Analysis of Internal Audit Function in Poland Empirical Research Findings

Public Finance is the role of government in the economy. Transparency and accountability in government financial management is crucial. The reading, “Understanding New York City’s Budget” references that due to government spending of taxpayer money to operate various services, several checks and balances such as Audits, City Council Oversight, Mayor’s Management Report (MMR), and Program Evaluation were put in place for accountability. The adherence to policy, procedures, rules, regulations and laws are important when compliance and integrity is the goal.

The act endorses companies to change the practice and regulations of accounting and auditing. It required them to maintain good financial recorded which were different than the past. The management team is held personally liable for the reliability and accuracy of the financial statements. All publically listed companies must establish a system of internal controls which must be evaluated by management at least quarterly and external auditors are required to conduct independent assessments of company’s in –house internal controls as well as report any fault or fraudulent acts they observe.

Due to increasing economic and financial growth, many types of audit have been incorporated throughout the development process of internal activities. Audits can be performed manually or they can incorporate technology. According to Hunton and

The Sarbanes Oxley Act of 2002 enacted many new legislations including the creation of the Public Company Accounting Oversight Board, which inspects audits of public companies, increased regulations on auditor independence, prohibiting certain non-audit activities, increased corporate responsibility of company executives and management for financial reports, timely and accurate disclosure requirements, and management’s responsibility to design and test the effectiveness of internal controls. These legislations are just a few of the key sections of the Sarbanes Oxley Act among many others and have has a great impact on public auditors and the audit process of public companies. Although many of these new requirements and regulations require more detail, time, and money to implement, they help to protect the public interest of investors and restore the public’s trust in auditors and the financial reports of corporations and business that must follow the policies the forth in the Sarbanes Oxley Act.

This means that the main goals of the act in enhancing auditor independence in preventing fraud in future are faced with pressures regarding its efficiency. Case 3 Effective fraud control depends on prevention of the following three weaknesses in the internal control system. First is the static nature of internal controls. This means that internal controls might not be fluid in terms of evolution with the changes experienced in technology, business and the fraud environment. Second is the immunity of the internal control systems. For instance, if a company’s internal control system has weak control policies for its procedures and processes, then the company becomes a target for both internal and external criminal activities. Thirdly, are unclear definitions of the roles and responsibilities of ownership. By this it means that if the internal control system is not well defined to the employees, then there will be an assumption that the role of the internal controls is to only perform audits hence they would not be interested in preventing fraudulent

Sarbanes-Oxley Act was enforced in the past but caught everyone’s attention when drastic audit failures from Enron and Worldcom happened. An enhanced act (SOX) was enacted in 2002 improving audit quality. In particular, section 404 provides guidance of assessment to internal control. For an accounting perspective, internal control is a system for internal and external auditors to measure performance and recommend the improvement of the control. It is definitely correct that both enforcement and the system are to address the risks of frauds. In the meantime, a new regulatory agency, the Public Company Accounting Oversight Board (PCAOB) was created to monitor the work of public accountants. Among SOX and the PCAOB, accounting

     The second standard requires public accounting firms to audit internal controls in conjunction with an audit of financial statements. The second standard requires public accounting firms to attest that the internal controls documented and set forth by the company audited are sufficient to ensure the integrity of the financial statements (Griggs). This second standard is a real breakthrough in ensuring the financial statements of a company are sound. It is impossible for a public accounting firm to audit every detail of large multi-national company. Strong internal controls reduce the risk of material misstatements to a company’s financials caused by negligence or fraud. Maintaining internal controls is no longer enough. Companies must now analyze and document their internal processes (Calabro). When a public accounting firm issues an unqualified opinion on the internal controls of a company, which will be required starting November 15, they are stating that the internal checks set forth adequately protect the assets of a company from negligence or fraud.

When auditing a public company, the auditor must form an opinion on the effectiveness of internal control

|SCICI |December 1986 |Public Ltd Co |For assisting shipping, fishing and related industries in the form of rupee |

To evaluate risk management effectiveness and policies compliance in a company, auditing is introduced as an independent, assurance and a consultative activity.

Another issue is on whether or not internal auditors should whistleblow when they discover organizational wrongdoings. Internal auditors always face situations that involve conflict of interest while executing their dual-role duties (Armold & Ponemon, 1991; E.Z. Taylor & Curtis, 2010). The dual-role duties mentioned here are the role of internal auditors as employed by the organization, which subject to the needs and requirements of their employment, and the role as members of a professional body, they are required to adhere to the profession's ethical requirements. Ahmad and Taylor support the view and assert that the role of internal auditors in providing auditing tasks for their organizational may cause ongoing conflicts. Zhang, Chiu and Wei (2009) argue that the "disclosing insider information to outsider's breaches obligation to the organization, violates the written or unspoken contract, and elicits damaging publicity".

Business organizations are now being challenged to review, alter, and appraise their undivided business to satisfy the established needed misdate of compliance for monetary coverage. As a result, internal auditing and also the company management setting are retained exaggerated attention and resources necessary to adjust to the vigorously enacted legislation. Government Management and Boards of Administrator’s are trying to internal audit these days with a way of urgency to supply them with tier of trust on the general company management setting Before their external auditors provide any evidence of an ineffective administration setting. Despite the exaggerated exposure and buy-in from government control, internal audit departments are faced with several challenges in providing

|authorities, using the rates/laws that have been enacted or substantively enacted by the balance sheet date. [IAS 12.46] | |

Internal auditing consist of a continuous, critical review of financial and operating activities by a staff of auditors functioning as full time salaried

ABSTRACT Fiscal Responsibility Act 2007 was designed to regulate and supervise the fiscal activities of public office holders in the country. This paper critically analyses the effectiveness and efficiency of the implementation of the Act; the machinery for implementation; the powers and tenor of the members of the Fiscal Responsibility Board;