Internal Audit Activities Research Articles

Evaluation of Learning Management Standards to Improve Higher Education Quality Standards Through Internal Quality Audits

Independent evaluation is required through an internal quality control system through internal quality audit activities. This study evaluated the achievement of learning management standards, inhibiting factors, and recommendations for improving education quality standards at Palembang Polytechnic. This type of qualitative research uses observation methods, structured interviews, and literature studies. The research instrument is the author directly involved in the research. The informants in this study were determined using a purposive technique: three research informants. The study’s results obtained data on implementing internal quality audits on learning management standards that have not been implemented. An effective internal quality management model is needed as a platform or application that supports collecting, storing, and managing data and information on website-based internal quality management system services to support fast, precise, and efficient internal quality management system integration.

MONITORING ACTIVITY IN THE RISK-ORIENTED INTERNAL AUDIT: A MODEL PROPOSAL

The purpose of this article is to make a proposal for process development for monitoring activities in a way that includes experiences gained from audits conducted in order to achieve the goal of risk-oriented internal audit function in institutions and to contribute a guiding study on the subject to the literature. In this study, first of all, the risk-oriented internal audit approach and monitoring process are explained with the document analysis method, and then a model for the monitoring process is presented and conclusions and recommendations are made. By using the document analysis method and the features of the risk-oriented internal audit approach, an original application process was compiled to test the risk and control processes for the internal audit activities required for an effectively functioning monitoring system. It is suggested that risk- oriented internal audit will be an important tool in increasing the added value for institutions with the monitoring system designed for risk- oriented internal audit activity, which examines the processes and offers suggestions for areas of development in order to ensure that all financial and non-financial resources are used effectively, economically and efficiently and to add value to the work of the organization.

Applying The Six Sigma Methodology To Enhance Accounting Information Quality And Boost Tax Revenue- An Applied Study

The purpose of the research was to boost tax revenues and enhance the accuracy of accounting information by implementing the SIX SIGMA technique. In order to gather primary data from the study sample, which consisted of (148) personnel in the quality and internal audit departments or the representatives of them in the Iraqi General Tax Authority, a questionnaire with (148) items was created. The study came to several conclusions, chief among them being that Six Sigma standards—which include senior leadership commitment and support, feedback and measurement, continuous improvement, processes and systems, and human resources—have a major influence on enhancing the degree of accounting information quality and collecting tax revenue (internal audit activities management, risk management evaluation, planning and carrying out the audit procedure, and sharing the findings) at a significant level (0.05). The report advised focusing on the Six Sigma idea and showcasing its potential for reducing mistakes, enhancing the caliber of accounting data, and boosting tax revenues.

Peranan PT IMC Ship Management Selaku Auditor Internal Terhadap Safety Management System di MV. Dewi Shinta Manggala

Internal audit activities are carried out to meet and implement the Safety Management System (SMS) rules so that safety on board ships is implemented in accordance with the ISM Code. In addition, an internal audit conducted by a shipping company can minimize the findings of an external audit of the Safety Management System (SMS). The purpose of this research is to find out the implementation process, obstacles and solutions for the implementation of MV internal audit. Dewi Shinta Manggala. The method carried out in this study is qualitative descriptive. Data collection was carried out by in-depth interviews, observations, and documentation. The results of the study show that the obstacles faced in the obstacles experienced in the internal audit process are the unsuitable time between the ship's schedule and the auditor resulting in delays, crew ratings that are not optimal in implementing the Safety Management System (SMS), and the crew's understanding of the Safety Management System (SMS) on board the ship which is considered to be still lacking. So that the efforts that must be made, namely the company's internal parties communicate well with each other, the company gives strict sanctions to crews who do not optimally implement SMS, the company requires crews to attend SMS training.

Independence and objectivity of internal auditors within provincial governance systems

The study addresses the dearth of research on internal audit activity independence (IAAI) and internal auditors' objectivity within South Africa's (SA) provincial governance systems, despite their crucial role in government department performance. A mixed research approach was employed, using 260 purposely selected participants. Questionnaires, telephone interviews, and focus group discussions were used as data collection instruments. A triangulation of descriptive statistics and thematic analysis was applied to report the findings. The study found that management is not taking timely corrective action based on audit findings and recommendations. Internal auditors have friendship relationships with auditee employees, sectional heads are not cooperating with the internal audit function (IAF), and management has a negative perception of the IAF, viewing it more as a fault-finder than as adding value to the organization. Furthermore, the study's insights offer practical implications for improving internal audit practices within provincial governance systems, thereby facilitating better governance and operational efficiency.

Internal Audit Practices and Quality of Financial Reports of Listed Consumer Goods Manufacturing Firms in Nigeria

The quality of financial reporting has remained an issue of significant concern among professional accountants, regulators, and other users of financial information. This is because financial reporting has been a principal means of communicating result of financial transactions and events which transpired within the organization. To that end, this study investigated the relationship between internal audit practices and financial reporting quality of consumer goods manufacturing in Nigeria. The research design used in this study was descriptive survey. The targeted population of this study consists of all the twenty-one (21) listed consumer goods manufacturing firms in the Nigerian Exchange Group (NGX) with a respondent total of two hundred and ninety (290). The sample size of the study consists of ten (10) consumer goods manufacturing firms that have branches in South-South, Nigeria using purposive sampling technique. The study employed primary data sourced from questionnaires administered to the respondents and two hundred and fifty-one (251) representing a response rate of 86.6% was used as sample size for the study. The study used content validity and Cronbach alpha reliability test was used to determine the statistical reliability of the instrument. Descriptive statistics such as frequencies, percentages, means, and standard deviations and spearman rank correlation were used in data analysis. Findings indicated that a positive and significant relationship between internal audit control mechanisms and timeliness of financial reports, a positive and significant relationship between internal audit risk management and timeliness of financial reports, and a positive and significant relationship between management support and timeliness of financial reports of consumer goods manufacturing firms in Nigeria. Based on the findings, this study concluded that, internal audit practices positively and significantly influence financial reporting quality of consumer goods manufacturing firms in Nigeria. The study recommended amongst others that consumer goods manufacturing firms in Nigeria should adopt the effective use of internal audit activities since it has positive and significant influence towards an improvement in financial reporting quality.

A hybrid decision support framework for planning a risk-based audit engagement

Internal audit engagement planning is a fundamental component of internal audit activities, and a poor plan can impair the audit quality. However, studies on internal audit engagement planning have limited exposure in the literature. To the best of our knowledge, a comprehensive and robust model has not been established to address the decision-making problems associated with the audit engagement planning process. To fill these gaps, an integrated multi-stage framework is presented for developing a risk-based audit engagement plan. The designed framework includes three stages to carry out the decision procedure. First, a combined method of best worst method and weighted probability-impact score is used to evaluate the risk exposure. Second, risk assessment results are integrated into the weighted multi-choice goal programming (WMCGP) model for selecting the audit scope and allocating budgeted audit hours. Third, WMCGP model assigns audit staff to the selected audit scope to satisfy auditor preference and fitness. Two real-life case studies illustrate that the proposed framework is a useful tool for selecting the critical audit scope and deploying appropriate resources. The research results outperform the manual procedures, enabling the audit team to use constrained resources more effectively and efficiently.

Does internal audit function outsourcing policy matter for environmental, social and governance performance score? Evidence from Bursa Malaysia

Purpose Anecdotal evidence indicates the internal audit function may be crucial in supporting the implementation of ESG practices and reporting. However, thus far, no study has been empirically conducted to check how and why internal audit function might affect ESG performance. This study aims to address this gap by examining whether the internal audit budget is positively related to the ESG performance of Malaysian listed firms. It also explores whether the sourcing arrangement of the internal audit function can moderate the internal audit budget – ESG nexus. Design/methodology/approach The secondary data for the paper is extracted from two main sources, namely, the Thomson Reuters Eikon database and firms’ annual reports that were downloaded from the Bursa Malaysia website. The final sample consists of public firms listed on Bursa Malaysia over the period 2010 to 2019. Multivariate tests are used to examine the linkage between the variables. Findings The results show that the relationship between the annual internal audit budget and ESG performance is contingent on the sourcing arrangement of the internal audit function. Specifically, the results show that the annual internal audit budget has a positive impact on ESG performance for firms with an in-house internal audit function but not for firms outsourcing an internal audit function to external providers. Overall, the results suggest that the annual internal audit budget promotes ESG performance for firms performing their internal audit activities internally. Practical implications The findings of this paper provide a strong motivation for authorities in Malaysia to develop new policies and rules aiming at ensuring that internal audit departments are adequately resourced to function effectively, thereby promoting corporate ESG performance. Moreover, the findings may be useful in informing the board of directors and other policymakers that establishing an in-house internal audit department assists in advancing corporate sustainability performance. Social implications The findings of this paper suggest that investors, creditors and other stakeholders should link ESG reporting with the attributes of the internal audit function and outsourcing arrangement when evaluating firm performance. The total annual costs allocated to the internal audit function coupled with the outsourcing arrangement by an external provider should be considered for the overall assessment of the ESG performance and provide additional warranty towards corporate goals’ achievement and sustainability for the society. Originality/value This study extends previous studies on the determinants of ESG performance by focusing on two crucial aspects of the internal audit function: the annual budget and the outsourcing arrangement, a hitherto largely unexplored mechanism by the existing literature.

The Role of Internal Audit in The Merger and Acquisition Process to Provide Added Value: A Critical Review

Purpose – This research focuses on how internal audit influences added value in the merger and acquisition (M&A) process. One of the internal audits provides value added by doing due process diligence For M&A transactions. The failure rate in creating value for companies and shareholders through M&A is still relatively high. Factors contributing to such failures include cultural differences between organizations, overly optimistic decisions based on market assessments, overestimating synergies, and inappropriate technology assessments. In overcoming these risks, the role of internal audit becomes crucial. This research underscores how internal audits can aid in recognizing and addressing the risks linked to M&A, particularly during the strategy, feasibility assessment, and results integration implementation phases. Methodology – This research uses descriptive qualitative analysis methods Findings – Research demonstrates that internal audit plays a vital role in guaranteeing the seamless operation of the M&A process. Internal audits help identify the various risks involved in the M&A process, from market and financial risks to legal and cultural risks. In addition, internal audits also provide recommendations for improvements needed to ensure that the M&A process runs according to the company's plans and goals. Thus, the contribution of internal audit is significant in ensuring the success of every M&A transaction carried out by the company. Originality – This article comprehensively discusses internal audit activities in the M&A process so the internal audit activity can add value to the company.

Analysis Concept of Independence of the Sharia Supervisory Board in the Sharia Banking

The Sharia Supervisory Board is obliged to direct, review, and supervise the activities of financial institutions so that it can be believed that they comply with Islamic sharia rules and principles, the fatwa of the Sharia Supervisory Board rules binding the Islamic financial institutions. The Shari'ah Supervisory Board has a heavy and strategic task so it takes a high professional to live it. The objectives of this research are: To find out the role of the Sharia Supervisory Board in supervising and handling the issue of Compliance with Islamic principles in Islamic Banking; To find out the obstacles faced by the Sharia Supervisory Board in upholding sharia economic principles in Sharia Banking; and to find out the steps shown by the Sharia Supervisory Board in upholding the principle of Independence in Sharia Banking. This research uses a conceptual approach that explains the concept of the independence of the Sharia Supervisory Board in carrying out sharia supervision activities in sharia banking. The result of this research is that Supervision in Sharia Banking is carried out to ensure the suitability of all bank operations with sharia principles and rules, namely by issuing fatwas, rules, and directives in fiqh issues which are used as guidelines for management in operating Islamic banks. With regard to independence, members of the Sharia Supervisory Board must not be part of the employees of the Islamic bank. Although he was appointed by the General Meeting of Shareholders, however, the matter of approval must come from the National Sharia Board. The Shari'ah Supervisory Board also has a work system and certain tasks as do other oversight bodies. The absence of influence from directors, commissioners and employees in Sharia Banking is able to shake the decision of the Sharia Supervisory Board in assessing fund distribution and internal audit activities in the Sharia compliance report in Sharia Banking.

The Impact of Internal Audit System on Good Corporate Governance, a Study of Tertiary and Second Cycle

Internal audit has been in increasing demand in both the public and private sectors because it has impacted a lot by instituting several rules and control measures to guide their operations, especially in tertiary and second-cycle institutions. The main purpose of the research was to assess the impact of the internal audit system on good corporate governance through a study of tertiary and second-cycle institutions in Wa, Upper West Region of Ghana. The main objective of the study is to assess the impact of the internal audit system on corporate governance. Nonrandom (purposive) and random sampling techniques were employed in the study. The population was internal auditors and management at four tertiary institutions and one municipal education office, making a total population of 5. The sample size was made up of 10 respondents, consisting of 5 internal auditors and 5 management staff. The study revealed that internal audit activities help promote good corporate governance by focusing on compliance with laws and regulations and also evaluating fraud and errors. Also, the study found that the internal auditors play a key role in their institutions, and most of these institutions have inadequate audit staff. It is recommended that the internal audit units be provided with enough staff in order to be able to do their work effectively and on time. Internal auditors need to be adequately resourced, especially in the use of appropriate technology, rather than focusing too much on traditional systems.

Impact of Digital Transformation on Internal AuditAn Applied Study on The Egyptian Central Bank

The world is currently witnessing a widespread digital revolution, which is having a profound impact on all aspects of life, including the financial sector. In this context, digital transformation has become a necessity for financial institutions, including banks. This research aims to test the impact of digital transformation technologies on the internal audit function and financial inclusion in Egyptian banks. To achieve this goal, a field study was conducted on a sample of Egyptian government-owned commercial banks. The study found that there is a strong impact of the application of digital transformation mechanisms in banks on the development of internal audit procedures, through the following: (a) Improvement of the efficiency and effectiveness of internal audit activities: Digital transformation technologies help to analyse data faster and more accurately, which contributes to the faster and more effective detection of potential risks. (b) Increased transparency and accountability: Digital transformation technologies help to provide easier and faster access to financial and administrative information, which contributes to the enhancement of transparency and accountability in financial institutions. (c) Support for achieving financial inclusion: Digital transformation technologies help to provide banking services in a simpler, faster, and more efficient manner, which contributes to achieving financial inclusion. Keywords: Digital transformation, banking sector, Egyptian Central Bank

Bibliometric Analysis of Academic Studies in the Field of Internal Audit and Determination of Factors Affecting their Citations

Internal audit activities are vital for the continuity of businesses. This situation is carefully followed by the researchers. Therefore, researchers carry out academic studies on the effectiveness, efficiency, etc. of internal audit. This study is carried out in order to make a bibliometric analysis of academic studies in the field of internal audit and to determine the factors that affect the probability of being cited. In the research, 226 articles published on the Dergipark platform in the period of 2013-2022 are included and the citations to the studies are obtained from Google Scholar. In the evaluation of the data, bibliometric analysis and logistic regression analysis methods are used. As a result of the bibliometric analysis, the most studies are carried out in 2019 with 37 articles. 226 studies published in the 2013-2022 period received 1,350 citations in total. 92% of the studies are published in Turkish and 8% in English. It is determined that studies with 3 authors received more citations. When the citations from the published studies are examined, it is determined that the other category is in the first place in terms of total and international citations, and the full professor category is in the first place in terms of national citations. The keywords of 216 (95.6%) of 226 articles within the scope of our study include the phrase "internal audit". In the logistic regression analysis of the citation probabilities of the articles included in the review, it is found that there is a positive and significant relationship between the age of the article, presence of the phrase "internal audit" among its keywords, at least one of the authors being a full professor, the number of downloads from the Dergipark platform and the probability of being cited. On the other hand, it is determined that the language, type, number of authors, number of pages, number of keywords, inclusion of the phrase "internal audit" in the title of the article, indexing of the journal in which it was published in the TR Dizin and the number of references do not affect the citation potential.

Case Study: Internal Audit's Contribution to Financial Sustainability in Self-Financing Units

The aim of this research is to demonstrate the role of internal audit activity in achieving financial sustainability in self-financing units, and to achieve the objectives of the research and test its hypotheses, we conducted a case study in municipal institutions in Nineveh Governorate. One of the most important findings of the study that the researchers reached was the weak role of internal audit in achieving financial sustainability, the lack of adoption of modern internal audit objectives, and the lack of a clear program for internal audit prepared according to sustainability. The study concluded with a number of recommendations, the most important of which are: Activating the internal audit advisory services with regard to the financial sustainability of the unit, directing its expenditures and maximizing its revenues, and the internal audit should measure the financial sustainability of the financial reporting information through specific quantitative measures.

The Use of Continuous Audit to Improve the Effectiveness and Efficiency of Internal Audit Activities: A Practical Study of Distribution Sharia Company in Indonesia

The implementation of technology has encouraged internal auditors to develop continuous audits as a practical method for obtaining useful information from a set of company electronic data related to internal audit activities at all stages. Continuous audit methods allow internal auditors to process the entire population of transaction data to identify risk and internal control weaknesses that are more likely to be the subject of an audit finding. XYZ is a distribution company that continues to expand its business with more than 200 branches in Indonesia especially in sharia business. However, a large number of branches and transactions face limited internal auditors, high audit costs, low levels of audit coverage, and potential human error, which are an obstacle. This research is a design science that proposes the use of DMADV six sigma methodology as a problem-solving method to enhance the effectiveness and efficiency of internal audit activity by applying technology and audit concept in the continuous audit system. This research revealed that the internal audit cost can decrease by 45,5% to IDR 528.000.000 and audit coverage can increase by almost double to 86,3% in a year.

The Influence of Blueprints on Internal Audit Monitoring System (IAMS) Application Development


 The Digitalization era shows increasing application developments, both at the individual, group, and corporate levels. One of the corporations or companies involved in this Digitalization development is PT Pelindo Terminal Petikemas. The need for auditing activities arises to ensure that the company's business processes comply with regulations and policies. To fulfill the audit working papers, the Internal Audit Division of PT Pelindo Terminal Petikemas has developed IAMS (Internal Audit Monitoring System), a web-based application that plays a role in digitizing the auditing process. However, the absence of a blueprint or master plan for this application has become a constraint in its development, as there are still features that are not fully optimized when used. This research is conducted to identify the deficiencies in the application caused by the absence of a blueprint and to emphasize the importance of creating a blueprint in the application development process. The research adopts a descriptive qualitative approach and tends to use analysis. The primary data for this research were obtained through interviews and literature studies, and bibliographic references were used to compile the literature. The research findings conclude that the IAMS (Internal Audit Monitoring System) application must still be fully optimized to assist the company's internal auditing activities. One of the reasons for its suboptimal performance is the lack of a blueprint, which would facilitate the application's development and serve as a direction and master plan for designing an application.
 
 DOI: https://doi.org/10.5281/zenodo.8415610

THEORETICAL AND PRACTICAL ASPECTS OF INTERNAL AUDIT ACTIVITY IN BUDGET ORGANIZATIONS

This article discusses the theoretical and practical features of internal audit activities in budgetary organizations.

Factors of Effective Internal Audits for Patient Safety in Primary Health Care Centers of Taif, Saudi Arabia

Introduction: Internal audit is one of the tools to ensure safety in patient care. Literature on the internal audit effectiveness (IAE) in patient safety is scarce in Saudi Arabia. This study therefore aimed to assess the factors which influence the IAE in patient safety. Methods: A cross-sectional study was conducted among primary healthcare centers’ general directors and medical directors in Taif, Saudi Arabia. Data were collected using a validated structured questionnaire in Arabic and English. The questionnaire besides sociodemographics characteristics collected data on support of management, interdepartmental coordination, independence, objectivity, competence, and IAE. Analysis was done on SPSS version 26.0. Pearson correlation was used to see the relationship between factors and the IAE in patient safety. Results: A total of 94 participants were included in the analysis. The mean scores in each of the domains on a scale of 5 were; support of management 4.04, interdepartmental coordination 3.95, independence 4.03, objectivity 4.20, and competence 4.46, while for the IAE the mean score was 4.36. Correlation analyses found that the IAE was significantly associated with all five factors. All the factors had moderate association except for objectivity which had a weak correlation with IAE. Conclusions: Overall, there were satisfactory scores for the factors which affect IAE with room for further improvement. All the factors studied were positively associated with the IAE, indicating a need for healthcare organizations to consider these factors while planning internal audit activities. Further research on large scale is required to provide robust and generalizable results.

A study on university staff s perspective on the harmonization of the internal audit system within the framework of International Internal Auditing Standards

Purpose- In this study, it is aimed to determine the problems experienced during the implementation of the internal audit system in state universities, which are a public administration, within the framework of international internal audit standards. Solution suggestions were made to the identified problems. In this research, a field study was conducted to determine the perceptions of senior supervisors working at Dicle University about the internal audit system at the university and their thoughts on compliance with international auditing standards. Methodology- The application part of the research consists of two parts. The first part consists of 5 questions to determine the demographic characteristics of the personnel participating in the research. In the second part of the research, it consists of 26 statements that will determine the opinions of the personnel on the harmonization of internal audit with international internal audit standards within the scope of the study. Findings- In general, it is seen that the participants of the research have an indecision about their working statements. Particularly, while disagreement comes to the fore in statements about international auditing standards, it is observed that the state of agreeing with statements about the role of internal auditing has increased. Conclusion- As a result of this study, it is thought that the internal audit activities of the university staff are insufficient, there is not enough internal auditor in the university and the information about the internal audit activities is insufficient. In particular, the university should attach importance to the awareness-raising activities of the senior management personnel regarding internal audit. Because internal audit activities directly contribute to the efficient work of university personnel. Therefore, in-service training activities should be increased to increase the efficiency of internal audit units in universities. In addition, it is seen that there are not enough internal audit personnel in universities. In particular, universities should allow more internal auditors to work on this issue. Keywords: Internal auditor, internal audit, international internal audit standards, university staff, Law No. 5018. JEL Codes: M40, M42, M49

A multi-objective optimization approach for integrated risk-based internal audit planning.

Annual audit planning is a multi-criteria decision-making problem faced by internal audit departments of all organizations. Due to the constrained audit resources, the planning process primarily involves the analysis and evaluation of complex factors for selecting auditable units that maximize the full potential of internal audit. Previous research on internal audit planning only focused on the goal of risk minimization and applied ranking methods to prioritize alternatives. In order to enable internal audit activities to add more value to the organization, the integrated risk-based internal audit planning is proposed to assist audit department in achieving multiple objectives in addition to risk management. Meanwhile, a multi-stage framework is proposed to support the development of such value-added internal audit plan. The new framework integrates the risk assessment of auditable units with the selection of audit activities and resource allocation through a combined analytic hierarchy process (AHP), fuzzy comprehensive evaluation (FCE) and weighted multi-choice goal programming (WMCGP) approach. The model considers both qualitative and quantitative decision criteria. A real-life case study of the development of an integrated risk-based annual audit plan is presented, and sensitivity analysis is performed to illustrate the validity of the proposed approach. The results indicate that the proposed framework is a useful tool for internal audit planning and the implications of the study can be extended to various selection and allocation problems.