Government of India
Ministry of Finance
O/o Chief Controller of Accounts
Internal Audit Wing
New Delhi
IAR No. MoF/01/2012
Internal Audit Report
of (Name of Unit / Scheme audited),
Department of __________,
Ministry of ________, New Delhi
for the period ________ to _________
Internal Audit conducted by
_______________________
_______________________
_______________________
(Write names of Auditors)
From _________to________
Report Issued on________________

Internal Audit Wing, O/o Chief Controller of Accounts, Ministry of ___________, D/o___________
Page ii
Executive Summary
1. Introduction
1.1 Name of the Auditee (unit audited)
1.2 Period covered under current audit
1.3 Brief description of duties/functions of Auditee
1.4 Sanctioned strength and working strength
1.5 Budget / Expenditure of the auditee unit
2. Objective and Scope
The objectives of this internal audit engagement were:
i.
ii.
iii.
The scope of this Internal Audit engagement included:
i.
ii.
iii.
Individual audit engagement(s) should identify the key risks of audit units and
evaluate the adequacy and effectiveness of controls designed to mitigate these
risks. The audit engagement should detail the strengths and weaknesses in design
and operation of the internal control systems and provide guidance for removing
deficiencies noted during audit.
3. Methodology
This section should refer to the methodology adopted for conduct of internal audit
engagement viz. Interview, Observation, Sampling, Sample size used for checking
records, the number of records checked, type of records checked. It should also
include checklists (if any) used during the engagement.

Internal Audit Wing, O/o Chief Controller of Accounts, Ministry of ___________, D/o___________
Page iii
4. Results and Findings
4.1 Strengths observed during the audit engagement.
4.2 Weaknesses observed in the functioning of office, maintenance of records
etc. observed during the audit engagement.
The comments under these two categories should summarize each significant Audit
observation in the order of materiality. The summary should be as brief as possible
and draw on the observations under the Para on Consequence / Effect / Impact of
each Audit observation. It should also include a summation of outstanding statutory
and internal audit observations.
5. Opinion
Overall opinion of Audit Team about the functioning of Auditee Unit.
6. Audit Recommendations
The recommendations of Audit Team on the observed weaknesses.
This could be presented in a box of highlighted print.
7. Acknowledgement
This section could acknowledge in brief the cooperation, acceptance of the criteria /
findings and recommendations by the auditee (or otherwise).The observations
should be stated in a factual and not in the form of an opinion (praise / accusation).

Internal Audit Wing, O/o Chief Controller of Accounts, Ministry of ___________, D/o___________
Page iv
Detailed Audit Report
1. Introduction
1.1 Name of the Auditee (unit audited)
1.2 Period covered under current audit
1.3 Duration of Internal Audit (Indicate dates)
1.4 Brief description of duties/functions of Auditee
1.5 Sanctioned strength and working strength
1.6 Budget / Expenditure of the auditee unit
1.7 Status of outstanding Statutory Audit observations
1.8 Status of outstanding Internal Audit Observations
2 Objective and Scope
Elaborate on the objective and scope of the audit engagement
3 Methodology
Elaborate on the methodology employed during the audit engagement.
4 Audit Observations
Each Audit Observation may be structured as described below
Audit Objective: To which Audit Engagement objective does this observation relate?
Criteria: What should exist? The rules / regulations / procedures / expectations are the
basis against which Audit evidence is compared.
Condition: What exists? The condition identifies the nature and extent of deviation
from the criteria i.e. deviation from what should exist. This should be supported by

Internal Audit Wing, O/o Chief Controller of Accounts, Ministry of ___________, D/o___________
Page v
factual evidence. A statement of condition would be formed on the basis of Auditor’s
comparison of actual evidence against the appropriate criteria.
Consequence / Effect / Impact: What effect did it have? The effect establishes the
actual or potential impact of the condition and can be both quantitative and qualitative.
It is the likely effect/ impact which would determine the significance of the condition.
Cause: Why did it happen? The possible or likely reason for the difference between
the expected and actual condition.
Corrective Action / Recommendation: What should be done? The actions
suggested or required to correct the situation and prevent future occurrences.
Wherever possible, the audit findings should be accompanied by graphs and charts to
improve the visibility of the analysis and findings. Photographs could also be used as
corroborative evidence.
5 Recommendations
This section will have general recommendations if any which are not covered as part of
recommendations in the specific Audit Observations
6 Conclusion
This would constitute the auditors’ overall opinion about functioning of the Auditee Unit.
The strengths of the Auditee Unit may be highlighted in this section along with areas
needing attention and corrective action.
7 Glossary
This section would have a Glossary of terms explaining technical and uncommon
terms used in the Internal Audit Report.
8 References
This section should list all published material utilized and referred to in developing the
Internal Audit Report.

Internal Audit Wing, O/o Chief Controller of Accounts, Ministry of ___________, D/o___________
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9 Action Taken Report
This is to be completed by the auditee unit and forwarded to Internal Audit Wing of
the Ministry/Department within 4 weeks of receipt of the Audit Report.
Suggested format of the Action Taken Report is given below
S.
No
Areas
needing
improvement
Time proposed by Internal
Audit to bring about
necessary improvements
Time frame
accepted by
Auditee Unit
for effecting
required
changes
Remarks of
Audit (on
receipt of
completed
ATR)
1.
2.
3.
4.

Internal Audit Wing, O/o Chief Controller of Accounts, Ministry of ___________, D/o___________
Page vii
Guidance Notes
i.
The Executive Summary should be restricted to a few (2-3) pages. Considering that
brevity in presentation is desirable, the entire Internal Audit Report should ideally
not be more than 10 pages. However, there may be cases which may necessitate a
longer report for some audit engagements. Final decision in this regard may be
taken by the Head of the Internal Audit Wing in each Ministry.
ii.
The detailed Audit evidence (all data / information / documents in support of Audit
observations) form part of the working papers for each audit engagement and
should not be annexed to the Internal Audit Report. These however, should be
linked / indexed properly and kept in safe custody for any future reference and
examination.
iii.
Each Internal Audit report should follow the numbering format indicated on the
cover page of the draft report template. Audit observations should be so numbered
as to facilitate simple referencing subsequently.