INTERNAL AUDIT AND GROWTH OF PUBLIC INSTITUTIONS

The ONATRACOM was established by the law number 08/2007 of 03/02/2007 determining the responsibilities, organization and functioning of Rwanda Public Transport Authority with function of promoting public transportation between Rwanda and other countries; participating in the implementation of the public transportation policy of Ministry in charge of transportation; perform any other activity that is directly or indirectly related to its objectives; and establish relations and collaborate with other regional and international agencies with similar attributions. In the recent days many public institutions have been listed by general auditor for being mismanaged and are on the course of deficit. This study aimed at examining internal audit growth of public institutions, case study of ONATRACOM – Rwanda. This research was conducted as a case study using ONATRACOM in NYARUGENGE District. The study was built at four specific objectives which are to determine if internal audit lead to the business growth of ONATRACOM, to find out if achieving internal audit increases the net profit and sales of ONATRACOM, to explore if there is internal sources of funds for pursuing growth opportunities in ONATRACOM, to assess whether ONATRACOM is able to obtain external sources of funds for pursuing growth opportunities as a result of internal audit impact or not. The findings were got from 27 respondents as the sample from the total target population of 96. Questionnaire was used as the technique to obtain primary data, while secondary data were obtained through examining the existing literature about the study. Chapter four presents the finding in form of descriptive statistical tables starting with the profile of the respondent and findings in line with the research objectives, It was found out that ONATRACOM was failure in its services because it was not achieve its targeted objectives and in this company, the internal audit was not effective in order to make performance of that company.

[Consolidation and reorganization activities, status and results of internal audit services pursuant to Executive Order 10 (2003)] /

Illinois Executive Order 10 (2003) authorized the consolidation of the internal auditing functions from 26 designated agencies into a single statewide function covering 46 agencies/boards/commissions that report to the Governor. After further consolidation, internal audit coverage has been expanded to 36 agencies.

Audit resolution : responsiveness of defense management to internal audit recommendations : briefing report to the Chairman, Subcommittee on Readiness, House Committee on Armed Services /

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The use of internal audit by Australian companies

Purpose – The purpose of this study is to explore the voluntary use of internal audit by Australian publicly listed companies and to identify factors that lead listed companies to have an internal audit function. Design/methodology/approach – Drawing on the Institute of Internal Auditors' definition of internal auditing, the paper predicts that internal audit use is associated with factors related to risk management, strong internal controls and strong corporate governance. To test the predictions, the study combines data from a survey of listed companies with information from corporate annual reports. The paper also provides descriptive information on the use of internal audit. Findings – The results indicate that only one-third of the sample companies use internal audit. While size appears to be the dominant driver, there is also a strong association between internal audit and the level of commitment to risk management. However, the study finds only weak support for an association between the use of internal audit and strong corporate governance. Research limitations/implications – A limitation of our study is that some of the variables in the model may not be good proxies for the factors being measured. Refinement of the model and the variables used provides an opportunity for future research. Practical implications – The limited use of internal audit by Australian companies has important implications for sound corporate governance. Originality/value – This is the first study that identifies factors associated with the use of internal audit by Australian listed companies.

A versenyképesség és a társaságok belső ellenőrzése (Competitiveness and corporate internal audit)

A cikk a belső ellenőrzésnek a hatékony társaságirányításhoz való hozzájárulását és ennek a versenyképességre gyakorolt hatását vizsgálja. A belső ellenőrzés és a társaságirányítás kölcsönös összefüggésben áll egymással. Nemcsak a belső ellenőrzés hat a társaságirányításra, hanem a releváns társaságirányítási struktúrák, emberi kapcsolatok és magatartásformák jelentős hatást gyakorolnak a belső ellenőrzés színvonalára és hatékonyságára. A cikk ezért különös figyelmet szentel a belső ellenőröknek az igazgatósággal, az auditbizottsággal/felügyelőbizottsággal, a menedzsmenttel és a könyvvizsgálóval való kapcsolatainak vizsgálatára. Rávilágít a belső ellenőrzés legfőbb funkciójára, amely objektív bizonyosságot nyújt az igazgatóság és a felső vezetők számára a kockázatok azonosítására, kezelésére és elfogadható szintre történő csökkentésére szolgáló kontrollfolyamatok megfelelőségéről és hatékonyságáról. A bemutatott belső ellenőrzési modell azt a szemléletet közvetíti, hogy a belső ellenőrzés által nyújtott objektív bizonyosság megszerzése nemcsak a jogszabályoknak vagy az ajánlásoknak való megfelelés, hanem a társaságok versenyképessége szempontjából is kiemelkedő jelentőségű. _________ The purpose of this paper is to consider the contribution of internal audit to the sound corporate governance and the impact of that on the competitiveness of the companies. There is a mutual dependency between internal audit and corporate governance. Not only the internal audit has impact on the corporate governance but the relevant governance structures, relationships and behaviour influence the level and effectiveness of the internal audit. Therefore the present paper is highly concerned with the internal auditors` relationships with the board, audit committee/supervisory board, senior management and the external auditor. It highlights the internal audit function, that provides objective assurance to the board and senior management about the adequacy and effectiveness of the processes by which risks are identified, managed, controlled and mitigated to acceptable levels. The internal audit model demonstrated represents an approach, according to that getting objective assurance provided by internal audit is important not only to be in line with laws and recommendations but to facilitate the corporate competitiveness.

South Carolina Office of the State Treasurer Department of Internal Audit Policies and Procedures Manual

The purpose of this project is to develop a Policy and Procedures Manual as a written guidance for applicable and required procedures to identify processes which will improve the effectiveness of risk management, control, and governance process through the Department of Internal Audit of the South Carolina Office of the State Treasurer's Internal Audit functions.

A study of the informal interactions between audit committees and internal auditors in Australia

This paper finds evidence for the growing importance of informal interactions between the internal audit function and the audit committee (AC) in Australia – a relatively unexplored topic in the literature – using a survey of Chief Audit Executives (CAEs). It also describes the nature of these informal interactions. The most innovative elements of this paper are the findings that certain personal characteristics of CAEs, the specific knowledge and expertise of the AC chair, as well as some of the AC chair’s personal characteristics are associated with the existence (and increase) of informal interactions.

The Asia Pacific literature review on internal auditing

Purpose – By conducting the 2006 global Common Body of Knowledge (CBOK) study, The Institute of Internal Auditors (IIA) attempts to better understand the expanding scope of internal auditing practice throughout the world. The purpose of this review of recent internal auditing literature in Asia Pacific is to document how the internal audit function is changing in response to the shifts in global business practices.
Design/methodology/approach – The literature in Asia Pacific is reviewed with a focus on developments that have implications for the expanded scope of internal auditing and the changing skill sets of internal auditors. This focus has implications for CBOK 2006.
Findings – The literature indicates a paradigm shift in the activities performed by internal auditors. The increasing complexity of business transactions, a more dynamic regulatory environment in Asia Pacific, and significant advances in information technology have resulted in opportunities and challenges for internal auditors. Although in 2004, The IIA responded to the changing organizational environment by updating the professional practices framework, more work needs to be done to prepare internal auditors for the expanded set of skills and knowledge required to perform audits of the future.
Originality/value – By presenting an overview of past literature in Asia Pacific and discussing the shifting demands on internal audit services, the researchers hope to motivate further research in the field.

Internal auditor perceptions on audit committee interactions : a qualitative study in Malaysian public corporations

Audit committees (AC) and the internal audit function (IAF) are two key corporate governance mechanisms. The primary objective of this study is to provide insights into internal auditors' perceptions of their interactions with AC members in Malaysia. The paper thus contributes to the extant literature by providing additional evidence from a South-east Asian country which is recognised as being characterised with a high power distance culture and a developing capital market. The findings are based on in-depth interviews of the heads of the internal audit function (HIAFs) from 11 publicly listed companies. The results indicate infrequent informal communications and limited private meetings between the HIAFs and ACs, and a need for clear reporting lines. Further, ACs are seen to be held in high esteem for their authority and are expected to take on greater leadership in the inquiry of management's decision-making. These findings highlight the importance of the leadership role of ACs in supporting the IAF.

Audit committee characteristics, internal auditors' contribution to financial statement audits and audit fees : Malaysian evidence

This paper provides empirical evidence on the impact of audit committee characteristics on the extent of internal auditor’s contribution to financial statement audits in an emerging economy. Using a cross-sectional regression model, based on Felix, Gramling and Maletta’s (2001) study, it provides evidence of a positive relationship between internal auditor contribution to financial statement audits and three dimensions of audit committee characteristics: the proportion of independent audit committee members; the extent of audit committee members’ knowledge and experience in auditing, accounting, and finance; and the extent of audit committee review of IA proposal related to program, budget and coordination. A second model examines a relationship between internal audit contribution to financial statement audits and audit fees. However, the results did not yield a significant relationship between the two variables. These results are based on a unique data set comprised of publicly available data matched with survey data from chief internal auditors or financial controllers of 90 firms listed on the Kuala Lumpur Stock Exchange (KLSE).

External auditors' reliance on internal auditing : further evidence.

Purpose – The purpose of this paper is to explore whether internal audit’s reporting relationship with the audit committee and the client’s business risk environment impact external auditors’ reliance on the work of internal audit. Design/methodology/approach – An experiment is conducted using a 2 £ 2 between-subjects design where we manipulate the above two factors at strong and weak levels. Participants are 66 audit partners, managers and seniors, all experienced with clients having internal audit functions. Findings – The results indicate that both factors affect external auditors’ reliance on work already undertaken by internal audit and their use of internal auditors (IA) as assistants. The results also indicate that external auditors are more likely to use internal audit for control evaluation tasks than for substantive tests of balances. The study does not find any significant interaction effects between the two factors. Originality/value – No prior studies have examined the influence of reporting relationship and client business risk on external auditors’ reliance decisions in the current governance environment. Further, the paper examines the impact of these factors on reliance on work already undertaken by internal audit and on using IA as assistants, with respect to both control evaluation work and substantive testing of balances.

Audit committee effectiveness : informal processes and behavioural effects

Purpose This paper seeks to investigate the conditions and processes affecting the operation and potential effectiveness of audit committees (ACs), with particular focus on the interaction between the AC, individuals from financial reporting and internal audit functions and the external auditors. Design/methodology/approach A case study approach is employed, based on direct engagement with participants in AC activities, including the AC chair, external auditors, internal auditors, and senior management. Findings The authors find that informal networks between AC participants condition the impact of the AC and that the most significant effects of the AC on governance outcomes occur outside the formal structures and processes. An AC has pervasive behavioural effects within the organization and may be used as a threat, an ally and an arbiter in bringing solutions to issues and conflicts. ACs are used in organizational politics, communication processes and power plays and also affect interpretations of events and cultural values. Research limitations/implications Further research on AC and governance processes is needed to develop better understanding of effectiveness. Longitudinal studies, focusing on the organizational and institutional context of AC operations, can examine how historical events in an organization and significant changes in the regulatory environment affect current structures and processes. Originality/value The case analysis highlights a number of significant factors which are not fully recognised either in theorizing the governance role of ACs or in the development of policy and regulations concerning ACs but which impinge on their governance contribution. They include the importance of informal processes around the AC; its influence on power relations between organizational participants; the relevance of the historical development of governance in an organization; and the possibility that the AC’s impact on governance may be greatest in non-routine situations.