What should be audited? Village bank records, procedures and internal controls, as specified in the financial audit and operational guidelines, should be audited. These include external account and internal account journals, passbooks, receipts, bank statements and records, cash and miscellaneous registers, as appropriate. If there is insufficient time to audit everything, a sample of transactions or records should be randomly selected. Random selection is important to keep the audit unbiased. Explain ways to do random sampling. Give each person a number and roll a die to choose which number is reviewed Make an alphabetical list and choose every other or every third record. Keep in mind that the objective is to identify any misuse of funds, as well to as identify training or technical assistance needs.
What preparation, if any, is necessary for the village bank or the auditor? If it is a scheduled audit—the village bank management committee should bring journals, receipts and other records that are kept. Members should bring passbooks. If it is an unscheduled visit—a spot audit—there is no warning and auditors arrive unannounced. This gives them the opportunity to see how the village bank operates on an everyday basis.
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Tool Set: Agency Audits