Internal Audit Services Research Articles

НЕЗАЛЕЖНІСТЬ ЯК ОБОВ’ЯЗКОВИЙ ПРИНЦИП РОБОТИ ЗОВНІШНІХ ТА ВНУТРІШНІХ АУДИТОРІВ: ВИМОГИ ТА МЕХАНІЗМ ДОТРИМАННЯ

The purpose of this study is to determine the requirements for the observance of the principle of independence by external and internal auditors, given their relationship in the performance of audit engagements. Research methodology. The methodological and theoretical basis of the study is the scientific and creative understanding of the developments of foreign and national scientists in the field of auditing in general, and internal audit in particular. The information base of the study was the official documents, standards and codes of ethics of international professional associations and organizations of accountants and auditors. To achieve this goal, a set of general scientific methods (analysis, synthesis, induction, deduction, abstraction) and methodological techniques (systematization, generalization, review, comparison) to study the principle of independence in the practice of external and internal audit as a professional activity have been used. Results. The necessity of developing a detailed Code of Ethics for Internal Auditors and specific regulations for internal audit services, which would combine the requirements of official standards and codes, and identify clear measures to assess conflicts of interest and precautionary measures, has been substantiated. The main stages of development of appropriate precautionary measures at such levels as level of auditor, level of engagement, functional level, and organizational level have been determined. It has been proved that the independence of thought and behavior as components of the independence of both external and internal auditors should be formed in view of all parties involved in the process of performing the audit engagement, taking into account the content of three party relationships. The practical significance of the research results. The practical use of the proposed theoretical approaches and practical recommendations will improve the quality of engagements performed by both external and internal auditors.

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.

The Effectiveness of the Use of Artificial Intelligence in The Internal Audit Process and Its Impact On Risk Management, Control and Governance in The Palestinian Government Sector

The study aimed to identify the effectiveness of the use of artificial intelligence in the internal audit process and its impact on the management and evaluation of risks, control and governance in the Palestinian government sector, and to answer the research questions and test the hypotheses of the study, the researchers relied on the descriptive analytical method, and distributed a questionnaire to the study community consisting of department managers and heads of departments and internal auditors working in the internal audit departments of the Palestinian government ministries and the number of (40) auditors, and the use of statistical analysis program(SPSS) to enter and analyze data. The results of the study also showed that there is a significant impact on the use of artificial intelligence in the internal audit process on the management and evaluation of risks and regulatory systems, strengthening governance procedures and mechanisms, improving the efficiency and effectiveness of the audit process, increasing the quality of internal audit services and reducing risk in Palestinian government ministries. The study also recommended the need to direct Palestinian government ministries to adopt the use of Artificial Intelligence applications in the internal audit process, because it provides a reduction in time and cost and increase the efficiency of performing internal audit tasks in light of the huge amount of data and complex reports and then help him reach rational decisions, and should enhance the awareness of internal auditors of the importance of the use of Artificial Intelligence technologies, its role in achieving the quality of the audit, conducting the risk assessment process, examining internal control systems, and strengthening the governance system in Palestinian government ministries

Statistical Techniques for Planning Internal Audit Engagements and Analytical Procedures Selection

The planning an audit engagement is the most important component that determines the effectiveness of internal audit services, both from the standpoint of improving the efficiency of the company and users of the results of the internal audit work. The use of statistical tools during the planning phase of the audit engagement can be considered as a component of a risk-based approach to internal audit. This research applies such statistical instruments as the normal distribution, the Kolmogorov–Smirnov test and regression analysis. The methodological support improvement of the internal audit process is one of the ways to perfect a guarantees quality and advice provided by the internal audit unit, as well as to minimize labor costs at the stage of planning an audit and determining the scope of the audit. There had being used such general methods of scientific knowledge as observation and comparison of data, analysis and synthesis, scientific abstraction during the research course. The proposed risk-based methodology for defining the scope and objectives of internal audit engagements using statistical tools was developed in conformity with the International Framework for the Professional Practice of Internal Auditing (Supplementary Guide “Planning an Audit Engagement: Defining Objectives and Scope”). The scope of analytical procedures formed in the process of planning the audit engagement allowed to cover the areas of the process that are most at risk of deviations. The practical significance of the study is considered by the possibility of applying the proposed methodology to define the audit assignment scope and its purpose, select the most effective analytical procedures, and minimize the labor costs of the working group. The developed methodology can be used for the work process organization in internal audit departments of business entities; some of its provisions can be applied in order to conduct a self-assessment of the effectiveness of the internal audit function. The use of statistical data analysis tools and publicly available information processing tools can improve the effectiveness of the internal audit function by the way of focusing on the most risky areas of the audited process. The developed methodological support is based on a risk-oriented approach.

ТИЖОРАТ БАНКЛАРИДА ИЧКИ АУДИТ ХИЗМАТИ ФАОЛИЯТИНИ ТРАНСФОРМАЦИЯ ҚИЛИШ ИСТИҚБОЛЛАРИ

The article discusses the prospects for improving the activities of internal audit services of commercial banks, transforming their activities through the introduction of modern banking services,digital technologies. The results of previous studies on the topic were reviewed. The regulatory framework for the transformation of the internal audit service has been introduced.Keywords: internal audit, transformation, current control, digital technologies, remote services, bank board, annual plan

Организация внутреннего аудита профессиональными участниками рынка ценных бумаг

Th is article discusses the main provisions of a new regulatory document that will enter into force on October 1, 2021, namely, Bank of Russia Ordinance No. 5683-U dated December 28, 2020, which regulates the requirements for organizing internal control and internal audit by professional participants in the securities market. For the fi rst time, this document speaks of the obligation to create an internal audit service and defi nes its functions. Th e attractiveness of the securities market for clients and their investment activity depend on the professional activities of participants in the securities market.

Some methods of performance audit

In this article, the author proposes a methodology for conducting an efficiency audit used by the internal audit services of state bodies. In order to effectively use the appropriate time resources to achieve the objectives of the performance audit for efficiency, cost-effectiveness, productivity, priority should be given to the analysis, evaluation of management, finance, information, public services, strategic results, the opinions of the company, the results of audits of authorized bodies, audit bodies and other information of the audited entity for a certain period. High-quality developed special indicators and evaluation criteria and performance audit indicators are the most necessary tool for achieving the audit objective and detailed determination of the results of the object's activities audit based on these indicators.

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.

Attributes of the internal audit function and effectiveness of internal audit services: evidence from local government authorities in Tanzania

PurposeThe purpose of this study is to examine how the level of attributes of the internal audit function relates to the effectiveness of internal audit services in local government authorities (LGAs) in Tanzania.Design/methodology/approachData have been collected through a survey whereby 510 respondents from LGAs in Tanzania through their Heads of Internal Audit Functions, Internal Auditors and Chairpersons of Audit Committees respond to the questionnaire. The data were subjected to principal component analysis and exploratory factor analysis to reduce the set of items and to provide continuous scores for use in multiple regression analyses.FindingsThe findings reveal that audit quality; organization setting and auditee attributes have a significant positive influence on the effectiveness of internal audit services in LGAs in Tanzania.Research limitations/implicationsThe study covered only LGAs in Tanzania. Future research in this field should address the gaps identified in the study.Practical implicationsThis paper highlights areas that need management attention on the improvement of the effectiveness of internal audit units.Originality/valueThis paper contributes to the literature of both internal auditing and management studies by linking the level of attributes of internal audit function which are audit quality, organization setting, auditee attributes and effectiveness of internal audit services in Tanzania.

Functioning of Public Internal Audit in Albania

Internal audit is an important tool in helping senior management of organizations to find the right solutions in meeting the objectives. Through findings and recommendations, auditors provide assurance and advice on the management of internal control systems, risk and governance. The management of public organizations in Albania still has an incomplete conception and a low level of awareness on the role of contemporary internal audit services. This is firstly related to the quality of audit activities, where in significant cases the quality of this service is assessed to be not at the levels required by contemporary standards and practices, and secondly to the lack of recognition and misuse of these services by many administrators of public organizations. The aim of this research is to determine the state of capacity of public administration employees in the field of internal audit, in public organizations in Albania and give the right recommendations for the development of these capacities in order for the internal audit service to become a powerful tool in the hands of managers to achieve their objectives by adding value to the organization. The methodology used for the research has its own dimensions such as: specification of research subjects and sampling, tools used for research, implementation plan, ethical issues, presentation of research findings, etc. The research is based on primary and secondary data collection. The research is based on the testing of the Hypothesis, H0. The practical implications of this paper consist in the fact that: this is an in-depth study of the problems faced by the internal audit activity in public sector organizations in Albania. The conclusions and recommendations given to address these issues will add value to the management of these organizations, by helping managers reconsider their roles and responsibilities in order to strengthen the Internal Control System, and to make it a powerful tool in meeting their objectives. They also serve internal auditors to improve their practical activities. The paper is original, as so far in Albania no other studies with these dimensions have been conducted in this field, and it also has both theoretical and practical value for researchers, internal auditors and managers of the field.

IMPLEMENTATION AND ORGANIZATION PROBLEMS OF INTERNAL AUDIT IN THE RUSSIAN FEDERATION AGROSECTOR

The article reveals the features of the implementation of internal audit in the companies of the agroindustrial sector of Russia, the main difficulties and current trends of its development. Today, the tasks of internal audit are diverse, depending on the industry differences of economic entities, organizational and legal forms, and the preferences of owners and managers of enterprises. To improve the well-being of the enterprise and optimize management activities, it is necessary to implement an independent internal audit system that will have all the necessary human and technical resources. Unfair and ineffective actions of the company's management can be significantly reduced by increasing the level of independence of the internal audit service, providing internal auditors with the necessary methodological tools that are aimed at reducing the likelihood of unfair actions of management and inefficient use of the company's resources. The main difficulties of the development of the internal audit system in the modern conditions of economic activity of agricultural enterprises are analyzed and development options are proposed.

Pengaruh Kompetensi Audit Internal Dan Kualitas Jasa Audit Terhadap Good Corporate Governance (GCG)

Penelitian ini bertujuan untuk menganalisis pengaruh kompetensi audit internal terhadap Good Corporate Governance dan kualitas jasa audit terhad Good Corporate Governance. Populasi dalam penelitian ini adalah seluruh hotel yang berada di kabupaten Badung. Metode pengumpulan data yang digunakan dalam penelitian ini adalah dengan penyebaran kuisioner secara online menggunakan google form . Teknik pengambilan sampel dilakukan dengan metode purposive sampling dan berdasarkan kriteria yang telah ditentukan maka jumlah hotel yang memenuhi kriteria sebanyak 62 hotel bintang04 di kabupaten Badung. Responden dalam penelitian ini adalah chief accounting dan audit internal dalam hotel. Hipotesis penelitian diuji menggunakan regresi linier berganda dengan bantuan softqware SPSS 22.00 for Windows Hasil penelitian menunjukan bahwa variabel kompetensi audit internal dan kualitas jasa audit secara parsial berpengaruh positif terhadap Good Corporate Governance .

STRATEGY FOR OPTIMIZING INTERNAL AUDITING FINANCIAL CONTROL OF THE COMPANY DURING THE ECONOMIC CRISIS

The article considers the process of strategic transformation of the company’s internal audit as an effective form of the financial control system, which is a structurally branched set of interrelated links. The paper analyses various aspects of organization management in the context of global crisis phenomena in socio-economic and other spheres. The author proposes a set of measures to adapt the company to work during the Covid-19 pandemic impact on the economy. The study clarifies fundamentally new requirements to the content of the internal audit service specialists` functionality and the nature of their interaction with top management representatives. The paper outlines the prospects of professional development of the auditor in modern conditions.

ПЕРСПЕКТИВИ РОЗВИТКУ СЛУЖБИ ВНУТРІШНЬОГО АУДИТУ НА ПІДПРИЄМСТВІ

The article discusses the prospects for the development of the internal audit service at the enterprise. The need for internal audit is due to the increasing scale of enterprises and the inability of the accounting system to provide the information, which is necessary for timely management decisions. If the company wants to know about the state of affairs, identifies the strengths and weaknesses of its activities and prevent possible risks, it appeals to internal audit. Despite the level of professionalism of management, imperfection and variability of the national tax system makes the issue of control over the activities of the enterprise relevant. Most inspections and audits carried out by external control entities only confirm the fact of violation. What cannot be said about the internal audit service, which helps to prevent negative phenomena, works ahead and eliminates the possible cause of the offense. Given the volume of offenses and abuses identified by supervisory authorities, the introduction of an internal audit becomes a necessity. After all, fraud not only causes financial damage to the company, but also negatively affects their reputation and relationships with business partners, which in the future will lead to even greater losses. Having an internal audit service is a signal to potential investors and lenders of good corporate management and generally makes good impression of the company. In addition, the existence of such a service allows the company to enter international capital markets, operate well, preserve assets and survive the crisis. You can organize an internal audit by creating a separate division of the enterprise, outsourcing or co-sourcing. The advantages and disadvantages of each of the methods are discussed in more detail in the article. At the current stage, we see an ambiguous attitude to internal audit among businesses. This is due to managers' lack of understanding of its capabilities and the need to do business. However, internal audit can be an effective source of information for managers at all levels and will give business owners an assessment of the real state of affairs to make effective and appropriate management decisions.

ВНУТРІШНІЙ АУДИТ В УМОВАХ ПАНДЕМІЇ

Until recently, internal audit staff performed three key tasks: monitoring the internal control system, advising management on various issues, and detecting fraud in the company. But the Covid-19 pandemic has made its adjustments. From the beginning of the pandemic, the focus of their work has shifted towards resource saving and risk assessment. Thus, internal auditors began to play more the role of consultants than auditors. But any new tasks require new approaches. Those who are accustomed to working in stable conditions, according to standard procedures, are forced to restructure, learn new audit techniques, expand the set of skills. And all in order to remain effective for business, and therefore - in demand professionals. Undoubtedly, the pandemic has taught the internal audit services a lot. Despite the obstacles, they can carry out almost any inspections remotely. Internal auditors have been creative in finding ways to continue their work during the constraints caused by the coronavirus, and have adopted alternative audit methods, technologies and tools. In addition, the internal auditors focused on the advisory function, which allows for an independent assessment of the response to the crisis, as well as the implementation of anti-crisis measures. Internal audit services have proven their worth to businesses by demonstrating flexibility and the ability to apply digital technology in responding to emerging issues. However, what to expect in the next stage, which will probably be accompanied by a change in business models and accelerated digital transformation, no one knows enough. That is why, today in a crisis, the work of internal auditors is somewhat different, because they act more quickly and use a wider range of skills. Traditional inspection methods such as site visits, sample testing, and documentation review are giving way to remote auditing, analytics-driven testing and digital methods. The Covid-19 pandemic is accelerating the transformation of internal audit by requiring it to take on the role of a flexible, forward-thinking and technological business partner that offers management a strategic vision of risk across the company.

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.

СОВРЕМЕННЫЙ АСПЕКТ ВНУТРЕННЕГО КОНТРОЛЯ И АУДИТА В РОССИЙСКОЙ ФЕДЕРАЦИИ

The conduct of financial and economic activities of organizations, both budgetary and commercial, is associated with possible risks of non-compliance with the current legislation, making unreasonable management decisions by the top and middle management, which leads to reputational and financial losses. In order to forestall financial and reputational losses, organizations form an internal control system. In the Russian Federation, the formation of normative and legislative regulation of the organization and conduct of internal financial control and audit is taking place, both in relation to commercial organizations and organizations of the budgetary sphere. The article examines the order of organization, types, tasks of internal control and audit in various organizations. The organization of internal control and audit is considered in the article through the prism of legal regulation of this area in the Russian Federation and international regulations. The internal audit system, as an obligatory element of the management system, has been introduced in the banking sector and for public sector organizations. For commercial organizations, this issue is left to the management of the organization and the creation of an internal audit service is optional. The regulatory and legislative framework of the organization and methods of conducting internal control for organizations have been studied. The approaches to the organization and conduct of internal control have been investigated from the point of view of orientation towards possible risks. Based on the results of the study, the article concludes that the presence of an effectively functioning internal control system, which is based on an assessment of possible risks, contributes to an increase in the efficiency of the organization, the prevention of cases of fraud by the organization’s personnel, and an increase in the reliability of accounting, tax and other types of reporting

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.

ПРИНЦИПЫ ОРГАНИЗАЦИИ СИСТЕМЫ ВНУТРЕННЕГО АУДИТА В УСЛОВИЯХ РЫНОЧНОЙ ЭКОНОМИКИ

This article deals with the issues related to the organization of the internal audit service, which allows to assess the effectiveness of control and management systems that exist in the organization, as well as to determine the factors that hinder the achievement of the goals and development of the company. The article examines the principles of the organization of the internal audit system in companies, as well as reveals the factors that affect the effectiveness of the internal audit service.

INTERNAL AUDIT AS AN EFFICIENT CORPORATE CONTROL TOOL UNDER THE CONDITIONS OF THE COVID-19 PANDEMIC

Under the conditions of the Covid-19 pandemic the classic functionality of internal audit is subject to review. It is necessary to change the usual activity trajectory, meet the dialogue with the company’s business administration on the issues of business running. The advisory function which allows to conduct an independent assessment as well as to insure the implementation of anti-crisis measures planned by the company’s business administration steps forward. The article analyses the interest of scholars in the research topic using Google Trends research tools and Google Ngram Viewer. The concept of internal audit in the system of corporate control is considered. The objectives of internal audit and their relationship for corporate control have been identified. The principles of optimal organization of the internal audit service of the enterprise are described. The necessity of an internal audit service existence as an effective tool of corporate control has been proved. The role of internal audit during the COVID-19 pandemic has been identified and the measures taken by internal auditors to respond to the challenges posed to the business by COVID-19 have been explored. Audit processes during the COVID-19 pandemic are described. The need to make changes to the plan in case of non-compliance of the plan with the most significant risks is stated. The trends of expected risks caused by the COVID-19 pandemic have been identified. The steps for risk identification and assessment are presented, in particular: risk identification; risks assessment and its analysis and risk response. The directions of internal audit activity during the COVID-19 pandemic are indicated. The recommendations of international experts on internal audit are analysed, the priority of internal audit areas is presented. The priority of the consulting function of internal audit is emphasised. The participation of the internal audit service in anti-crisis measures to overcome the consequences of the COVID-19 pandemic is proposed.