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1 – 10 of over 15000Financial crises in the international markets, which have global effects, have increased the importance of internal auditing especially in the banking sector in recent years…
Abstract
Financial crises in the international markets, which have global effects, have increased the importance of internal auditing especially in the banking sector in recent years. Minimizing the negative effects of crises is closely related to the establishment and functioning of an effective internal control system. International internal audit standards (IIAS) issued by the International Internal Audit Standards Boards are internationally applicable standards that contain the basic requirements for the professional implementation and evaluation of the effectiveness of internal auditing. In developing countries where the effects of crises are intensely felt, public banks are one of the most important actors of the financial system. An effective internal control structure in public banks and in compliance with international standards is necessary for a strong and fragile financial system. The purpose of this study is to examine the internal audit activities in public banks in terms of compliance with international standards. In this study conducted at one of the leading state-owned bank in Turkey, the bank’s internal control procedures and internal control activities reports were examined. In addition, the Bank’s internal audit activities were analyzed by conducting interviews with bank officials for a better understanding of the internal control system. The IIAS, which are grouped under two main headings, are related to the internal audit activities of the related bank. It is thought that the study will guide banks and auditors in terms of demonstrating the application of IIAS, which usually consist of abstract statements.
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Salvatore Polizzi and Enzo Scannella
This paper aims to analyse the implementation challenges faced by internal audit departments of public sector organisations and central banks when implementing continuous auditing…
Abstract
Purpose
This paper aims to analyse the implementation challenges faced by internal audit departments of public sector organisations and central banks when implementing continuous auditing (CA) systems. CA aims to monitor internal control systems and risk levels on a continuous basis to support the audit process. This study identifies the implementation challenges of CA systems and proposes adequate countermeasures.
Design/methodology/approach
This study employs the design science information system research and the design science research process methodologies to ensure the rigor of this analysis. These research methodologies are adopted to tackle identified organisational problems and propose solutions. This methodological approach consists in the following phases: identification of the problems and motivation; definition of the objectives of the solution; research design and development; evaluation; communication.
Findings
This study detects several implementation challenges for public sector organisations and central banks and proposes adequate solutions. This study finds that these challenges are related to organisations’ complexity, institutional rigidity, potential threats to internal auditors’ independence and the issue of considering CA system as a “real time error correction” mechanism. The solutions involve the development of a business process focussed audit approach to enable internal auditors to analyse CA indicators, and the use of CA systems to support each phase of the audit process.
Originality/value
This study contributes to the scant strand of literature on internal auditing in central banks. Given the exceptional demand for guidance concerning internal auditing in the public sector and in central banks, this paper provides guidelines for these organisations to implement CA systems and to tackle implementation challenges. The analysis allows internal audit departments within central banks to better support their organisations in the achievement of their important regulatory and policy objectives.
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By using Latour’s notion of “action at a distance” (Latour, 1987), the purpose of this paper is to examine the ways in which the government acts at a distance to achieve corporate…
Abstract
Purpose
By using Latour’s notion of “action at a distance” (Latour, 1987), the purpose of this paper is to examine the ways in which the government acts at a distance to achieve corporate governance of public sector banks, and the extent to which accounting enables such actions of the government.
Design/methodology/approach
This study follows the qualitative research approach and adopts the case study research method. A major public sector bank in Sri Lanka was selected as the case organization for this study. Data were gathered from semi-structured interviews with organizational participants and document study.
Findings
The study provides evidence to suggest that inscriptions produced through four areas of accounting, namely external reporting, external auditing, management accounting and internal auditing, have the capacity to develop strong explanations enabling action at a distance and good corporate governance in the case organization. The study also provides evidence to show how the role of accounting in long-distance control and corporate governance in the case organization is influenced by various contextual factors. In particular, the study finds that undue government interference over the case organization to gain the long-distance control have resulted in deteriorating the level of corporate governance.
Research limitations/implications
The findings support the literature that examines the accounting in its social context.
Practical implications
The findings suggest that actors should be allowed to operate independently, particularly without political expedience and undue influences from pressure groups, which ensure effective utilization of accounting inscriptions by the actors in long-distance control as well as good corporate governance of public sector banks.
Originality/value
Although research into accounting in public sector organizations has gained considerable importance in recent times, those studies examining public sector banks are still lacking. The paper aims to fill this gap.
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Salvatore Polizzi, Fabio Lupo and Sara Testella
Quality Assurance and Improvement Program (QAIP) is defined as “an ongoing and periodic assessment of the entire spectrum of audit and consulting work performed by the internal…
Abstract
Purpose
Quality Assurance and Improvement Program (QAIP) is defined as “an ongoing and periodic assessment of the entire spectrum of audit and consulting work performed by the internal audit (IA) activity”. QAIP is an important component of internal auditors’ commitment to improve internal audit (IA) quality. The pressure towards improvement is urgent for central banks, in light of the vulnerabilities of their IA functions identified by the International Monetary Fund. The authors analyse the professional standards and the literature on IA and QAIP, aiming to propose general considerations to enhance IA quality and to develop and maintain a QAIP, with reference to central banks, also shedding light on the synergies among IA, QAIP and total quality management (TQM).
Design/methodology/approach
This paper reviews the most relevant professional standards in light of the professional and academic literature regarding IA quality, QAIP and their relationship with TQM. The analysis of these sources represents an important step to identify general measures to improve IA quality and develop effective QAIP in central banks.
Findings
This analysis shows that it is important to understand the rationale behind the development of an IA function and its theoretical and practical foundation, especially for complex organisations such as central banks. In addition, the authors show that QAIP represents an important tool to exploit the synergies between TQM and IA. These synergies could result in higher levels of quality for the IA function and more effective implementation of TQM within the whole organisation. Lastly, the authors provide practical suggestions to support the implementation of an effective QAIP in central banks and to spread TQM philosophy within the organisation.
Originality/value
The authors contribute to the scant literature on IA quality and QAIP by focusing on central banks and shedding light on the relationship with TQM. Regardless of their importance, these topics have been largely neglected by the extant literature.
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This paper examines the role of professional associations, governmental agencies, and international accounting and auditing bodies in promulgating standards to deter and detect…
Abstract
This paper examines the role of professional associations, governmental agencies, and international accounting and auditing bodies in promulgating standards to deter and detect fraud, domestically and abroad. Specifically, it focuses on the role played by the US Securities and Exchange Commission (SEC), the American Institute of Certified Public Accountants (AICPA), the Institute of Internal Auditors (IIA), the Institute of Management Accountants (IMA), the Association of Certified Fraud Examiners (ACFE), the US Government Accounting Office (GAO), and other national and foreign professional associations, in promulgating auditing standards and procedures to prevent fraud in financial statements and other white‐collar crimes. It also examines several fraud cases and the impact of management and employee fraud on the various business sectors such as insurance, banking, health care, and manufacturing, as well as the role of management, the boards of directors, the audit committees, auditors, and fraud examiners and their liability in the fraud prevention and investigation.
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The structure of the Turkish banking system is described. Theresearch methodology and the background to internal audit are examinedand the examination system and advantages of the…
Abstract
The structure of the Turkish banking system is described. The research methodology and the background to internal audit are examined and the examination system and advantages of the profession outlined. Suggestions to departmental managers and internal auditors are presented.
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This paper aims to investigate the financial crises and the role of auditors in those crises. The paper is concerned with the banking system, as the last financial crisis in 2008…
Abstract
Purpose
This paper aims to investigate the financial crises and the role of auditors in those crises. The paper is concerned with the banking system, as the last financial crisis in 2008 was provoked by the mortgage business and the big banks and risks management.
Design/methodology/approach
The paper choses to use data from corporations, practices and professional websites. The authors use interviews that were available and related to the subject matter. Academic works are also used to discuss the literature review and various issues.
Findings
The paper explores the auditors’ responsibilities and finds that there is a growing concern for auditing. This research is complex, as it discovers that corporate executives in the banking business should be more responsible; this is confirmed by the high risks in the financial area that still persists.
Research limitations/implications
This is a very complex topic; however, the authors designed it so that it can be read and used by non-accountants, that is to say, CEOs and governmental agencies that are in charge of the regulatory system. Further research studies are needed to ensure ongoing discussions about the financial crisis. The Word is not free from such bad economic events.
Practical implications
The contribution is important; this research can be used by organizations, governments and academics.
Social implications
The paper includes implications for the banking and auditing industries. It extends to the public interest.
Originality/value
This paper contributes to the literature for academic and can be used for teaching purposes. Students can understand the paper, as the authors did not use a regression model.
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Modar Abdullatif and Shatha Kawuq
The purpose of this paper is to explore the current practices of internal auditors in banks in Jordan regarding risk management, especially the risks they are most involved in…
Abstract
Purpose
The purpose of this paper is to explore the current practices of internal auditors in banks in Jordan regarding risk management, especially the risks they are most involved in dealing with, the nature of their responses in the presence of these risks, and appropriateness (according to the Institute of Internal Auditors (IIA), 2009a) of these responses.
Design/methodology/approach
A questionnaire surveyed views of internal auditors about their roles in risk management. It asked about 20 different types of risks, and, for each individual risk, how internal auditors would respond in its presence.
Findings
The role of internal auditors in risk management in banks in Jordan was found to be limited. The risks that internal auditors were most involved in managing were those related to compliance, while the risks least dealt with by internal auditors included those related to the Jordanian economy and culture. Also, most of the respondents reported that they did undertake some inappropriate roles in dealing with the risks.
Practical implications
The findings suggest the possibility that internal auditors are not aware of the importance of several types of risks and of the appropriate roles for internal auditors in risk management. Therefore, increasing awareness of these issues is very important.
Originality/value
The research topic is relatively new and very under-researched in the Jordanian environment. This study is therefore likely to significantly contribute to the knowledge about how internal auditing operates in a developing country context that differs significantly from the contexts where professional internal auditing standards were issued.
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Collins G. Ntim, Teerooven Soobaroyen and Martin J. Broad
The purpose of this paper is to investigate the extent of voluntary disclosures in UK higher education institutions’ (HEIs) annual reports and examine whether internal governance…
Abstract
Purpose
The purpose of this paper is to investigate the extent of voluntary disclosures in UK higher education institutions’ (HEIs) annual reports and examine whether internal governance structures influence disclosure in the period following major reform and funding constraints.
Design/methodology/approach
The authors adopt a modified version of Coy and Dixon’s (2004) public accountability index, referred to in this paper as a public accountability and transparency index (PATI), to measure the extent of voluntary disclosures in 130 UK HEIs’ annual reports. Informed by a multi-theoretical framework drawn from public accountability, legitimacy, resource dependence and stakeholder perspectives, the authors propose that the characteristics of governing and executive structures in UK universities influence the extent of their voluntary disclosures.
Findings
The authors find a large degree of variability in the level of voluntary disclosures by universities and an overall relatively low level of PATI (44 per cent), particularly with regards to the disclosure of teaching/research outcomes. The authors also find that audit committee quality, governing board diversity, governor independence and the presence of a governance committee are associated with the level of disclosure. Finally, the authors find that the interaction between executive team characteristics and governance variables enhances the level of voluntary disclosures, thereby providing support for the continued relevance of a “shared” leadership in the HEIs’ sector towards enhancing accountability and transparency in HEIs.
Research limitations/implications
In spite of significant funding cuts, regulatory reforms and competitive challenges, the level of voluntary disclosure by UK HEIs remains low. Whilst the role of selected governance mechanisms and “shared leadership” in improving disclosure, is asserted, the varying level and selective basis of the disclosures across the surveyed HEIs suggest that the public accountability motive is weaker relative to the other motives underpinned by stakeholder, legitimacy and resource dependence perspectives.
Originality/value
This is the first study which explores the association between HEI governance structures, managerial characteristics and the level of disclosure in UK HEIs.
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This study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh.
Abstract
Purpose
This study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh.
Design/methodology/approach
The data was obtained through 152 survey questionnaires from a total of 43 privately owned and six state-owned commercial banks in Bangladesh. The analysis was conducted using structural equation modeling.
Findings
The findings demonstrate that the independence of internal auditors and the quality of IA substantially impact enhancing the efficiency of IA. On the other hand, the competence of internal auditors and management support in IA functions do not significantly impact the effectiveness of IA.
Practical implications
The study’s findings may have significant policy implications for the government, regulators, internal auditors, management committees and other stakeholders in establishing programmes to enhance the efficacy of IA as a component of banking audit management reforms.
Originality/value
This study makes three distinct contributions to the existing literature. Firstly, previous literature focused on the determinants affecting the external audit efficiency of the public companies and banking sectors in Bangladesh (Hasan, 2018; M. M. U. Reza, 2021). In this study, the author enhances the research by presenting empirical findings on the IA effectiveness of banks. Secondly, the author expands the research by incorporating both private and state-owned commercial banks as samples. Thirdly, the study is unique given that it investigates the effectiveness of IA in response to the recent financial scandals in the banking industry of Bangladesh (The Daily Star, 2023).
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