Internal Audit Plan Research Articles

RISK BASED APPROACH DAN TREN MENDATANG DALAM INTERNAL AUDIT TOOLS & TECHNIQUES

Internal auditors have begun to shift from a traditional approach to risk-based approach. This article will review the previous literature on risk based audit approach, risk based audit plan and the forthcoming trends for internal audit tools and techniques (TTs) based on Common Body of Knowledge (CBOK) survey in 2007 and 2010. Based on surveys conducted by IIA in 2007 and 2010 the risk based audit plan continues to occupy the top position in the TTS used by internal auditors. It is argued that the risk-based audit plan will continue to be used by auditors in the future, because internal auditors conceive that if the internal audit plan is based on key risks that exist within the organization, it will enhance Chief Audit Executive (CAE)'s ability to match the audit plan to organizational needs..

INTERNAL AUDIT TECHNIQUE AT RETAIL ENTERPRISES

One of the currently significant, as well as promising and effective types of control over the financial and economic activities of economic entities in market conditions is an independent audit control, which is carried out by auditors, audit organizations operating on a commercial contract basis at the expense of the client (audited entity). The organization should create such a control system that would not only guarantee the absence of deviations, errors and inefficiencies in work, but would help to identify and eliminate them in a timely manner, contributing to increased efficiency. After all, the resources allocated by the company to create excess control could be used to achieve other goals and objectives. However, even a well-built and organized internal control system needs to assess its effectiveness both in terms of achieving the set goals and in terms of efficiency. The internal audit serves this purpose. For timely and more effective internal control, organizations use internal audit. The tasks of internal audit include the creation of an internal control system necessary to exercise the competence, rights and responsibility of management bodies and officials, as well as a clear system of economic responsibility of officials and specialists of the organization. The internal audit provides analytical information to the top management of the organization about its financial and economic activities, increases the efficiency of the internal control system and confirms the reliability of the reports of its separate structural divisions. Thus, the functioning of large companies in a business environment objectively led to the creation of an internal audit service in the management apparatus. The international experience of US and Western European joint stock companies shows that internal audit is becoming an integral part of effective corporate governance. The internal audit is an element of the internal control system, an independent and objective activity related to risk management, assessment and confirmation of the reliability of financial statements, with verification and assessment of the company's activities as a whole in its interests and for various users. After analyzing the known approaches to the formation of the general plan and audit program of the company, including audit tasks, we came to the conclusion that audit tasks are incompatible with the tasks of internal audit, since the purpose of the audit is to prevent inefficient use of resources, to identify and prevent abuse. The revision is retrospective-oriented, i.e. on events that have already taken place and their consequences. Thus, we have developed the following procedure for organizing internal audit planning in an organization where there is an internal audit service. In addition to the control and analytical function, the internal audit system can perform information and consulting. In this case, it means consulting employees of all structural divisions and heads of the organization on issues within the competence of internal auditors. For example, consulting in the field of finance, economics, taxation, etc. Thus, depending on the function performed, the internal audit can be in different relationships with the internal control system at the enterprise. If the internal audit in an organization performs control functions, then in this case it will clearly be part of the internal control system in an economic entity.  

Controlling as a tool for SME management with an emphasis on innovations in the context of Industry 4.0

Research background: Small and medium-sized businesses are significant economic power and employer in the European Union. The modern globalized world, new technologies, and advanced connectivity bring SMEs a wide range of opportunities, but also threats. Increasing the stability and competitiveness of SMEs is one of the main goals of national governments and the EU. The research is based on personal research in SMEs, its experiences and backward testing of reached results.
 Purpose of the article: The aim of the paper is to analyze the possibilities the potential of using controlling as a managing tool of SMEs for increased competitiveness in the context of Industry 4.0 with an emphasis on innovations.
 Methods: The study is based on a detailed analysis of 341 SMEs from the Czech Republic obtained in the years 2017?2019. The data were analyzed using statistical methods such Pearson correlation, stepwise regression for the purpose of determining the relationship between the controlling management system of a company, its innovation potential, level of process maturity, number of employees, internal audit, financial stability and strategic plan. Statistical analysis confirmed the close relationship of the analyzed variables and backwards experimental testing of the statistical analysis conclusions defined critical factors in the area of people in an organization, usage of advanced information systems and Industry 4.0 technologies implementation.
 Findings & Value added: Those important areas were determined as essential for the successful development of SMEs, as well as the most significant threats in the Industry 4.0 environment. The information obtained is useful in practice and can be applied to a more in-depth analysis of the issues. The research findings are showing possible opportunities and treads for SMEs long term stability and development as well as ways to increase enterprise performance based on controlling management system.

SETTING INTERNAL AUDIT’S LONG-TERM PRIORITIES

ABSTRACTAs I have discussed in past articles, internal audit efforts must be risk-based and contribute to the long-term assurance needs of the organization and its board. A formal risk-assessment audit must be completed at least annually and the results of that assessment should direct audit priorities. Periodic updates throughout the year are also highly recommended. Over time, a focus on short-term results (quarterly financial results, meeting current regulatory requirements, etc.) has driven the priorities of management and consequently the organization toward a short-term perspective. Similarly, internal auditing’s efforts has commonly moved toward this short-term focus, boiling down priorities to whichever audits the company needs to complete in the immediate quarter or two. During the challenging business environment period some would say it is not a good time to refocus sights on the long-term horizon. I disagree. For example, knowing what the organization want to achieve in the next two to five years, and what does it need to do to get there, is critical to success! Certainly, each organization will have different goals, objectives, issues, and challenges, and no single “standard” long-term internal audit plan will work; but I took a shot at it anyway, and present the results in this article.

The Effects of Interaction between Internal Auditor and Audit Committee on Fraud Detection in Malaysia

This study aims to examine the effect of interaction between internal auditor and audit committee on fraud detection in Malaysia. Specific interaction is firstly; audit committee approving the appointment of chief audit executive, the evaluation of chief audit executive, the dismissal of chief audit executive, the internal audit budget and the internal audit plan or program. Secondly, audit committee’s involvement in reviewing internal auditor’s work specifically; providing input for the internal audit plan, reviewing the results of internal auditing related to financial reporting, reviewing the results of internal auditing related to internal control, reviewing the results of internal auditing related to compliance with laws and regulation, reviewing the internal audit involvement in management responses to internal audit suggestions, reviewing the difficulties or scope restrictions encountered by internal auditors and reviewing the coordination between internal auditors and external auditors. Survey questionnaires were mailed to internal auditors attached to 782 companies listed on Bursa Malaysia’s main market. The results of this study suggest that involvement of audit committee in approving chief audit executives’ matters is insignificant on internal auditors’ contribution to fraud detection. However, audit committee’s involvement in reviewing internal auditors’ work significantly influence the internal auditors’ contribution in fraud detection.

INTERNAL AUDIT PROFICIENCY AND FIRM GOAL ACHIEVEMENT: AN EMPIRICAL INVESTIGATION OF THAI-LISTED FIRMS

ABSTRACT The objective of this study is to examine the effects of internal audit proficiency on firm goal achievement. Internal audit proficiency consists of continuous internal control assessment, integrative internal audit planning, best internal audit practice, dynamic internal audit review and excellent internal audit reporting. In this study, 105 Thai-Listed firms are the sample. With the results of this research, continuous internal control assessment has a significant positive effect on financial reporting reliability. Internal audit planning has a significant positive effect on organizational value increase and risk management efficiency. Best internal audit practice has a significant positive effect on operational effectiveness enhancement. Also, excellent internal audit reporting has a significant positive effect on financial reporting reliability and operational effectiveness enhancement. Furthermore, organizational value increase and risk management efficiency have a significantly positive effect on firm goal achievement. Meanwhile, financial reporting reliability and operational effectiveness enhancement have no impact on firm goal achievement. Moreover, governance vision has significantly positive effect on continuous internal control assessment, integrative internal audit planning, best internal audit practice and excellent internal audit reporting. Internal audit competency has a significantly positive effect on integrative internal audit planning, best internal audit practice, dynamic internal audit review, and excellent internal audit reporting, while internal audit learning has a significantly positive effect on integrative internal audit planning and best internal audit practice. However, future research is needed to collect in-depth data so as to reflect the actual concept of internal audit proficiency of Thai-listed firms in Thailand. Likewise, future research is strongly recommended to collect data from a larger and/or comparative population, or from other auditing professions such as certified public accountants (CPAs), tax auditors (TAs), governmental auditors (GAs), and co-operative auditors (CAs) in Thailand or elsewhere. Keywords Internal audit proficiency, continuous internal control assessment, integrative internal audit planning, best internal audit practice, dynamic internal audit review, excellent internal audit reporting, financial reporting reliability, operational effectiveness enhancement, organizational value increase and risk management efficiency, governance vision, internal audit learning, internal audit competency

Consider the OIG Work Plan in Your 2012 Internal Audit Schedules

Wound care professionals should conduct monthly internal audits of their business processes. In addition to auditing, the coding, payment, and coverage issues that are considered issues by the Medicare contractor that processes your claims and the Medicare contractors that audit your claims and payments, be sure to include the OIG Work Plan topics that pertain to your wound care business. Remember, if atopic is important enough to make the OIG Work Plan, it should be important enough to make your 2012 internal audit plan. Because the Medicare Trust Fund is important to all US citizens, everyone has a responsibility to assist in combating fraud, waste, abuse, and mismanagement in HHS programs. Therefore, the OIG Hotline accepts tips from all sources. To provide a tip to the OIG Hotline, see Table 1 for contact information.

A model for measuring an ISO 9000 internal audit outcome

This paper developed a model for quantitative assessment of a quality management system internal audit findings showing their potential to contribute to the business performance. This potential is evaluated for each of four groups of company’s strategic goals according to the balanced scorecard approach and for the company as a whole (all four groups of goals included). Literature reviewshowed that no method existed that could be used to monitor and quantitatively evaluate such internal audit findings’ potential. However such a measurement tool has been searched for by professionals and practitioners. The developed Audit Record Assessment Model (ARA model) has wide possibilities of its application.Model results are easily understood by managers and useful for internal audit planning, for comparison of internal audit outcomes through the time and for benchmarking. Model is easy to implement and to use and its results could be used for monitoring the work of the auditors as one of the criteria for their motivation, selection, training, etc. Key words: ISO 9000, internal audit, business performance measurement, quantitative assessment, balanced scorecard.

Equipped to sustain (how an organization’s internal audit plan can help it meet its current sustainability needs)

Equipped to sustain (how an organization’s internal audit plan can help it meet its current sustainability needs)

Developing a strategic internal audit‐human resource management relationship: a model and survey

Presents a model for analyzing the potential for value creation of the internal audit (IA) function, the human resource management (HRM) function, and the IA‐HRM pairing. A survey of 161 chief audit executives indicated that virtually all IA functions are risk managing in their audit approaches, while a great majority of HRM clients are also moderately or strongly strategic in their outlook. Findings included that a productive working relationship was strongest when a risk m anaging IA function is paired with a strategic HRM function. Also, the IA planning process was found to be more strategic in the presence of the same pairing. Analysis of written examples of strategic findings related to HRM supplied by the respondents suggested that there may be a significant gap between auditors’ knowledge of strategic HRM practices as developed in the literature and their self‐reported examples. Future research should use both HRM and IA responses to reduce bias. Additonally, there is a need for case studies of the IA‐HRM partnership.

Using Software to Create a Risk-Based Annual Internal Audit Plan

This article reflects the experience of Bay View Capital Cor-poration (BVCC) in using a commercial risk-based audit plan-ning and administration software product in planning and executing its annual internal audit plan, which, as a result of this effort, became a risk-based audit plan (RBAP). The prod-uct used in this endeavor was ADM PLUS, which is produced by Pleier & Associates of Mission Viejo, CA. ADM PLUS is based on a quantitative risk model. That model was config-ured, in turn, to facilitate the adoption by BVCC of the U.S. Of-fice of the Comptroller of the Currency (OCC) risk model, which is further described later in this article. This material is offered as a possible help to those organizations that are en-gaging in a comparable internal audit planning process.

Implementation of a quality system (ISO 9000 series) for placental blood banking.

Although placental blood has recently become a new source of hematopoietic progenitors for marrow replacement, limited attention has been given to systems suitable to ensure the short-term and long-term quality of placental blood units used for transplantation. In this article, we describe a quality system for placental blood banking developed in accord with ISO 9002 norms at Milano Cord Blood Bank. The quality system is the organizational structure, procedures, processes, and resources needed to implement quality management. ISO 9002 is a model for quality assurance in production, installation, and servicing, which includes a number of clauses providing guidance for the implementation of the quality system. The quality system was started by the bank medical director with step 1: the general quality plan, which included (a) the written description of mission, objectives, technical and organizational policies, and staff organization chart of the placental blood bank, (b) the definition and acquisition of adequate financial, human, and structural resources, (c) the appointment of a quality system head independent from the production laboratory and reporting directly to the medical director. Tasks of the quality system head were (a) to identify the placental blood banking process together with the placental blood bank personnel, (b) to implement a documentation plan finalized at the production and maintenance of (i) the quality manual, which provides a summary on how the bank operates with a quality system in compliance with the ISO 9002 clauses, (ii) the general procedures (or quality system procedures), which provide more detail on selected clauses, including at least those prescribed by the ISO 9002 standard, (iii) the operative procedures (or process procedures), which describe in detail the process of placental blood banking and how technical activities must be performed, (iv) the work instructions, which provide stepwise descriptions of individual activities, (v) records/forms for data collection and storage, (c) to identify quality indicators, (d) to start a regular internal audit, (e) to report audit results to the medical director for review. This was followed by step 2: the job descriptions, staff training, and qualification; step 3: the documentation plan; step 4: the internal audit plan; step 5: the launch of the quality system, and step 6: the assessment by an external team from an accredited third-party organization and final certification for compliance to ISO 9002. The quality system, which must be maintained and undergo external audit at regular intervals so that certification is confirmed, ensures the high probability that placental blood units provided to clinicians conform regularly to predefined levels of quality.

A zero‐one programming model for internal audit planning

One of the major components of an audit plan is risk assessment. Risk factors vary among organizations, and internal auditors must review their own organizational cultures to determine audit exposure. In order to minimize the risk, the internal audit department must develop an audit plan that ensures a maximum coverage of the areas to be audited. Presents the second phase of a study which aims to identify the relevant risk factors and rank the relevant auditable activities in terms of their riskiness. Develops a mathematical model that will ensure maximum audit coverage, using data from a local hospital. Suggests that the results of this research offer a practical alternative for audit managers.

Global corporate philanthropy: a strategic framework

Over the past decade, corporate philanthropy has undergone two fundamental transformations – strategic refocusing and globalization. Faced with scarcer resources and downsizing, leading firms have redefined philanthropy by tying it directly to corporate strategies and business units. Philanthropy is now seen as a component of long‐term competitiveness, rather than a short‐term image builder and sales generator. Internationally it can not only enhance and unify a global image, but also help open emerging markets through much‐needed social programmes. This high potential is unfortunately matched by an equally high risk. Global philanthropy can represent an ethical minefield, owing to extreme difficulties in monitoring subsidiary operations. In order to address this issue, presents a dual strategic framework for multinationals and their non‐profit counterparts. Adopts a stepwise approach, starting with a mission review and moving to a partner screening process, an internal audit and action plan, followed by actual programme development and performance monitoring. Despite the complexity of global corporate/non‐profit alliances, this strategic approach can minimize ethical and financial risks and give both entities a powerful competitive edge.

The Effect of Combining Compliance and Substantive Tasks on Auditor Consensus

In a recent paper in this Journal, Gaumnitz et al. [1982] provided evidence on the consensus of auditors' judgments which seemed to reconcile conflicting results reported in Ashton [1974] and Joyce [1976]. In their study Gaumnitz et al. [1982] combined judgment tasks of evaluating internal control and recommending the number of audit hours needed to assess the propriety and collectibility of accounts receivable. They reported mean correlations of 0.704 and 0.617 for internal control and audit planning judgments, respectively. The former was consistent with Ashton [1974] and the latter was higher than observed by Joyce [1976], who reported a mean correlation of only .373 for audit hour of an accounts receivable subsystem. Gaumnitz et al. suggested that by linking the two judgment tasks they reinforced the link between internal control and planned number of audit hours. Specifically, they stated: link is provided by the auditor's knowledge that an inverse relationship should exist between the strength of internal control and the number of audit hours planned. Thus, the requirement to provide an explicit judgment on the strength of internal control enabled our subjects to operationalize this inverse relationship, resulting in a high correlation (relative to Joyce's findings) among audit hour estimates [1982, pp. 753]. This explanation appears plausible given the results of previous audit judgment research. That is, high levels of consensus have been found for

Auditor Consensus in Internal Control Evaluation and Audit Program Planning

Auditors generally perform an evaluation of internal control as a basis for determining the extent of audit work necessary for a particular client engagement. Prior studies on auditors' assessments of internal control systems generally found high consensus among auditors (e.g., Ashton [1974]), while those involving auditors' decisions on audit program planning tasks found low consensus (e.g., Joyce [1976]). Joyce [1976, p. 33] explained these differences in consensus as follows: It is conceivable that different auditors might generally agree on the quality of internal control in a given subsystem yet disagree on how much audit work should be devoted to that subsystem. This is not an unreasonable proposition in view of the fact that characteristics of sound internal control are well defined (and presumably widely known), while the basis for the selection, timing, and extent of audit procedures to apply in a given situation seems to be more ambiguous. However, Joyce's explanation has not been empirically tested. Most research has focused on either internal control or audit planning judgments, but not on both. Thus, when studies reveal high consensus in internal control evaluation (e.g., Ashton [1974], Hamilton and Wright [1977], Ashton and Brown [1980], and Ashton and Kramer [1980]), it is not known if the subjects would have subsequently agreed on the extent of substantive testing.