Conclusion to be drawn from this chart is if the 15 agencies choose to use IIAMS instead of purchasing the commercial package “Audit Leverage” an initial savings to the State of Florida would be $185,000, with an avoidance of reoccurring of expense of $16,900. It should be noted, the Auditor General’s Office has a workgroup that recommended the IIAMS solution for their 400 plus professional staff. They are currently testing the software. This is a savings of over $500,000 for the AG’s office.
Abstract— Units of Government InternalAudit (GIA) play a significant role in developing a system of good governance. They contribute to the improvement of public services delivery and the welfare of society. But some current governance issues in Indonesia, such as corruption, accountability and performance problems, raise questions concerning the effectiveness of Indonesia’s GIA units. The complexity of these issues requires cybernetic study to find holistic and effective solutions. The objective of this study is to examine the effectiveness of government internalaudit systems in order to enhance the professionalism of government internal auditors and the maturity of the management processes that they audit. This research was based on qualitative approaches with systems methodology. The instruments used during the research were regulatory analysis, survey, and in-depth interviews. The survey involved 205 Chief Audit Executives (CAE) of Government Internal Supervisory Apparatus (GISA) in national government and regional governments, and was conducted on-line or on paper. The survey was complemented by in-depth interview with 24 (twenty four) senior stakeholders representing practitioners (the CAE of GISA units), internal users (governors, mayors, heads of regional planning agencies), external users (Indonesia’s Supreme Audit Board, SAB), regulators, and associations of professional internal auditors, both private sector (IIA) and public sector (AAIPI). The research found that the effort of enhancing the role of the GIA units should be seen holistically. The improvement of the role of GIA units related to the stakeholders, including management line of the organization, the SAB, professional associations, regulators, and law enforcement officials as well as other factors. The arrangement of the internalauditsystem could allow the government auditors to improve their professionalism and help line management to mature their management processes. The emerging strategic issues needed to build an effective internalauditsystem are the improvement of independence and objectivity of the auditors, a relationship with relevant stakeholders regulation and harmonization of regulation for the internalauditsystem.
century) internal auditors were seen mostly as revisers of accounting and financial information. Internal auditors were used as assistants to externals auditors and were called upon financial statements review or other account- ing functions (e.g. reconciliation with third parties). Inter- nal auditors played minimum role within organizations and had only a “limited responsibility in the total managerial spectrum” (Moeller & Witt, 1999). Step by step internal auditors are focusing on compliance audits. Later internal auditors start to evaluate effectiveness of internal control system, assess operating processes. Finally, nowadays, the scope of internalaudit covers not only compliance audits, evaluating internal controls, fraud investigations, assess of operating processes, but also consultations to the senior management and participation in risk management.
¾ Outside parties - also play an important role in the internal control process. They can contribute to achieving the objectives of the organization or can provide useful information to influence internal control. However, they are not responsible for the design, implementation, proper functioning, maintenance and documentation of the internal control system of the organization.
For every audit visit, IAD’s management will monitor the duration in which reports are prepared and issued to the auditee to enable management to limit and control the process to ensure the budgeted reports to be produced in each financial year as prescribed in the department’s Key Performance Indicator (KPI) are achieved.
The internalaudit is a tool that can significantly contribute to the improvement of the entire business system. But to achieve that, the organizations must change the way they perceive internalaudit and consider all its potentials. First of all it is necessary to refocus from corrective to preventive action. Moreover, the audits should cover all aspects of the business system whenever it is possible. That is because the quality managementsystem, or any other standardized managementsystem, is a part of the business system, integrated into the existing managementsystem. Accordingly, the audit objectives and criteria should be reviewed. The audit should not be a goal in itself. If the audit should contribute to overall system improvement then that is how it should be planned.
The growing level of crimes, corruption and fraudulent activities has lead to great concerns. In Nigeria, many banks are faced with the challenges of irregularities, illegitimacy and inaccuracies which are as a result of inadequate external audit systems. Thus, the need of a good external auditsystem cannot be over emphasized. In financial organizations, errors and irregularities are not disclosed to the public because it might terminate their image and goodwill. A new wave of bank fraud that has challenged the recently upgraded internal risk control measures ordered by the Central Bank of Nigeria has become a source of concern for the authorities. The public’s expectations of boards and senior management, and those charged with providing an independent review of the company’s operations and financial accounts have been raised. In this study, the impact of internalaudit on financial fraud detection is examined. Specifically, the study examines three core internalaudit features; internalaudit size, internalaudit quality and internalaudit independence. Using a combination of both descriptive and inferential statistics, the study found that all three core internalaudit features; internalaudit size, internalaudit quality and internalaudit independence have a significant positive impact of financial fraud detection.
The auditors, who do not normally participate in setting the corporate tax strategy, could be asked by central management to endorse aggressive and pathological transfer pricing ideas instead of taking on the role of active promoters of useful and lawful transfer pricing dynamics. In Italy, this filter between the board of directors and the auditing activity (Dittmeier, 2011) isdone by the Control and Risk Committee, whose fundamental duty it is to support the board of directors’ valuations and decisions in relation to the internal control system and risk management. The first instrument the internalaudit function must necessarily use is to acquire the relevant information from all the companies in the group. To do this there must be coordination between peer departments in the individual subsidiaries and an upward information flowso that the parent company is aware of all the aspects of the subsidiaries’ fiscal management. The internal auditors of each subsidiary must ensure that the information is correctby checking that all the data underpinning each audit are correct, exact and complete.
Sarens and Beelde (2006) argued that the relationship between internalaudit task and the management be symbiotic. Hence, management would be willing to give support when its expectations are met by IAD. Based on their qualitative examination (case study) of five companies in Belgium, Sarens and Beelde (2006) highlighted five expectations of the management that motivated support for internalaudit function. The management expects IAD to leverage management’s loss of control due to increase in organizational complexity; safeguard the corporate culture through interaction with the people in the field; support in monitoring and improving the risk management and internal control system; serve as a training ground for potential managers; and ensure active relationship with external auditors to increase audit coverage. The thought is that the presence of all or part of these expectations will influence the support of the management. Burton et al. (2012) likewise assert that the decision and the attitude of the managers towards internalaudit recommendation depend on the credence given to the recommendation.
Good governance is an important issue in the management of public administration today. Good governance practices can improve the climate of openness, participation and accountability in accordance with the basic principles of good governance in the public sector. The challenge to realize this goal is very heavy, because the behavior of businesses and public services by the government during the long period of time has been tainted by corruption, collusion, and nepotism. This cause of Indonesia as one of the country are still high levels of corruption. Institute of Transparency International released corruption perception index for 2015. The report mention there are 168 countries surveyed, and Indonesia was ranked 88. Corruption perception index for 2015 can be seen in Table 1.
Committee of Sponsoring organization of the Tread way Commission (1992) inserts the efficacy in the new realm of ICS as their input towards a radical change in the scope of ICS. According to Power (1997), prior works on ICS only emphasized on the issue of probity and efficiency in organizational operations. Good internal control system begins with management’s assessment of the risks facing the entity with regard to preparing reliable financial report; management should have a working knowledge of what can go wrong in the capturing, processing and reporting of financial information. One of the fundamentals of achieving efficacy in ICS is a vibrant internalaudit. Decades ago, internalaudit is perceived as a monitoring mechanism which is seen as a mere watch dog, but lack the jurisdiction and power to assist an entity in its strive towards achieving major objectives (Morgan, 1979). But, McNamee and McNamee (1979), observe that through its role and functions, internalaudit has metamorphosed into a prime agent of transformational change, particularly when it comes to the issue of testing, designing and monitoring of internal control system. ICAEW (2004); Dandago and Suleiman (2005), stress that internalaudit plays an indispensable role in achieving overall corporate intent of entities, be it in the public or private sector. InternalAudit Guideline (2008) adds that internalaudit role is primarily about providing independent assurance over the internal control system frameworks to an organization.
Workflows and automated authorisations to replace these cumbersome processes can be created within SharePoint (a Microsoft application) which is currently in use across some departments within the Council. As well as having the capacity for workflows which contain audit trails, SharePoint can be used as a document managementsystem. It can utilise version control and automated document retention management, which will aid compliance with the demands of the keeper of records.
Judgmental sampling will in some cases be used to provide the Director with clues as to whether to proceed with a statistical sample. If the Director encounters a well-designed and well-executed internal control system, good management, well-trained employees, and a feedback mechanism that highlights errors, it may be unnecessary to spend a great deal of time performing extensive transaction tests. A small sample selected at random to obtain some reasonable representation of the population may suffice. If no errors are found, the Director may reasonably determine that he sees no basis for examining the population further or for suspecting any material error.
In today’s world, many governments are interested in modernizing their public service, leading them to introduce new techniques and tools of management inspired by the business sector. This new field is called the new public management. The quality and the efficiency of public services constitutes a priority for each of us. Many countries have tried this new theory; the results were different from one system to another. The use of the new public management covers different sectors through the introduction of several new functions. The internalaudit is among the functions that has proven good results. This article aims to investigate how internal audits accomplish their role in improving the management.
6. The Riskmetrics system is provided by MSCI as a managed service. The software is physically hosted by MSCI in its data centre and it is accessed remotely by IMD via secure connection. IMD transmits on a daily basis to MSCI a position file containing the list of its holdings. MSCI uploads the position file sent by IMD into Riskmetrics. Based on MSCI proprietary market data and algorithms, risk assessment reports are generated in Riskmetrics. IMD accesses Riskmetrics via Internet for viewing/downloading the risk reports or simulating potential risk scenarios and their impact on its holdings.
areas in an organization (Kumar and Hillegersberg, 2000). A benefit to firms that has been attributed to the ERP implementation is the easy maintenance of internal controls (Matsuo, 2009; Nikkei Solution Business, 2009). ERP systems help firms set up accurate and timely information flow systems for internal managers and outside stakeholders and make information transparent (Zhang and Wang, 2010; pp. 33-34), as ERP systems are designed for the processing of business transactions built upon a core database managementsystem (Kuhn and Sutton, 2010; p. 92). Therefore, firms with ERP implementation can guarantee accurate and timely information disclosure and improve corporate governance by resolving information asymmetry problems (Zhang and Wang, 2010; p. 34). Based on previous evidence, the effectiveness of an internal control system is likely to increase when corporate governance is improved. Therefore, the effectiveness of internal controls is essential for audit quality improvement and is characterized by the decrease in misstatements and errors in preparing financial statements.
assessment of the system of internal controls and risk management to the board, as well as a written assessment of the internal financial controls to the audit committee. (King 3 differs from Sarbanes-Oxley in that no attestation is required from external auditors on internal controls on financial reporting). Implications: Internalaudit may require more resources to provide assurance on the system of internal control and risk management to the board. Currently in practice, many internalaudit functions take care not to duplicate the work of external audit and thereby do not provide assurance on exclusively internal financial controls. Internalaudit will have to determine the basis and methodology by which it can provide a written assessment on the internal financial controls to the audit committee going forward. The audit committee will have to ensure that internalaudit is properly resourced and has sufficient budget.