant balances and other information in the financial statements
• Identifying and documenting key and support business processes linked to significant balances and other information, and tailoring these to parent company regulations (in particular to the provisions of PCAOB Auditing Standard No. 2)
• Risk-control analysis of key and support business processes, remedying inefficient controls
• Planning, executing and documenting process (walk-through) tests
• Planning, executing and documenting control tests
• Drawing up recommendations aimed at remedying the inefficient controls identified during the tests and monitoring their implementation.

During our work we provide important feedback to management and the internal audit department and besides ensuring SOX compliance we prepare recommendations and documentation which contribute to setting up and operating a satisfactory internal audit system that does not focus just on the reporting system.