Organization Of Internal Audit Research Articles

ORGANIZATION AND CONDUCT OF INTERNAL AUDIT SERVICE IN THE PUBLIC SECTOR

In the article, a study was conducted on the organization and implementation of the internal audit service in the public sector. Based on the study of the current state of the internal audit organization and foreign experience, suggestions and recommendations were made on the implementation of the internal audit service in different foreign countries and the mechanism of its operation in our republic.

ESG performance and the cost of debt: exploring the role of internal audit

ABSTRACT This study investigates the effect of Environmental, Social, and Governance (ESG) performance on capital-raising costs in the debt market. The study also examines the role of internal audit organizations in this relationship. The results of the current study show that firms with high ESG performance have lower cost of debt. More importantly, when ESG is classified into sub-factors (E, S, and G), all three are negatively associated with the cost of debt. Next, the current study documents that the presence of an audit committee, the increase in the number of internal audit members, and the higher independence of the internal audit organization incrementally weaken the negative relationship between ESG and the cost of debt. The results remain robust across various additional tests and when endogeneity concerns are mitigated. Overall, these findings suggest the possibility that, as a primary risk assessment function, an independent and large internal audit organization exposes and highlights ESG risks to external credit rating agencies. The findings of this study offer valuable practical insights into how internal audit organizations can effectively assess and contribute to the evaluation of ESG performance.

The Effect Of Institutional Ownership, Internal Audit Organization Status, And Audit Committee On Fraud Prevention With Political Connection As Moderating Variable

This study aims to examine the effects of institutional ownership, internal audit organization status, and audit committee on the frequency of audit committee meetings on fraud prevention, with a moderating variable of political affiliation. The study's sample consisted of 32 mining sector businesses that were listed on the Indonesia Stock Exchange between 2020 and 2024, using the Purposive Sampling technique. Secondary data was taken from the websites of individual firms and the Financial Statements and Annual Reports of Mining firms that were posted between 2020 and 2024 on the Indonesia Stock Exchange's official website (www.idx.co.id). The analysis method used in this study is known as Moderated Regression Analysis (MRA). The following are the study's conclusions: 1) Institutional ownership greatly enhances the ability to avoid fraud, 2) The status of the internal audit organization has a significant benefit for fraud prevention, 3) The frequency with which the Audit Committee meets has an adverse effect on fraud prevention, 4) Political connections can lessen the negative effects of institutional ownership on fraud prevention, 5) The influence of Internal Audit Organization Status may be lessened by the connection between Political Connection and Fraud Prevention, 6) Political Connection is not able to minimize the influence of the Audit Committee on the Frequency of Audit Committee Meetings on Fraud Prevention.

МОДЕЛЬ ВНУТРІШНЬОГО АУДИТУ ДЛЯ ДЕРЖАВНИХ ПІДПРИЄМСТВ ЕНЕРГЕТИЧНОЇ ГАЛУЗІ В УМОВАХ НЕСТАБІЛЬНОСТІ ТА НЕВИЗНАЧЕНОСТІ

The current conditions of management of state-owned energy enterprises are characterized by high uncertainty, instability and complexity, which are signs of the so-called VUCA world (volatility, uncertainty, complexity, ambiguity). These factors are especially acute in conditions of military conflicts, economic crises and threats to energy security, which requires the adaptation of management systems and an increase in the role of internal audit. The complexity of modern challenges is increasing due to the integration of energy systems and interdependence with international markets, which makes traditional internal audit models ineffective. In this context, internal audit becomes an important tool that not only provides control over financial and operational processes, but also contributes to strategic planning and increases trust in enterprises. The purpose of the article is to develop an internal audit model that will meet the specifics of the functioning of state-owned energy enterprises in conditions of instability and uncertainty. The theoretical basis for building an internal audit model for state-owned energy enterprises in conditions of instability and uncertainty was the concepts, principles and conclusions formed in the scientific works of domestic and foreign researchers in the field of internal audit, risk management and management in crisis conditions. The study is also based on the author's developments aimed at adapting audit models to the specifics of energy enterprises. The article proposes a conceptual model of internal audit for state-owned energy enterprises, which takes into account the challenges of instability and uncertainty associated with military operations, economic crises and energy security risks. Key aspects of the organization of internal audit are investigated, functional features are identified that contribute to increasing the effectiveness of risk management and ensuring sustainable development of enterprises in crisis conditions. Special attention should be paid to control measures in wartime, which include a risk-based approach, the creation of crisis teams, strengthening financial and physical control, cybersecurity measures and anti-corruption actions. It is also important to develop transparent public procurement and modernize logistics processes to ensure business continuity. All these measures should be supported by transparent reporting and ongoing staff training. Thus, internal audit becomes an important tool for ensuring the resilience of state-owned energy enterprises to external challenges.

Some Aspects of the Organization of Internal State Audit in Kazakhstan

In the article, the authors identified shortcomings in risk management in the state audit system. These aspects are system-forming in the organization of state audit, as it is a holistic and independent assessment of the effectiveness of the audit objects, covering not only financial issues, but also all areas of their activities with the presentation of effective recommendations and suggestions for their management. The system of organization of internal audit in the Republic of Kazakhstan, the results of the audit activities of the Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan are considered. A comparative analysis of the internal audit of longterm assets showed how prepared the financial statements on all material aspects in accordance with the established conceptual framework for their presentation. According to the results of the study, it was revealed that today internal audit is focused more on «post-audit», since it is carried out mainly to identify and eliminate violations of the budget and other legislation of the Republic of Kazakhstan, as well as internal regulatory documents of the organization. Research methods: With the help of general scientific research methods, as well as methods of statistical and comparative analysis, conclusions are drawn about the need for analysis in the state audit system. Suggestions for further improvement of risk management are given

The Role of the Government's Internal Supervisory Apparatus in Preventing Corruption In Indonesia

This research is motivated by the existence of weaknesses in the Internal Control System as well as problems of non-compliance with laws and regulations that need to be corrected in Ministries and Institutions in Indonesia. This problem will have an impact on organizational goals, namely not achieving effective and efficient activities, reliability of financial reporting, safeguarding state assets, and compliance with laws and regulations. Therefore, a capable APIP is needed so that the organizational goals are achieved. This study aims to analyze the APIP Capability in Ministries/Institutions in Indonesia. The method used in this research is qualitative research design using literature study. Research data were taken from journals, books, previous research, scientific articles, literature and news from official websites and the research subjects were the Government Internal Supervisory Apparatus (APIP). The result of the research is that the internal audit function as a management partner plays a strategic role in fighting corruption. The transformation of the role of internal audit in terms of preventing, detecting and investigating fraud, especially corruption, was carried out in line with the increase in the maturity of the internal audit organization which was marked by an increase in the capability of the internal auditors

Роль внутрішнього аудиту у системі управління підприємством

Abstract. Introduction. It has been established that internal audit is one of the types of internal economic control of business entities. The main criteria for the quality of conducting an internal audit as a management function are the efficiency, productivity and cost-effectiveness of the internal audit system. Purpose. The purpose of the article is to reveal the need for internal audit at the enterprise and the peculiarities of its organization. Results. It has been established that internal audit is one of the types of internal economic control of business entities. The main criteria for the quality of conducting an internal audit as a management function are the efficiency, productivity and cost-effectiveness of the internal audit system. The need for the functioning of the internal audit service at the enterprise is substantiated. The peculiarities and methods of its organization are considered, and their positive and negative aspects of internal audit are determined. The content of the concept of "internal audit" and the question of the need for its operation at the enterprise as a tool for improving the efficiency of the accounting system and activities as a whole are revealed. The main stages of internal audit are formulated and a set of qualitative and quantitative parameters for evaluating the effectiveness of the accounting system is proposed, based on the directions of research of individual objects (elements) of the accounting system by means of internal audit. The tasks of the internal audit regarding the evaluation of the efficiency of the enterprise's accounting system have been substantiated and specified. Conclusions. It has been proven that the effectiveness of internal audit at enterprises is determined by the level of its organization. The main objects of the internal audit organization are the creation and organization of the work of the internal audit system, the organization of the work of internal auditors, and the organization of the internal audit process.

Internal audit and financial control: features of the organization in the public sector

The article reveals issues related to the peculiarities of the organization of internal audit and financial control in the public sector. Interest in the topic is caused by ongoing changes in the system of internal financial audit and financial control, as a result of which their capabilities have expanded, which will further contribute to the achievement of the goals of public sector organizations. In addition, within the framework of the article, a number of measures are identified, through which it becomes possible to ensure the effective use of internal audit and internal control as a tool for the proper management of public finances. When conducting research, such methods as analysis and synthesis, a logical approach, a systematic approach were used. The results presented in this article are of interest to a wide range of readers who study the issues of internal audit and financial control.

CONSEPTUAL ISSUES OF INTERNAL AUDIT

The characterization of internal audit and the scope of organizational functions are perceived differently by stakeholders. Formed much later than external auditing, internal auditing developed relatively quickly, and that too in several directions. Currently, the most common types of internal audit are operational audit, management audit and performance audit. Studies show that in practice, the listed types of internal audit overlap in their functions, which not only causes confusion among audit beneficiaries, but also takes additional resources from the organization. The article clarifies the functions of operational, management and performance audit from the point of view of the beneficiaries. Operational audit pursues the identification of efficiency reserves in the implementation of various entrepreneurial functions, which are related to production, service provision. The task of management audit is to promote the functioning of the effective management system used in the organization. And the performance audit is mainly related to the public sector organizations and aims not only to find out the reliability of the budgets of state finances, but also their effectiveness in terms of the expectations of the beneficiaries. Therefore, the areas of operational, management, and performance auditing may intersect somewhere in organizations. And the smaller the scope of managerial, operational and performance audit functions, the more effective the organization of internal audit in organizations.

Risk-based approach to the organization of internal audit of a testing laboratory

Risk-based approach to the organization of internal audit of a testing laboratory

Knowledge Management Model for Internal Auditing

Internal audit is crucial to improve the effectiveness and efficiency of internal controls, governance, and risk management processes in organizations. For an internal audit organization, to benefit from the knowledge of its staff, it is vital to identify the knowledge that is needed to complete quality and efficient internal audits. Knowledge management is a system that is concerned with using to the best advantage knowledge and experience. In internal auditing, knowledge management is increasingly recognized as a tool to effectively manage not only the knowledge of individuals, but also the collective knowledge in the organization. Research on internal audit has appeared since the 1980s and brought many benefits to internal audit activities, but these studies have not explained how knowledge is created during an internal audit. To address the research gap, this study looks into how knowledge is managed in an internal audit process. The applied methodology is to conduct qualitative case study research by using in-depth interviews, observations, and documentary analysis in the internal audit field.
 Findings from empirical analysis of the case together with the literature review provide useful insights to construct a potential model of knowledge management in internal audit. During an internal audit process, there are three key elements including data, information, and knowledge that internal auditors need to consider. Data is a series of separate observations, measurements, or events in the audited company. Information is the organized data that has been arranged with relevance and purpose for better comprehension of the internal activities. The knowledge generated and applied by internal auditors can be thought of as a collection of specific and broad information sets and experience in similar audit situations. The process of knowledge management in internal audit involves four sub-processes: collecting data, analyzing data to get information, synthesizing information to create knowledge, and improving knowledge by putting knowledge into practice. The research findings imply that the process of internal auditing requires internal auditors to apply not only analysis capacities but also empirical experience in their work. In the internal audit, it requires collaboration from within the auditing organization and from the auditee’s sources to enable a valuable outcome for all involved.

Application of risk-oriented technologies in the organization of internal audit

Application of risk-oriented technologies in the organization of internal audit

Strategijsko posmatranje rada interne revizije kao deo upravljačke podrške u savremenim načinima poslovanja u Republici Srbiji

Strategic observation of internal audit in the real business conditions of heterogeneous legal entities in transition economies like the Republic of Serbia enables top management to improve, first of all, the management position in the company. In addition to the above, this approach to internal audit enables top management to make safe business decisions, contributes to the improvement of business decision-making and contributes to making business de-cisions that are economical, efficient and expedient. In general, strategic business decision-ma-king should be viewed as part of the introduction of internal control factors, where internal audit is certainly of great importance. The monitoring of the internal audit should be such that its work can be carried out smoothly in accordance with organizational independence. Such an approach implies that internal audit is organized as an independent function in the companies that have implemented it, as well as that it is organized as an independent function and is not part of any business process, i.e. organizational part of the company, and in its work is directly responsible to the manager who is in charge of internal audit operations. Such an approach is basically a modern approach that has elements of a safe approach, a strategic base that is particularly important for making valid audit findings and recommendations, all of which are made in the sense of increasing the security of making a valid business education of top management. The new or strategic principle of the organization of internal audit represents a unique way of doing business within the overall socio-economic changes that may occur primarily in transitional economies such as Republic of Serbia.

Давлат секторида ички аудит хизматини ташкил қилиш ва ўтказиш

In the article, a study was conducted on the organization and implementation of the internal audit service in the public sector. Based on the study of the current state of the internal audit organization and foreign experience, suggestions and recommendations were made on the implementation of the internal audit service in different foreign countries and the mechanism of its operation in our republic.

Organizing internal audit at enterprises: a risk-based approach

The paper investigates organization of internal audit at risk-oriented enterprises. The differences between traditional and risk-oriented approaches of internal audit at enterprises are considered. The risk-oriented internal audit allows us to investigate not only financial risks that arise in internal control and accounting, and the risks of differentiated audit are to evaluate various risks groups: financial, operational, technical, informational, etc. Each group has a corresponding hierarchy. Thus, financial risks include accounting risks (second level), which in accordance with IFRS and GAAP requirements include three groups of economic risks: market risk, credit risk and risk of main activity - third level. The risk-oriented internal audit allows you to evaluate the risks at the level of the enterprise divisions. The introduction of the principles and postulates of the concept of "liability centers" in the enterprise allows, for example, in the implementation of expert risk assessment, use personal opinion of managers and specialists of various units in the formation of the chain of values of the enterprise. The risk-oriented internal audit focuses on assessing risks that are not enough or excessively controlled. At the same time, risks are taken into account by the level of significance on the Luckyert scale: minor, moderate and large. But for each subdivision, the level of materiality can be different - it is necessary to calculate the integral risk for the enterprise in general. The risk map of the financial department of the enterprise is built on the basis of the concept of stakeholders. It has been proved that the risk map allows monitoring of the risks of significant distortion of accounting (financial) and non-financial reporting in terms of responsibility centers. The prospects for further research are determined: the development of internal audit documents using the principles of risk-oriented approach - an audit plan, audit program, audit report, schedule document circulation of internal audit service, etc.

The Effect of Voluntary Adoption of Internal Audit Organization and Internal Audit Quality on Value Relevance

The Effect of Voluntary Adoption of Internal Audit Organization and Internal Audit Quality on Value Relevance

ТИПОВІ ПОРУШЕННЯ, ЩО ВИЯВЛЯЮТЬСЯ В ПРОЦЕСІ АУДИТУ ВІЙСЬКОВИХ ЧАСТИН ЗБРОЙНИХ СИЛ УКРАЇНИ

The article considers the general principles of internal audit, the concept, essence, as well as theoretical principles and methodological features of internal audit in the military units of the Armed Forces of Ukraine. Considerable attention is also paid to the purpose of internal audit in general and in the Armed Forces of Ukraine in particular. The definition of audit and internal audit is given in accordance with the norms of current regulations of Ukraine. The process of planning, organization and direct conduct of internal audit, as well as the results of auditors' work is described in detail, the analysis of the regulatory framework for conducting internal audit in budgetary institutions and, in particular, in the Armed Forces of Ukraine. Particular attention is paid to the stages of audit, analysis of typical violations identified in the process of internal audit and internal control. The analysis of the results of the internal audit for 2014-2019 is carried out, the typical violations revealed in the process of internal audit are given, and the violations in 2019 are considered in detail. Low professionalism and negligent performance of duties by officials appointed to the positions of heads of services and relevant officials are common causes of violations of poor records of military property in military services, which have led to losses, risks of illegal expenditures and shortages. Military units assigned to support, which in their duties had to work out timely documents on the accounting of material values, spending according to the norms and write-off of military property, keeping books of losses and shortages. Today there is a question of introduction of effective system of the organization of internal audit and adaptation of its technique to activity of budgetary institutions including military units of Armed forces of Ukraine in the conditions of reforming and deepening of integration processes in economy of Ukraine.

Методичне та організаційне забезпечення внутрішнього аудиту доходів і витрат комунальних некомерційних підприємств охорони здоров’я

The article is aimed at systematizing the theoretical and methodical provisions and substantiating practical recommendations for organizational provision of internal audit of revenues and expenses for the communal non-profit healthcare enterprises (hereinafter – CNP HE) under current conditions of management as result of reforming the healthcare system. The methodology and organization of internal audit of revenues and expenses of the CNP HE is considered. The theoretical and methodical provisions are systematized. The necessity of introducing an internal audit of revenues and expenses in the activities of the CNP HE is substantiated. The directions of internal audit development in Ukraine and other countries are studied. Practical recommendations on organizational provision of internal audit of revenues and expenses for the CNP HE are provided. Objects of internal audit of revenues and expenses are explored; its components and functions are considered; the main tasks are defined; the main forms of the organization are identified; the need to establish an internal audit service in the CNP HE and its effective functioning is substantiated. The factors that ensure the effectiveness of internal audit of revenues and expenses of the CNP HE are examined. The indicators for evaluating internal audit of revenues and expenses of the CNP HE are determined. It is summed up that the internal audit of revenues and expenses for the CNP HE should be defined as providing independent and objective consultations and conclusions aimed at identifying the causes of violations and shortcomings in the financial and economic activities, in the financial and budgetary statements of these enterprises, eliminating these shortcomings and especially preventing their occurrence. Prospects for further research in the sphere of internal audit of the CNP HE are formation of an adaptive model of methodical and organizational provision for internal audit according to certain directions and objects of audit.

Internal audit in the enterprise economic security management: important aspects

Effective management of the enterprise financial and economic activities is based primarily on the application of a set of relevant and reliable data concerning its financial status, provided by internal audit procedures. The factors arising interest in internal audit, such as: streamlining business processes; the need to obtain independent and objective information on the state of affairs; ensuring the economic security of the company are identified in this paper. In order to substantiate the tasks of internal audit for ensuring the economic security of the enterprise, the main sources of threats and objects of protection investigated in the process of internal audit are defined. It is substantiated that one of the important tendencies in the development of internal audit is the increase of its level from the tester of control procedures to the analyst of the most important risks. The functions of internal audit in ensuring the security of the company are analyzed. They include: assessment of the economic security system as a whole and providing information to the board of directors and senior management; participation in the implementation of the enterprise security process procedures. A new and important direction for internal audit development – audit of corporate culture is defined. The main tasks of internal audit in this area are to assess how effective measures are provided in the company for the purposeful formation of corporate culture; how the existing level of corporate culture is assessed. Recommendations for the organization of internal audit are given, the following three main approaches are highlighted: creation of own internal audit service; use of services of outsourcing companies; co-sourcing – the division of functions for internal audit in the company between its own service and the involvement of external experts in solving certain tasks. It is proved that the need to introduce internal audit meets the requirements of economic security of the enterprise, information and management needs of economic entities, the specific facts of the internal audit. It is substantiated that internal audit is an integral part of quality control of enterprise management processes and a component of general audit, organized in the interests of owners and regulated by regulations on compliance with the established order of economic activity, property protection and economic security.

АНАЛІЗ ФІНАНСОВОГО СТАНУ ТОРГОВЕЛЬНОГО ПІДПРИЄМСТВА

In today’s economic environment, much attention is paid to the company’s partnerships, which, in turn, arise with counterparties. Accounting for settlements with counterparties is of great importance for any company that is active in a market economy, as each company that conducts financial and economic activities, in the process of its operation makes settlements with counterparties: with customers – for their products, with customers – for work performed and services rendered. An important issue in the organization of settlements with counterparties is the organization of internal audit of receivables and payables. This issue is due to the common problem of non-payment and is associated with the existence of insufficient accounting in the structure of the business entity. Settlements with counterparties are inextricably linked to incoming and outgoing cash flows, which form the basis of the process of ensuring the continuous operation of economic entities. The article studies activity of a trade enterprise. The main indicators of financial condition assessment, the main types of assets and liabilities of the enterprise were considered over the last three years, management of the enterprise financial activity has been estimated on the basis of coefficients of liquidity and security of own working capital. The value of the calculated coefficients by years shows their positive dynamics, well above the norm, which indicates the financial stability of the company and the ability to be active even in the absence of access to borrowed funds and external sources of funding. In order to determine the symptoms of the critical financial condition of the enterprise, the bankruptcy was assessed for its early prevention according to O. Tereshchenko’s model, which employs the methodology of discriminant analysis. The calculation according to the model showed a gradual increase of the indicator, which confirms the financial stability of the enterprise.