...MANAGEMENT METHODS AND TECHNIQUES USED TO ENSURE THE INTERNAL AUDIT PERFORMANCE Marian SFETCU Phd. Student, Faculty of Economics Sciences and Business Administration of „Babeș - Bolyai” University of Cluj Napoca.E-mail: marian_sfetcu@yahoo.com. Tel: 0720 760 220 Abstract: This approach shows a research on the usage of managemental methods on the internal audit activity through qualitative and quantitative indicators of performance assurance. Balanced Scorecard, the management method and tool, referred to the Dashboard, contributes to the internal audit performance through resource planning, setting objectives and scope of the audit, communication and approval, following the recommendations, deferring to the code of ethics and how to achieve the objectives. The listed indicators, are components of the proposed management methods and tools, and they define efficency, effectiveness, economy and quality, all elements of the internal audit performance. Keywords: methods and techniques, audit, corporate governance, internal control system, performance indicators, Balanced Scorecard, Dashboard. JEL: M 42 1. INTRODUCTION The importance of using the management methods and techniques concerning the internal audit, is given by providing a new approach to this problem, which highlights the need to ensure the performance by applying new methods and techniques, based on scientific management. This approach was born from the need to adapt the internal audit to the new demands of...
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...Control self-assessment as a route to organisational excellence A Scottish Housing Association case study James Sheffield Comhairle, The Scottish Centre for European Public Sector Studies, University of Paisley, Paisley, Scotland, and 484 Siobhan White Division of Accounting and Finance, Glasgow Caledonian University Business School, Glasgow, Scotland Keywords Scotland, Housing, Financial management, Auditing, Corporate governance Abstract Control self-assessment (CSA) has been discussed as an audit technique, but little practical guidance is available in the UK on the subject. A limited number of public sector organisations have implemented it. This paper describes a case study of CSA implementation in a Scottish Housing Association. The case study details the decision processes that led to the choice of CSA as a favoured audit technique, and the development of CSA skills within the organisation. This paper examines the broader benefits of a CSA approach, in terms of performance management and employee empowerment. This paper also uses a cost benefit analysis to examine the efficacy of CSA for small organisations. Managerial Auditing Journal Vol. 19 No. 4, 2004 pp. 484-492 q Emerald Group Publishing Limited 0268-6902 DOI 10.1108/02686900410530493 Introduction West of Scotland Housing Association (WOSHA) is a provider of social housing, whose homes are rented to people who apply to the Housing Association to become members. Once an individual (or family) has become part...
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...assisted audit techniques (CAATs). A CAATs audit is focused on testing the computer systems for data integrity and security of the company’s information data processing. CAATs provide a 10 step process made available to the auditor for use as guidelines in conducting an efficient audit. The guidelines will reduce the time to complete the audit, save money and ensure a high degree of confidence in the audit results. The CAATs audit will provide the owner of Kudler Fine Foods with assurance that the systems are operating with accuracy and the data is secure. To initiate the audit procedure, the auditor will first collaborate with the owner of Kudler Fine Foods to define the intents and desired end results of the audit. The auditor will review the computer systems, processes, types of data and process controls with Kathy Kudler to ensure that she thoroughly understands the system. Through this collaboration, the auditor will determine the best strategies for assessing the risks associated with the system and current processes. He or she will also determine the optimal strategy for collecting and testing data. Once the auditor determines the best strategies for conducting the audit, he or she will begin collecting and testing data in the most time efficient and effective manner. Kudler Fine Foods will benefit from the CAATs audit in the company’s growth and expansion by having a high level of confidence in the accuracy and security of the system. The CAATs audit will...
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...ASSURANCE II PRE-REQUISITE : AUDITING AND ASSURANCE I _____________________________________________________________________ 1. SYNOPSIS This is a continuation of Audit and Assurance 1. It intends to strengthen and enhance the students’ understanding in auditing. Among the topics that will be discussed are code of ethics, auditors’ liability and in-depth explanations on analytical procedures, computer assisted audit techniques, audit sampling, materiality and audit risk, group audit and current issues facing the auditing profession. This course will justify other activities than financial statement audit that can be performed by a public accountant like performance/operational audit, internal audit and compliance audit. 2. COURSE OBJECTIVES This course intends the student: 1. To comprehend applicable regulations, legal responsibilities and ethical standards and current issues facing the audit profession. 2. To appreciate the concepts of internal control system and the use of computer assisted audit techniques in auditing a computerised environment. 3. To understand and apply audit risk, materiality, and statistical and non statistical audit sampling techniques. 4. To be familiar with related issues in audit completion, group audit, internal audit and related audit services and other services that can be provided by the public accounting firms. 3. LEARNING OUTCOMES Upon completion of the course, students will be able to: ...
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...REVIEW QUESTIONS 8.1. Explain the purpose of (a) prevent controls and (b) detect controls. Why would it be important for an entity to have both types of controls? In order to prevent, detect and correct material misstatement the auditor performed the procedures called Test of Controls. There are two types of controls: Prevent Controls and Detect Controls. Prevent Controls can be applied to each transaction during normal processing in order to avoid errors. When planning controls, an auditor should take in consideration all possible scenarios (What can go wrong WCGWs) which would result in an error. By designing effective controls the auditor can prevent and correct detected errors as soon as possible. Detect Controls help to discover an error or fraud that may have occurred during transaction processing and to correct those errors. Detect controls usually applied outside the normal flow of transactions to groups of transactions that have been processed already. Controls over transaction should include both prevent and detect controls in order to be effective because without prevent controls, detect controls may not be able to identify and correct an error. 8.2. Explain the difference between automated and manual controls. Manual Controls are controls that do not depend on the client’s IT system for their operation. There are few companies that do not use any sort of IT system in processing transactions now days, so manual controls will still use some sort of IT-produced...
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...Assignment 2 AU2 Advanced External Auditing Question 2 a) Three specific business strategies that explain eBay’s decision to offer good for sale at fixed prices: 1. Expand into New Markets: With the shrinking market of auction bidders on eBay and a growing market of fixed price buyers, customers may not prefer to go in the direction of purchasing goods in an online auction. Since, in an online auction the customer has to wait till the end of the auction to see which buyer with the highest bid wins that item. Whereas, in a fixed price type of format, there are no bids placed and the price remains constant. Customers may prefer the idea of price stability over waiting to see if they get the item as they may be time-sensitive and want the item right way. Therefore, eBay may want to focus and expand its market to customers who do not prefer online auctions. 2. Fixed price “Buy-It-Now” format is beginning to dominate eBay and is a key to future growth. Fixed price items make up of 42% of the gross merchandise sold on eBay. Over the past six years, this fixed price format has been growing at a faster rate than auctions. (Trouble at eBay) 3. Meet consumer expectations in the marketplace by matching its competitors who also offer products at fixed prices online through their websites. Customers who are not interested in purchasing goods in online auctions will then purchase goods from eBay at fixed prices. Since eBay acts as the ‘middle man’ the concept...
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...“Audit” is defined as an independent evaluation implementation by an independent expert of a particular activity or event. There are many types of audits such as financial, operational, technological etc. The most popular reference to audits, however; are the ones that examine financial statements. Auditing is the examination and systematic structural evaluation of an organized business. The evaluation is made up of operations within the business organization and the products and developments of production occurring within the business system. An investigation into past history of a business is involved in auditing. Records and data about a company are also involved, in order to measure and discover the legality of the business's transactions operations, tax reporting, and thorough handling of finances. To be blunt, audits test the financial legitimacy claimed by a business entity. According to R. Gene Brown’s “Changing Audit Objectives and Techniques”, (The Accounting Review, Vol. 37, No. 4), reviewing the history of auditing helps to provide a basis for analyzing and interpreting the changes which have occured in audit objectives and procedures over the years. Fundamentally, this review shows a recent significant correlation between expanded reliance on internal controls and a decrease in detailed testing. The future of auditing will probably consist primarily of a procedural or systematic review, with the analysis of effectiveness of internal controls providing the major...
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... ACCT: 407-01 3/31/2010 The general definition of an audit is an evaluation of a person, organization, system, process, enterprise, project or product. Audits are performed to ascertain the validity[->0] and reliability[->1] of information; also to provide an assessment of a system's internal control[->2]. The goal of an audit is to express an opinion on the person / organization/system (etc) in question, under evaluation based on work done on a test basis. Due to practical constraints, an audit seeks to provide only reasonable assurance that the statements are free from material error. Hence, statistical sampling is often adopted in audits. In the case of financial audits[->3], a set of financial statements are said to be true and fair when they are free of material misstatements - a concept influenced by both quantitative and qualitative factors. Audit is a vital part of accounting[->4]. Traditionally, audits were mainly associated with gaining information about financial systems and the financial records of a company or a business (see financial audit[->5]). However, recent auditing has begun to include other information about the system, such as information about security risks, information systems performance (beyond financial systems), and environmental performance. As a result, there are now professions conducting security audits, IS audits, and environmental audits[->6]. In financial accounting[->7], an audit is an independent assessment of the fairness by which a...
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...Summary Audit sampling is necessary and helps improve an audit engagement because examining all items are rather very timely, requires more effort, and of course, at higher cost. Audit risks such as inherent, control and detection risk are first assessed when doing audit sampling. Low control risk means auditors rely extensively on the entity's internal control, and vice versa. The process for determining risks and gathering evidences to provide reasonable assurance are done through other audit procedures such as tests of controls and tests of details. These procedures are done by sampling. Using sampling, when auditors do not obtain sufficient and appropriate evidences, there is a risk of not identifying material errors and therefore result in a wrong conclusion. The use of either non-statistical sampling techniques or statistical ones does not directly affect application of audit procedures, appropriateness of audit evidences or courses of actions that could be taken. Even though the procedures in non-statistical sampling is less formal, they are still rigorous. Non-statistical sampling method involves eight steps namely establish objective test, defining the population, determining distortions, determining the appropriate sample size, determination of the right method for the sample selection, proper testing of the selected sample, extrapolating results, risk assessment. Firms include in their policies the techniques which they use to implement auditing procedures....
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...allows auditors to provide written results on the subject matter using one or a series of reports issued simultaneously (ISACA 2002). Continuous auditing leverages technology and opens database architecture to enable auditors to monitor a company’s systems over the internet using sensors and digital agents. Discrepancies between the records and the rules defined in the digital agents are transmitted to the client and the auditor. The auditor then determines the appropriate action to take. Continuous auditing completely changes the method of auditing enabling auditors to test 100 percent of transactions (versus sampling) on an on-going, continuous basis (versus periodic or once a year reviews). History According to the Global Technology Audit Guide the origins of continuous auditing...
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...Risk Identification There are many tools and techniques for Risk identification. Documentation Reviews • Information gathering techniques o Brainstorming o Delphi technique – here a facilitator distributes a questionnaire to experts, responses are summarized (anonymously) & re-circulated among the experts for comments. This technique is used to achieve a consensus of experts and helps to receive unbiased data, ensuring that no one person will have undue influence on the outcome o Interviewing o Root cause analysis – for identifying a problem, discovering the causes that led to it and developing preventive action • Checklist analysis • Assumption analysis -this technique may reveal an inconsistency of assumptions, or uncover problematic assumptions. • Diagramming techniques o Cause and effect diagrams o System or process flow charts o Influence diagrams – graphical representation of situations, showing the casual influences or relationships among variables and outcomes • SWOT analysis • Expert judgment – individuals who have experience with similar project in the not too distant past may use their judgment through interviews or risk facilitation workshops Risk Analysis Tools and Techniques for Qualitative Risk Analysis • Risk probability and impact assessment – investigating the likelihood that each specific risk will occur and the potential effect on a project...
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...PROJECT PROPOSAL ON EFFECT OF MARKETING AUDIT ON ORGANISATIONAL PERFORMANCE IN SELECTED NIGERIAN FAST FOOD (A Case Study of MR BIGGS) BY OGUNRINDE FATIMO OLAIDE 090822049 1.1 Background to the Study In recent years, increasing pressure to reduce costs has forced many companies to radically reengineer the way they do business. This pressure is also leading marketing executives to reconsider the goals, structure, and effectiveness of their marketing arms. As a comprehensive review of a company’s market environment, the marketing audit identifies any inadequacies in overall marketing structures. It also identifies operational strengths and weaknesses and recommends the necessary changes to the company’s marketing strategies. If the marketing audits are done correctly, they will provide management with a useful and analytical tool for evaluating, measuring, motivating and revising management actions (Mylonakis, 2003). The growing complexity of the current market environment necessitates a more systematic scrutiny and evaluation process of the organisational preparedness to deal with the dynamic market. The existing information gathering and processing methods, generally, lack a comprehensive and integrated structure that incorporates the entire marketing function as well as providing strategic recommendations for action. The marketing audit, characterised as a systematic, comprehensive, objective, and independent approach, can assist the...
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...States Government Accountability Office GAO February 2009 GAO-09-232G FEDERAL INFORMATION SYSTEM CONTROLS AUDIT MANUAL (FISCAM) This is a work of the U.S. government and is not subject to copyright protection in the United States. The published product may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately. United States Government Accountability Office Washington, DC 20548 February 2009 TO AUDIT OFFICIALS, CIOS, AND OTHERS INTERESTED IN FEDERAL AND OTHER GOVERNMENTAL INFORMATION SYSTEM CONTROLS AUDITING AND REPORTING This letter transmits the revised Government Accountability Office (GAO) Federal Information System Controls Audit Manual (FISCAM). The FISCAM presents a methodology for performing information system (IS) control 1 audits of federal and other governmental entities in accordance with professional standards, and was originally issued in January 1999. We have updated the FISCAM for significant changes affecting IS audits. This revised FISCAM reflects consideration of public comments received from professional accounting and auditing organizations, independent public accounting firms, state and local audit organizations, and interested individuals on the FISCAM Exposure Draft issued on July 31, 2008 (GAO-08-1029G). GAO...
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...the institute of cost accountants of india(ICAI) (A Statutory body under an act of parliament) SYLLABUS 2012 STRUCTURE & contents Evaluation Synthesis ANALYSIS ANALYSIS APPLICATION APPLICATION COMPREHENSION COMPREHENSION COMPREHENSION KNOWLEDGE KNOWLEDGE KNOWLEDGE LEVEL A LEVEL B LEVEL C FOUNDATION COURSE - Syllabus 2012 the institute of cost accountants of india(ICAI) (A Statutory body under an act of parliament) SYLLABUS 2012 STRUCTURE & contents The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) Page 1 FOUNDATION COURSE - Syllabus 2012 The Following table lists the learning objectives and the verbs that appear in the syllabus learning aims and examination question. Learning objectives Level A COMPREHENSION What you are expected to understand List Make a list of. State Express, fully or clearly , the details/ facts of. Define Give the exact meaning of. Communicate the key features of. Distinguish Highlight the differences between. Explain Make clear or intangible/state the meaning or purpose of. Identify Recognise, establish or select after consideration. Illustrate What you are expected to know Definition Describe KNOWLEDGE Verbs used Use an example to describe or explain something. The Institute of Cost Accountants of India (Statutory Body under an Act of Parliament) ...
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...likelihood of achieving management objectives in three areas: * Efficiency and effectiveness of operations * Reliability of financial reporting * Compliance with laws and regulations There are many techniques for reaching all parts of an organization in order to assess and manage risks in the organization, self-assessment by front line staff is one of these techniques, some argue the widespread use of questionnaires that are completed by key employees, The questionnaires are designed in a way to help the management in identifying risk and eliminating considerations of risk that do not apply to a department within the organization. The questionnaire serves as management tool for the organization in evaluating how well risks are being addressed through current control policies and practices. It is designed to raise awareness of certain issues and encourage further analysis and discussion. Another technique is the use of interviews with managers in particular business units to determine whether the area is under control or not. A further approach is to commission comprehensive reviews of risk in high-profile parts of the organization normally by the use of external consultant, who would report back on any problems found. These three techniques are fairly straightforward, in that they involve a process superimpose on the normal business operations and support services. A more particular approach is the...
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