The Use of Internal Auditors Work in Accordance with the Requirements of the ISA

Auditor ◽  
2019 ◽  
Vol 5 (1) ◽  
pp. 20-24 ◽  
Author(s):  
И. Дымова ◽  
I. Dymova
Keyword(s):  
Internal Audit ◽  
International Standards ◽  
Internal Auditors ◽  
External Auditors ◽  
Degree Of Participation

The article presents the analysis of possible variants of application of the external auditors the results of the activities of the internal audit service from the perspective of the recommendations of the international standards on auditing. The issues of practice of Russian auditors to determine the degree of participation of internal auditors in their work are touched upon. The author's version of the test to assess the quality and objectivity of the internal audit service of the audited entity by external auditors is proposed.

scholarly journals External and internal auditors’ perceptions on compliance with internal audit standards and practices: Spirit versus letters?

2021 ◽  
Vol 18 (3) ◽  
pp. 31-45
Author(s):  
Mohamed Hegazy ◽  
Marwa Farghaly
Keyword(s):  
Financial Reporting ◽  
Emerging Market ◽  
Internal Audit ◽  
International Standards ◽  
Internal Auditing ◽  
Internal Auditors ◽  
Listed Firms ◽  
External Auditors ◽  
Body Of Knowledge ◽  
The Status

This paper investigates differences between the external auditors’ (EA) and the internal auditors’ (IA) perceptions of the degree of usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by internal audit departments. The research uses survey-based questionnaires sent to IAs and EAs of the listed firms registered in an emerging market and included interviews with individuals involved in the internal auditing function (IAF) and EAs. The survey analyzes issues relating to IAF compliance with IIA standards summarized in the Common Body of Knowledge Database (CBOK). Social identity and stakeholders’ theories are used to explain the development of the research hypotheses in relation to IAF. The research indicates that the rates of conformance for the selected individual standards vary significantly among respondents. The findings provide evidence that there are low levels of interactions between IAs and EAs in emerging markets. This study is considered among the first that surveys the status of the use of the professional IIA standards in listed firms in an emerging economy. It also investigates the importance of ensuring that the “spirit” of the IIA standards is adhered to rather than the mere compliance with their “letters”. The paper emphasizes the gap still existing in practice between IAs and EAs in relation to their interactions, communication, and cooperation to enhance the quality of the IAF activities and related financial reporting. The research study relied on a sample of companies to investigate the level of compliance with IIAs standards and selected a limited number of the IIA standards for usage and compliance assessments.

External Auditors' Involvement in the Internal Audit Function's Work Plan and Subsequent Reliance Before and After a Negative Audit Discovery

2016 ◽  
Vol 35 (4) ◽  
pp. 159-173 ◽  
Author(s):  
Byron J. Pike ◽  
Lawrence Chui ◽  
Kasey A. Martin ◽  
Renee M. Olvera
Keyword(s):  
Internal Control ◽  
Internal Audit ◽  
Internal Controls ◽  
Professional Standards ◽  
Data Availability ◽  
Internal Auditors ◽  
External Auditors ◽  
Internal Audit Function ◽  
Anchoring Bias ◽  
Before And After

SUMMARY To reduce redundancies and increase efficiency in the evaluation of internal controls (PCAOB 2007, 402–403), professional standards encourage coordination between external auditors and their clients' internal audit function (IAF). Recent surveys of internal auditors find that a component of this coordination is external auditors' involvement in developing the IAF's audit plans. Nevertheless, it is not known how such involvement affects external auditors' reliance on the internal control test work of the IAF, either before or after a negative audit discovery. Based on an experiment with 107 experienced auditors, we find that external auditors involved in the development of the IAF's audit plan perceive the IAF as more objective and that both objectivity and involvement contribute to these auditors' placing more reliance on the IAF as compared to external auditors with no involvement. This initial reliance results in the involved auditors' proposing reductions to the audit budget and re-performing less of the IAF's work. Consistent with an anchoring bias, we find that involvement leads to external auditors' continuing to place greater reliance on the IAF's work, even after they become aware of a negative audit discovery that should not have occurred had the client's controls been effective. Data Availability: Data are available from the authors on request.

Internal Auditors and the Prevention and Detection of Computer Fraud

1989 ◽  
Vol 4 (4) ◽  
pp. 230-238
Author(s):  
Claire Marston ◽  
Rob Dixon ◽  
Paul Collier
Keyword(s):  
Internal Audit ◽  
Computer Assisted ◽  
Input Output ◽  
Network Systems ◽  
Internal Auditors ◽  
External Auditors ◽  
Additional Information ◽  
Specific Responsibility ◽  
Computer Fraud

This study examines the involvement and attitudes of internal auditors to the prevention and detection of computer fraud. This approach differs from previous research which has concentrated on learning from frauds which have occurred. The main enquiry was by means of a questionnaire sent to members of the Institute of Internal Auditors. Verification and additional information was forthcoming by visiting some respondents. Almost a fifth of internal audit departments reported that they had no specific responsibility for either prevention or detection of computer fraud. It was clear that where responsibility was acknowledged, it is generally on an informal basis or is self imposed. Internal auditors reported that most reliance was placed on computer assisted tools and manual techniques like input/output reconciliation for detection of computer fraud. Few of the organisations surveyed had any laid down guidelines what to do in the case of a fraud discovery. Where guidelines did exist they called for dismissal and prosecution. In smaller firms, external auditors have a larger role in the prevention and detection of computer fraud than in larger firms. Opinion on the prevention and detection of computer fraud included the view that as network systems become more common, so detection and prevention will become more difficult. In addition it was claimed that management did not appreciate the level of the threat. Internal auditors feel that they have a role to play, but highlighted the fact that there is a shortage of staff with the requisite skills.

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

2020 ◽  
Vol 4 (15) ◽  
Author(s):  
Lamis Jameel Banasser, Maha Faisal Alsayegh
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Auditors ◽  
External Auditors ◽  
Riyadh City ◽  
Creative Accounting ◽  
Telecommunications Sector

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.

scholarly journals The Attitudes of Internal Auditors to Internal Audit Practice in Post-communist Countries - Case of Albania

2017 ◽  
Vol 6 (3) ◽  
pp. 88
Author(s):  
Mustafa Uc ◽  
Dritan Shehu
Keyword(s):  
Internal Audit ◽  
International Standards ◽  
Communist Country ◽  
Public And Private ◽  
Quality Work ◽  
Internal Auditors ◽  
Current State ◽  
Research Findings ◽  
Communist Countries ◽  
Person Questionnaire

This paper aims to reveal the attitudes of internal auditors, towards overall internal audit practices in the post-communist country of Albania. The study presents the current state of internal audit practices in Albania from eyes of the internal auditors themselves. The study will explore the independence of the internal auditors, the level of professionalism they exhibit, the use of international standards, and whether current regulations are resulting in higher quality work in the profession. In order to study these objectives, a 169-person questionnaire was conducted, all participants where internal auditors from public and private sectors in Albania. The research findings of the study reveal that internal auditors can be assessed as independent in Albania, and that the private sector is the most independent. Regarding professionalism, internal auditors are able to detect and prevent fraud in companies. In this paper, we examine the international standards of auditing that are used by Albanian auditors; the international standards are really useful for internal auditors in Albania, even though there is much room for improvement. The number of participants was limited of 169 and analyzed one country. For the future researches questionnaire can be conducted more than one country to have comparative analysis. One improvement needed is the adaptation of the international standards in national regulations. This will make the international standards easier to apply and understand the standards in Albania.

External Auditor Evaluations of Outsourced Internal Auditors

2010 ◽  
Vol 29 (2) ◽  
pp. 159-173 ◽  
Author(s):  
Duane M. Brandon
Keyword(s):  
Internal Audit ◽  
Audit Fees ◽  
Accounting Firms ◽  
Internal Auditor ◽  
Internal Auditors ◽  
External Auditors ◽  
Consulting Services ◽  
Significant Area ◽  
External Auditor ◽  
Nonaudit Services

SUMMARY: In the last decade internal auditing services has been a significant area of growth for public accounting firms. Unlike the provision of external audits, the provision of outsourced internal audit services does not prohibit accounting firms from providing the client with additional services. This study investigates some implications of an outsourced internal auditor providing nonaudit services. Specifically, 89 experienced external auditors completed an experiment to investigate whether external auditors will evaluate and rely on an outsourced internal auditor’s work differently when the internal auditor also provides nonaudit services. Results indicate that evaluations of the outsourced internal auditors’ objectivity were negatively affected by the provision of nonaudit services. Further, the differences in objectivity perceptions are tempered by the use of different personnel to provide consulting services. Competence perceptions were not affected. Results also indicate that external auditor reliance on internal audit and suggested audit fees are affected. However, these results do not appear to be tempered by audit and nonaudit staffing decisions.

scholarly journals The importance of considering internal audit as a decision-making by top-management of an agricultural company

2020 ◽  
Vol 6 (3) ◽  
pp. 123-136
Author(s):  
Miloš Jokić
Keyword(s):  
Decision Making ◽  
Internal Control ◽  
Internal Audit ◽  
International Standards ◽  
Top Management ◽  
Internal Auditing ◽  
Internal Auditors ◽  
Agricultural Enterprises ◽  
Agricultural Enterprise ◽  
Valid Information

The top management's decision-making in an agricultural enterprise should be based on valid information gathered within the enterprise itself. Collecting timely business information is done daily by all sectors of the enterprise. Merely improving the security of information gathering and the safety of all parts of the enterprise is a task performed by trained internal control and internal audit personnel in the company, appointed by top management. In performing their duties on a regular basis, internal auditors should apply procedures and methodologies that are consistent with International Standards on the Professional Practice of Internal Auditing in their work. The aim of the paper is to emphasize the importance of implementing the adopted methodology of work of internal auditors in agricultural companies. The author points out those standards that are in line with best audit practice should be applied in internal audit work. The contribution of the study authors is to emphasize the importance of applying the internal audit profession in the regular operation of agricultural enterprises, which is in line with the general objective of improving the regular business operation.

scholarly journals An Examination Of Underreporting Of Time And Premature Signoffs By Internal Auditors

2010 ◽  
Vol 14 (4) ◽  
Author(s):  
Qianhua (Q) Ling ◽  
Michael D. Akers
Keyword(s):  
Internal Audit ◽  
Internal Controls ◽  
Professional Skepticism ◽  
Internal Auditors ◽  
External Auditors ◽  
Considerable Research ◽  
Internal Audit Function ◽  
Sarbanes Oxley ◽  
Audit Team ◽  
The Impact

The passage of the Sarbanes-Oxley Act of 2002 (SOX) heightened the importance of internal controls and accordingly, a key control - the internal audit function.  Consequently, management and external auditors have both increased their reliance on internal auditors’ work.  While there has been considerable research regarding the impact of the underreporting of time and premature sign-offs on the external audit, there has only been one study that has examined the impact of these two items on the internal auditors’ work.  Such research is dated (1994) and prior to the passage of SOX.  We surveyed members of the Institute of Internal Auditors (IIA) in the Midwest to examine their behavior and perceptions regarding these two items.  The respondents in our study believe the underreporting of time is unethical and is supported by their reporting of all time worked, even if such time exceeded the budget.  Our findings also show that the respondents feel premature sign-offs are unethical and result primarily from lack of professional skepticism and inadequate training.  Increasing training in audit areas and improving communications within the audit team are possible solutions to reduce premature sign-offs.  Premature sign-offs are more likely to occur in operational audits and to a lesser degree in financial audits and compliance audits. 

Implications of the Audit Oversight Board: External Auditors’ Perspective

2015 ◽  
Vol 2 (3) ◽  
pp. 1-4
Author(s):  
Mazlina Mustapha ◽  
Foong Sook Hwa
Keyword(s):  
Internal Audit ◽  
Financial Statements ◽  
Internal Auditors ◽  
Face To Face ◽  
External Auditors ◽  
The Public ◽  
Training Costs ◽  
Audit Firms ◽  
And Training

The purpose of Audit Oversight Board (AOB) is to oversee the external auditors who audit the listed companies. Its establishment is expected to improve the quality of the audited financial statements and to increase the confidence of the public on the quality of the services provided by the auditors. This study explores how the establishment of audit oversight board affects the auditors in Malaysia. As the study is exploratory in nature with limited studies being carried out on AOB, face-to-face interviews were conducted with the external auditors. The findings show that the establishment of AOB affects the job of external auditors, especially on the documentation and training costs, which vary across audit firms of different sizes. There are opinions that the increased pressure on the external auditors is not solely due to the establishment of AOB, but it is also due to the revised accounting standards and other regulations. The study also finds that the external auditors’ reliance on the internal auditors is not affected by the establishment of AOB. In addition, regardless of whether the internal audit department is in-house or outsourced, it will not affect the reliance of external auditors on the internal auditors work.

Attracting Applicants for In-House and Outsourced Internal Audit Positions: Views from External Auditors

2015 ◽  
Vol 30 (1) ◽  
pp. 143-156 ◽  
Author(s):  
Geoffrey D. Bartlett ◽  
Joleen Kremin ◽  
K. Kelli Saunders ◽  
David A. Wood
Keyword(s):  
Critical Role ◽  
Internal Audit ◽  
Job Applicants ◽  
Internal Auditing ◽  
Internal Auditors ◽  
External Auditors ◽  
Internal Audit Function ◽  
Career Option ◽  
Negative Perceptions ◽  
Survey Results

SYNOPSIS While the internal audit function (IAF) plays a critical role in organizations, it faces challenges in finding sufficient numbers of high-quality job applicants to fill its ranks. The results of two experiments suggest that practicing external auditors are twice as likely to apply for positions that are labeled as accounting positions rather than either in-house or outsourced internal audit positions. The results also suggest that external auditors have negative perceptions of the profession and work environment of internal auditors—especially in-house internal auditors relative to outsourced internal auditors—and are more likely to recommend that mediocre rather than top students apply to work in internal auditing. We also provide survey results from experienced external auditors about aspects of internal auditing that may be improved to make it a more attractive career option. Taken together, the results suggest internal auditing faces significant hiring challenges, but also offer ways to mitigate these challenges.

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