RESEARCH PROPOSAL
Promoting Good Governance in Public Institutions of Ghana: The Role of the Internal Auditor
Introduction
All over the world there is a realization that the Internal Audit activity has the potential to provide hitherto unparalleled services to management in the conduct of their duties. This potential has been turned into a challenge and embodied in the new definition of Internal Auditing from the Institute of Internal Auditors (the IIA).
Background of the Study
The Government of the Republic of Ghana by the Internal Audit Agency Act, 2003 (Act 658)established the Internal Audit Agency “as an apex oversight body to co-ordinate, facilitate and provide quality assurance for Internal Audit activities within the public sector”
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These are as follows:
1. Professional Practice Framework which aims at developing key documents and templates for use by the Internal Audit function such the Internal Audit Regulations, Internal Auditing Standards, Audit Programmes Internal Audit Charter and Annual Audit Planning templates.
2. Human Resource Development which seeks to facilitate the recruitment, training and development of internal auditors to be proficient in applying internal audit standards, procedures and techniques in performing engagements.
3. Quality Assurance and Improvement which addresses the issue of continues improvement in the performance of the internal audit activity.
Definition of Internal Audit
According to the Institute of Internal Auditors, “internal auditing is an independent, objectiveassurance and consulting activity designed to add value and improve an organization’soperations. It helps an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes” (March 2007).This definition actually seeks to demonstrate the depth and breadth of the internal audit activity within an institution as against the previous orientation of reviewing payment transactions over the years. Modern internal audit covers (or should cover) all activities of the
978-0-. 912503-35-6) identify issues and to research solutions. 6. Understand the . Integrated Audit Practice Case, 4th
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
Deborah S. Archambeault, F. T. (2008). The Need for an Internal Auditor Report to External Stakeholders to Improve Governance Transparency . American Accounting Association .
The internal auditing has vastly changed since the Archer Daniels Midland Company price fixing scandal, the Enron deceit or implementation of Sarbanes-Oxley Act of 2002. Both of these corporations had two things in common greed and faulty internal auditing accounting practices. In fact, since the time of both scandals Hollywood has made two movies, “Dick and Jane” played Jim Cary, who was executive that highlighted the debauchery of Enron not mention the second movie “The Informant” played
The engagement in this type of activities will provide the IAD with the responsibilities to fulfill certain degree of assurance from an independent and objective position. Although, the consulting activity could be the main focus for the IAD in this organization, the assurance portion could be a source of reliability and confidence for the management team, the board, and the employees in general regarding the work performed by the different departments. Another, recommendation will be to include in the charter the complete, unrestricted, and free access to any records and physical properties by the internal auditor while working in an engagement. This freedom will facilitate immensely the work performed by the internal auditors allowing them to have all the information required to accomplish their assurance and consulting objectives. Moreover, the IAD charter should include system to monitor the disposition of results communicated to management and a system to resolve risk conflicts between the chief audit executive and the senior management. The addition of these two crucial parts of the internal audit activity in the charter will facilitate the achievement of quick results and a more effective and efficient way to resolve significant issues that may arise in the
Fullerton and Durtschi, (2012) in their study found that internal auditors should adopt an elevated attitude of skepticism, as they are the first line of defense for finding fraud within a firm. Internal auditors, have an intimate knowledge of the workings of a firm, the corporate environment, as well as employee activities are in a unique position to spot many of the symptoms of fraud to which an external auditor may not be aware. Thus internal auditors should be more skeptical and use their knowledge to enhance their fraud detection in firms (Fullerton and Durtschi, 2012). This is one of the key inputs into the factors that drive audit quality as external auditors rely on inputs from internal auditors in obtaining the evidence they require to produce the audit report (Fullerton and Durtschi, 2012).
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.
This practice is addressed here on account of the capacity of the free market to rebuff auditor failure; the dynamism indicated by members in connection to the deliberate appropriation of new self-administrative approaches and the high costs and questionable adequacy of the new regulations embraced (Arruñada 2004). A more reasonable methodology that would give the business time to find the productive blend of administrations, quality shields what 's more, firm structures is exhorted (Arruñada 2004). Current administrative propensities, the primary component of which is obligatory evaluating, safeguarding against threats and progressively incapable regulation.
The internal audits in an organization provide numbers of services that are significantly important to company management and help organization to succeed. These services include testing internal control, assessing operational risk, detecting the misstatement, and monitoring compliance with government regulation and policy. Institute of Internal Auditors (IIA) gives the latest definition of internal audit is that: Internal audit is an independent assurance and consulting activity management, aims to add value to organizations and institutions to improve operational efficiency. It takes a systematic, disciplined approach to risk management, control and governance processes to improve, and helping organisation to achieve its objectives.
1) What additional work could the Internal Audit Department perform prior to issuing the audit report?
The internal auditing was important for each company management because it provides reporting for management and prevent the fraud inside the company. The internal auditors are the main reason that contributes to the success of the company. I will prepare the findings of both primary and secondary research. Thus, the discussion which including a detailed analysis of strengths and limitations of the project. After that, I will write the recommendations which resolve the problem of the company.
3 pillars of effective internal audit services- independence and objectivitiy, proficiency, and due professional care.
Internal auditors cannot effectively provide an analysis on the company’s internal dealings as they are part of the company. External auditors, however, can observe these processes from the outside and then determine where the funds of the company and whether the dealings adhere to the regulations. Using external auditors in a company prevents conflict of interest from happening. Conflict of interest is a situation where an individual or organization has multiple interests and of those multiple interests, one could possible corrupt the motivation for an act on the other when the auditor has any kind of beneficial interest in their client’s performance. In other circumstances, there is also the threat of familiarity where auditors become
According to the Institute of Internal Auditors (IIA), (2011), the internal auditing is a team of consultants, a department and a division or other practitioner which independent, have objective assurance and conduct a consulting activity which is designed to add value and improve the organization operations. The internal auditor can help an organization in achieving its objectives by bringing a discipline and systematic approach in order to improve and evaluate the effectiveness of risk management, control and governance process.
The role of internal audit is to provide independent declaration that an organization’s threatadministration, governance and internal control processes are functioning effectively. Internal auditors deal with concerns that are essentially important to the existence and success of any organization. Unlike external auditors, they aspect beyond financial possibilities and statements to reflect wider problems such as the organization’s reputation, development, its power on the location and the approach it treats its organizations.In summary, internal accountantssupport organizations to thrive.