scholarly journals Banking sector lack detection: Expectation gap between auditors and bankers

Accounting ◽  
2021 ◽  
Vol 7 (6) ◽  
pp. 1353-1362 ◽  
Author(s):  
Nurul Hasanah Uswati Dewi ◽  
Putri Wulanditya ◽  
Dian Oktarina ◽  
Herwin Ardianto
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
Fraud Detection ◽  
Internal Audit ◽  
Internal Auditors ◽  
Interpretive Paradigm ◽  
Expectation Gap ◽  
Private Banks ◽  
Bank Managers ◽  
Work Units

This study aims to identify the determinants of the expectation gap in fraud detection between internal auditors and bankers in Indonesia. The shift in the internal audit task in the banking sector can cause the hole in audit expectations to widen. This research uses qualitative methods with an interpretive paradigm which is rarely done by previous research. The results of interviews with internal audit work units and bank managers from 4 state-owned and private banks indicate a gap in audit expectations regarding the responsibilities between internal auditors and bankers, especially in carrying out the function of examining and detecting fraud. This study recommends the financial services authorities and bank leaders be able to improve education regarding anti-fraud policies to stakeholders, especially in terms of a clear division of tasks in fraud detection in the banking sector.

Could perverse incentives encourage financial services compliance and internal audit staff to ignore or engage in illegal behaviour?

2018 ◽  
Vol 33 (1) ◽  
pp. 64-89 ◽  
Author(s):  
Bryane Michael ◽  
Mark Williams
Keyword(s):  
Financial Services ◽  
Internal Audit ◽  
Economic Incentives ◽  
Financial Industry ◽  
Self Assessment ◽  
Content Type ◽  
Internal Auditors ◽  
Financial Firms ◽  
Perverse Incentives ◽  
Using Data

Purpose The purpose of this paper is to understand why managers, internal auditors and compliance staff (in financial firms specifically and using Malaysia as a concrete example) can want to ignore compliance-related legislation (a law on anticompetitive behaviour in this case). Design/methodology/approach The authors review, discuss and critique the literature on compliance and institutions in the light of existing data from Malaysia’s financial industry (literally confronting theory with data). Findings Legislative design can actually encourage managers and their auditors disobey/ignore the law for reasons which previous theories cannot explain. Research limitations/implications This research does not use the regression techniques in vogue now. The findings, nevertheless, imply that attempts to explain phenomenon in management auditing should start with the laws governing managerial activity. Practical implications Auditors may use the methods used in this study to assess the extent to which financial services firms’ managers have incentives to comply with laws. Similarly, this research can quantify the extent to which internal auditors in these firms have incentives to find untoward conduct. Social implications Poorly designed laws affecting managerial auditing derive from pre-existing social relationships, as well as help shape them (as shown using data). Identifying areas of non-compliance may actually signal deeper problems in the way businessmen and lawmakers make and enforce laws requiring compliance and self-assessment. Originality/value The authors know of no study looking at the economic incentives driving internal auditors’ behaviour – particularly in the area of antitrust. They show how law shapes management and auditors’ incentives, quantify these incentives and show how/why previous research fails to explain these incentives.

scholarly journals The Contribution of the Internal Audit Function in Risk Management

2017 ◽  
Vol 8 (3) ◽  
pp. 178
Author(s):  
Faten Hanna Kerazan
Keyword(s):  
Risk Management ◽  
Internal Audit ◽  
Professional Organizations ◽  
Professional Certification ◽  
Public And Private ◽  
Internal Auditors ◽  
Internal Audit Function ◽  
Private Banks ◽  
Regulatory Bodies ◽  
Training Courses

This study aimed to identify the contribution of internal audit in risk management in Syrian public and private banks, the questionnaire was used in collecting the initial data, which was distributed to a sample of board of directors and executives in these banks.The study found that there is a contribution to the internal audit function in risk management in all Syrian public and private banks and there are no statistically significant differences on this contribution.The study recommended of the need to conduct training courses for workers in the internal audit function and issue instructions and necessary legislations to regulate the activity of internal audit in banks, a committee of internal audit must be formed within the Association of Chartered Accountants in Syria, where its mission is to the development of internal auditors and the need for cooperation of professional organizations of accounting, auditing and regulatory bodies in Syria to establish an association for internal auditors to qualify them and give them a professional certification to carry out their roles under the new framework for exercising of the profession that guarantees to provide the necessary advice and guidance for them to bring the profession up to the required level.

scholarly journals The Influence of Corporate Ethics Culture on Whistleblowing Mechanisms and Their Impact on Fraud Detection (Empirical Study in the Anti Fraud Division of PT. Bank XYZ in Jakarta 2020)

2021 ◽  
Vol 6 (3) ◽  
pp. 1
Author(s):  
Rizki Nurul ◽  
Yudhi Herliansyah
Keyword(s):  
Quantitative Research ◽  
Banking Sector ◽  
Fraud Detection ◽  
Internal Audit ◽  
Statistical Test ◽  
Statistical Testing ◽  
Ethical Culture ◽  
Corporate Ethics ◽  
Significant Positive Effect ◽  
Positive Effect

Fraud is one of the main problems for many organizations today. The more cases of fraud that occur in the banking sector in Indonesia, it is necessary to have fraud prevention efforts. This study aims to examine the effect of corporate ethical culture on the whistleblowing mechanism and its impact on fraud detection. This research was conducted using an explanatory quantitative research method with a survey through distributing questionnaires to all anti-fraud employees and the internal audit work unit who were directly involved in the whistleblowing mechanism at Bank XYZ who became respondents. The total respondents in this study amounted to 89 respondents. Statistical testing in this study used a statistical test approach with Smart PLS software version 3.0. The results of this study indicate that the company's ethical culture has a significant positive effect on the whistleblowing mechanism, the whistleblowing mechanism has a significant positive effect on fraud detection and the company's ethical culture has a significant positive effect on fraud detection with the whistleblowing mechanism while the influence of corporate ethical culture has no significant effect on fraud detection.

scholarly journals Protection of Clients’ Rights in the Microcredit Process

2020 ◽  
Vol 91 (4) ◽  
pp. 170-184
Author(s):  
M. A. Sadykov
Keyword(s):  
Financial Services ◽  
Banking Sector ◽  
State Control ◽  
Customer Complaints ◽  
Bank Managers ◽  
Domestic Banks ◽  
And Control ◽  
To Receive ◽  
Bank Employee

The author has analyzed the role and significance of overdraft for microcredit of the needs of the poor in the conditions of economic crisis and low wages. The positive and negative aspects of overdraft in the context of integration of the country’s financial system into the world community have been clarified. Inconsistency of normative provisions of legislative acts reduces the efficiency of the banking sector of the economy. Bank managers resort to abuse, do not fully explain the terms of microcredit, and do not create conditions for the management of balances and control over them. Customer complaints are considered formally, without their participation. Using the trust of the client, bank managers offer a variety of services in order to receive commissions. The business reputation of a bank employee depends on the amount and amount of funds attracted by the client, but not on the quality of services. It has been offered to strengthen state control over the activities of the banking sector, as well as to increase the legal awareness of young people in the process of using financial services of foreign and domestic banks and credit institutions.

اثر استخدام أدوات المحاسبة الإدارية على تحسين جودة التدقيق الداخلي للمصارف العراقية الأهلية: بطاقة الأداء المتوازن أنموذجًا

2021 ◽  
Vol 1 (1) ◽  
Author(s):  
سعد محيميد ◽  
عمار ياسين ◽  
زهير عباس
Keyword(s):  
Balanced Scorecard ◽  
Banking Sector ◽  
Internal Audit ◽  
Quality Of Services ◽  
Internal Auditing ◽  
Four Dimensions ◽  
The Balanced Scorecard ◽  
Private Banks ◽  
Audit Team

The research aims to find out the effect of using management accounting tools on improving the quality of internal auditing for private Iraqi banks - the Balanced Scorecard as a model, and to achieve the goal of the research, a questionnaire was developed that included Balanced Scorecard information, with regard to the studied community represented by private Iraqi banks in Iraq. Research The Iraqi banking sector The research sample focused intentionally for the Mosul Bank for Development and Investment and the Ashur International Bank for Investment, and among the most important findings of the research: the presence of a moral impact of using the balanced scorecard in its four dimensions to improve the quality of internal auditing in private banks. On the efficiency of the work of the internal audit team in banks. The research reached several recommendations, the most important of which are: Paying attention to the qualitative dimensions of implementing the Balanced Scorecard and disseminating its concept, it must be concerned with the quality of services to attract new clients, maintain old clients, pay attention to customer suggestions and complaints and address them in a timely manner, improve internal processes and qualify and train cadres to increase their experience and capabilities Proper application of the Balanced Scorecard.

scholarly journals Metrics of internal audit effectiveness in banking sector

2019 ◽  
Vol 51 (2) ◽  
pp. 63-70
Author(s):  
Bartłomiej Iwanowicz ◽  
Tomasz Borowy
Keyword(s):  
Banking Sector ◽  
Internal Audit ◽  
Qualitative Approach ◽  
Input Process ◽  
Additional Method ◽  
Internal Auditors ◽  
Internal Audit Function ◽  
Strongly Connected ◽  
Private And Public ◽  
Audit Effectiveness

This article attempts to analyze the metrics of internal audit function effectiveness. The authors review and discuss the metrics perceived as most relevant and appropriate to the banking sector. The literature review is supported by an attempt to introduce an additional metric of the internal audit function effectiveness. The methodology adopted in this paper bases strongly on the qualitative approach. The article involves an analysis of available literature and own studies, as well as authors’ professional experience in auditing. The metrics of internal audit function effectiveness presented in modern studies strongly favor qualitative approach, focused on assessing the input, process and output of internal auditors, and most notably recommendations issued and their implementation by organizations’ management. The authors suggest supplementing the list of available metrics with an additional method, strongly connected to financial performance of the banks employing the internal audit function. This article introduces an additional possible way of measuring the effectiveness of the internal audit function. This metric can be considered by the banks and can be further empirically verified for appropriateness by entities from other industries, from both private and public sector.

DEVELOPMENT AND THE CURRENT PROFILE OF INTERNAL AUDITING – THE RESULTS OF THE TWO EMPIRICAL STUDIES IN SLOVENIAN ORGANISATIONS

2006 ◽  
Vol 12 (2) ◽  
pp. 55-69
Author(s):  
Marjan Odar ◽  
Bojana Korošec ◽  
Robert Horvat
Keyword(s):  
Corporate Governance ◽  
Financial Services ◽  
Work Experience ◽  
Empirical Studies ◽  
Internal Audit ◽  
Developed Countries ◽  
Internal Auditing ◽  
Current Profile ◽  
Internal Auditors

Results of (the first) two empirical studies with the aim to reveal the state-of-the-art and development of internal audit in Slovenia are presented in the article. Internal auditing, one of the cornerstones in modern corporate governance, has a relatively short tradition in this new EU member country. Nevertheless, beside the first and mandatory established internal audit units, which were initiated by the corresponding industry’s laws in financial services in the early 90s, there is already evidence of a significant and growing number of non-mandatory, voluntary established internal auditing units in other industries. And a variety of internal audit practices regarding establishment, reporting lines, size and scope of work performed by internal audit units, and professional qualifications of internal auditors characterizes the current profile of internal auditing in Slovenian organisations. It can be concluded that internal auditing in Slovenia is following the trends of practice in developed countries, although, in some cases internal auditors are facing problems, mainly due to their lack of work experience, to (un)professionality of corporate governing bodies, and to top management’s lack of awareness or even misunderstanding of the role of internal auditing in corporate governance.

Risk of money laundering in the US: HSBC case study

2016 ◽  
Vol 19 (3) ◽  
pp. 225-237 ◽  
Author(s):  
Mohammed Ahmad Naheem
Keyword(s):  
Risk Assessment ◽  
Money Laundering ◽  
Corporate Culture ◽  
Financial Services ◽  
Banking Sector ◽  
Internal Audit ◽  
Governance Structure ◽  
Content Type ◽  
Global Banking

Purpose This paper uses a case study approach using the Permanent Sub Committee on Investigations (PSI) report on HBUS to determine where gaps in anti-money laundering (AML) regulation and compliance are within the banking sector. Design/methodology/approach The PSI highlighted five areas of serious weakness and fundamental flaws in the HBUS AML risk assessment. This paper examines the governance response that led to these weaknesses and applies a rationale decision-making theoretical framework to explain it. Findings The report found that corporate culture and attitude at the governance level were key factors in the difficulties that HBUS faced. Research limitations/implications This paper focuses on one case, albeit one of the largest banks in the global banking sector. Although generalisations are limited, the report does highlight areas to consider with all banks. Practical implications The implications that are identified are aimed at banks and auditing firms that have to work alongside governance structure within banks. The role of internal audit is raised and has future implications for how risk assessment is undertaken and how AML compliance frameworks are devised and reported on. Social implications A stronger social corporate responsibility attitude is suggested that considers the wider social impacts of supporting criminal transactions, even inadvertently, by inappropriate and under-resourced AML risk-assessment frameworks. Originality/value The detailed analysis of one case that considers the governance response to AML regulation is new in this paper, and the detailed recommendations for improving and developing stronger AML risk-assessment frameworks apply to the banking, financial services and auditing professions.

scholarly journals The Effects of Interaction between Internal Auditor and Audit Committee on Fraud Detection in Malaysia

2018 ◽  
Vol 7 (4.38) ◽  
pp. 1338
Author(s):  
Sunita Lylia Hamdan ◽  
Nahariah Jaffar ◽  
Ruzanna Ab Razak
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Specific Interaction ◽  
Fraud Detection ◽  
Internal Audit ◽  
Internal Auditing ◽  
Internal Auditor ◽  
Internal Auditors ◽  
External Auditors

This study aims to examine the effect of interaction between internal auditor and audit committee on fraud detection in Malaysia.  Specific interaction is firstly; audit committee approving the appointment of chief audit executive, the evaluation of chief audit executive, the dismissal of chief audit executive, the internal audit budget and the internal audit plan or program.  Secondly, audit committee’s involvement in reviewing internal auditor’s work specifically; providing input for the internal audit plan, reviewing the results of internal auditing related to financial reporting, reviewing the results of internal auditing related to internal control, reviewing the results of internal auditing related to compliance with laws and regulation, reviewing the internal audit involvement in management responses to internal audit suggestions, reviewing the difficulties or scope restrictions encountered by internal auditors and reviewing the coordination between internal auditors and external auditors.  Survey questionnaires were mailed to internal auditors attached to 782 companies listed on Bursa Malaysia’s main market. The results of this study suggest that involvement of audit committee in approving chief audit executives’ matters is insignificant on internal auditors’ contribution to fraud detection.  However, audit committee’s involvement in reviewing internal auditors’ work significantly influence the internal auditors’ contribution in fraud detection.       

scholarly journals Selected Methods of Psychological Manipulation in the Marketing of Financial Services

2020 ◽  
Vol 6 (1) ◽  
pp. 24-29
Author(s):  
Sylwia Lach
Keyword(s):  
Impression Management ◽  
Financial Services ◽  
Banking Sector ◽  
Management Technique ◽  
Professional Experiences ◽  
Preliminary Identification ◽  
Bank Managers ◽  
Contrast Technique ◽  
The Face ◽  
Immediate Supervisor

The main purpose of this article is preliminary identification of manipulation techniques and methods used in banks for staff relationship management. The empirical contribution of this article is to discuss the influence of immediate supervisor on the consumer’s consultants in the banking sector. The author has tried to answer the research questions, Are there any manipulation techniques used by bank managers? If, yes, what methods of psychological manipulations are applied by supervisors on to their employees. Data is gathered by using interviews with an experts’ group and by the critical reflection on the professional experiences of the author of the article. The initial results highlight some manipulation techniques used by bank managers on the consumers’ consultant, for example, the reciprocity technique, group technique, the contrast technique, authority technique, word manipulation technique, impression management technique and social manipulation techniques, such as the foot-in-the- mouth and dialogue, the door-in-the-face”, stressful situations, feelings of guilt. It is also worth noting that in opposition to techniques there are examples of psychological counteraction to manipulation, for example, the instinct to restrain aggression and empathy, change assessment into opinion, violation of the principle of reciprocity, self-esteem, personality and manipulation. The author also paid considerable attention to aspects such as rights and needs of the employee in the sales of financial services and his job satisfaction.

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