Yes, agreeing by lavina's comment, the most important and foremost step in any internal audit is having thorough knowledge of clients business, then preparing proper audit plan..etc etc, as written by lavina below. But in case of trading firm, utmost care needs to be taken on the 1. proper mechanism for recording of purchases and sales. Because that is what a trading firm is involved in. 2. a proper maintainence and a daily reconciliation of stock register, purchase register, sales register, purchase return, sales return registers is required in terms of quantity, which should be reconciled with physical verifical of stock at frequent intervals depending upon the size and scale of business of the firm. 3. Then checking, that proper valuation of inventory is being done or not. 4.Proper maintainece of VAT records, bcoz on a trading firm Major compliance needs to be done with VAT act of that particular state in which that trading firm is situated. 5. Observing the item that is in stock for long..i.e, checking whether there is any item in stock which is not moving or is in stock for long, so as to report further not to buy that particular item, and take suitable action for its early disposal. 6. Checking at all times that in no case, ur stock register shows a negative stock of any item, because that will represent some discrepancy at the data entry level..i.e, either some purchase is not recorded, or purchase return is inflated or sales has been inflated.
I think above are some of the major things that needs to be taken care of in internal audit of a trading firm.