Importance Of Internal Audit Research Articles

Determinants influencing the effectiveness of internal auditing and the responsibility of auditors in fraud detection in an emerging country

Internal audit has become an essential part of firms in the age of Industry 4.0 due to its ability to identify errors or violations leading to fraud in firms (Alzeban & Gwilliam, 2014; Cohen & Sayag, 2010). This study is conducted to investigate the relationship between variables such as the quality of internal audit, the capability of the internal audit team, the independence of internal audit, and the support of leadership on the effectiveness of internal audit (EIA). Specifically, the study also examines the relationship between the EIA and the responsibility of auditors in detecting fraud. Data were gathered through a survey of 325 questionnaires from joint stock firms in the context of Vietnam, using SPSS 22 software and SmartPLS 3.0 software to analyze the regression of influencing determinants. The results reveal that: 1) the quality of the internal audit, the capability of the internal audit team, the independence of the internal audit, and the support of leadership have an impact on the internal audit effectiveness; 2) the EIA, the responsibility of auditors, and auditor training have a positive and significant impact on fraud detection. Therefore, the importance of internal audit in identifying accounting fraud and the need for firms to design internal audit processes and training to improve the effectiveness of their operations are highlighted.

The role of internal audit in applying the self – assessment of internal control systems according to the COSO committee

The study aimed to demonstrate the role of internal audit in the self-assessment of internal control systems according to the COSO framework represented by (control environment, risk assessment, control activities, information and communication, monitoring, setting goals, setting events), in addition to standing on the importance of internal audit in self-assessment . The study was distinguished by its descriptive approach in presenting and analyzing the results, through the design of the questionnaire as a tool for the study, and it was distributed to a sample of accountants and auditors working in a sample of bank branches operating in Sulaymaniyah Governorate, as (122) forms were distributed, and (109) were recovered. Forms from them, where (100) forms were valid for analysis, i.e. 91.7% of the retrieved forms and 81.9% of the distributed forms. After applying the statistical program (spss) on it. The study reached a set of important conclusions, among them, it was found that the self-assessment system of internal control systems leads to the improvement and development of the components (removal) of internal control represented by (control environment, risk assessment, control activities, developing Events and objectives), and that the existence of an effective internal control operating under the plans, programs, procedures and laws will lead to the application of an efficient self-evaluation system. The study also delivered a set of recommendations, the most important of which is the need to strengthen the role of internal audit when applying the self-assessment system of internal control systems by tracking the internal audit department to the highest executive level in the organizational structure in banks as an independent administrative unit, and the need for local professional organizations to adopt the recent developments of the internal control framework. According to COSO

Uloga internih revizora u sprečavanju nastanka finansijskih prevara u Republici Srbiji

Financial fraud poses a significant threat to the stability and integrity of financial systems around the world. The Republic of Serbia, as an economy in dynamic development, is no exception to this challenge. This research paper investigates the key role of the profession of internal auditors in the fight against financial fraud in the Republic of Serbia. By exploring the practices and challenges faced by internal auditors, this paper aims to provide valuable insights and recommendations to strengthen the effectiveness of internal audit functions in detecting and preventing financial fraud. The importance of internal audit as a vital component of corporate governance and risk management was emphasized through a review of relevant literature and consideration of various activities of internal auditors and their role in preventing financial fraud. Internal auditors play a key role in assessing and monitoring internal controls, identifying vulnerabilities and making recommendations to mitigate fraud risk. Examining the legal and regulatory framework that regulates internal audits in the Republic of Serbia, the importance of implementing a strong control environment and effective monitoring mechanisms in preventing financial fraud is highlighted. The paper's conclusions highlight the specific challenges internal auditors face in the Republic of Serbia in preventing financial fraud, such as resource limitations, limited independence and insufficient awareness of fraud. The findings and recommendations presented in the paper can serve as a valuable resource for policymakers, regulatory bodies and organizations seeking to strengthen their financial fraud defense mechanisms and their internal audit function.

The importance of internal audit in increasing performance of microfinance institutions: The case of the developing country

The study aims to explore the role and importance of internal audit in increasing performance in microfinance institutions in Kosovo. The operation of microfinance institutions in Kosovo is a necessity to meet the demands of the people, households, and small businesses, who do not have access to financial banking services (Kupina, 2018). The presence of an internal audit body in the organization is a need and necessity for good governance and performance of the organization. This study was conducted in five microfinance institutions in Kosovo. The study is based on data collected from the field through a questionnaire (N = 80) conducted face to face with respondents, with both genders represented in microfinance institutions in Kosovo. The data collected from the field were systematized and analyzed in the SPSS program. Of the total number of respondents, 64% were male and 36% were female. Most of the respondents were economists (88%), lawyers (4%), IT (6%), and other professions (2%). The results of the study (96.3%) show that an internal audit is necessary for the organization. Also, from the findings of the study, we learned that (66.3%) internal audit positively affects good governance and performance of the organization

АНАЛІТИЧНІ АСПЕКТИ ВНУТРІШНЬОГО АУДИТУ НА ПІДПРИЄМСТВІ В КОНТЕКСТІ НОВИХ ТРЕНДІВ ТА ВИКЛИКІВ

The article is devoted to the study of the analytical aspects of internal audit in the context of new trends and challenges. The systematization of problematic aspects of internal audit has shown that the requirements for improving the analytical aspects of internal audit are becoming higher. These benefits can only be realized when internal audit not only uses data analysis techniques to automate individual audit procedures, but fully integrates these methods into the internal audit lifecycle. A survey profile has been built on which risk analytics can be based. The key risks for internal audit have been systematized. It will contribute to the improvement of its organization and allow the provision of risk-oriented and objective audit services, advice and professional opinion. There are many tools which can help to collect and manage data, and while this can provide exceptional opportunities for business decision making and development, it also poses the challenge of finding appropriate applications that meet the unique needs of an organization. The audit should assist in the creation, integration, and deployment to conduct appropriate audits and controls to ensure that it is fully fit for purpose and cost. It is substantiated that data analysis offers internal auditors a multidimensional view of data, which improves data transformation and enables proactive risk management, which is what the internal audit stakeholders expect. Attention is paid to the role and importance of internal audit in corporate culture, assessing the values and goals of the company. The research results have practical orientation, since a properly constructed internal audit system allows achieving stability in business development.

The importance of internal audit in the control system

The importance of internal audit in the control system

Research on the Current Situation of Internal Audit Outsourcing Service

Under the background of the rapid development of market economy, the competitive pressure among enterprises is growing day by day. In the continuous practice and exploration, enterprises realize the importance of internal audit. However, due to the fierce competition and the inherent defects of internal audit, more and more enterprises adopt the form of outsourcing for internal audit. However, there are still many problems because the internal audit outsourcing is in the initial stage. Therefore, this paper will theoretically analyze the advantages and risks of internal audit in all aspects, and put forward suggestions according to the analysis results.

Institutional Theory on Internal Audit Effectiveness The Case of India

The need and importance of internal auditing in Indian listed companies is increasing because of strengthening of corporate governance practices by regulatory bodies and the Indian market environment is becoming more competitive. This study attempts to determine some of the critical factors that affect the effectiveness of internal auditing in Indian listed companies. A final sample of 252 Nifty companies was drawn. We mailed questionnaires to the Head of Internal Audit department, Chief of Accounts and Chief Executive Officers of the company. The overall, response rate was 29.4%. Companies represented manufacturing, information technology, retail, banking and financial services. Using multiple regression technique, the study findings reveal that the factors that affect the effectiveness of internal auditing are ‘competency of internal audit staff’ and ‘interaction of internal auditing with audit committee’. Institutional theory best explains the effectiveness of internal auditing in Indian context. The study encourages auditing professionals to develop their core competencies for delivering their services efficiently and a continuous interaction with audit committee members will help them to be focused both on the organizational performance by improving the IA effectiveness. The implication of these findings for the practice and theory and direction for future research are also provided.

Improving the system of internal audit in banks

This article analyzes ways to improve internal audit in banks. The experience of Uzbekistan and international experience in internal audit are considered. The importance of internal audit in banks and the role of the bank in the sustainable operation are also mentioned. The article also examines various international research on internal audit. Based on the research and analysis, scientific conclusions and recommendations have been developed. This division of the banking system primarily determines the goals, objectives and position of the Central Bank and commercial banks. Commercial banks provide services to individuals and legal entities on a commercial basis. Internal audit is part of the ongoing monitoring of the bank's system of internal controls and of its internal capital assessment procedure. Internal audit provides an independent assessment of the adequacy of, and compliance with, the bank's established policies and procedures. It may help an organization accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

Use of information technologies in internal audit

The article reveals the essence and importance of internal audit in adding value to the organization and its stakeholders by assessing and providing recommendations for improving corporate governance, risk management and control, promoting economic efficiency, sustainable growth and financial stability. The main current trends in the development of internal audit on the use of modern technologies in auditing and the growing need for internal auditors to acquire knowledge and skills of IT technologies, work with big data, knowledge in the field of cybersecurity, analytical and critical thinking skills. Using the provisions of the International Standards for the Professional Practice of Internal Auditing, the functions of internal audit to assess the adequacy and effectiveness of controls in accordance with the risks in the field of information systems of the organization. It is emphasized that internal auditors must have sufficient knowledge of the key risks and controls of information technology, as well as technological audit methods, and some of them must have the competence of the auditor, whose main responsibility is the audit of information technology. The essence, evolution of the development of the concept of information technology audit, as well as its application in the management system of the business entity, are revealed. The classification of functional types of IT audits is covered, in particular: information security audit; IT quality audit; IT project audit; systems development audit; data analysis as part of the financial audit; audit of control measures; judicial audit. It is indicated that IT audit is a separate type of audit at the enterprise, and can also be part of the financial audit process. The advantages of using computer tools and technologies in the audit, which improves internal audit processes, as well as the need and prospects for the development of computerization in the audit, are considered.

A Model for Identification of Internal Audit Quality Criteria From the perspective of professional experts

A Model for Identification of Internal Audit Quality Criteria From the perspective of professional experts

ANALYSIS OF THE INTERNAL AUDIT SUBDIVISION ACTIVITY IN THE CORPORATE SECTOR OF THE REPUBLIC OF MOLDOVA

The actuality of the topic results from the importance of internal audit for owners, potential investors and creditors, as well as from the significance of internal audit as a basic element in corporate governance. At the present moment, there are no studies on the current situation and the role of internal audit in the country’s corporate sector. Therefore, the author intended to perform the analysis of the internal audit subdivisions activity in the nominated sector. For this, the relevant research directions have been established, the purpose of which is to study the qualitative characteristics of the internal audit subdivisions. The author has conducted a qualitative study, through a semi-structured interview, and the information analyzed represents the October-December 2019 period. The main results of the study show that the basic functional tasks of an internal audit are the classic tasks, such as safety assessment and the effectiveness of internal control; monitoring the process of liquidating the weaknesses of the internal control system; developing recommendations for improving the internal control system. Failure to comply with the provisions of ISPPIA has been observed. The factors that most influence the activity of the internal audit subdivisions are their insufficient provision with employees and the duration of obtaining the necessary information. It was discovered that independent external evaluations are not performed and planned in the analyzed economic entities, which proves the non-compliance with ISPPIA, due to the lack of need for such an evaluation and the relatively short period of activity of internal audit subdivisions.

Valuation of the internal audit mechanisms in the decision support department of the local government organizations using mathematical programming

The importance of internal audit and its impact on the organizations’ effectiveness raised public interest. This study focuses on the internal control mechanisms in the local government organizations (LGO). Specifically, the level of implementation of internal corporate control mechanisms in the Decision Support Department (DSD) of the LGOs is explored. On the basis of data analysis and processing of the results of the study, in which 93 civil servants took part, it is evident that the degree of the added value of internal audit in public organizations depends on the degree of its independency. Also, findings suggest that it is inversely proportional to the degree of compliance with procedures of the DSD. The analysis is extended by incorporating mathematical programming techniques for subset variable selection in order to minimize error values. Decision variables of the proposed models indicate which of the variables will be included in the regression model, to increase adjusted R2.

Reporting Structures and Financial Efficiency among Selected County Governments

Internal auditors face several obstacles including limited of independence, limited access to records as well as support and recognition by the management. The importance of internal auditing within the county government is underscored by noted irregularities including records inaccessibility, poor reporting structures and even incompetence of internal auditors within the county government expenditure. Therefore, the focus of this study was to examine the influence of internal audit independence on the financial efficiency of selected county governments. The study was guided by the specific objectives of; to evaluate the influence of reporting structure on the financial efficiency of selected county governments. The study targeted 423 respondents from the 9 county Audit Committee members of the 47 county governments in Kenya. The researcher sampled 126 respondents from the 14 (30% of the 47 targeted population of counties) counties which was purposively sampled regionally. Purposive sampling technique was used to get the 14 county governments. The survey involved collecting information by administering questionnaires. Data collected was descriptively analyzed using SPSS. Results was summarized using tables and presented in form of pie charts, graphs, and bar charts. The means of reporting structures and Financial Efficiency of County Governments were regressed. Findings revealed that the relationship of reporting structures and Financial Efficiency of County Governments variables which was linear, positive and significant. The correlation coefficient (R) of 0.470 implied a relatively weak relationship of reporting structures and Financial Efficiency of County Governments. The coefficient of determination, R-square of 0.221 implied that 22.1% of the variance in Financial Efficiency of County Governments was accounted for by reporting structures with the significance value of p = 0.000 which is less than 0.05. This findings will be of use in policy formulation, industry practice and research. Keywords: Reporting Structures, Financial efficiency, Internal audit independence DOI : 10.7176/RJFA/10-19-02 Publication date :October 31 st 2019

Internal audit and control in a company in the context of management activity

Entities pursuing their objectives focus on the smooth and efficient operations and processes, and optimum use of funds. For this purpose, an internal control system is being implemented in enterprises and organizations, one of the components among these systems is internal audit. The main objective of the internal auditor is to provide an independent and impartial assessment of the entity's performance and provide insights on how to improve its operations. Although internal audit is only part of the internal control system of the entity, it has to assess the proper functioning of the system itself, propose measures to make internal control more efficient. The state of internal control largely depends on the work of the internal auditor. Scientific problem. The scientific literature emphasizes the need to create an appropriate system of internal control of the entity, but for many supervisors and internal auditors internal audit and internal control still associate with the role of the inspector. A well-functioning internal control system reduces the work involved in the audit and risks that allow the internal auditor to devote more time to developing the entity's development prospects. Particular attention in the process of operational efficiency must be given to employees performing the functions entrusted to them, including them in the process of internal control improvement. Not only managers but also all employees need to deepen knowledge of the importance of internal audit and the necessity of reaching the goals set by the entity, not only managers but also all employees. The aim of the article: to analyze peculiarities of theoretical internal audit and control. In order to achieve the tasks: to analyze the concept of internal audit and control, and its variation; to research internal audit objectives. The object of the research: internal audit and control in a company. The methodology of the research: the systemic analysis of scientific literature and legislation

An Analysis of the Construction of Internal Audit System in Enterprise Groups

China is carrying on the reform of the economic system, the connection with other countries is becoming more and more close after joining the WTO, the property right structure in the enterprise has also realized the diversified development. With the continuous improvement of the system, the importance of internal audit is gradually embodied in this process. In this paper, through analyzing the development status of our country enterprise internal audit system and an urgent need to solve the problem at present, it is necessary for us to improve the personal accomplishment and level of the internal staff of the enterprise, pay attention to the internal audit system of the enterprise so as to realize the optimization and integration of the internal and external resources of the enterprise, the key point is to pay attention to the final situation of the internal audit of the enterprise, saving the cost of auditing.

INTERNAL AUDITING ROLE IN BANKS IN BOSNIA AND HERZEGOVINA

The role of internal auditing in banks in Bosnia and Herzegovina has been presented in this paper. Internal auditing as a relatively new profession is rapidly developing and its growing importance is an analysis of the manner and practice of internal auditing functioning in Bosnia and Herzegovina banks. The purpose of the research is elaboration of internal auditing based on risk estimation, new challenges which the internal auditing faces as well as analysis of practice and presentation of results of internal auditing functioning in Bosnia and Herzegovina banks. This paper gives a reply to the question how senior management and the employees in banks understand role, function and importance of internal auditing in them. Researches carried out for the purpose of this paper are searching for the answer to the question on what kind of internal auditing is meant in Bosnia and Herzegovina banks, what its role and importance are and what is specific in carrying out internal auditing in banks. We expect that our researches will make possible testing and proving the stated hypothesis: that internal auditing in banks can fulfill its role and help bank management to resist successfully the challenges they are facing only if they apply in their work modern, systematic approach to auditing focused on the process on risk managing to which the bank is exposed. In contemporary business conditions it has been evidenced that the approach of traditional internal auditing based on control is not adequate any more or sufficient and that it cannot give the needed support to those responsible for bank management, which is necessary for effective realization of goals.

The Role of Internal Audit in Continuous Improvement of Quality Management Systems at Private HE Institutions: A Case Study of Eurasia International University (Armenia)

The recent worldwide expansion of higher education and increase of the enrolment number, emergence of diverse educational providers, as well as various delivery modes continuously provokes the need for development of appropriate internal and external quality assurance mechanisms for different types of higher education providers. Private higher education is one of the most dynamic and fastest growing segments of postsecondary education at the turn of 21st century and, lacking traditions of quality provisions, the private tertiary institutions are challenged to build appropriate mechanisms from scratches. These institutions are urged in developing internal quality assurance systems to address the external controls and external accreditation requirements, as well as to face an increasing competition. The internal quality assurance systems set up by universities vary in scope, employed models (in case if used formal quality models at all), objectives, implementation methods etc. Implementing internal quality management systems for the sake of meeting the requirements of accreditation bodies, inherits the risk of symbolic adaptation of quality management rather than an embedded quality improvement system. Continues improvement is agreed by many experts on quality in education as a central element in achieving improvement. Yet, continuous improvement is observed as lacking in many HEIs. This research is aimed at exploring and examining the importance of internal audit for sustaining the implemented quality management systems and continuous improvement of private higher education institutions. It examines the emerging role of internal audit function (IAF) for quality and the importance of the internal audit for ensuring the continuous improvement of the private higher education institutions.

Organization and tasks of internal audit in domestic and foreign banks in Serbia

The paper attempts to determine the achieved level of internal audit development in Serbian banks, based on the referent Anglo-Saxon literature and practice. Empirical research has included the sample of 14 banks in the Republic of Serbia, out of the 32 banks, with the aim to seek the methods of organizing internal audit and its tasks within them. The subject of this study is to determine how managers and employees in senior positions in the bank understand the role and importance of internal audit. Based on the questionnaire responses, the aim of the paper is to make suggestions for the improvement of this important bank function. The research results indicate that the bank size does not affect the organization methods, responsibility, and tasks of the internal audit of the bank. The achieved level of internal audit development in financial institutions is at a much higher level compared to economic entities, but in many areas, it is behind the internal audit of developed countries.

The Role of Internal Auditors in Malaysian Local Authorities

Good governance is a precondition for competitiveness of a firm, market and economy. As part of the government machineries, local authorities also should observe and maintain good governance as they are entrusted with public money. Overseas literature has shown the importance of internal auditing in the management of local authorities. Additionally, local internal auditing literature also reveals the importance of internal auditing as important governance structure in organisation. With respect to internal audit function in Malaysia, Treasury circular 2/79 requires all government department including local authorities to establish internal audit department. It then was replaced by Treasury Circular 9/2004. The function and responsibility of internal auditors in government department are specified in that circular. This study provides empirical evidence on the existence and scope of internal auditing in Malaysian local authorities. The same variables used in the study done by Zakaria, Selvaraj and Zakaria (2006) are tested on internal auditors in Malaysian local authorities. The sample of this study consisted of head of internal auditor in local authorities of all states in the West Coast of the Peninsular Malaysia. Given the importance of internal auditing in every type of organisation, it is hoped that this study will benefit the institutions and its stakeholders in their effort towards establishing and maintaining good governance. © Common Ground.