Financial audits

A financial audit is an independent examination of a company's financial statements and records to determine whether they are accurate and fair. The auditor will review the company's accounting policies and procedures and will test whether the requisite internal controls are in place, commensurate with the size and volume of operations of the entity. The auditor will also look for any evidence of fraud or other irregularities.

There are two types of financial audits:

1. External audits are conducted by an independent auditor who is not affiliated with the company (SHS / DHS) being audited. External audits are required for publicly traded companies and are also often required for private companies that borrow money from banks or other lenders.
2. Internal audits are conducted by the company's own internal audit department. Internal audits are typically less comprehensive than external audits, but they can be a valuable tool for identifying and correcting internal control weaknesses.

There are different types of financial audits under NHM, such as:

1. Statutory audit: This is conducted by a qualified chartered accountant empanelled by C&AG. The auditor is appointed by the management of SHS/DHS. The objective is to verify whether the financial statements represent a true and fair view of the financial position as at end of the financial year.
2. Internal/concurrent audit: This is conducted by an internal audit team within the organization or an external auditor/consultant. The auditor is appointed by the management of SHS/DHS. The objective is to determine whether the financial management arrangements, including internal control mechanisms, are working effectively, identify areas of improvement and suggest corrective actions.
3. C&AG audit: This is conducted by the office of C&AG. The auditor is appointed by the government. The objective is to ensure compliance with statutory requirements, rules and regulations, and to examine economy, efficiency and effectiveness of operations.

Resource:

1. Training Module on “Financial Monitoring & Reporting, Ministry of Health and Family Welfare, Government of India