Internal Audit Department Research Articles

Computer Assisted Audit Tools and Techniques Adoption: A Systematic Literature Review

Computer Assisted Audit Techniques and Tools (CAATTs) are a form of innovation in the field of technology in the world of accounting, CAATTs have become fundamental in many audit methodologies. However, there is still very little information regarding these CAATTs. This research is based on increasing knowledge about the success of CAATTs, this is useful for analyzing implementation and operational problems with a broader understanding of the practices contained in internal audit departments that use CAATTs technology. Therefore, we present a systematic literature review on the factors that determine an auditee to use CAATTs technology. This research was conducted using a qualitative analysis of the things that influence an audit to use CAATTs in the auditing process based on previous studies. The findings from this study indicate that what influences an audit to use CAATTs is time efficiency, work effectiveness, auditor confidence, company partners, processing accuracy, techniques and services, purchase costs, understanding of using CAATTs, background of the audit itself, motivation to learning, performance expectations, characteristics of the audit team, support or coercion, and facilities.

Innovation in lieu of compliance: Internal audit departments’ standardized and non-standardized knowledge sources

There is a substantial body of work on managerial innovations, but less attention has been paid to innovation in regulated professions such as internal audit. The aim of this paper is to identify the sources of knowledge on internal audit innovations. Our model is derived from the work on technological innovation, internal and external learning, search capabilities and related absorptive capacity (AC). We draw on AC theory to consider the arbitrage between standardized knowledge with low value for innovation and up-to-date knowledge which might lead to radical innovation. We exploit organizational theory to examine the effect of hierarchical pressure for compliance with standardized practices. Our econometric results support the idea that our technological innovation model can be applied to audit innovations. We confirm the existence and the dominant role of search activities for audit departments which are not simply innovation adopters and demonstrate the role of external knowledge sources for extending work on open innovation. We identify an adverse role of AC in relation to standardized knowledge which adds to the mixed results in the AC literature. By challenging the dominant view of auditing as purely compliant, we contribute to the emergent stream which considers internal auditing an innovative profession.

Construction of Enterprise Audit Risk Identification Platform Under the Background of Financial Management Reform

Internal audit is an important way for state-owned enterprises to carry out risk management. The internal audit system developed and implemented based on risk management can not only effectively evaluate and supervise the internal control of enterprises, but also help enterprises effectively manage risks and improve the value and efficiency of enterprises through the identification, judgment and disposal of contingencies encountered in the operation of enterprises. This paper analyzes the existing problems in risk management of internal audit of state-owned enterprises In this context, this paper first briefly introduces the internal audit of enterprises from a theoretical point of view, summarizes the characteristics of the audit department, and then discusses the construction scheme of the current internal audit risk management mechanism of state-owned enterprises, aiming to provide useful guidance for state-owned enterprises to build a scientific and efficient internal audit department in the next step, and finally serve the risk management mechanism.

The Impact of Information Technology Governance Under Cobit-5 Framework on Reducing the Audit Risk in Jordanian Companies

Purpose: The goal of this study is to ascertain how the COBIT 5 framework, which consists of (Planning and organization, Acquire and implementation, Support and Delivery, Monitoring and evaluation, Guidance and Control), affects audit risk. Theoretical framework: IT governance (ITG) is a strategic and administrative procedure that aids in an organization's efficient and responsible usage of IT. The efficacy of audit control and audit process can be significantly impacted by COBIT5. Design/methodology/approach: This study used a quantitative approach, with questionnaires distributed to 450 workers from each of the 150 Jordanian companies. The three employees served as a representative sample from the finance, internal audit, and IT departments. A total of 371 sets of questionnaires were returned with complete responses and were further examined. The data analysis employed descriptive analysis, Pearson correlation, and multiple linear regressions. Findings: The results of this investigation revealed that every independent variable, including Cobit 5, had a favorable and substantial impact on the decrease of audit risk. one of the most important results of this study showed that Monitoring and evaluation is one of the most influential dimensions of ITG to reducing audit risks, and perhaps this may be due to the nature of the delivery of IT within companies’ systems and the implementation of their applications and services to be delivered. Research, Practical & Social implications: This study helps Jordanian companies to enhance the application of information technology governance, which contributes to raising the level of efficiency of their accounting systems and enabling them to compete. Originality/value: The findings showed that are a limited number of studies on IT governance and audit risk that have focused on developing countries, especially Jordan, and this is where the research comes in –to fill up the gap.

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.

Implementation model of data analytics as a tool for improving internal audit processes.

The aim of this article is to understand the importance of internal audit departments todays-part of corporate governance and guardian of the organisation's culture and climate-, as well as the opportunities that new technologies offer to increase their effectiveness and efficiency. To this end, based on an exhaustive review of the literature, the concepts of internal audit and data analytics are related, and a framework is proposed for the implementation of a technology of these characteristics in an internal audit department. The results of the research show that those companies that invest resources in readapting their processes to technological change are likely to obtain better results than those organisations that keep their management procedures obsolete. Based on these results, it is concluded that there is a need to consider technological change in internal audit departments, specifically data analytics, to increase the effectiveness and efficiency of audit processes.

The extent of commercial banks’ readiness to implement blockchain technology

This study aimed to find out the readiness of Jordanian commercial banks to implement blockchain technology. The population of this study consisted of thirteen Jordanian banks. The study targeted the employees of the higher departments represented by the general managers and their deputies, and the employees of the middle departments represented by the directors and heads of the departments of each of the finance, internal auditing, and information technology departments in Jordanian banks. The study used the survey method to collect data and the SPSS Statistics 20.0 program to process and analyze the data. The most important results of the study were the presence of a statistically significant impact of the banks’ readiness with its dimensions (administrative readiness, professional readiness, organizational readiness, and legislative readiness) in the blockchain technology with its dimensions (the use of blockchain technology, hashing, information, and time imprint). As for the most important recommendations, it crystallizes the need for Jordanian banks to carry out a continuous updating process on the data within the block, and to apply periodic tests on the block operations to verify that there are no gaps in the chain.

Internal Audit and Operational Performance in Public Teaching Hospitals in Oyo State Nigeria

The paper examined the effect of internal audit on operational performance in public teaching hospitals in Oyo state Nigeria. The study proxy health performance which is dependent variable by medical equipment utilization and internal audit which is independent variable was proxy by internal audit independence, staff competence, management involvement and the scope of work. The data was collected through the administration of questionnaire directly to the ninety nine (95) respondents. Data collected was analysed using percentage counts, Pearson correlation analysis and multiple linear regression technique. The result showed that internal audit is significant to the operational performance of public teaching hospital in Oyo State Nigeria. It was recommended that the management of public teaching hospital should make fund available for internal audit department to carry out their duties as deem fit and public teaching hospitals should be required by law to allow government information to be publicly published.

The Role of Modern Accountant Skills to Improving the Effectiveness of Performance in Oil Companies

The main objective of the current study is to try to develop the role of internal control and audit in government units, especially in risk management, and this is achieved by identifying the role of internal control and audit in activating risk management in government units and identifying the requirements for activating the role of internal control and audit in the assessment of risk management in government units. The study found that the existence of a scientific specialization in the field of oversight, internal control and audit contributes to the increased effectiveness of the staff of the Internal Audit Department, followed by the provision of continuous training, specialized courses in the evaluation of risk management for the staff of the internal audit department, in order to enable them to perform their duties effectively, followed by the professionalism, experience and skill of the control and internal audit staff that enables them to properly assess risks within government units. The study recommends the need to develop the reports of internal audit departments, as oversight and internal audit reports should include an assessment of risk management processes, the extent to which unit management is committed to governance, and the fight against corruption within government units.

THE ROLE OF INTERNAL AUDITING IN THE EFFECTIVE MANAGEMENT AND CONTROL OF THE AFFAIRS IN LGAS IN NIGERIA (KALTUNGO LGA)

The objective of this research is to find out the role of internal auditing in the effective management and control in the affairs of Kaltungo local government and whether the functions of the internal audit department are performed in compliance with the established standards, policies and how much it has succeeded in achieving the objective of the local government and finally, to find out the benefits that may be derived from effective audit control system in the affairs of the local government. It is expected that at the end of the research, it should have been established that the local government areas are faced with lot of problems such as ineffective audit control system. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. It was obtained from staff of the Local government, staff of the state ministry of local government affairs, through questionnaires and interviews. The total population for the study is 200 persons,140 staff of Kaltungo local government area,10 staff of Gombe state ministry of local Government affairs and 5 staff each from the other 10 local government areas of Gombe State. A total of 133 respondents was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies. The end result showed that there was need for the internal audit unit of Kaltungo local government to reactivate its accounting and financial reporting review engine and maintain sufficient and appropriate documentation of work done to provide a basis for the external auditor’s reliance on internal audit work.

The Role of Internal Audit Computerization in Supporting the Task of External Auditing in Jordanian Insurance Companies

The study aimed to examine the role of the computerization of internal audits in Jordanian insurance companies in supporting the tasks of the external auditor. The study population consisted of managers and heads of internal audit departments, a number which is estimated at 112 in Jordanian insurance companies, of which there were 25 in the year 2021. Using a questionnaire as a primary source for the study data and relevant statistical methods to analyze the respondents’ answers, it is concluded that there is a significant impact for the computerization of internal auditing processes in supporting the tasks of external auditing, and that the computerization of internal auditing processes has a statistical impact on supporting risk assessment, internal control assessment, and the evaluation of audit evidence by the external auditor. The study recommended giving more attention to qualifying both external and internal auditors to work considering the widespread computerized environment, as well as conducting similar studies in different sectors to compare the results from other sectors with those from the Jordanian insurance companies’ sector in this study.

Internal Audit During a Pandemic: Acceptance of Technology in Internal Audit in Retail Companies

This research is qualitative research with a case study approach to the use of technology in the internal audit department of a retail company during the pandemic. The samples used were all internal auditors of PT Sumber Alfaria Trijaya Tbk Branch Jember. The data analysis used was the focus group discussion (FGD) method and literature study. Research results related to audit activities during a pandemic from the point of view of technology utilization have been implemented in five (5) sectors. Sector planning, documents, field audits, confirmation and reporting. In general, the use of technology in carrying out internal audits during a pandemic has been well adapted.

Efektivitas Peran Audit Internal Dalam Pencegahan Fraud

Fraud is still a problem in various sectors in Indonesia, both private and non-private companies, even though it is within the scope of government. The existence of an internal control system is not enough to help the company to fortify the organization from fraud. The purpose of this study is to determine the stages of implementing an effective internal audit for fraud prevention as well as matters that need to be considered by internal audit to improve the efficiency and effectiveness of internal audit for fraud prevention. The research method used is qualitative with a literature review approach because this approach can provide an overview for researchers related to the development of topics regarding the role of internal audit and prevention of fraud. Sources of data used in this study is secondary data. The results of this study are the stages that must be carried out by internal audit so that fraud prevention is the planning stage, testing stage and monitoring of follow-up audits. In order to improve the efficiency and effectiveness of the role of internal audit, the organization can make the internal audit department independent, have full support from top management, and have competent, professional resources with high integrity and loyalty.

The governance structure on the role of internal auditors in environmental auditing practices: Cases of Malaysian local organisations

This study investigates how governance structures’ internal auditors play their roles in environmental auditing practices. This study used interpretative research focusing on multiple case studies: two Malaysian Local Governments with single-case design and environmental auditing. This study utilised three methods of data collection: document analysis, observations and interviews. This study used thematic analysis using Atlas.Ti software. This study concludes that governance structures such as NGO Watchdog Group, independence of the internal audit department, tenure of Chairman, multiple functions and review meetings influence the roles of the internal audit department. This study explores the environmental auditing practices using expectation development by Role Theory to illustrate the process of environmental auditing practices. The findings outline how to construct environmental auditing practices and improve the effectiveness of the practices in government organisations.

Effectiveness of Internal Audit Implementation at BPJS of Employment

Abstract This study aims to analyze the effectiveness of implementation of internal audit in BPJS Ketenagakerjaan. This study involved 8 informants consisting of the Assistant Head of the Internal Audit Department, Internal Auditor, and the Branch Head. Measurement of the effectiveness of internal audit in this study uses the IPPF Practice Guide: Measuring Internal Audit Effectiveness and Efficiency from the Institute of Internal Auditors which consists of basic measures, services to stakeholders, technical development, innovation, and human resource development. The results showed that in a basic measure, clients (auditees) felt satisfy with the services provided by SPI. Internal auditors also feel satisfied in terms of the field of work and salary or facilities provided by management. The findings obtained by internal auditors at this time are more on administrative errors and do not lead to fraud. The recommendations by the internal auditor are always followed up by the auditee and this is also the support of management. Repeated findings are still at a reasonable level and the numbers are not many. The existence of SPI greatly helps management in achieving organizational goals. SPI allocates a budget for internal auditor technical development, but this is done in turn because of budget constraints. Internal auditors are also involved in professional organizations, but their nature is only passive. All internal auditors already have certification and auditor rotation is carried out in accordance with the needs and management policies. Keywords: internal audit, effectiveness of internal audit, internal audit department

The Use of Rapid Response Systems (Agile) And Their Role in Legalizing Operational Risks in Banks

The study aimed mainly at scientific rooting by identifying the role of using rapid response systems (Agile) in legalizing operational risks in banks listed on the Palestine Stock Exchange. Previous studies, periodicals and theses, analysis of the results of the field study and testing of hypotheses using the statistical program (SPSS) .The questionnaire, after evaluation and arbitration by a number of specialists, was distributed to the study community consisting of branch managers, directors, heads and employees of the Risk Management Department, which numbered (98) employees. The researchers used a comprehensive inventory of the community due to the small size of the study community .The results of the field study demonstrated that the use of rapid response systems (Agile) helps to overcome the weakness in the control and internal audit systems in the banks listed on the Palestine Stock Exchange. In addition, the operational risks are being controlled and monitored by the internal control departments and the internal audit departments in a large and clear way . The study also recommended that the managements of banks listed on the Palestine Stock Exchange should prepare plans for the use of rapid response systems (Agile) to legalize the operational risks that these banks may face.

DETERMINANTS OF COMPUTER ASSISTED AUDIT TOOLS AND TECHNIQUES (CAATs) ADOPTION

Determinants of the adoption of CAATs in the Internal Audit Departments are examined in this study by employing the Unified Theory of Acceptance and Use of Technology (UTAUT). The attributes that were taken from the UTAUT theoretical model are performance expectancy, organisation readiness, effort expectancy and social influence. Apart from UTAUT’s attributes, this study has taken individual factors to be examined together with the model. They are also considered an external factor that was established through the Theory of Acceptance Model (TAM) in previous literature. Using a quantitative approach, questionnaires were administered to internal auditors, followed by IT auditors and others such as Compliance officers and Quality auditors who use CAATs in their routine tasks; they work in multinational companies, government link companies and government agencies. The companies were chosen because they have in-house Internal Audit Departments. The results show that performance expectancy and individual factors are the most supported attributes that influence the adoption of CAATs. This study offers insights into the effect of individual factors on CAATs adoption. This paper expands the existing literature on factors that influence CAATs adoption among internal auditors.

ANALYSIS OF THE STATUS OF THE FRAUD WITHIN THE ENTERPRISES IN DIFFERENT COUNTRIES AROUND THE WORLD

The consequences of fraudulent actions are losses of significant financial resources in companies, which endangers their business. The resolution of the occurred criminal issues is complex and therefore requires the exchange of the experience of many countries worldwide. It is needed to conduct an internal audit to detect embezzlement in the company. The relevant department must carry out the audit, e.g., the security services department, involving an internal audit, internal control, and legal department. Identification of persons possibly involved in fraudulent actions is a complex issue that carries a criminal responsibility. Different companies impose disciplinary liability, penalties, or criminal liability on employees. The most common are corruption, misappropriation of property, and falsification of financial statements. The variety of fraudulent schemes grows and becomes even more dangerous for businesses. Fraudsters analyze the financial statements of enterprises and find vulnerabilities to create threats and fraudulent actions. Such schemes lead to risks for both large and small businesses worldwide. Most companies have been affected by fraud incidents in recent years. The unreliable partners frequently cause losses in the companies. The negative consequences of risky activities include losses of money, reputation, and trust of customers and partners. All affect the loss of profits, which is the purpose of the activities.

العوامل المؤثرة على فاعلية نظام الرقابة الداخلية (دراسة ميدانية على دوائر ضريبة الدخل في فلسطين)

هدفت الدراسة التعرف إلى العوامل المؤثرة على فاعلية نظام الرقابة الداخلية في دوائر ضريبة الدخل في فلسطين، وفحص أثر كل من (البيئة الرقابية، تقييم المخاطر، الأنشطة الرقابية، نظام المعلومات والاتصالات، المتابعة) على فاعلية نظام الرقابة الداخلية في دوائر ضريبة الدخل في فلسطين، ولتحقيق أهداف الدراسة تم استخدام المنهج الوصفي لملاءمته لطبيعة هذه الدراسة، وتصميم استبانة تتناسب مع موضوع الدراسة وأهدافها، وبعد اختبار صدقها وثباتها تم تطبيقها على جميع أفراد العينة التي تكونت من فئتين: الفئة الأولى تكونت من ( 66 ) موظفاً من دوائر ضريبة الدخل الذين تم اختيارهم بطريقة العينة القصدية، والفئة الثانية تكونت من ( 15 ) موظفاً من دائرة التدقيق الداخلي في وزارة المالية والتخطيط الذين جُمعت البيانات منهم باستخدام أسلوب الحصر الشامل، حيث تم استرجاع ( 64 ) استبانة من موظفي دوائر ضريبة الدخل و( 13 ) استبانة من موظفي دائرة التدقيق الداخلي، وتم تجميعها وترميزها وإدخالها إلى الحاسوب ومعالجتها باستخدام برنامج الحزمة الإحصائية للعلوم الاجتماعية ( statistical package for social sciences spss 26.0 ) لتحليل البيانات الميدانية للخروج بالنتائج والتوصيات، أظهرت النتائج أن أكثر العوامل تأثيراً على فاعلية نظام الرقابة الداخلية في دوائر ضريبة الدخل هو(وجود فصل ملائم بالمهام لموظفي الدائرة (مثل، الفصل بين وظائف التقدير والتدقيق))، كما أظهرت أن أقل العوامل تأثيراً على فاعلية نظام الرقابة الداخلية في دوائر ضريبة الدخل هو(توفر إطار مهني معتمد (سياسات، إجراءات، تدريب، دائرة) لتنظيم عملية إدارة المخاطر في دوائر ضريبة الدخل) من وجهة نظر العينة جميعها كوحدة واحدة، وفي ضوء النتائج أوصى الباحثان بضرورة إنشاء دائرة مختصة لإدارة المخاطر في الإدارة العامة لضريبة الدخل؛ لأهميتها بالتحكم بالمخاطر التي قد تواجه دوائر ضريبة الدخل وتخفيضها إلى نسب مقبولة.

Blockchain technology and its impact on audit activities

Purpose- Within the scope of this study, it is to conduct a comprehensive literature review on the conceptualisation, functioning, historical process, types, basic features, areas of use of blockchain technology and finally the relationship of blockchain technology in terms of an audit. Methodology- A comprehensive literature review was conducted on the concept relationship of blockchain technology in terms of auditing. Findings- The biggest feature of blockchain technology is that it has a decentralized verification system. In this respect, it is shown as one of the most effective areas where digital transformation is experienced. The usage areas of blockchain technology can be summarized as shown: Finance, public service, health, supply chain, education and auditing. The main impact of blockchain technology on the audit profession is to reduce the cost of monitoring and control as blockchain technology becomes more common in organizations thanks to the reliability, transparency and timeliness of the data used in auditing. Blockchain creates a more robust audit trail by using multiple sibling databases instead of a single and central database. The most important part that distinguishes blockchain technology from other technologies is that this technology is far from a centralized structure. Conclusion- With the blockchain technology, which emerged to question the need for intermediary institutions that provide trust and to show that there is no need for trust in intermediary institutions, it is expected that many sectors from the banking and finance sector, logistics and supply chain to the health sector will be affected, especially cost and time savings. With the increasing number of blockchain technology, the existing risks both continue and new technology brings new risks. This technology inevitably affects audit activities as it does all sectors. Businesses should identify these risks and take the necessary precautions. Internal audit departments should develop themselves on blockchain, and businesses should allocate an additional budget for those working in this department and ensure that they receive training on this subject. Keywords: Blockchain, audit, database security, distributed ledger technology, digital transformation. JEL Codes: G10, M10, O10