审计风险外文文献

1、Independent audit risk an alysis and p reve ntivemeasuresAbstractPrev ious studies have utilized a variety of app roaches to determ ine appropriate criteria to evaluate the effectiveness of the internal auditfunction. For example,consideredthe degree of complianeewith sta ndards as one of the factor

2、s which affects in ternal audit p erforma nee.A 1988 research report from the IIA-United Kingdom(IIA-UK , 1988 )focused on the perceptionsof both senior managementand external auditors of the value of the internal audit fun cti on. The study ide ntifiedthe difficulty of measuringthe value of service

3、s providedas a major obstacle to such an evaluation. Profitability, cost standards and the effective ness of resource utilizatio n were ide ntified as measures of thevalue of services. In its recommendationsit highlighted the need to en sure that audit work comp lies with SPPIA.In the US, Albrecht e

4、t al.(1988)studied the roles and benefits of theinternal audit function and developeda framework for the purpose of evaluati ng in ternal audit effective ness. They found that there were four areas that the directors of in ternal audit dep artme nts could devel op toenhanceeffective ness:an approp r

5、iatecorpo rateen vir onment,top man ageme nt supp ort, high quality internal audit staff and high quality internal audit work. The authors stressed that man ageme nt and auditors should recog nize the internal audit fun cti on as a value-addi ng functionto the orga ni zatio n. In the UK, Ridley and

6、DSilva (1997) identified theimportaneeof complying with professionalstandards as the most imp orta nt con tributor to the internal audit function add ing value.Key wordsAudit,Risk, I nternal C on trol, Audit ingComp lia nee with SPPIAA nu mber of studies have focused on the SPPIA sta ndard concerned

7、with independen ce.Clark et al.(1981) found that the independence of theinternal audit departmentand the level of authority to which internalaudit staff report were the two most imp orta nt criteria in flue ncing theobjectivity of their work. P lumlee (1985) focused on poten tial threats toin ternal

8、auditor objectivity,p articularlywhether p artici pati on inthedesig n of an internal con trolsystem in flue need judgeme ntsas tothequality and effective ness of that system. P lumlee found that such desig ninvo Iveme nt p roduced bias that could ultimately threate n objectivity.The relati on shi p

9、 betwee n the internal audit function and companyman ageme nt more gen erally is clearly an imp orta nt factorindeterm ining internal auditor objectivity. Harrell et al. (1989) suggestedthat perceptionsof the views and desires of managementcouldin flue neethe activities and judgeme ntof internal aud

10、itors. Also, theyfound that in ternal auditors who were members of the IIA were less likelyto succumb to such p ressure .Ponemon (1991) exam ined the questi on ofwhether or not internal auditors will report sensitive issues uncoveredduring the course of their work. He concluded that the three factor

11、saffectinginternal auditor objectivity were their social positionin theorga ni zati on, their relati onship with man ageme nt and the existe nee of acom muni cati on cha nnel to report wron gdo ing.The independence of internal audit dep artme ntsComme ntators and sta ndard setters ide ntify independ

12、ence as beinga key attribute of the internal audit dep artme nt. From the questi onn airerespon ses 60 (77%) of the internal audit dep artme nts stated that therewas a writte ndocume ntdefi ning the purpo se, authority andrespon sibility of the dep artme nt. In n early all in sta nces where there wa

13、ssuch a docume nt the terms of refere nee of the internal audit dep artme nthad bee n agreed by senior man ageme nt (93%), the docume nt ide ntifiedthe role of the internal audit departmentin the organization,and itsrights of access to individuals,records and assets (97%), and thedocument set out th

14、e scope of internal auditing (90%). Respondentswere asked to assess the exte nt to which the releva nt docume ntwas con siste nt with the sp ecific requireme nts of SPPIA. In those dep artme nts where such a docume nt existed 27 (45%) claimed full comp lia nee withSPPIA, 23 (38%) considered their do

15、cumentto be partially consistent with SPPIA. In more tha n on e-third of the dep artme nts surveyed either no such docume nt existed ( n=18, 23%) or the res pondent was not awaren=10, 13%).whether or n ot the docume nt comp lied with SPPIA (SPPIA suggests that independence orga ni zati on s board of

16、 directors con cursis enhan cedwhe nwith the appointmenttheorremoval of the director of the internal auditdepartment,and thatthedirector of the internal audit dep artme nt is res pon sible to an in dividualof suitable seniority within the organization.It is noticeablethat in47companies (60%) their r

17、esponsibilitieswithregard to appointment.removal and the receipt of reports lay withnon-seniorman ageme nt,nor mally a gen eral man ager. SPPIA recomme nds that the director of theinternal audit dep artme ntshould have direct com muni cati onwiththeboard of directors to ensure that the departmentis

18、independent,andpro vides a mea ns for the director of internal audit ing and the board ofdirectors to kee p each other in formed on issues of mutual in terest. Thein terviews with directors of internal audit dep artme ntsshowedthatdepartments tended to report to general managers rather thantheboard

19、of directors. Further evide nee of the lack of access to the board ofdirectors was pro vided by the questi onn aire res pon ses show ing that inalmost half the companies,members of the internal audit departmenthave never attended boardmeetings and in only two companies didatte ndance take p lace reg

20、ularly.Un restrictedaccess todocumentationand unfetteredpowers ofenquiry are imp orta nt asp ects of the independence and effective ness ofinternal audit. The questionnaireresponsesrevealed that 34 (44%)internal audit directors con sidered that they did not have full access toall n ecessary in forma

21、ti on. Furthermore, a sig nifica nt min ority (n=11, 14%)did not believe they were free, in all in sta nces, to report faults, frauds,wrongdoingor mistakes. A slightly highernumber(n=17, 22%)considered that the internalaudit functiondid not always receivecon siste nt support from senior man ageme nt

22、.SPPIA identifiesthat invoIvementin thedesig n,in stallatio nandop erati ngof systems is likely to imp airin ternalauditor objectivity.Respondents were asked how ofte nman ageme ntrequested theassistanee of the internal audit departmentin the performaneeofnon-audit duties. In 37 internal audit dep a

23、rtme nts (47%) surveyed suchrequests were made sometimes,often or always, andonly 27 (35%)dep artme ntsn ever p artic ip atedin these non-auditactivities. Thein terviews revealed that in some orga ni zati onsinternalaudit staff wasused regularly to cover for staff shortages in other dep artme nts.Wo

24、odworth and Said (1996)sought to ascerta in the views of internalauditors in Saudi Arabia as to whether there were differencesin thereacti on of auditees to sp ecific internal audit situatio ns accordi ng to then ati on alityof the auditee. Based on 34 questionnaireresponses frommembersof the IIA Dh

25、ahranchapter, they found there were nosig nifica ntdifferencesbetween the differentnationalities.The internalauditors did not modify their audit con duct accord ing to the n ati on alityof the auditee and cultural dime nsions did not have a sig nifica nt impacton the results of the audit.Give n the

26、imp orta nee of comp lyi ng with SPPIA, the pro fessi onal andacademic literatureemphasizes the importance of the relationshipbetwee n the internal audit dep artme nt and the rest of the orga ni zati onin determining the success or otherwise of internal audit departments(Mi nts,1972;Flesher,1996;Rid

27、ley& Chambers,1998 and Moeller &Witt,1999). This literature focuses on the need for co-operationandteamwork betwee n the auditor and auditee if internal audit ing is to beeffective.Bethea (1992) suggests that the n eed for good huma n relatio nsskills is important because internal audit ing creates

28、n egative p erce pti onsand negative attitudes. These issues are particularlyimportantin amulticultural bus in ess en vir onment such as Saudi Arabia where there aresig nifica nt differe nces in the cultural and educatio nal backgro und of theauditors and auditees Woodworth and Said (1996).Reas ons

29、for not hav ing an internal audit dep artme ntOf the 92 companyin terviewsexam iningthe reas ons whycompanies do not have an internal audit function, the most frequentresponse from 52 companies (57%) wasthat relianee on the externalauditor enabled the company to obtainthe ben efits that might beobta

30、 inedfrom in ternalaudit. Typi cally,intervieweesargued that theexternal auditor is better, more efficientand saves mon ey. In terviewswith the external auditors revealed that client companies couldnotdisti nguish clearly betwee n the work and roles of in ternal and exter nalaudit. For exa mple, one

31、 exter nal auditor said,there is a misp erce pti on of what the exter nal auditor does, they thinkthe exter nal auditor does everyth ing for the company and must discoverany p roblem.Having said this, one exter nal auditor doubted that an internal auditfunction would add value in all circumstances.W

32、hen referring tothein ternal con trol system he stated,as long as they are happy with the final out pu t, I think the internalaudit fun cti onwill not add value. Exter nal audit ingeve ntuallywillhighlight any sig nifica nt in ternal con trol weak ness.The second most frequent reason mentioned by in

33、terviewees(23firms, 25%) for not operatingan internal audit departmentwasthecost/benefit trade-off.Specifically,17 firms considered that the smallsize of the company and the limited n ature of its activities meant that itwould not be efficient for them to have an internal audit department.The exter

34、nal auditors in terviewedwere of the opinion that the readilyidentifiable costs as comparedwith the more difficult to measure ben efits was a factor con tributi ng to this decisi on.A number of other reasons were given by intervieweesfor not hav ing an internal audit dep artme nt. As a con seque nee

35、 of the high costsof con duct ingin ternal audit activities, 14 firms used empio yees who were not within a sep arate in ternal audit dep artme nt to carry out internal audit duties. Eight companies did not think there was a n eed for internal audit because they believed their in ternal con trol sys

36、tems were sufficie nt to obviate the n eed for internal audit. Five companies did not thi nk that in ternal audit was an imp orta nt activity and three felt that their type ofthe bus in essdid not require internal audit. Three res pondents men ti oned that they did not op erate an internal audit dep

37、 artme nt because pro fessi onal people could not be found to run the dep artme nt.and six companies did not pro vide a reas on for not hav ing an internal audit dep artme nt. I n 10 companies an internal audit dInternal audit risks in clude the in here nt risks and con trol risks. Thein here nt ris

38、ks is the assu mp ti onthat has nothing to do with internal acco un ti ng con trols, the un its being audited finan cial stateme nts and the overall bala nee of the acco unt of a bus in ess or the p ossibility of a major error, that is caused by the audit unit economic characteristics ofbus in ess a

39、nd acco un ti ngwork itself the formati on of the lack of audit risk. Some enterp rises such as the lack of due atte nti on to the acco unting system, acco unt system comp lex, reduci ng clarity of acco un ti ng in formatio n, reports, use of difficulty, cost, cost of lack of cost acco unting concep

40、 ts. Control risk refers to as a result of in adequate in ternal control system p erfect, weak in ternal con trol behavior, not timely detect ion andcorrect ion of a bus in ess acco unt or a major error in the formatio nof audit risk. Sometimes, eve n if the auditors audited un its to con firm the i

41、n ternal con trol system is un reas on able or out of con trol in key areas, theamendmentsproposedby the audit can really suitable for operating activities, but will also create a risk ame ndme nt.First, the internal audit risk causes 1. The independence of the internal audit age ncy eno ughInternal

42、 audit body is set up un its in in stituti ons, in the unit un der theleadership of the responsiblepersons to work as a unit of service.Therefore, the independence of internal audit as social audit, the auditp rocess, in evitably affected the in terests of the unit con stra in ts. OIA stafffaced wit

43、hthe unit leadership was amongleadershi pof the relationship, as well asrelatio nshipbetwee n colleagues, people1 the leadersh ipand thewithvarious secti ons,thearenot invo Ivedintheleadershi pof my colleagues is, non-directlyrelated to also in directlyrelated tothe audit processand conclusionswill

44、inevitablyinvoIve theinterestsof specificindividuals,which inevitably affected the audit p rocess for all categories of personnel in terfere nee.2. Internal audit op erati ons personnel ill-eq uippedThe quality of auditors is to determ ine the size of audit risk factors. The quality of the audit in

45、clud ing those en gaged in the audit of the p oliciesand regulationsneed to level of expertise,experienee, skills, auditpro fessi onal ethics and work res pon sibilities.Audit exp erie nee, the audit staff should have an imp orta nt skill, the n eedfor the audit p raetiee of the aeeumulati on of exp

46、 erie nee. Chi nas internalaudit staff, many people only familiar with the finan eial and aeeo un ti ngop erati ons, some auditors do not un dersta nd the bus in ess aetivities ofthis un it and internal con trols, audit limited exp erie nee. In additi on, theinternal audit staff res pon sibilities a

47、nd pro fessi onal ethies is the impactof audit risk faetors. Beeause of Chi nas in ternal guideli nes for the work ofnorms and ethieal sta ndards still some gaps, and many in ternal orga nsand personn el laek of oee up ati onal norms bound and guida nee. In short,Chinas overall quality of the low OI

48、A staff and direetly affeeted theinternal audit work earried out by the depth and breadth. Faeed with thecomplexity of todays OIA object and contentdevelopment,internalaudit staff and po werful sin gle foree book, whieh will direetly lead to theseleet ion of audit risk.3. Internal audit of the seie

49、ntific method is not strongChin as system of internal audit is the basis of the audit, with the internaloperation and managementof environmentalcomplicated modelsarenot suited to carry out this audit internal man ageme nt audit of the n eeds,beeause it is overly dependent on the internalmanagementof

50、enterp rises con trolled test, i n itself a huge poten tial the risk of internalaudit gen erally use statisticalsamp li ngmethods, as a result ofthesample itself is based on a sample audit of the results of the review canbe inferredfrom the general characteristics, therefore,betweenthesamp les and t

51、he overall form is bound to a certa in degree of error, theformation of audit samplingrisk. With the degree of informationtech no logy imp roved, the audited acco un ti ng in formatio n will be moreand more errors and false accountinginformationdoped them,andfailed to investigatethe possibility of a

52、lso increasing. Althoughthesurvey samp le is built on the solid foun dati on of mathematical theory,but its existe nee is to allow a certa in degree of audit risk. Similarly, a largenumber of analytical review will also have associated risks, so thatthecomp ositi on of the contents of audit risk is

53、more comp licated.4. Internal Audit man ageme nt systemsIn ternal audit man ageme nt system con structi on and imp leme ntatio n ofinternal audit is the prerequisite and foundation.Sound and effectiveinternalmanagementsystem to detect and controlof enterpriseecono mic activity occurri ng in a variet

54、y of errors and fraud. To en sure thequality of internal audit, internal audit orga ni zati ons should establish ap erfect quality con trol system, however, some audit in stituti ons still lackof p rior audit plan, a matter of audit ing p rocedures and audit review ofthe reporting p eriod; the audit

55、 work ing papers incomp lete,gen erallyonly Records of audit matters, not the recordi ng of audit staff that thecorrect audit matters, making the audit review, audit quality con trol noway; to coord in ate the relati on shi p betwee n the audit report as a starti ng point to certa in p erforma nce-based, qualitative ambiguous issues. More than the existenee of the status quo, making the internal audit quality assura nee become an empty talk, let alone ward off risks.Secon d, reduce the risk of internal audit ways 1. Stren gthe n the internal a