Audit Function Research Articles

A Brief Discussion of Audit Risks and Their Causes

As a crucial supervisory department overseeing economic operations, the audit department plays a pivotal role in safeguarding the healthy development of the country’s economy, exposing corruption, and effectively maintaining social and economic peace and stability. The work of auditing involves detecting existing issues, providing remedies, and consistently contributing to national governance. However, as the market economic environment undergoes continuous changes, legal systems advance, and the audit environment becomes more complex, audit risks have gradually gained prominence. The prevention of audit risks has increasingly captured the attention of audit agencies at all levels. This necessitates audit institutions to continually adapt to new challenges, comprehend risks, and exert effective control over them. This article delves into the causes of audit risks, exploring ways to effectively identify and respond to these risks within a complex and ever-changing environment. The objective is to ensure the objectivity and accuracy of audit reports, allowing the audit function to truly serve as an “immune” system, protecting public interests.

Accountability Competence on Internal Audit Quality: Auditors of District/City Inspectorates in West Java

ABSTRACK
 This research aims to analyze organizational commitment, auditor motivation, auditor competence and the performance of the government internal audit of audit quality in Inspektorat Kota/Kabupaten Se Jawa Barat. The population in this study is the internal auditor who works in the city/district inspectorate throughout west java. The population is 514 respodents with 226 samples. Sampling used purposive sampling and data analysis using SEM (Structural Equation Model) with PLS application program. The method used by the researcher is quantitative with a causality approach. Data collection was carried out by distributing questionnaires. The results of this study indicate that organizational commitment doesn’t have a direct or indirect effect on audit quality. Motivation doesn’t have a direct effect on audit quality but must go through performance as an intervening variable on audit quality, while auditor competence has direct influence or through performance mediation variables on audit quality.

Marketing Audit as a Tool for Assessing Business Performance

The aim of this article is to determine an approach to the practical implementation of a marketing audit of business performance in a competitive environment. The aim will be achieved with the involvement of the following methods: trend, comparative and rating analyses, the BCG matrix, the Brand Health Tracking, and Delfi methods. As a result of the conducted research, an approach to conducting a marketing audit of business performance in a competitive environment with an emphasis on the use of modern digital platforms and web resources was proposed. The proposed approach to the implementation of a marketing audit of business performance in a competitive environment involved the use of the BCG matrix to determine the positions of the four leading confectionery companies of Ukraine in terms of revenue volume and growth, as well as the market share. The online presence analysis evaluated the online presence of the studied companies and to analyse other related indicators. The conducted analysis gave grounds to provide relevant recommendations. The importance of implementing each of them was determined with the help of the Delphi method. The obtained results can be applied in practice in the activities of companies in order to improve the approach to the implementation of marketing audit as a tool for assessing business performance in a competitive environment. Academic novelty is the developed comprehensive practical approach to the implementation of marketing audit as a tool for assessing business performance relative to competitors using modern digital platforms.

AUDIT EXPECTATION GAP IN THE PUBLIC SECTOR: A REVIEW OF LITERATURE

The Audit Expectations Gap (AEG) is a well-known phenomenon in the private sector, and it has developed into an emergent issue that has gotten minimal attention from public sector researchers. Consequently, the AEG in the public sector has been the subject of only a small number of studies, all of which have been carried out pertaining to the financial or performance audit contexts. Subsequently, numerous scholars have defined and assessed the AEG in a variety of ways in a variety of studies using a variety of parameters. The main purpose of this paper is to develop a new synthesis of the extensive literature on the AEG concerning the public sector. Moreover, this study examines the literature on AEG definitions and meanings, diverse dimensions employed to measure AEG, various methodologies used, the reasons for AEG, and mechanisms for narrowing the gap. The relevant articles were mainly selected using related keywords namely “audit expectation gap” and “audit expectation-performance gap” blended with “public sector”, “government sector” or “performance audit” from the Google Scholar search engine and three selected databases from 1974 to 2021, as suggested by Quick (2020). The dominance of the quantitative method within the positivistic approach was found in the examination of the AEG in the Public Sector. Moreover, the Mann-Whitney U test was found to be the predominant analytical method in empirical studies that primarily utilized questionnaire surveys for data collection. The "society" side in the samples has been extraordinarily diverse, whereas the "auditor" end has always been dominated by the Auditor Generals. Further, AEG in the public sector is a multifaceted concept. Multiple causes for the AEG and various approaches to minimizing it in the public sector have been presented. As far as the originality of the study is concerned, this is the first time a literature review on AEG was performed in the public sector context. Further, all of the facets of AEG have been addressed, and research gaps and potential issues for future studies in the public sector are highlighted. Eventually, a novel definition was developed, contributing originality to the existing public sector literature on AEG.

Leveraging computer-assisted audit tools for corporate sustainability: Evidence from Ethiopia

The existing ample literature studied the factors for adopting computer-assisted audit techniques (CAATs) by internal and external auditors, frequently ignoring their impact on the quality of audits and companies’ efficiency. This study delivers new evidence on the kinds of CAATs utilized by internal auditors, examines their adoption impact on corporate sustainability, and studies the moderating impact of company characteristics. This study used data from internal auditors in Ethiopia gathered using a survey, and the study hypotheses were tested using the partial least squares-structural equation modeling (PLS-SEM) technique. The study found a moderate utilization of CAATs by internal auditors in executing their activities. The result also revealed a highly positive impact of internal auditors’ CAAT utilization on fraud discovery in the acquisition process. The study found that the intensity of this relationship is impacted by the companies’ characteristics of management commitment. However, the size and type of the company are not impacting it. This study finding complements prior studies and helps practitioners make decisions that can improve CAAT utilization in internal audit functions for a high level of companies’ sustainability.

INTERNAL CONTROL SYSTEM AND EFFECTIVE INTERNAL SHARIAH AUDIT FUNCTION: A CONCEPTUAL FRAMEWORK

This study proposes a conceptual framework for the internal control system, as a necessary pre-requisite for an effective internal Shariah audit function in Islamic Financial Institutions (IFIs). To improve a strong management of risks that do not comply with the Shariah, it is imperative that the internal Shariah audit function is effectively operated. This study reviews existing literature on the internal Shariah audit function. By adopting contingency theory, this study then develops a conceptual framework for an effective internal Shariah audit function. The main argument presented in this article is that a strong internal control system leads to a more effective the internal Shariah audit function at managing risks associated with non-compliant events in IFIs. This study contributes to provide a clear direction to the IFIs in reshaping the prevailing Shariah audit function and Shariah governance arrangements.

- Auditor’s Integrity: The Balance of Roles

Auditor integrity is very important to ensure audit quality. However, auditor integrity can be influenced by pressure from superiors such as role conflict, role ambiguity, and role overload. This study aims to examine the effect of the three role pressure factors on auditor integrity and performance. This quantitative research with a causality approach was conducted through Google Form by involving staff auditors who work for 52 KAPs in Surabaya. Then the primary data was analyzed using SmartPLS. The results show that role conflict and role ambiguity have a significant negative effect on auditor integrity, while role overload has a positive but insignificant effect. Auditor integrity significantly negatively mediates the effect of role conflict and role ambiguity on auditor performance, and significantly positively mediates the effect of role overload on auditor performance. This study concludes that role pressure can threaten auditor integrity, so steps need to be taken to reduce pressure so that auditors can maintain their integrity.
 
 Keywords: Role Conflict, Role Ambiguity, Role Overload, Auditor Integrity, Auditor Performance.

The involvement of internal audit in environmental, social, and governance practices and risks: Stakeholders' salience and insights from audit committees and chief executive officers

We conducted 31 interviews with audit committee (AC) members, chief executive officers (CEOs), and chief audit executives (CAEs) to investigate the role of the internal audit function (IAF) in environmental, social, and governance (ESG) processes and related risks. We find that multiple possible combinations of the maturity of companies' ESG practices and CAE's perception of the IAF stakeholders' salience drive the type of IAF's involvement in ESG. In ESG‐mature companies with more salient ACs, the IAF provides assurance over ESG practices, ESG reporting, and reputation risks related to ESG, and it focuses on the governance dimension of ESG. When the CEO is perceived as more salient, the type of IAF's involvement includes both assurance over ESG controls in the supply chain and consulting on ESG activities. In contrast, in low ESG maturity companies with more salient AC, the IAF's role is limited to providing assurance over internal controls established to comply with environmental, health, and safety legal requirements, and prevent managers' unethical behavior. Finally, we discuss the implications for the IAF's ability to add value to the organization. We contribute to the underexplored research area of IAF's involvement in ESG practices and related risk.

Internal Audit in Public Hospitals: the case of Greece

Internal control is of utmost importance for effective corporate governance, particularly in public hospitals aiming for modernization in the Greek framework. Internal audit functions enhance transparency, enforce accountability, and ensure compliance with societal values, bolstering public trust. This study delves into the implementation of internal control in Greek public hospitals, considering factors like size, structure, and operational intricacies. We explore the regulatory framework, procedures, scope, and objectives, while interviewing auditing experts for insights into challenges and opportunities. Findings reveal procedural dominance in current implementation of the Law. Focus on accounting neglects crucial functional departments. The audit committee's role and composition raise independence concerns. Understaffing further hampers operations. A significant weakness appears in the independence of the audit. Internal auditors report to the hospital administrator and participate in the audit committee. The appointment and remuneration of auditors is not based on the auditor's competence and suitability, but on a cost basis. The question therefore arises as to whether the auditor performs the duties objectively and impartially in accordance with the International Institute of Internal Auditors' standards. Furthermore, regarding the research question on the role of the internal auditor and the treatment by auditees, there has been a significant improvement as evident by the respondents’ answers.

Pengaruh Keseimbangan Kehidupan Kerja terhadap Kinerja Auditor dengan Stres Kerja Sebagai Variabel Mediasi

This research was conducted to determine and analyze the influence of work-life balance through the mediating variable work stress on the performance of BPK auditors representing West Kalimantan Province. The research respondents were 30 auditors who held the positions of first expert examiner and junior expert examiner. Data collection was carried out through an online questionnaire by providing an assessment of work-life balance indicators, testing work stress as a mediation and measuring its impact on the performance of BPK auditors. The data obtained was then analyzed using SmartPLS version 4 software. The results showed that work-life balance had no significant effect on auditor performance, work-life balance had a significant effect on auditor work stress, work stress had a significant effect on auditor performance and work-life balance had a significant effect on auditor performance through the mediating role of work stress.

Auditoria operacional dos sistemas previdenciários: achados do Tribunal de Contas do Estado do Ceará

The national public administration is preceded by being monitored and supervised given the large resources that are allocated to the provision of services that society needs, leaving the courts of accounts to their control and measurement. With regard to the management programs of the private pension systems, the courts began to audit actuarial management and the accounting entries referring to long-term provisions for the payment of retirement and pension benefits. The Federal Court of Auditors presented irregularities and the Court of Auditors of the State of Ceará carried out operational audits related to the municipal regimes, and asked: what were the findings of the operational audit? The answer came through research of an interpretive nature with a qualitative approach and a case study in two municipalities of the six audited. It was concluded that: the municipal social security management in the State is recurrent in the irregularities and vices in the processes of acquisition of goods, products, or services; actuarial estimates are defective and incapable of assessing the sustainability capacity of the social security system, with indications of the absence of adherence tests for the workforce, actuarial cash flow incompatible with future execution, and inconstancy in results; absence of recording mathematical provisions in the balance sheets, originating from actuarial estimates; and absence of projections of actuarial liabilities in the tax statements. The audits studied pointed out recommendations and determinations to managers, which must be monitored by the body with the possibility of sanctioning and returning resources to public coffers.

A Clinical Audit of Operation Notes Documentation and the Impact of Introducing an Improved Proforma: An Audit Cycle.

Introduction Accurate and comprehensive documentation of surgical procedures is vital in healthcare for both medical and legal purposes. This audit assessed adherence to international guidelines for operative note documentation in a general surgery department and the impact of introducingeducational initiatives and an enhanced proforma. Methods A retrospective audit of 100 operative notes was conducted in April 2023, followed by a prospective re-audit of another 100 notes in October-November 2023. A checklist based on Royal College of Surgeons (RCS) guidelines assessed 20 parameters. An improved proformaand an awareness session for surgeons were implemented between audits. Data analysis utilized the IBM SPSS Statistics for Windows, Version 26.0 (Released 2019; IBM Corp., Armonk, New York, United States). A paired-sample t-test was used, and a p-value < 0.001 was considered statistically significant. Results The initial audit revealed discrepancies in documentation, with missing information on deep vein thrombosis (DVT) prophylaxis, elective/emergency settings, anticipated blood loss, closure technique specifics, and prosthesis/mesh details. Legibility was satisfactory in 88% of notes. After implementing the proformaand awareness session, significant improvements were observed in all parameters, with documentation rates exceeding 91%. Overall documentation completeness increased from 65.2% to 95.2%. Results of the paired-sample t-test indicated a significant difference before and after the introduction of the new proforma(Mean (M)= 65.2, standard deviation (SD) = 34.3 versus M= 95.2, SD= 4.3) with a p-value of 0.0005. Conclusion Regular audits, surgeon education, and standardized proformas are essential for maintaining high standards in operative note documentation, contributing to improved patient care and safety.

Pengaruh Profesionalisme, Pelatihan dan Gaya Kepemimpinan Terhadap Kinerja Auditor

This research aims to examine Professionalism, Training and Leadership Style on auditor performance. Data collection for this research used a questionnaire. The questionnaire was submitted to the Public Accountant Office in Padang City. This research is included in Quantitative research. The sample is determined by purposive sampling technique. Data analysis used multiple regression using SPSS 22 software. The results of this study indicate that professionalism has a positive effect on auditor performance, training has no effect on auditor performance and leadership style has a positive effect on auditor performance.

INTELLECTUAL CAPITAL AND INTERNAL AUDIT PERFORMANCE: THE MINISTRY OF FINANCE'S INSPECTORATE GENERAL AUDITOR CASE

This research aims to determine the influence of intellectual capital, which comprises public human capital, public organizational capital, and relational public capital, on internal auditor performance. It follows a quantitative research approach where data was collected from questionnaire surveys to 40 Inspectorate General of the Ministry of Finance auditors. Structural Equation Modeling (SEM) was employed to test the hypothesis. This research concludes that public human capital and relational public capital are positively associated with internal auditor performance. Meanwhile, public organizational capital is not associated with internal auditor performance. This research offers valuable insights into the role of intellectual capital in enhancing performance within public sector organizations.

Internal Audit Quality In North Sumatra Government

This study explores the concept of internal audit quality within the context of the North Sumatra Government. The focus is on understanding the factors influencing and contributing to the effectiveness and reliability of internal audit practices in the region. Through a quantitative research approach, data is collected to analyze the key components of internal audit quality and their impact on organizational governance. The study employs a survey methodology, distributing questionnaires to internal auditors, management, and other stakeholders involved in the internal audit processes of North Sumatra Government agencies. The research investigates factors such as adherence to professional standards, competency of internal auditors, independence, and the effectiveness of communication within the internal audit function. Preliminary findings indicate a correlation between internal audit quality and the overall governance and risk management framework within the North Sumatra Government. The study contributes to the existing body of knowledge by providing insights into the specific dynamics and challenges faced by internal audit functions in the public sector. The implications of this research extend to government officials, policymakers, and internal audit practitioners, offering recommendations for enhancing internal audit quality to strengthen accountability, transparency, and organizational performance within the North Sumatra Government. The results aim to inform decision-makers and contribute to the continuous improvement of internal audit practices in the regional public sector.

Implikasi Peran Auditr Internal Dalam Tata Kelola Perusahaan

The internal audit function continues to evolve in line with changes in the business environment. In Europe, the challenging business environment is closely related to risks and corporate governance issues. As a result, a shift in the internal audit function in addressing corporate governance issues demands greater independence from the function. Responding to the need for a more independent internal audit function, a decision regarding the appointment and dismissal of the head of the internal audit and his remuneration is required, which must be approved by the supervisor. These changes indicate that the role of internal audit in the governance management relationship has changed. This research provides an overview of these changes, the trends toward an increasing role of internal audit in corporate governance, the expected benefits of internal audit independence organizations, and the future challenges in European countries.

Principal’s Strategies in Improving Employee’s Performance (Study at SMA Negeri South Bengkulu)

This study aims to determine the Principal's Strategy in Improving Employee Performance (Study at SMA Negeri 1 Bengkulu Selatan). This research is qualitative research which is presented descriptively. There were 6 informants in this study consisting of: 2 key informants and 4 key informants. Methods of data collection through interviews, observation, and documentation. The data analysis techniques used are data reduction, data presentation, and drawing conclusions. Based on the results of the research and discussion, it is known that employee performance (a study at SMA Negeri 1 Bengkulu Selatan has been carried out). This can be seen from the indicators discussed earlier, namely: (1) Positive Encouragement: there is an award given by the school principal to TU employees and the teacher council who have achieved achievements assessed by the school principal, in the form of a charter. (2) Perform a Performance Audit: Every year the principal conducts an audit both in terms of finance and performance checks of employees, both the teacher council and TU staff to assess performance results. (3) Set Performance Standards and Goals: The principal assigns duties and responsibilities to the teacher council and TU staff in accordance with their respective duties in carrying out their duties. (4) Give Feedback: To Employees Regarding Their Performance The principal can see from the absence of teachers and TU staff to check the attendance of early or late employees whether or not the tasks assigned are carried out. (5) Give Employees Compliments or Other Rewards Related to Performance. The existence of praise given or carried out by the principal to the staff of the teacher council, TU and students who excel by giving some kind of reward can be in the form of money that has been budgeted by the school committee.

Evaluation of the performance of the internal audit function in Libyan banks: A study on Libyan commercial banks.

This study aimed to evaluate the performance of the internal audit function in Libyan banks and to explore the role of demographic information in determining this evaluation. It provides an insightful look into the performance and this relationship through the opinions of the respondents. The study utilized a quantitative descriptive-analytical approach to collect data and answer the posed questions. The study population consisted of employees in the Libyan commercial banking sector. The study distributed 350 questionnaires to Libyan banks, and after about three weeks, 345 were collected, of which 333 were valid for analysis. Survey results indicated that respondents largely agreed that the performance of the internal audit function was high, as most scores were rated high. However, there were some items that respondents indicated as average, meaning they did not agree with their content. Hence, it should be noted that internal auditing should provide recommendations to improve the internal control system when necessary, tables of committee meeting agendas and related key information should be circulated before meetings, and the audit committee should monitor the selection of accounting policies and principles. The study also revealed that there was no statistically significant effect of demographic information on the evaluation of the performance of the internal auditor, with the exception of the age variable. Thus, the study recommends addressing the challenges faced in adopting the International Financial Reporting Standards (IFRS) by providing a high-quality set of internationally recognized accounting standards that achieve transparency, accountability, and efficiency for financial markets worldwide.

IMPLEMENTASI ETIKA PROFESI DAN LOCUS OF CONTROL TERHADAP KINERJA AUDITOR

The purpose of this study is to provide an overview of the application of professional ethics and locus of control to auditor performance either by internal auditors within a company or auditors at a Public Accounting Firm. This research uses the Systematic literature Review (SLR) method. This method is carried out by reviewing several national and international standard journals. The results showed that the quality of auditor performance audit results is dominantly influenced by several situational factors and characteristics of an auditor, for example professional ethics and locus of control that exist for all auditors. This internal locus of control has a positive effect on audit quality, the more internal the locus of control, the higher the audit quality. The external locus of control has a negative effect on audit quality and audit quality decreases. Certified auditors who have good professional ethics will have a positive impact on the auditor's performance. The better the professional ethics of an auditor, the better the auditor's performance will be. An auditor's internal locus of control will behave ethically compared to the auditor's external locus of control which tends to behave unethically.

Making internal audit count

Abstract In recent years the role of the internal audit function has gained increasing prominence and is now seen as a cornerstone in the overall governance of public sector bodies. This article explores the experience of 127 public sector bodies and illuminates key insights for public sector bodies seeking to realise more meaningful results from the efforts currently directed towards the internal audit function. Among the most significant research findings is the evidence that the function is not viewed by its most key stakeholders as a primary driver of continuous improvement. This finding identifies a disconnect between the real-world practice of internal audit function and the definition of the function across relevant academic literature, public policy and practitioner guidance. The author concludes that an overemphasis on assurance activities can be to the detriment of the other value-add functions which the internal audit function can deliver. While currently widely viewed as a divorced function, the real value of internal audit will only be realised by integrating it within the organisation. Such integration will allow the sharing of enterprise-wide learning, thus enabling the function to become a primary driver of a permanent culture of continuous improvement.