2. Overview
In (insert date), Company X established an internal audit function. The results of our
internal audit strategy analysis were presented to the board of directors.
Subsequent to this meeting, Company X executive management and the audit committee
requested and contributed to the creation of an internal audit plan. The plan included in this
document incorporates the following assumptions:
• An outsourced internal audit function will be created to enhance risk management
practices at Company X.
• The internal audit plan will be based on an annual budget between $X and $X.
• The plan will be flexible to allow for focus on changing or evolving risks.
• The plan will include a prioritization of the audit areas included in the strategy document.
2 Source: www.knowledgeleader.com
3. Internal Audit Plan – Summary
Listed below is the anticipated internal audit plan for the first two years. Details of each
audit area are included on the following pages. Actual time allocated to individual projects
will be based on approved project scopes.
Typically, the internal audit plan is subject to revision, depending on changes to the
business over time. As such, a portion of the second year internal audit plan is listed as
“discretionary.” Any changes to the plan, including the allocation of discretionary hours to
a specific project, will be subject to the approval of the audit committee.
Year One Internal Audit Plan Est. Hours Year Two Internal Audit Plan Est. Hours
Compliance Assessment (insert hours) Compliance
(insert hours)
Trading Practices Process Review (insert hours) (Scope Based on Year 1 Assessment)
Net Asset Value (NAV) Valuation Accounting Process Review (insert hours)
(insert hours)
Process Review
Audit Issue Tracking and Follow-Up (insert hours)
Trade Execution Process Review (insert hours)
Audit Committee Meetings and
Audit Issue Tracking (insert hours) (insert hours)
Management Meetings
Audit Committee Meetings and
(insert hours) Discretionary (insert hours)
Management Meetings
Total Internal Audit Budget (insert hours) Total Internal Audit Budget (insert hours)
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4. Internal Audit Focus Areas – Detail
Project Description Hours Allocation
Trading Practices Process Review
Review policies and internal controls to prevent “late-trading” transactions from occurring. (insert hours)
Review policies and internal controls to restrict and detect “market timing” trading practices.
Compliance Process Review
Review Company X’s compliance program and related risk assessment processes. This review
would include compliance activities with regards to the Investment Advisors Act of 1940 and
Investment Company Act of 1940.
This would include:
• Overall Compliance Risk Assessment • Soft Dollar Oversight (insert hours)
• Fee Disclosure • Fund Governance Rule Review
• Advertising • Anti Money Laundering
• Personal Trading & Insider Trading • Privacy And Security of Shareholder
• Shareholder Performance & Management Information
• Investment Company Names – Rule 35D-1
Net Asset Value (NAV) Valuation Process Review
Review the appropriateness of operational procedures and supervisory structures in place with
respect to both “market value” and “fair value” determinations. At a high level, review controls (insert hours)
within processes for market value pricing obtained by third parties. At a detailed level, review
processes for monitoring events that necessitate the need to use fair value pricing to protect
fund shareholders (e.g. foreign securities).
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5. Internal Audit Focus Areas – Detail
Internal Audit
Project Description
Budget
Trade Execution Process Review
Review processes for determining the best execution that is reasonably available for customer
orders. Cover an evaluation of decision points including: the opportunity to get a better price (insert hours)
than what is currently quoted, the speed of execution and the likelihood the trade will be
executed.
Accounting Process Review
Review covering the integrity of information and processes related to accounting and (insert hours)
management reporting. Specific areas covered would include controls over expense
identification and allocations (inclusive of expense caps).
Audit Issue Tracking / Audit Follow up
(insert hours)
Follow up of the implementation status of internal audit action items. Also includes actions
relating to external audit or regulatory compliance internal control concerns.
Audit Committee Meetings & Management Meetings (insert hours)
Discretionary
Audit time to be allocated based on changing risks or new initiatives that are uncovered through (insert hours)
ongoing risk assessment processes.
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