Audit Procedures Research Articles

Development of a Metric of Aquatic Invertebrates for Volunteers (MAIV): A Simple and Friendly Biotic Metric to Assess Ecological Quality of Streams

Citizen science activities, involving local people in volunteer-supported and sustainable monitoring programs, are common. In this context, the objective of the present work was to develop a simple Metric of Aquatic Invertebrates for Volunteers (MAIV), including a user-friendly tool that can be easily accessed by volunteers, and to evaluate the efficiency of a volunteer monitoring program following an audit procedure. To obtain MAIV values, macroinvertebrate communities were reduced to 18 surrogate taxa, which represented an acceptable compromise between simplicity, efficiency, and reproducibility of the data, compared to the regular Water Framework Directive monitoring. When compared to results obtained with the National Classification System of Portugal, MAIV accurately detected moderate, poor, and bad ecological status. Thus, MAIV can be used by volunteers as a complement to the official monitoring program, as well as a prospective early warning tool for local problems related to ecological quality. Volunteers were students supervised by their teachers. Results obtained by volunteers were compared to results obtained by experts on macroinvertebrate identification to measure the efficiency of the procedure, by counting gains and losses on sorting, and identification. Characteristics of groups of volunteers (age and school level) did not influence significantly the efficiency of the procedure, and generally results of volunteers and experts matched.

Auditor's responsibility during the audit of the application of management's principle of continuity in the preparation of financial statements

The article explores the information base on the regulation of auditor responsibility. The types of responsibilities and the main elements that need to be considered when evaluating the auditor's actions that may pose a risk to the entity's continued business are systematized. Recommendations have been made regarding the specific provisions of the internal company quality control audit policy in terms of ensuring that the auditor understands his or her professional responsibility. Therefore, attention should be paid to ensuring the internal quality control of the procedures performed by the auditor in collecting, organizing and analyzing information on threats to business continuity, notably by establishing a clear system of responsibilities and responsibilities between partners for the task. Thus, the rules of the internal quality control system for audit services have been developed in the aspect of ensuring pre-emptive measures of compliance with professional responsibility when planning and conducting audit procedures to verify the assumption of continuity of activity of an entity. The results of the conducted research show that the issue of control of the auditor's responsibility requires further elaboration, first of all, due to the updating of the legal framework for the regulation of audit activity. As a result of our research, we have developed a number of methodological recommendations aimed at combining the requirements of international standards, legislation and practice of auditing, in particular in the aspect of ensuring the responsibility of the auditor, in the process of assessing the risks of termination of the enterprise, by building a regulation that is a system of key elements of the auditor's responsibility, under a time to assess the risk of business continuity that can be adequately monitored by audit.

ОЦІНКА ВНУТРІШНЬОГО КОНТРОЛЮ ПРИ АУДИТІ ЛІЗИНГОВИХ ОПЕРАЦІЙ

Лізинг покликаний забезпечити підприємства потрібними засобами із застосуванням альтернативних джерел їхнього надходження і фінансування. Складний і багатогранний характер лізингу, неоднозначна інтерпретація його змісту в нормативно-правовій базі спричиняє труднощі в операціях лізингу аудитора з перевірки. Часті зміни законів, високі стандарти контролю лізинговим компаніям свідчать про необхідність послуг сторонніх аудиторів. У силу специфіки лізингу запропоновано методику оцінки внутрішнього контролю лізингових операцій спеціалізованої компанії. Внутрішній контроль у лізингових компаніях через велику кількість операцій з основними фондами як об’єкти лізингових угод потрібний для проведення аудиторських перевірок. Науково обґрунтовано запропоновані процедури перевірки та окреслено перспективи їх застосування. Розкрито переваги оцінки внутрішнього контролю для правильного розроблення наступних етапів аудиту лізингових операцій. Запропонована методика є основою для розроблення процедур безпосереднього аудиту лізингових операцій і перевірки основної діяльності лізингових компаній.

Insights into Auditor Public Oversight Boards: Whether, How, and Why they 'Work'

We survey 170 inspectors, representing 27% of the inspection staff, from auditor public oversight boards (POBs) in 20 countries to understand whether, how, and why auditors change auditing practices in response to POB oversight. We ask about several theories and areas in the literature. We find that a large majority of POB inspectors believe that auditors frequently respond to inspector feedback by changing audit procedures and quality control systems. Inspectors perceive inspections to have broad effects on several aspects of auditing, ranging from documentation, scrutiny of management estimates, and training to changes in firm culture and even the removal of low-quality partners from public company audit engagements. Inspectors think that the primary reasons why auditors respond to their feedback are 1) POB enforcement capabilities, 2) the perceived authority of the POBs, 3) public disclosure of inspection findings, and 4) that POBs have a culture conducive to detecting auditing deficiencies.

ORGANIZATIONAL AND ECONOMIC MECHANISMS OF ENERGY CONSERVATION AND ENERGY EFFICIENCY MANAGEMENT IN KAZAKHSTAN

The article considers the problem of low energy efficiency of the Kazakhstan economy and identifies opportunities for its improvement. The energy intensity indicator and the GDP structure by industry are analyzed relatively to developed countries and countries with similar climatic and territorial conditions. The legislation of recent years in the field of energy sector was studied, as well as a number of programs and strategies for energy conservation. The main problem points in the field of energy conservation and energy audit procedure are clarified by the authors. The prevalence of regulatory methods over economic ones in energy efficiency management in the country is reveled. The possibilities of using stimulating organizational and economic mechanisms for the development of energy saving as opposed to regulatory measures are considered. The use of a number of financial mechanisms to finance the transition of enterprises of Kazakhstan to the cost-effective energy conservation mode is justified.

Інституціональні аспекти вибору та застосування аудиторських процедур

The purpose of the article is to identify the substantive characteristics and possibilities of application of audit procedures in the context of the implementation of its functions as of a public institute. On the base of application of the method of abstraction, it is established that the main elements of the audit institution that affect the features of planning, implementation and evaluation of audit procedures are the institutions, the subject of the audit and the functional content of the procedures. It’s found the following types of procedures: providing, implementation, identification, evaluation, comply with ethical requirements and quality control. It is determined that there are differences in the procedures performed by public and independent audit entities. The reason for such differences is the integration of public audit entities into the public resource management system. Differences are characterized, in particular, by the lack of procedures in the state audit for compliance with ethical requirements and quality control. Instead, independent auditing entities are delegated by law to perform procedures that are not directly related to audit tasks. The subject area of the audit performed by state institutions is limited by the use of state resources. This makes it impossible to use the results of the audit by public groups that do not participate in these processes. The functional workload of audit procedures determines the possibility of their use for the implementation of executive and information functions by the subjects of state audit, as well as the information function of audit firms and private auditors. The problem of restrictions on using of audit procedures in the audit institute functioning context is proposed to be solved by amending the regulations. Such changes will help expand the powers of public audit entities in the selection and application of audit procedures.

ІМПЛЕМЕНТАЦІЯ МІЖНАРОДНИХ СТАНДАРТІВ ВИЩИХ ОРГАНІВ АУДИТУ У ФІНАНСОВІ АУДИТИ РАХУНКОВОЇ ПАЛАТИ УКРАЇНИ

The peculiarities of financial audits conducted by the Accounting Chamber of Ukraine according to a methodology that meets the requirements of ISSAI are explored. The Financial Audit Manual with detailed instructions, audit procedures, and templates of audit documentation, elaborated by the Accounting Chamber and international partners in 2019, is considered. The analysis of the experience of 31 European SAIs showed that most of SAIs do not publish audit manuals, in particular, only SAI of Albania, Georgia, Lithuania, Moldova, and Romania provided free access to financial audit manuals. The methodological recommendations for conducting the financial audit by the Accounting Chamber of Ukraine, adopted and published in 2015, cover all the issues that are outlined in such manuals of SAIs from those countries..Besides, the risks of providing open access to the Financial Audit Manual, elaborated by the Accounting Chamber of Ukraine were detected. They are the risks of fraud by officials of audited entities, not detecting a material risks by auditors, the use of intellectual property of the Accounting Chamber for commercial purposes by other entities and reputational risks due to breach of agreements with international partners involved in the development of the manual. The Financial Audit Manual was tested on six financial audits conducted by the Accounting Chamber in 2019 and main results are analyzed in the paper. Significant deficiencies of internal control, fraud risks and risks associated with accounting, budgeting and financial reporting software, and the need of improvement in accounting policies, internal control and workflow in all audit entities were identified. Additionally,, the audit results are presented in a user-friendly format tailored to the needs of decision- makers, with an emphasis on issues that require rapid response. Based on the conducted analysis, the conclusions about the low quality of financial and budgetary reporting of public sector entities and the systematic nature of identified problems and risks were made. Thus, the importance of financial audits was emphasized and the proposals for further improvement of this type of audit of the Accounting Chamber were elaborated. In particular, updating of the legislation and internal documents, usage of modern information technologies and software for audits, translation of ISSAI, training for staff, changes in personnel policy, improvement of the quality control system.

Assessment problems of the financial condition of enterprises according to the results of the audit

The relevance of the article lies in the importance of conducting an audit in assessing the financial condition of industrial enterprises as a basis for effective internal control and effective operation and development of the enterprise. The main purpose of the study is to determine the conceptual basis of the organization and conducting an audit to assess the financial condition of the enterprise, identify the main problems of assessing the financial condition of enterprises based on the results of the audit, and develop the ways to overcome them. The paper emphasizes the importance of audit as one of the methods of internal control, which ensures the prevention of abuse and timely response to identified deficiencies in order to prevent them in the future, thus ensuring a high level of the financial condition of the enterprise. The main tasks of organizing and conducting an audit at the enterprise are determined. The general stages of the audit of the financial condition of the enterprise are outlined, including the preparation and planning of the audit, audit sampling and audit procedures, evaluation of the results of audit procedures, and preparing the auditor’s report and opinion. The main shortcomings of industrial enterprises, which lead to a violation of their financial condition, are studied. According to the results of the research, the main problems, causes, and ways to overcome the negative trends identified by the results of the audit of financial statements of industrial enterprises are determined. The paper emphasizes the importance of conducting an independent audit of the financial condition, which allows managers to ensure the veracity of information about the financial condition; analyzing the indicators of financial condition and ways to improve them; exercising control over the correctness of accounting and compliance with financial reporting indicators; avoiding falsification of financial statements and fraud by employees; establishing compliance of the enterprise’s activity and accounting with the current legislation.

The Joint Effects of Rich Data Visualization and Audit Procedure Categorization on Auditor Judgment

We predict that the audit-effectiveness benefits of richer visualization depend on how auditors categorize the procedures used to generate visualized evidence. We experimentally test our prediction using analytical procedures, which can be categorized either as risk assessment or substantive procedures under certain conditions. As predicted, audit-senior participants more frequently identify more richly visualized outliers as high risk, but only when these visuals arise from risk assessment procedures rather than substantive procedures. Richer visuals also increase the comprehensiveness of auditors’ prescribed follow-up tests, again only when risk assessment procedures generate these visuals. Post-experimental responses corroborate our theory: Auditors view evidence as more persuasive and sufficient when categorized as substantive procedures rather than as risk assessment procedures, in which case they view evidence as more preliminary. We conclude that whether and the degree to which richer data visuals improve audit effectiveness depends on how audit procedures generating these visuals are categorized.

Research on Application of Big Data in Local Government Debt Audit

While big data provides massive information for auditing work, it also changes the specific requirements of audit procedures. The pressure of economic downward has increased the concealment of local government debt risks in China, hence the requirements for its audit have increased accordingly. This paper combines the method of investigation and theoretical analysis to study the status quo of local government debt. Based on big data, the audit procedure of local government debt is designed in order to provide a reference for actual government debt audit work.

Auditing as a Vital Component to the Financial Management of Local Councils in Cameroon; the Case of Buea Rural Council

The lack of efficient and effective utilization of financial resources could destroy a municipal council. Proper auditing standards could help the city councils avert financial mismanagement from some unscrupulous individuals who are out to damage the reputation of the leaders and make their hard work unnoticed. This qualitative case study was on the premise that proper auditing could help reduce or eradicate financial mismanagement and consequently aid in the improvement of the business portfolio of the municipality for the benefit of all. A qualitative descriptive method was used, and twelve executives interviewed within the four local councils' financial management structure. This article addressed two specific arguments: The first argument challenges the contention that the council must be managed according to the political party ideology to achieve goals and objectives. The second refutes the assertion that the council’s management, in line with the party’s ideology will enhance efficiency and productivity. The following research questions were addressed: RQ1: Who do you think is responsible for the financial management of councils? RQ2: What are the auditing structures and procedures in place within your council for proper transparency in the usability of finances? RQ3: What do you think; should we change or maintain the current system in place for the financial management within the council? RQ4: How can we address the issues of financial fraud within councils? RQ5: Who should we hold accountable for poor financial performance within the councils? Addressing those concerns and from the data gathered, it suffices to conclude that Georgopoulos pathway theory which is a bad managerial instrument practiced by some council staff should be avoided by management because it sees favoritism as path to success. Eroding dissatisfaction (Hygiene) and replacing it with satisfaction (motivation), Herzberg’s two factor theory will guide the management towards financial success.

Exploring Improvisation in Audit Work through Auditors’ Response to COVID-19

This paper explores auditors’ responses to unexpected, systematic changes in circumstances. We use the COVID-19 outbreak, a “critical incident” that disrupted all year-end audits in China, to understand this underexplored research area. Based on 24 semi-structured interviews, we first describe how COVID-19 disrupts both formal and informal aspects of audit (i.e., those documented in audit plans according to auditing standards, and those not documented in audit plans). Applying an improvisational lens, we find that in response to disruptions, auditors had to improvise by designing and executing new actions concomitantly to maintain quality and ensure timely audits: auditors modified sequence of audit process, changed format of audit procedures, and produced new behavior. We show that auditors’ improvisation is based on their mobilization of organizational memory, and we discuss consequences of auditors’ improvisation. Our findings suggest that computer-mediated communications with enhanced channels (e.g., audio or visual channels) only partially mitigate the disruption of face-to-face interactions with clients and within teams, while generating additional efforts to establish mutual understanding of files, status, and actions to be taken. Our evidence and discussion of how auditors’ improvisation changes with local versus non-local clients also provide insights regarding the role and setup of local offices.

The extent to which participants in the indonesian legislative elections obey the rules

This study aims to evaluate the extent to which the compliance of legislative candidates as participants of the 2019 Indonesian general election is related to the rules for reporting campaign funds. To achieve this objective, this study uses election rules indicators that relate to the rules of campaign finance reporting with reference to 21 indicators according to Law No. 7 of 2017 concerning General Elections in the Republic of Indonesia along with all derivative rules. Based on the rules that apply in Indonesia, general election participants who do not comply with the rules for reporting campaign funds can be canceled from the process of election as legislative members. In other words, the results of the compliance audit which concludes that a legislative candidate does not comply with the rules for the reporting of campaign funds could be canceled as a legislative member. This study uses the “X” Political Party legislative members from South Kalimantan Province, including legislative candidates for the DPR-RI, Provincial DPRD, and district/city DPRD. The total number of legislative candidates from Party X is 11 for the DPR-RI from 2 electoral areas, 55 for the Provincial DPRD from 7 electoral areas, and 296 for district/city DPRDs from an average of 5 electoral areas for each district/city. By setting a sample of 20% of the population, this study ended-up with 74 legislative candidates as the sample., i.e, 3 DPR RI legislative candidates, 11 legislative candidates for the provincial DPRD, and 60 legislative candidates for district/city DPRD. Descriptive analysis method is used to answer the problems in this study. Evaluation of compliance with the reporting of campaign funds is carried out by using compliance audit procedures through review of existing supporting documents and interviews with legislative candidates who are selected as the sample as confirmation procedure. The review of documents is carried out carefully and thoroughly to evaluate whether the legislative candidates from political parties follow the rules in the mechanism of reporting the campaign funds for the period February 20, 2018, until April 25, 2019. After the entire evaluation process conducted in May 2019 has been completed, this study concluded that in general, the legislative candidates adhere to the rules of campaign funds reporting in accordance with applicable laws and regulations. This study does not find any material deviations from applicable laws and regulations.

Central Environmental Supervisors and Departure Audits of Outgoing Local Government Officials’ Environmental Accountability: An Analysis Based on Game Theory

The establishment of central environmental supervision system (CESS) and the departure audits of outgoing local government officials are major environmental initiatives established by the Chinese government during the 18th National Congress of the Communist Party of China in 2012. Their aim is to separate the different environmental responsibilities of the local and central governments. In just one year, central environmental supervisors inspected 30 provinces’ and cities’ environmental performance and punished many local officials for their failures to fulfil their environmental responsibility as part of a national pollution crackdown. Inspired by the significant and profound effects of the environmental audits, we construct a tripartite game model involving the central auditors, environmental whistle-blowers and local government officials. We show that local government officials are more likely to act responsibly and that auditors adopt more detailed auditing procedures due to the involvement of whistle-blowers. This suggests that the central environmental supervision system must be institutionalised, legalised, normalised and focus on protections for whistle-blowers. Environmental audits are useful for focusing on departing officials’ accountability for environmental protection. We urge the government to strengthen the transparency of audit and to distribute environmental audit information on social media.

Environmental-economic aspect of sustainable development of industrial enterprises of regions of Ukraine

The features of development of industrial enterprises of Ukraine are considered in the article taking into account ecological-economic aspect. The advantages and disadvantages of integrating national industry into a single ecological and economic space are considered. The ways of restoration of potential, development of industrial regions of Ukraine are offered. The basic directions of development of industrial production which, should become the basis not only of formation of budgets of different levels, investment attractiveness of national producers, but also a basis for the development of regional and state programs of sustainable development, the program of taking of economy of Ukraine to a new qualitative level are singled out. These problems are related to the improvement of the environment and its stabilization, the achievement of a balance between economic growth and the environmental situation, the creation and implementation of a system of rational use of natural resources. There is a need for a transition to intensive development, which involves finding ways to use existing resources rationally to meet the ever-increasing needs of humanity. The article also gives directions of interaction of industrial enterprises with the public sector in order to prevent negative consequences and sustainable development of industrially loaded regions. The issues of state regulation of industrial development are covered. The task of socio-economic development and the establishment of Ukraine as a high-tech state, asking into account the global experience of applying the environmental audit procedure in previous years, and to step up activities in this area in order to prevent environmental and economic crises in industrial regions. The stages of carrying out ecological audit are specified, in order to give greater economic attractiveness of industrial production of the region in the international markets and attraction of foreign partners. The stages of carrying out ecological audit are specified, in order to give greater economic attractiveness of industrial production of the region in the international markets and attraction of foreign partners. The necessity of applying a rational combination in meeting the needs of mankind and breaking the ecosystem balance is highlighted.

Planiranje i izvođenje interne revizije u praksi u privatnom sektoru

During the data collection process to understand and assess risk, internal auditors gain significant insight into operations and opportunities for improvement that can be extremely beneficial to the organization. This paper presents valuable insights into practical work that will assist internal auditors in the process of planning and conducting internal audit in the private sector. In the process of internal audit, it primarily starts from planning through the creation of an audit universe that includes a list of all potential audits based on risk and exposure assessment. The chief audit executive develops an annual action plan based on the audit universe. The annual plan should be broken down into four quarters and each defined audit should be arbitrarily assigned to one quarter. The beginning of the process of the planned audit begins with preparatory activities that include defining the objectives of the individual audit, preparation of a detailed schedule of the individual audit, conducting a preliminary survey. What follows is that audit sampling techniques (defined as the application of audit procedures to less than 100% of items within a class of transactions or account balance so that each sample unit has a chance to be selected) perform sample selection from the population. According to the selected model, the audit is approached on the basis of which the opinion of the internal auditor is issued in the created engagement report.

Qualified Audit Reports of Local Authorities in the Northern States of Malaysia

The reliability of information presented in the financial reports of local authorities is of utmost importance to enable the public to measure their performance in terms of efficiency and effectiveness in using public resources. The task to provide such an assurance lies with the Auditor General, who has been entrusted to enforce the auditing compliance regulations. A certificate in the form of “unqualified,” “qualified,” “adverse,” or “disclaimer” accompanied by a report on the financial affairs of the local authorities concerned will be issued after the Auditor General completes the audit of the local authorities’ financial statements. Our study on 14 local authorities comprising municipal and district councils in the Malaysian States of Perlis, Kedah and Penang found that the Qualified Certificate is the common type of audit certificate issued to the local authorities concerned during the period 1997-2001(inclusive of both years). Discrepancies in “Fixed Assets Register” ranked first among the audit incidents that led towards non-compliance to the audit procedures. This was followed by discrepancies in “Other Receivables” and “Cash Flow Statements” which ranked second and third positions respectively. Our finding also shows that size does not grant any advantage to the bigger local authority in reducing the number of audit incidents.

ANALYSIS OF AN AUDIT AND EXPERTISE IN A CIVIL CONSTRUCTION COMPANY LOCATED IN THE CITY OF MANAUS/AM

This article aims to emphasize the importance of Auditing and Expertise with civil construction companies, as well as to investigate whether Internal Audit systems can be considered as a tool in management procedures. Due to the fact of the constant growth in the last years of the companies are linking the concept of Strategic Management to the existence of a specific branch of the new administration, which reflects in the main objective that is to know the biggest obstacles that deprive the companies of civil construction to adopt the audit as a management tool for the purpose of ascertaining the procedures adopted by company managers. For this, a comparative analysis was performed between the literature review and the opinion of the managers of the organizations, through semi-structured interviews. The research problem was adopted qualitatively using books, articles, dissertations, legislations and manuals to support the analysis of the contents from 2009 to 2019. Finally, there is a need for transparency in procedures. In this context, there are tools available to organizations for systematic use. In this sense, Internal Audit should be understood as a Strategic Management instrument that completes the objective, systematic and periodic assessment of companies. This tool can and should be extended to the entire organizational structure of the company. In other words, it can be stated that Internal Audit procedures aim to ensure the financial protection of an organization through correct accounting practices.

ОЦІНКА ПОТЕНЦІАЛУ АУДИТОРСЬКИХ ФІРМ В КОНТЕКСТІ ВИЯВЛЕННЯ ЕКОНОМІЧНИХ ЗЛОЧИНІВ

The article proves that the number one issue in the development of the information society is not the amount of information, but its quality, and it is the audit of confirmation of this quality through the assessment of the risks of its reduction. It is specified that in this direction it is important both the innovative method of auditing the financial statements for quality, and the resources needed to perform all defined audit procedures. It is revealed that according to the model the content of audit tasks changes, and there is a need to transform its methodology. The impact of negative financial reporting and auditing results on the securities markets was assessed by studying corporate scandals in Ukraine and the world. The characteristics of corporate scandals in terms of falsification of financial statements and methodology and organization of audit are given. The directions of transformation of institutional audit support as a tool for evaluating financial statements and its results as components of the information resource for internal and external users are identified. The analysis of the legal framework in the field of quality control of services provided by audit entities allowed to form the institutional aspects of quality assurance of audit activities and to establish the functional features of the relevant institutions. The organizational-hierarchical interrelations are defined, and also the functional value in system of maintenance of quality of auditing activity of subjects of regulation of auditing activity in Ukraine is defined. The relationship between the quality of the audit and the audit of the quality of financial statements is substantiated. It is established that the key resource of economic activity of the audit firm is the labor resources that form the human resources and determine the quality of the audit service. It is characterized that the quality of the audit service depends on the effectiveness of the audit entity as a subject of external independent financial control in the context of the relevant public functions and as a business entity whose main purpose is to make a profit. It was found that the efficiency of use and formation of economic resources by the audit firm depends on all the effects associated with its operation.

Effect of Task Complexity, Role of Whistleblower and Investigative Auditor's Ability on the Effectiveness of the Implementation of Audit Procedures in Proving Fraud

The news about the number of arrests conducted by the Corruption Eradication Commission is one proof of the high level of corruption in Indonesia. The fact that there are still many cases of fraud or fraud that cannot be detected due to the lack of effectiveness of auditors in carrying out audit procedures. This study was conducted to try to determine the effect of task complexity, the role of the Whistleblower and the ability of investigative auditors to the effectiveness of implementing audit procedures in proving fraud. This research will be conducted using a survey conducted with a questionnaire instrument that is first tested for its validity and reliability. The population in this study were investigative auditors at the Lampung Provincial Audit Board (BPK) and the Lampung Province Audit Board of Finance and Development (BPKP), with a sample of investigative auditors or auditors who were and were able to conduct investigative audits. The update of this study is that in this study the authors used other variables that influenced the effectiveness of the audit procedures in the proof of fraud which were still rarely examined in previous studies, namely the variable task complexity, and the role variable whistleblower. Another difference in research is the population used in research.