Internal Audit Process Research Articles

The Role of Internal Audit in Enhancing Performance: A Case Study of Mirwais Neeka Institute of Higher Education, Kandahar, Afghanistan

The Internal Audit is a systematic process of analyzing risk, its likelihood and impact and taking necessary steps to avoid and control risks by its various control measures particularly in educational institutions. The prime objective of this research is to study and explore the specific impact of the internal audit function on the performance of Mirwais Neeka Institute of Higher Education in Kandahar. This study investigates how the internal audit function at Mirwais Neeka Institute contributes to the institution’s overall performance by examining audit processes, stakeholder perceptions, and tangible outcomes. The population for this study consists of administrators, faculty, students, and relevant staff of Mirwais Neeka Institute of Higher Education involved in or affected by internal audit processes and purposive sampling technique has been used for selecting representative sample of 40 respondents from the population. The analysis employs descriptive statistics, correlations, and Ordinary Least Squares Regression to determine the relationships between internal audit functions and organizational performance. The study concludes that internal audit functions are crucial in enhancing risk mitigation, operational efficiency, and performance measurement, thus significantly impacting the performance of Mirwais Neeka Institute. The research provides valuable insights for administrators and policymakers, emphasizing the need for robust internal audit practices to improve institutional performance. Future research could explore additional factors influencing organizational performance and delve deeper into the specific components of internal audit functions driving performance improvements.

Enhancing Audit Quality: Key Factors and the Role of Rewards in Government Internal Audits at the Financial Audit Agency of North Sumatra

Numerous audit findings identified by the BPK, rather than the inspectorate—tasked with serving as an internal auditor and an early warning system—indicate that the quality of government internal audits remains inadequate. This observation suggests that the internal audit processes within government institutions have yet to achieve an optimal standard. The principal aim of this study is to analyze the influence of internal supervision, audit probity, public accountability, and auditor competence on the quality of government internal audits. Additionally, the study examines the role of rewards as a moderating variable within the context of the BPK RI North Sumatra Representative. The study utilized a saturated sampling technique to select 48 participants, and data collection was conducted via questionnaires. Statistical analysis was performed using the MRA (Multiple Linear Regression Analysis) method with SPSS version 25. The findings from partial statistical tests reveal that neither internal supervision nor audit probity significantly impacts the quality of government internal audits. Conversely, public accountability and auditor competence demonstrate a positive and significant relationship with internal audit quality. When analyzed collectively, internal supervision, audit probity, public accountability, and auditor competence collectively contribute positively to the quality of internal audits. However, rewards do not serve as a moderating factor for the relationships between internal supervision, audit probity, public accountability, and audit quality. In conclusion, this study provides critical insights into the determinants of government internal audit quality. The results underscore the vital role of public accountability and auditor competence in enhancing the effectiveness of internal audits. Nonetheless, greater efforts are required to strengthen internal supervision and audit probity to achieve overall improvements in audit quality.

The impact of using ChatGPT on internal audit quality: a case study of a subsidiary of an oil group in Morocco

The integration of artificial intelligence (AI) has brought transformative changes across industries, including the field of internal auditing. With AI technologies evolving, internal auditors are exploring innovative tools to enhance audit quality and efficiency. This study investigates the impact of using ChatGPT on the quality of internal audits in a subsidiary of a major oil group in Morocco. To achieve this objective, we analyzed internal audit processes and evaluated how ChatGPT’s AI-driven capabilities influence audit performance. Data was collected from a sample of 23 auditors working within the subsidiary and analyzed using SPSS (linear regression). The results revealed that ChatGPT’s perceived utility was strongly correlated with improvements in internal audit quality, particularly in explaining technical elements and concepts that are outside the auditors’ typical training, thus enhancing the accuracy and depth of their analyses.

Enterprise internal audit data encryption based on blockchain technology.

Internal auditing demands innovative and secure solutions in today's business environment, with increasing competitive pressure and frequent occurrences of risky and illegal behaviours. Blockchain along with secure databases like encryption improves internal audit security through immutability and transparency. Hence integrating blockchain with homomorphic encryption and multi-factor authentication improves privacy and mitigates computational overhead. Recently, blockchain applications for internal audits in the enterprise sector are still emerging. Thus, blockchain technology in auditing provides the benefits of enhanced transparency and immutability in data processing, which can establish new solutions for internal auditing but still lacks encryption techniques. The research proposed a framework called "BlockCryptoAudit" to enhance internal audit processes through cryptographic encryption methods and blockchain technology, ensuring secure and transparent audit operations. The proposed approach integrates an additive homomorphic Paillier encryption scheme with blockchain to create a safe and tamper-resident audit trail. Utilizing homomorphic Paillier encryption, BlockCryptoAudit ensures that computations may be performed on encrypted audit data while safeguarding data privacy. The applied blockchain hyperledger component guarantees the immutability and transparency of encrypted audit records, resulting in a decentralized and tamper-resistant record. By limiting data accessibility to authorized individuals based on specified responsibilities, role-based access restrictions handled using smart contracts further strengthen security. The study protects audit data's security and confidentiality by encrypting it and putting it on a blockchain. The study compares the proposed BlockCryptoAudit with models like B-OAP, BSE-DF, and EG-FLB regarding risk mitigation, audit quality, security overhead, and audit trail effectiveness. With little security overhead, BlockCryptoAudit beats out B-OAP, BSE-DF, and EG-FLB in terms of risk mitigation (98%) and audit quality (99%). It is an effective way to improve internal audit processes and guarantee data integrity due to its high performance.

The Role of Information Technology in Optimizing the Internal Audit Process and Improving the Quality of Internal Audit

This study describes the influence of the use of information technology on the quality of internal audits in Indonesia using the meta-synthesis method. The results show that the use of information technology has an important role in determining audit quality. It also highlights the importance of auditor competence in mastering various information technology tools and responding to changes that occur, especially in the business world, as well as helping auditors to carry out audit planning by monitoring the lifestyle of suspected fraudsters. This research can contribute to the development of audit practices and adaptation to technology. The implications are to help audit practitioners, regulators and stakeholders in increasing the use of information technology for better audit quality in the future. The digital era also presents challenges for auditors to be able to further improve their performance capabilities in order to adapt to future advances in information technology.

Leveraging technology in internal audit processes for streamlined management and risk oversight

The integration of advanced technologies into internal audit processes has revolutionized organizational management and risk oversight, enabling streamlined, data-driven decision-making. As businesses face increasingly complex regulatory environments and operational risks, traditional audit methods often struggle to keep pace. This paper explores the transformative role of emerging technologies, including data analytics, artificial intelligence (AI), robotic process automation (RPA), and blockchain, in enhancing internal audit efficiency, accuracy, and transparency. By automating repetitive tasks, RPA reduces audit cycle times and minimizes human errors, allowing auditors to focus on value-adding activities. AI and machine learning algorithms enable predictive risk analysis, anomaly detection, and real-time monitoring, strengthening an organization’s ability to identify and mitigate risks proactively. Additionally, data analytics tools facilitate comprehensive assessments of large datasets, uncovering patterns and insights that would otherwise go undetected in manual audits. The paper also examines the role of blockchain technology in fostering transparency and accountability through secure, tamper-proof audit trails. Despite the benefits, the adoption of these technologies presents challenges, including integration costs, skill gaps, and data privacy concerns. Addressing these challenges requires strategic investment, workforce upskilling, and collaboration between audit professionals and IT specialists. By leveraging technology, internal audit functions can evolve into proactive, agile frameworks that align with organizational goals, providing robust risk oversight and contributing to long-term sustainability.

The Interpretation of Public Administration Controlling From an Economic Perspective

Objective: The primary objective of this study is to assess the adherence of state/municipal economic companies to the requirements outlined in Government Decree 339/2019 (XII. 23.) concerning the use of budgetary funds. Furthermore, the study aims to evaluate the effectiveness of internal and external control systems and propose measures to enhance the efficiency and transparency of these companies' financial management. Theoretical Framework: The research builds on the principles of public sector governance, focusing on the role of internal control systems and external monitoring in ensuring the proper use of public funds. Government Decree 339/2019 serves as the regulatory basis for evaluating performance, while theories on financial control, transparency, and accountability in public administration are employed to interpret the findings. Method: A qualitative approach was employed, including an audit of selected state/municipal companies. The study utilized data from the ÁSZ (State Audit Office) reports, internal control mechanisms, and management reviews. Performance evaluations were conducted in light of the companies' compliance with regulatory requirements, with a focus on identifying systemic shortcomings and proposing improvements. Results and Discussion: The audit revealed that while the companies generally complied with Government Decree 339/2019, several shortcomings were noted, particularly in the areas of internal control and economic management. External monitoring by the ÁSZ and existing internal control systems contribute to ensuring the proper use of budgetary funds. However, there is a need to strengthen these systems further to address the observed issues. The study suggests the implementation of a management-oriented controlling system, which would emphasize economic decision-making and improve overall performance and transparency. Research Implications: The findings have significant implications for state and municipal economic companies. By adopting a more economically focused internal control system, these entities can enhance their financial management practices, optimize the use of public funds, and foster greater transparency and efficiency in their operations. This approach would not only benefit public administration but also improve service delivery to the general public. Originality/Value: This study contributes to the existing literature by highlighting the importance of a management-oriented controlling system based on economic principles in the public sector. It provides practical recommendations for enhancing the internal control and audit processes of state/municipal companies, offering valuable insights for policymakers and public administration professionals striving for greater fiscal responsibility and transparency.

EXAMINING THE CURRENT PRACTICE OF GOVERNANCE IN ZAKAT IN A MUSLIM MINORITY COUNTRY: THE CASE OF SRI LANKA

Zakat constitutes one of the pillars of Islam and religious practice in Islam aimed at supporting those in need. It also plays a major role in contributing to the socioeconomic development of society. To achieve efficient zakat management, institutions must focus on strong governance and proper management practices. This focus is essential due to the institution’s responsibility to manage effectively and provide transparent information to the public. Therefore, to meet stakeholder needs, non-profit organizations must prioritize governance. In Sri Lanka, the absence of specific laws or regulations governing zakat practice such as the Marriage and Divorce (Muslim) Act, the Muslim Intestate Succession Ordinance, and the Muslim Mosques and Charitable Trusts or Wakfs Act has led to a need for examination of current governance practices related to zakat collection and distribution. This study explores these practices and highlights how applying governance principles can help achieve the objectives (Maqasid) of zakat management in Sri Lanka. The research employs a doctrinal analysis of primary and secondary data, including statutes, practices, journals, and reports. Additionally, the study analyzes current zakat management practices through interviews with five respondents, including zakat practitioners and Shari’ah scholars, using thematic analysis. The findings reveal several issues: the causes of inefficient governance in zakat management, theoretical and practical problems with existing practices in Sri Lanka, gaps in the zakat governance framework, and conceptual and management deficiencies within zakat institutions. The study recommends developing a new governance framework for zakat management. This should include modern rules and practices based on Islamic law, staff training in fundamental Islamic knowledge, improved internal and external audit processes, and increased awareness among managers, donors, beneficiaries, and members of society.

Investigation of the Current Internal Audit Processes and Procedures within Morogoro Municipal Council

This study focused on investigating the current internal audit processes and procedures within Morogoro Municipal Council. A descriptive research design and quantitative approach were utilized, targeting Morogoro Municipal Council staff and internal auditors with a sample size of 74 respondents selected via simple random and purposive sampling methods, respectively. Data was gathered through questionnaires for staff and interviews for auditors, supplemented by secondary data from relevant documents. While most respondents agree that the internal audit processes are well-documented, effectively communicated, and robust enough to address risks, there are concerns about adherence, resource adequacy, and the independence of the audit function. To improve effectiveness, it is recommended that the Council enhance adherence to procedures, allocate adequate resources, strengthen the independence of the audit function, and ensure regular updates to audit procedures. These steps will better support governance, accountability, and overall organizational efficiency.

The Mediating Effect of Information Technology Usage on the Relationship of Internal Audit Processes and Internal Auditor Competence towards Internal Audit Effectiveness: Evidence from the Chinese Financial Sector

The effectiveness of internal auditing is determined by various factors, such as the independence of the internal audit function, auditors’ competence, effective audit planning, efficient audit processes, and support from senior management. The digitalization and informatization of modern enterprises have transformed the way companies are managed and have similarly impacted internal audit practices. Informatization not only alters traditional internal audit processes but also changes auditors’ ways of working and thinking. From the perspective of resource-based theory, the effective allocation and full utilization of human, technological and organizational resources can enhance the effectiveness of internal audit. Therefore, the purpose of this study is to examine the impact of internal audit processes (IAP) and internal auditor competence (IAC) on internal audit effectiveness (IAE), as well as the mediating effect of information technology usage (ITU) on the relationship between IAP and IAC and IAE. To test the proposed hypotheses, a questionnaire survey was conducted within Chinese financial enterprises, yielding a total of 133 valid responses. Statistical data analysis was performed using the partial least squares structural equation modelling (SEM-PLS) method. The results indicate that both IAP and IAC have a significant impact on IAE and ITU. Furthermore, ITU serves as a mediating factor, enhancing the positive contributions of IAP and IAC to IAE.

Implementation of Internal Quality Audit at IKesT Muhammadiyah Palembang

The Internal Quality Assurance System (SPMI) in universities has an important role in the implementation and improvement of the quality of educational services provided by universities. One of the ways to evaluate the fulfillment of the higher education standards in question is through the Internal Quality Audit (AMI) process. The implementation of AMI at IKesT Muhammadiyah Palembang has been carried out well and has had a positive impact on improving the quality of higher education implementation and has also referred to SPMI and the PPEPP cycle. The Quality Assurance Institute (LPM) reported the results of the AMI training to the Rector of IKesT Muhammadiyah Palembang and invited all leaders of faculties, study programs and work units to present the results of the AMI that had been implemented, with this the rector can know where the weaknesses and shortcomings need to be improved and improved in order to create Good University Governance (GUG).

Evaluating the impact of risk management and risk-based internal audit on fraud detection in local governments

One of the leading indicators for improving fraud detection capability is the evaluation of the implementation of risk management and risk-based internal audit and information technology systems. This study aims to evaluate how risk management and risk-based internal audits influence fraud detection capabilities in local government when integrated with information technology systems. SPSS 26 was utilized for data analysis. The paper uses a quantitative approach, collecting primary data with questionnaires distributed among 200 auditors and 70 supervisors across four districts in West Java. A purposive sampling approach based on self-selection was used. The findings show that the ability to detect fraud is significantly and positively influenced by the implementation of a risk-based internal audit (sig 0.000 < 0.05) and risk management process (sig 0.000 < 0.05). On the other hand, the risk management framework (sig 0.107 > 0.05) has a negative and insignificant effect on improving fraud detection capability. In addition, the relationships between the risk management process (sig 0.006 < 0.05) and fraud detection capability were found to be moderated by information technology systems. However, information technology systems are unable to moderate the relationship between risk-based internal audit (sig 0.563 > 0.05) and risk management framework (sig 0.115 > 0.05) on fraud detection capability. Therefore, risk management and risk-based internal audits are able to detect fraud, and information technology systems can strengthen the risk management process with the ability to detect fraud. AcknowledgmentThe authors would like to thank the University of North Sumatra, especially the Research Institute, for its support and the Ministry of Education and Research through the Directorate of Research, Technology, and Community Service program for providing intellectual assistance and funding for this project in the PMDSU grant (number: 91/UN5.4.10.S/PPM/KP-DRTPM/2024).

The Influence of Sustainable Risk Management on the Implementation of Risk-Based Internal Auditing

Risk management exerts a significant influence on the competitiveness of an organization and its operational processes. It presents opportunities for expansion, foresight, and the need to promote sustainability. Many organizations have executed comprehensive risk management processes. Moreover, internal audit has increasingly attracted managers’ attention, forming the basis of modern governance methods. The aim of this study is to examine, from the viewpoint of the agency, the impact of the role of internal auditors, training in risk management, and management support on risk management. Following this, the work examines risk management in terms of the risk-based auditing implementation that is performed by Saudi public organizations. This study encompassed 234 completed and therefore valid questionnaires from the manager and assistance of the internal audit department, internal auditors, accountants, and managers employed in Saudi public organizations. The data collected have been analyzed utilizing Smart Partial Least Squares (SmartPLS). This study’s findings confirmed that there is a significant association between the role of internal auditors in risk management, training in risk management, and between management support and risk management. There is also a significant association between risk management and the implementation of risk-based internal auditing. This study’s findings have significant ramifications for those in charge of public-sector organizations, and sustainability, aiming to enhance the dependability and trustworthiness of the internal audit process and other aspects of financial reports and audits in general. Currently, there is a dearth of published research on the factors that influence risk management and also on risk-based internal auditing. This study contributes to the emerging literature on this subject by examining Saudi public organizations; it also establishes empirical variables through a thorough review of relevant research. Conducted here is an empirical investigation that identifies the factors that affect risk management and then its influence on risk-based internal auditing implementation in the economic system of Saudi Arabia. By focusing on Saudi public organizations, this article highlights other countries that have similar systems of governance rules and procedures in their government-operated entities.

Towards Better Financial Governance: The Urgency of Model Risk Management in Indonesia Viewed Through Maqashid Shariah

This study assesses the adequacy of Model Risk Management (MRM) frameworks within Indonesian Islamic banking by utilizing Maqashid Shariah principles as a tool to align these frameworks more closely with global standards, specifically focusing on safeguarding life (Hifzh Al-Nafs) and property (Hifzh Al-Mal). Through a comparative literature review, this research examines the structure and effectiveness of MRM practices in Indonesia, referencing regulations such as POJK 65/2016 and SEOJK 25-SEOJK.03-2023, against those in developed financial markets such as the USA, UK, Europe, Japan, and UAE, with an emphasis on governance, lifecycle management, and internal audit processes. The findings suggest that Indonesia’s current MRM frameworks are somewhat rudimentary when contrasted with international norms. Key areas identified for enhancement include expanding the scope, enhancing governance structures, refining model lifecycle management, and strengthening internal audits and oversight mechanisms. By employing Maqashid Shariah principles as an analytical tool, this paper proposes enhancements to MRM frameworks that can significantly improve the stability and compliance of Islamic banks in Indonesia, promoting greater global competitiveness and adherence to Shariah principles. This approach not only integrates traditional MRM approaches with Islamic ethical standards but also provides a tailored framework for regulatory enhancements that support a stable, compliant, and ethical Islamic banking environment.

Research on Optimization of Internal Audit Process under the Background of Big Data

In the era of big data, it is especially vital to optimize the internal audit process. Traditional methods are increasingly inadequate to handle the burgeoning volume of data and intricate environments. Consequently, leveraging big data technology to enhance audit processes has become essential. The role of internal audit should evolve from mere supervision to a service-oriented function, aiming to bolster governance, uncover issues, and enhance value. Nevertheless, challenges such as inadequate audit independence and feeble rectification mechanisms persist. The integration of big data technology with internal audit practices can markedly elevate the quality and efficiency of audits, and foster innovation in audit methodologies. To optimize the audit process, it is imperative to define clear objectives, propose practical and viable solutions, and further refine the quality and sophistication of audit work through techniques like data preprocessing and analysis.

Peranan PT IMC Ship Management Selaku Auditor Internal Terhadap Safety Management System di MV. Dewi Shinta Manggala

Internal audit activities are carried out to meet and implement the Safety Management System (SMS) rules so that safety on board ships is implemented in accordance with the ISM Code. In addition, an internal audit conducted by a shipping company can minimize the findings of an external audit of the Safety Management System (SMS). The purpose of this research is to find out the implementation process, obstacles and solutions for the implementation of MV internal audit. Dewi Shinta Manggala. The method carried out in this study is qualitative descriptive. Data collection was carried out by in-depth interviews, observations, and documentation. The results of the study show that the obstacles faced in the obstacles experienced in the internal audit process are the unsuitable time between the ship's schedule and the auditor resulting in delays, crew ratings that are not optimal in implementing the Safety Management System (SMS), and the crew's understanding of the Safety Management System (SMS) on board the ship which is considered to be still lacking. So that the efforts that must be made, namely the company's internal parties communicate well with each other, the company gives strict sanctions to crews who do not optimally implement SMS, the company requires crews to attend SMS training.

Leveraging ChatGPT for Enhancing the Internal Audit Process—A Real-World Example from Uniper, a Large Multinational Company

Leveraging ChatGPT for Enhancing the Internal Audit Process—A Real-World Example from Uniper, a Large Multinational Company

IMPACT OF FORENSIC ACCOUNTING ON FRAUD DETECTION IN NIGERIAN DEPOSIT MONEY BANKS

This study investigated the impact of forensic accounting on fraud detection in deposit money banks within Benue State, Nigeria, utilizing a cross-sectional research design. The population consisted of 145 employees from three deposit money banks operating in Makurdi Metropolis, Benue State. A census sampling technique was employed, and data were collected using a structured questionnaire validated through content and construct validity methods, achieving a Cronbach's Alpha reliability coefficient of 0.872. The study employed binary logistic regression to estimate the impact of forensic accounting variables on fraud detection. The findings reveal that Engagement of Forensic Accountants (EFA) significantly enhances fraud detection, with a coefficient (B) of 1.671 (SE = 0.414), Wald statistic of 9.830 (p 0.001), and odds ratio (Exp(B)) of 3.911. This implies a 291.1 increase in the likelihood of fraud detection with the engagement of forensic accountants, underscoring their pivotal role in improving financial transparency and accountability. Conversely, Litigation Support Skills (LSA) did not show a statistically significant impact on fraud detection (B = 0.541, SE = 0.378, p = 0.152), suggesting limited effectiveness in this context. However, Forensic Investigative Professional Skills (FIS) demonstrated a significant positive impact (B = 1.203, SE = 0.406, p = 0.015), increasing the likelihood of detecting fraud by 104.4. The study recommends that banks prioritize the integration of forensic accountants into internal audit processes to bolster fraud detection capabilities effectively. Furthermore, continuous professional development in forensic investigative techniques should be emphasized to enhance staff skills and readiness in identifying and mitigating complex fraud schemes.

INFLUENCE OF INFORMATION TECHNOLOGY ON INTERNAL CONTROL SYSTEMS IN TERTIARY INSTITUTIONS IN OSUN STATE, NIGERIA

The study examined how information technology affects internal control systems in tertiary institutions in Osun State. Specific goals were to ascertain whether or not information technology has a significant impact on the internal control systems and internal audit processes of tertiary institutions. A survey research design was chosen. A sample size of 100 respondents participated in the study. This study used the stratified sampling method and a regression technique was used for data analysis. The findings showed that internal control systems and internal audit procedures in tertiary institutions in Osun State were highly influenced by information technology with t= 20.02 P< 0.0 and t= 19.049p<0.05, respectively. It was concluded that internal control systems and internal audit procedures at tertiary institutions were strengthened and improved by information technology. The study has recommended that tertiary institutions adopt information technology in order to improve their internal control frameworks. To keep their staff’s necessary skills and knowledge current, the management of tertiary institutions should encourage both on-the-job and off- the-job training in information technology. To stop fraud, internal control mechanisms should be put in place. To establish who will be held accountable for violations, tasks must be digitally separated effectively.

Internal Audit to Monitor the Injected Activity in PET/CT Using Control Charts.

In an effort to limit the risks associated with medical radiation exposure, the last century witnessed the development of dose control mechanisms, recommended by the International Commission on Radiological Protection. This organization recommends the optimization of radiation protection to provide the highest level of safety that may reasonably be achievable. Adhering to the "as low as reasonably achievable" principle, the purpose of this study was to monitor the 18F-FDG injected activity in PET and optimize the radiation protection through an internal audit process. This monitoring allows the identification of opportunities for improvement in patient care and safety, as well as to establish a periodic review of the medical unit reference levels. The methodology is based on short run Quesenberry (Q) statistics and normalized nonconstant sample size (Z-chart) control charts. Anonymized data from 512 patients were selected from a set of 18F-FDG PET/CT (Siemens, Biograph 6) examinations performed during 10 months. The analyzed variable was the ratio between the 18F-FDG injected activity (MBq) and patient weight (kg). Mean injected 18F-FDG activity was 347.811 ± 64.967 MBq corresponding to a mean effective dose of 6.608 ± 1.234 mSv. The ratio between the 18F-FDG injected activity and the body mass of patients was reduced from 5.243 ± 0.716 to 5.171 ± 0.672 MBq/kg during the statistical data analysis. The study demonstrates that control charts can be a useful tool to signal situations where patients receive an activity significantly different from the standard practice in a medical unit. The use of joint control charts is a suitable tool for detecting nonoptimized radiopharmaceutical administration. This analysis provides opportunities to evaluate and improve the quality of practice in nuclear medicine. This methodology constitutes an internal audit that may help health care professionals to make appropriate decisions to ensure all patients receive the safest and most appropriate care.