DEPARTMENT OF ACCOUNTING

ASSESSEEMNT OF INTERNAL AUDITING PRACTICE

(A CASE STUDY IN COMMERCIAL BANK OF ETHIOPIA DATO

BRANCH)

SUBMITTED: ABEBECH KEFICHO

ID:457/07

TELL:0926538747

ARESEARCH PAPER SUBMITTED TO ACCOUNTING DEPARTMENT FOR

THE PARTIAL FULFILL REQUIRMNT OF BACHLOR OF ART(BA) DEGREE
IN ACCOUNTING

ADVISOR: - TARIK SOLOMON

FEB, 2018 G.C

HAWASSA, ETHIOPIA
 Acknowledgement
First of all, I would like to thank the merciful almighty God without whose permission.
I couldn’t have performed anything and reach the level where we are now. I would like
to express my sincere gratitude and appreciation to our respectfully advisor Tarik
Solomon. for his valuable, constructive suggestions, processional advice and
encouragement in the preparation of this paper. Finally, I would like to my special
thanks commercial bank of Ethiopia Hawassa dato branch manager, auditor and
Employees for their assistant and cooperation by providing necessary material and
other supports through our study.
 Abstract
This study tries to assess the factor effectiveness with regard to internal audit data are
relevant to study. the research would collect from both primary and secondary sources. the
primary data are to be collected through interview and questionnaires. the secondary data
be collected published material and manuals which are available in the organization.
regarding the sample, simple random sampling of probability is used. finally, on the
collected data descriptive analysis had been made there analysis to supported by table and
percentage used. assess the importance of internal auditing in the existing condition with in
the cbe dato branch.The main objactive of the study identify the quality of internal audit
worker in commercial bank of ethiopia Dato Barnch .ther research gap is low managing
use of source document and lack of reqularly auditing system. majour finding of this study
is to assess quality of internal audit work and importance of internal auditing practice. in
order to achieve, the planned objective the method of data gathering researcher are used
both primary and secondary source the primary data would be collected like annual report,
manual. conclusion internal audit is very important for the overall operation of the
organization in ensuring the fairness of financial statement, evaluating whether the
activities in the bank operated effectively and detecting incorrect financial transaction
records in banking activities. recomednation of this research paper is there should be high
level of independence of auditors in doing their responsibility, there should be training and
experience sharing with other organization, the organization should use an audit technique
that will result in reasonable assurance.
 Table content

Contents
Acknowledgement --------------------------------------------------------------------------------------------------------I
Abstract---------------------------------------------------------------------------------------------------------------------II
Table content--------------------------------------------------------------------------------------------------------------III
CHAPTER ONE .......................................................................................................................................................... 1
1.INTRODUCTION ..................................................................................................................................................... 6
1.1 Background of the study ................................................................................................................................ 6
1.2. Statement of the problem ............................................................................................................................ 7
1.3.Objective of the study .................................................................................................................................... 7
1.3.1. General objectives ..................................................................................................................................... 7
1.3.2. Specific objective of the study ................................................................................................................... 7
1.4. Research questions ....................................................................................................................................... 7
1.5. Significant of the study ................................................................................................................................. 8
1.6. Scope of the study ........................................................................................................................................ 8
1.7. Limitation of the study .................................................................................................................................. 8
1.8. Organization of the study ............................................................................................................................. 9
CHAPTER TWO ......................................................................................................................................................... 9
2.LITERATURE REVIEW ............................................................................................................................................. 9
2.1.INTRODUCTION .............................................................................................................................................. 9
2.2. Basic concepts of auditing .......................................................................................................................... 10
2.3.Definition of auditing ................................................................................................................................... 10
2.3 Types of auditing and auditors .................................................................................................................... 10
2.3.1 Types of auditing ....................................................................................................................................... 10
2.3.2 Types of Auditors ...................................................................................................................................... 11
2.4 Internal auditing ....................................................................................................................................... 12
2.4.1. Definition of internal auditing.................................................................................................................. 12
2.4.2. Objective and scope of internal audit ...................................................................................................... 12
2.4.3. The reason for internal auditing .............................................................................................................. 13
2.4.4 Responsibility of internal audits ............................................................................................................... 13
2.4.5 Code of ethics for internal auditors .......................................................................................................... 14
2.5 The relationship of internal and external audits ..................................................................................... 15
2.5.1. Similarities ............................................................................................................................................. 15
2.5.2. Difference................................................................................................................................................. 16
 2.6. Performance standards of internal auditing ............................................................................................... 16
2.6.1. Managing the internal audit activity ........................................................................................................ 16
2.6.2 Applicability of internal auditing ............................................................................................................... 17
2.6.3. Quantity of the internal audit personnel ................................................................................................. 17
2.6.4. Degree of independence of the internal auditor and the objective ........................................................ 18
With which the workers performed .................................................................................................................. 18
2.7. The nature of internal control .................................................................................................................... 18
2.8. Summary ..................................................................................................................................................... 18
CHAPTER THREE ..................................................................................................................................................... 19
3.RESEARCH METHODOLOGY ................................................................................................................................ 19
3.1. Research design .......................................................................................................................................... 19
3.2. Data source and instruments ...................................................................................................................... 19
3.3. Target population and sampling design...................................................................................................... 19
3.4. Data processing and Analysis ...................................................................................................................... 20
CHAPTER FOUR ...................................................................................................................................................... 21
4.DATA ANALYSIS AND PRESENTATION ................................................................................................................. 21
4.1. Demographic Characteristics of Respondent ............................................................................................. 21
4.2. Analysis and discussion based on questioners ........................................................................................... 23
4.2.1. The CBEs Hawassa dato branch reliance on effectiveness of internal Auditing practice ....................... 23
4.2.2 The CBE Hawassa dato branch internal auditor activity ........................................................................... 24
4.2.3 Internal auditor competence in CBE Hawassa dato branch ..................................................................... 25
4.2.4 Internal auditor’s perception toward staffing of asset in CBE Hawassa dato branch .............................. 27
4.6.5 The application of internal auditing principle in practice in CBE, Hawassa dato branch ......................... 28
4.3. Discussion and Results Based on Interview ................................................................................................ 30
4.3.1 Internal audit practice............................................................................................................................... 30
4.3.2 Attitudes of employeesand management towards auditors .................................................................... 31
CHAPTER FIVE ........................................................................................................................................................ 32
5.Summary, conclusion and recommendation ...................................................................................................... 32
5.1 Summary ...................................................................................................................................................... 32
5.2 Conclusion .................................................................................................................................................... 32
5.3 Recommendation......................................................................................................................................... 33
Bibliography ....................................................................................................................................................... 35
 CHAPTER ONE

1.INTRODUCTION

1.1 Background of the study

Internal auditing is independence appraisal function established with an organization to
examine and evaluate its activities as a serve to the organization with the organization there
will be many various controls of money aspects of the organization activities. It is
important to understand that once which related to the objectives of preparing accountants
which are true and fair (Alan.M and Joht, 2005, p-87)

Internal audit as the process affected by entity boards of directors management and other
personnel designed to provide reasonable assurance regarding the achievement of
objectives in operation control (Harry.F.Konrath , 2002, p-205)

Different changes and factors will be influence the auditing profession in recent year.
Technological development and regulatory bodies will be cause the auditing policy to re-
examine its purpose intentions and methodology. Because of this the profession will be
change in auditing method from detailed examination of individual transaction to use
sampling techniques. Therefore all these change will be affected the internal auditing
component of the profession.

A proper internal auditing practice is a base for presenting the stability of any company.
The study will be faces on describing and analyzing the important control direction that are
related to internal auditing practice. In regard to see the existing and applicability of
attributes and the standard in CBE performance to increase the effectiveness of audit work.

Raising awareness of the role and significance of internal auditing to the achievement of
specific objectives in effectiveness of internal auditing practice of operations, reliability of
financial reporting in compliance with applicable laws and regulations (Sawyer lawyers,B,
1989, P-21)
1.2. Statement of the problem
Internal auditing is examination of internal control system which it function by measuring
and evaluating effective of other control. On the other hand external auditor has
reasonability to report on the true and fairness of account of the company. The absence of
proper internal auditing in the organization leads many problems. The absence of primary
internal auditing in the organization was resulted in lack of continuous assurance service.
The second problem in achieving internal auditing practice is the degree of independence
of internal auditor since auditors are employees of company this limited independence may
reduce their role with company to the level; of more assistance to the top management.
The other problem is that inadequate internal control can expose the company to various
identifiable risks such as, waste of company available resource fraud by employees and
lack of control over asset. By not having adequate internal auditing activities the companies
has be less substantial amount of resource and have difficulty to achieve its intended
objectives.

1.3.Objective of the study

1.3.1. General objectives

The general objective of the study is to evaluate and whether the commercial bank of
Ethiopia’s dato branch internal auditing practice is effectiveness or not.

1.3.2. Specific objective of the study

Specific objective of the study was
 To assess the importance of internal auditing in the existing condition with in the dato
branch
 To identify the quality of internal audit worker in commercial bank of Ethiopia dato
branch
 To assess the internal auditing as internal control
 To assess limitation of internal auditing practices

1.4. Research questions

The researcher wouldattempt to answer the following questions:-

 What assess is the importance of internal auditing in the existing condition with in
the CBE
 How identify the quality of internal audit worker in commercial bank of Ethiopia
 How to assess the internal auditing as internal control
  What is the limitation of internal auditing practices

1.5. Significant of the study

This study is expected to contribute many of organization, criticized public accountant,
institutional accounting standard board and various individuals:-

 Various problems that related to internal auditing will be investigated and

presented to the organization for the purpose of coping with it.
 The finding of these study suggest the possible solution of internal auditing
related problem that lead the organization to apply the proper internal auditing
principle.
 The finding of this research helps the researcher to elaborate the knowledge and
know how about internal auditors practice.
 This helped the auditors in this organization to know their role in the
organization.
 It will be used as an additional reference to the existing restructure and can be
used as aping boards. For other research, who wishes to conduct a research in the
same area
 It will be enable the managed to be aware of the importance and use of internal
audit in achieving intended.

1.6. Scope of the study

Even though effectiveness of the internal audit practice is the concern of any
organizationthe study was conducted as a case study only on commercial bank of Ethiopia
Hawassa dato branch.The research also has the scope which was bounded starting from
2009 E.C up to 2010 E.C. The data that are used in this study arewithin this one year
because it is too difficult to gather data from the early establishment of the organization.

1.7. Limitation of the study

The researcher faced different challenges while conducting this study. Some of these are
unwillingness of the respondents to give sufficient information. While conducting the
research; the study also encountered the following limitations: The study covered
effectiveness of internal audit practices in commercial bank of Ethiopia in Hawassa dato
branch.
 1.8. Organization of the study
This research comprised five chapters, the introduction part is presented in the first chapter
which consists of back ground of the study, statement of the problem, objective of the
study, research question, significance of the study, scope of the study, limitation of the
study and organization of the study. Chapter two gives us possible summary of literature
review related to the topic, chapter three contains research methods and chapter four
analyses and interpretation. Finally chapter five gives us summary, conclusion and
recommendation on the findings.

CHAPTER TWO
2.LITERATURE REVIEW
2.1.INTRODUCTION
Internal control is defined as all coordinate methods and measure within the organization or
within a system adapted to safeguard asset. Check accuracy and reliability of accounting
data promote operational efficiency and encourage adherence to prescribed managerial
policy.

Overall internal controls are also defined as operational checks and balance that prevent
less due to fraud, waste abuse and mismanagement of resource. Resource includes
personnel, information and capital.

As system of internal control goes beyond the matters directly related to the accounting
function. There are two kinds of internal controls, administrative control, financing control,
administrative control emphasis on controls for management decision concentrating on
authority and responsibility for authorization of information as such includes plan of
organizational structures and procedures and records related to the decision process.

2.2. Basic concepts of auditing

Concepts are abstractions derived from experience and observation and designed to aid
understanding of the similarities with in a subject matter and the difference from other
subject materials much like engineering, physics, economics, and sociology and other
physical and social sciences, auditing is based up on a series for standard, the guidelines or
measures of quality from which audit procedures are derived to gather ,therefore auditing
concept, standards and procedures are related (Kin-rath,1999,p1-4)

2.3.Definition of auditing
Auditing is the content of Dianetic and scientology is an activity where a person trend in
auditing listen and gives auditing commands to a subject, which scientology refers to has
“prectear” critics of auditing have suggested it has similarity with cult style programing and
some behavior modifications technique which result psychological manipulation of the
subject.

Auditing involves the use of processes which are set of questions asked or direction given
by an auditor, when the specific objective any one process is achieved the process is ended
and other can then be used by doing this, the subject are said to be able to free themselves
from unwanted barriers that inhibit their natural ability.

Auditing is the accumulation and evaluation of evidence about information to determine

and report on the degree of corresponding between the information and established criteria.
Auditing should be done by a component independent person (Arens, 1997, p-2)

2.3 Types of auditing and auditors

2.3.1 Types of auditing

According to Anes (1997, p 4-6) there are three types of auditing: Operational audits,
compliance audits, and audits of financial statement.

Operational audits: - an operational audit is a review of any parts of evaluating

effectiveness. Because of many different areas in which operational effectiveness can be
evaluated it is impossible to characterize the conducted of a typical operational audit. In
one organization, the auditor might evaluate the relevancy and sufficiency of information
used by management in making decision to acquire new fixed asset, while in the different
organization the auditor may evaluate the effectiveness of the popper flow in processing
sales. In operational audit, the reviews are not limited to accounting.

Compliance audits: - the purpose of compliance audits to determine whether the audit is
following specific procedures or rules set down by some higher authority. A compliance
audit for private business could include determining whether accounting personnel are
following the procedures prescribed by the company controller.

Reviewing wage rates for compliance with minimum wage laws or examining contractual
agreement with banks and others lenders to be sure the company is compiling with legal
requirement. Results of compliance audit are generally reported to someone within the
organization unit being audited rather than to be broad spectrum of user.

Auditors of financial statement: - an audit of financial statements is conducted to determine

whether the overall financial statement the quantifiable information being verified is stated
in accordance with specified criteria. The criteria are generally accepted accounting
principles although it is common to conduct audits of financial statement prepared using
the cash basis or some other basis of accounting appropriate for the organization. The
financial statement most commonly included are the statement of financial position,
income statement included are the statement of financial position, income statement and
statement of cash flows, including accompanying foot note.

2.3.2 Types of Auditors

The four most widely known types of auditors are (Arens, 1997, p 6&7). General
Accounting office (GAO) Auditors: - the United States (US) is a non-partisan agency in the
legislative branch of the federal government. The GAO which is headed by the comptroller
general, report to and is responsible solely to congress many of the GAOs auditors
responsibilities are the same as those of a certified public accountants (CPA) much of
financial information prepared by various government agency is audited by the GAO
before it is submitted to congress. In many states, experience as GAO before it is submitted
to congress. In many states, experience as GAO auditors the experience requirement for
becoming CPA.

Internal revenue agent: - the internal revenue service (IRS) under the direction of the
commissioner of internal revenue has its responsible. The enforcement of the federal tax
laws as they have been defined by congress and interpreted by the count. A major
responsibility of IRS is to audit the returns of tax payers to determine whether they have
complied with tax laws. The auditors who perform this examination are referred to as
internal revenue agents.

Internal auditors: - internal auditors are employed by individual companies to audit for
management much as the GAO does. For congress the internal audit group in some legal
firm can include over a hundred persons and typically report directly to the president
another high executive officer or even the committee of board of directors.

Internal auditors responsibilities vary considerably depending on the employer some

internal audit staff consist of only one or two employees who may spend most of their time
doing. Other internal audit staff consists of numerous employees who have diverse
responsibilities including many outside accounting areas.Certified public accountant
(CPA):- CPA firm have as their primary responsibility the [performance of audit function
on published financial statement of all publicly traded companies most other responsibility
large companies and many small companies and non-commercial organization. There use
of the title certified public accountant (CPA) is regulated by state law through the licensed
department of each state.

2.4 Internal auditing

2.4.1. Definition of internal auditing

An independent appraisal function established within an organization. Internal auditing is
control function that exist by examining and evaluating the adequacy and effectiveness of
other control the institution auditor (IIA) defines the internal auditing as an independent
appraisal activity established within the organization to examine and evaluate its activities
as service to the organization, this definition explains that internal auditors (professional of
internal auditing) has being done the extent and nature of assignment performed and the
action taken by the management as result internal audit report, this is the activities within
the organization and internal auditors must have department in mental attitude to world the
appraisal of internal auditor.

2.4.2. Objective and scope of internal audit

A wide range of activities will be done by the internal audit dependent. These activities
may broadly be classified as financial and operational audits under the former may be
included:-

 A continuous review of internal accounting controls

  The scrutiny of the reports and statements, financial or operating as
prepared for management purposes.
 The ascertainment of the extent to which the asset of the organization are
accounted for and safeguarded from losses or damages.
 The examination of balance sheet items test of balance and transaction as
to their authenticity through appropriate tests, etc. under operational audit
may be included.
 The study and assessment of operating practices to promotion increased
efficiency and economy.
 The examination and ascertain of the extent to which established
policies, plans and procedure are complied with
 The assessment of budgetary standard setting
 The assessment of the level of performance in successful discharging
duties and responsibilities assigned
 A carry out of audits to determine whether operating objective target and
associated control procedure are properly instituted and the degree to
which the desired result are achieved.

2.4.3. The reason for internal auditing

Audits are made for number of reasons. Some stem from the accountability that
subordinate own to their superiors for the accomplishment of task this has given a rise to
the theory of the owners as principal, the manager as agent. The agent must provide
objectively that tasks have been effectively accomplished. The jobs of most managers are
two extensive to accomplished by themselves; the managers need the help of skilled
internal auditors (KON RATH, 1999, P 676-677).

2.4.4 Responsibility of internal audits

The some responsibilities of internal audit are as follow.

 Responsible for evaluating design and effectiveness of compliance function

 Develop long range audit plan
 Audit of new management areas to evaluate internal control system
 Follow up on significant findings from previous audit
 Audit/ review operational areas for steward ship of resource and compliance with
established policies and procedures
  Review internal administrative and accounting control to safeguard resources and
ensure compliance with law and regulations.

2.4.5 Code of ethics for internal auditors

The purpose of codes of ethics is to promote all ethical culture on the profession of internal
auditing. A code of ethics is necessary and appropriate for internal auditing founded as it is
on the trust place in its objectives assurance about risk management control and
governance. The code of ethics extended beyond the definition of internal auditing to
include two essential components.
1.Principles
2.Rules of conduct
In the code of the six principles are identified as follows:
Responsibilities
The public interest
Integrity
Objective and independence
Due care
Scope and nature of service

Responsibility: - CPA renders important and essential service in our free enterprise system
all members have responsibilities to these who use their professional services. In addition
members have an ongoing responsibility to compare with other member to:

o Improve the art of accounting

o Maintain the public confidence in the profession
o Carry out the self-regulatory activities

The public interest: - members should accept the obligation to act in a way that serve the
public interest, honor the public trust and demonstrate commitment to professionalism. The
public interest is defined as the collective well-being to the community of people and
institution that CPAs aerie the CAPs public interest included clients, creditors, granters,
government agencies, employed, stock holder and the general public.

Integrity: - to maintain and broader public confidence members should perform all
professional responsibilities with the highest sense of integrity. Integrity is personal
characteristic that is in dependent in CPA this element is the benchmark by which members
must ultimate judge all decisions made in engagement integrity is also the quality in which
public trust is based.

Objectivity and independence: - member should maintain objectivity and be free of conflict
of interest in discharging professional responsibilities. A member in public practice should
be independent in fact and appearance when providing and other attestation service.

Objectivity is a stage of mind although this principle is not precisely measurable it

nevertheless is held up to members as animperative objective being important and unbiased
in all matter pertaining to an engagement. Independence is the corner of the professions
philosophical structure

Due care: - member should observe the professions and ethical standards strive continually
to improve competence and the quality of service and discharge professional responsibility
to the best of the member’s ability principle of due care is at the center of the profession
ongoing quest for excellence in the performance of professional service. Due care requires
each member to discharges his/her professional responsibilities with competence and
diligence.

 Competence is the product of education and experience

 Diligence involves steady, earnest and energetic application

Scope and nature of service: - member in public practice should observe the principle of the
code of professional conduct in determining the scope and nature of service to be provide.
This principle applies only to member who renders service to the public.

2.5 The relationship of internal and external audits

2.5.1. Similarities
More specifically the work of both the internal and the external auditor is carried out
largely by similar methods in such areas as: -

 Both must be competent auditors and remain objective in performing

their audits, including planning and performing test of control and
substantive tests.
 An effective system of internal check to prevent and/or detect errors and
fraud and that it is operating satisfactory.
 An adequate accounting system to provide the information necessary for
preparing true and fair financial statement.
  Examination and checking of accounting records and statement.
 Examination of the soundness and effectiveness of internal check.
 Verification of asset and liabilities.
 Observation, enquiry, the making of statistical comparison and other
measures as may be judged necessary.
 Performance of detailed examination of balance and transaction.

2.5.2. Difference
There are some fundamental difference between the two forms of audits scope: -In the case
of an independent audit, the duties responsibilities, right and liabilities so the auditors are
laid down the respective statues on the other hand, the extent of the work to be undertaken
by the internal auditors is mainly determined by the management the company.

Approach: -the internal auditors approach is with the view of ensuring that the accounting
system is effective so that accounting system information presented to the management
through the period is accurate and discloses material facts. The independent auditors
approach, however, is governed by this duty to satisfy himself that the account to be
presented to the shareholders show a true and fair view of the profit or loss for the financial
period and of the state of the company at the end of that period.

Responsibilities: -the responsibilities of the internal auditor are towards the management
whereas the independent auditor is responsible directly to share holder. The external
auditor is responsible to financial statement users who rely on audit to add credibility to the
statement.

Professional guidance:-for internal auditors is provided by the institute of internal

auditor(IIA).The IIA is an organization similar to the AICPA that establish ethical and
practice standards , provides education and encourage professionalism for members.

Independence:-the independence auditor has get an independent status while the internal
auditor, being and employee of the organization does not possess this independent of status.

2.6. Performance standards of internal auditing

2.6.1. Managing the internal audit activity

According to Ratliff (1988) the chief audit executive should effectively managed the
internal audit to ensure if adds value to the organization.
Planning: -the chief audit executive should establish risk based plans to determine the
priorities of the internal audit activity consistent with the organization goal.

The chief audit executive should consider accepting proposed consulting engagement based
on the potential to improve management of risk and improve the organization operations
those engagement that have been accepted should be included in the plan.

Reporting to the board and senior management:-the chief audit executive should report
periodically the boars and senior management on the internal audit activity is purpose
authority, responsibility and performance relative to its plan Reporting should also include
significant risk exposures and control issue, corporate governance issues and other matter
needed or requested by the board and senior management.

2.6.2 Applicability of internal auditing

The development of internal auditing has major extent been centered in the business
organization. These ties continuous in the exacting literature of the profession and the
convenient of the problem with work of business organization this ties however unduly
deny the universal applicability of internal auditing to all type of organization more over
they fail to renal auditing to all types of organization more over they fail to recognize that
some of the most progressive internal auditing is how being done by non-business type
organization a related fact also is that many organization are blend of business and non-
business all of those development confirm that the need for internal auditing exist in all
type of organization when the completeness of activities the volume of transaction and
dependence on large number of people to exist in some combination to create operational
problem.

2.6.3. Quantity of the internal audit personnel

In ascertaining the quality of the internal personnel, the independent auditor should enquire
in to (Sherahar, 2003)

 The qualification and technical training of the internal audit personnel

in some cases both the internal auditor and the independent auditor
belong to the some professional organization and are subject to the
same professional regulation except for independence.
 The client practices for the recruitment and training of the internal
audit personnel
  The extent of supervision provide by the chief internal auditors
including the supervision on planning, monitoring process, assessing
conclusions reached , reviewing reports and following up to the
ensure that recommendation accepted are carried out.
 The standing of and regarding for the abilities internal auditor’s
personnel in the client organization.

2.6.4. Degree of independence of the internal auditor and the objective

With which the workers performed

The independent auditor should himself that the internal auditor is in opposition to perform
his work with a satisfactory degree of independence and objectively. In assessing this
independent auditor should satisfy himself that the internal auditors reports or has access to
the highest level of management. In such a case he is likely to be more objective than when
he report to lower level of management. The nature and extent of many constraints placed
on the work of the internal auditor. A review of the finding and recommendation contained
in the reports of the internal audit personnel will usually be a useful factor in judging their
independence and objective.

2.7. The nature of internal control

According to Boynton (1995) internal can be defined as the process through which an
entity attempts to minimize the like hold of accounting related errors, irregularities, and
illegal acts. Internal control is a process effected by and entity is board of directors
management, end others personnel design to provide reasonable assurance regarding the
achievement of objective in the following categories.

 Reliability of financial reporting

 Compliance with applicable low regulations
 Effectiveness of an operation

2.8. Summary
In the study the auditing context of dramatic and scientology is an activity where a person
trend in auditing listen and gives auditing. Auditing is made for number of reasons some
stem from the accountability that subordinates, own to their superior for the
accomplishment of task. In this case he is likely to be more objective than when report to
lower level management. The nature and extent of any constraints placed on the work of
the internal auditors by management should carefully and recommendations contained
auditor. A review of finding internal audit personnel will usually be a use full factors in
judging their independence and objectively.

CHAPTER THREE
3.RESEARCH METHODOLOGY
3.1. Research design
In order to achieve the specific objective this research design emphasized on descriptive
research design means the study described to know the present and few years back now
situation of effectiveness of internal audit practice in case of Ethiopia commercial bank
Hawassabranch. To examine the collected data qualitative and quantitative techniques of
analysis were used to arrive at certain finding and conclusions.

3.2. Data source and instruments

The researcher was used both primary and secondary source. The primary data was
collected from selected respondents by distributing questionnaires and interview. In
addition the secondary data was collected from commercial bank of Ethiopia Hawassa dato
branch relative document like annual reports, manual, further more related printed books
on history of commercial bank of Ethiopia hawasa dato branch manuals management’s
book and any reference.

3.3. Target population and sampling design

The target population of this study will have 40 employees. Among thse 25 permanet
employes aband 15 are contract employes. Due to samall amount of total population the
researcher would take the total population as sample size. Then the researcher would not
use the formula to determine the sample siz from the total population In order to give equal
chance for the respondents this study was applied simple random sampling techniques
because researcher used probability sampling method.
3.4. Data processing and Analysis
After the data has been collected, it was edited, coded and classified. The study used to
involve the inspection of questionnaires on raw data and necessary condition of each
questionnaire and defect the most proofing omission in accuracy in detail coding is
technical procedure by which data was categorized through coding the raw data to transfer
into symbols usually numerals. It was tabulated and counted. This was done by specifying
the categories into which remains to be place the number is depending up on the number of
questions on the questionnaires. Coding open- ended and close-ended question this is done
through developing consistent set of standard to question. Tabulation consists of simply
counting the number face that fall in to vary categories. It communicates the result of the
study was used for several purpose (i.e. to calculate summary statistic). Tabulation will be
done by hand. It is facilitated determining the empirical distribution variables frequencies
are numerate in each table for calculation of varies statistics and communicative
distribution function was employee to observe with less than or equal to specify
determined. Finally the data presented the research findings, conclusion and
recommendations.
 CHAPTER FOUR

4.DATA ANALYSIS AND PRESENTATION

This chapter is concerned with the characteristics of target population, the presentation as
well as analysis of data gathered through questionnaire and interview. The data collected
through questionnaire and interview is going to be analyzed and presented in the table form
and it is seems appropriate to interpret each data which are presented in table form.

4.1. Demographic Characteristics of Respondent

Table 4.1

No Personal details No of respondent Percentage of respondent

1 Sex
Male 30 75%
Female 10 25%
Total 40 100%
2 Age 25
18-30 10 62%
30-40 5 25%
41 and above 40 12.5%
Total 100%
 Source complied from questionnaires. 2009

According to table 4.1 above 75% of the total employees in Hawassa Commercials bank
constitute males. These show majority of males and educated than females in the city while
only 25% of female employees are involved in the commercial bank of Ethiopia from these
we understand that there is variation between male and female in involvement in higher
institution because of absence on educated female in the city.

As we can see from table 4.1 62.5% employee are between 18-30 age years. 25%
employees are 30-40 years and 12.5% of employees are found between 41 and above this
further indicate that majority of employees are found in active age group.

Table 4.2Educated manpower and working position

Education level No. of respondent Percentage

Diploma - -
Degree 30 75%
Master 7 17.5%
Above master 3 7.5%
Total 40 100%
Current position
Manager 1 2.5%
Auditor 1 2.5%
Other 38 95%
Total 40 100%

Source complied from questionnaires. 2009

According to table 4.2 75% of the organization is degree holders 7.5% employees masters
holders and 7.5% of the employees above master. From this we can understand that on
organization has no problem of educated manpower. Finally as indicated in table 4.2 the
position of the respondents in the organization is 2.5% of the occupied as manager and
2.7% of the employees occupied as auditor.
4.2. Analysis and discussion based on questioners
The result and analysis done on the internal audit practice in CBE in Hawassa dato
branchthis discussion covers both the attribute standard and performance standard of
internal audit. A total of fifty (50) questionnaires were distributed to respondents that are
working in CBE in Hawassa dato branch. From these fifty (50) questionnaires forty (40) of
them tiled properly and forwarded which present 80% of the response rate. The remaining
Ten (10) questionnaires are failed or not presented. Present 20% of the response rate. The
response obtained from employees. The data gathered in the two methods, that are
questionnaire and interview and analysis made on this data is presented on the following
section.

4.2.1. The CBEs Hawassa dato branch reliance on effectiveness of internal Auditing
practice
As indicated earlier internal auditing practice of a company is useful for enhancing the
effectiveness of auditor work of a company this will increase quality. In addition greater
participation and coordination of internal auditors may result in lower audit cost. The
contribution of internal audit function to the financial statement audit depends on the
quality of internal auditing rules and procedure and the paper application of these rules and
procedures.

To address the twenty one questions, which concern about the commercial bank of Ethiopia
Hawassa dato branch reliance on effectiveness of internal auditing practice, respondents
were asked whether or not they rely on proper internal audit work and the degree of
reliance. As shown under table 4.1 below 24 out of 40 (72.5%) of the respondents yes and
11 out of 40 (27.5) of respondents replied partially they rely.

Table 4.3 CBE sod branch reliance on internal audit work

No Respondents Respondents
NO Percent
1 Yes 29 72.5
2 Partially 11 27.5
3 No 0 0

Source: compiled from questionnaire 2009

Table 4.4 The CBE Hawassa dato branch level of reliance on internal audit work

Respondents
NO Level of reliance No Percent
1 High 8 20
2 Medium 32 80
3 Low 0 0

Source: compiled from questionnaire 2009

As indicated in the above two table 4.1 and 4.2 event if the CBE, Hawassa dato branch has
enough internal auditing work which amount 72.5% of their work relied on the internal
audit work. The reliance on the level of internal audit work medium i.e. 80% therefore we
can say that, even though the bank has effectiveness internal auditing practice highly it’s
application is medium. The quality of internal audit work depends on adequate and reliant
as required by auditing standard.

4.2.2 The CBE Hawassa dato branch internal auditor activity

As indicated in the proposal internal auditor should be objective in performing always
audits. To be an internal auditor should ideally report to the high level management and for
other concerned party such as audit committee that allow internal auditor activity to
achieve their responsibilities and be independent of oppositional management in fact and in
appearance for the audit work quality and functioning and there should avoid conflict of
interest. Depending on the above issues related with the internal auditors objectivities the
response obtained by then questionnaire are presented in the following table (i.e. table 4.3)

Table 4.5The CBE Hawassa dato branch internal auditor activit

Responses
 Strongly agree agree neutral disagree Strongly disagree
NO NO % NO % NO % NO % NO %
Internal auditor in CBE
Hawassa dato branch is
free from conflicting
auditors 14 35% 20 50% 6 15% 0 0% 0 0%
The internal auditor in
CBE Hawassabranch
exercise due
professional cars in
performing audit 18 45% 22 55% 0 0% 0 0% 0 0%

Source: compiled from questionnaire 2009

Depending on table 4.3 the researcher can understand as the response of internal auditor
work (i.e. strongly agree and agree) increase the higher the internal auditors activity. This
result told in quality of internal auditor function. The table show that majority of
respondents agreed with the statement that internal auditor in CBE Hawassabranch was
free from conflicting of internal auditors which 50% responses.

The internal auditors in commercial bank of Ethiopia, Hawassabranch are exercising due
care In performing audit work are 22 out of the 40 respondents agreed which 55% from this
it is possible understanding that internal auditors in commercial bank of Ethiopia in
Hawassa dato branch have objective. In other word, this objectivity increases the extent of
reliance on internal audit practice.

4.2.3 Internal auditor competence in CBE Hawassa dato branch

If the organization has competent internal audit staff it is expected to prove more valuable
input to work improving internal controls of an organization. Which will affect the quality
of internal audit work to be competence internal auditors should have enough level of
knowledge, skill and discipline. The degree of competence of internal auditor depends on
their practical experience; availability of education and the quality of internal audit
working appear.

Therefore, examine the competence of internal auditors are practical experience.

Respondents were asked to indicate the extent of their opinion with the following
 statements which are executed to have influence (direct relation) with competence of
internal audit.

 Internal auditors in CBE, Hawassabranch have sufficient level of training.

 Internal auditors in CBE, Hawassabranch have sufficient level of practical
experience.
 The internal auditors prepare working paper to reduce test confidence out the
result of test and conclusion drawn in the bank.

Table 4.6 the internal auditor’s opinion on the degree of competence CBE,Hawassa
dato branch

Response

Strongly agree neutral disagree Strongly

Agree disagree
Statement
NO % NO % NO % NO % NO %

Sufficient level of Practical 24 60% 12 30% 4 10% 0 0% 0 0%

experience

Sufficient level of Training 6 15% 8 20% 6 15% 20 50% 0 0%

Working proper 10 25% 14 35% 12 30% 4 18% 0 0%

documentation and report
have enough quality and
quantity

Source: compiled from questionnaire 2009

This clearly shown in table 4.4 most of the respondents agreed on statement indicated on
no(1) 24 out of 40 which is 60% of the respondents strongly agreed, 12 out of 40 which is
30% of respondents have agreed, and 4 out of 40 which is 10% of respondents neutral. The
internal auditor in CBE, Hawassabranch has sufficient level of practice. For statement
indicated under no(2) 20 out of 40 which is 50% of the respondent have agreed, 6 out of 40
is 15% of the respondents have strongly agreed. For statement indicated on no(3) 14 out of
40 which is 35% of the respondents have agreed, 12 out of 40 which is 30% of respondent
have neutral, 10 out of 40 which is 25% of respondents have strongly agreed and 4 out of
40 which is 10% of respondents have disagreed.

The internal auditors prepare working paper to reduce test carried out the result of test and
conclusion draw in the bank. Therefore the bank has enough level of practice to prepare
working documentation and report. Internal auditing by competent internal audit staff is
relevant and reliable for the users of financial statements of the bank

4.2.4 Internal auditor’s perception toward staffing of asset in CBE Hawassa dato
branch
The internal auditor review the means of safeguarding assets and as appropriate, verify the
existence of such asset. The internal auditors not only verify the assurance of such asset,
but also appraise the economy and efficiency with which resource are employed. The
existences of these criteria enhance the adequacy of information provided by the internal
auditor to its customers. This application of internal auditor in practice for proper
safeguarding of assets will increase the reliability on internal auditors good work
performance. Based on the above information. We have the following response for our
questionnaire.

Table 4.7 the internal auditor’s perception towards staffing and safeguarding of

Asset in CBE Hawassa dato branch

Responses

statement Strongly agreed neutral disagree Strongly

agreed disagree

NO % NO % NO % NO % NO %

1 In the CBE internal is

reviewing the means
12 30% 20 50% 8 20% 0 0% 0 0%
of safeguarding
 In CBE staff
assignment of
2 0 0% 8 20% 10 25% 22 55% 0 0%
internal auditor is
rotated periodically

Source: compiled from questionnaire 2009

As clearly shown in table 4.5 the majority of the respondents agreed for statement indicated
on no (1) which is 50% of respondents agreed and 30% of respondents have strongly
agreed. Generally, 80% of respondents have agreed concerning the banks appropriate
safeguarding of asset. For the statement on no (2) respondents have almost disagreed which
is 55% and 20% of the respondents have agreed about the statement, “Staff assignment of
CBE internal auditor is periodically rotated”. By taking the majority about 55% of the
internal auditors are disagreed about staff assignment of bank and periodic rotation of
internal auditors. The low staff assignment may be the audit performed. From this the
researcher understands that, there is no potential and actual conflicts of interest and the
internal auditor should not be expected to report to the manager. The existences of stable
work in any company in case of the adaptability of the work and hence increase the quality
of audit work.

4.6.5 The application of internal auditing principle in practice in CBE, Hawassa dato
branch
In the first part of this chapter, the questionnaire result indicates that the extent of internal
auditor’s reliance on internal auditing practice and quality of internal audit work in CBE is
high. The reason for high internal auditing practice in CBE is high level of objectivity and
competence of internal auditor. To analysis this, respondents were asked to indicate the
extent of their point of view with the following three statement that may be basic causes for
the banks internal auditor dependability. From the three the first one is, the programs in
CBE, HawassaHawassa dato branch are regularly revised to covers changes in client
system: the second audit procedure including testing and sampling techniques improves is
selected in advance where practicable and expanded; the third, the internal auditor in CBE,
ambo branch are skilled dealing with people and in communicating effectively.
Table 4.7 Internal auditor’s suggestion about good qualities of internal auditing items
Of objective and compliant

Responses

NO Statement Strongly agreed neutral disagreed Strongly

agreed disagreed

NO % NO % NO % NO % NO %

1 Programs in CBE are

regularly revised to cover
change in the clients 0 0% 20 50% 8 20% 12 30% 0 0%
system
2 Audit procedure such as
testing and sampling
16 40% 20 50% 4 10% 0 0% 0 0%
techniques is selected in
advance.

No responses

statement Strongly agreed neutral disagreed Strongly

agreed disagree

NO % NO % NO % NO % NO %

3 The internal auditors in

CBE are skilled dealing
6 15% 6 15% 12 30% 16 40% 0 0%
with people and
communicating
effectively

Source: compiled from questionnaire 2009

The three factors mentioned above influence the internal auditors practice as indicated by
the professional auditing standard. As clearly show in the table 4.6 50% agreed for the
statement program in CBEs regularly revised to cover the change in the clients system
while 20% of respondents have neutral and 30% of respondents have disagreed.

This indicate in table 4.6 on no (2) tell as the CBE enough level of audit procedures, which
have 50% of respondents are agreed and 40% of respondents have strongly agreed. The
other statement on table 4.6 no (3) the internal auditors in CBE are skilled dealing with
peoples and communicating effectively of the respondents which are 15% agreed, 15% of
the respondents have strongly agreed and 30% of the respondents have neutral 40% of
respondents have disagreed.

Generally, from above analysis we can understand that internal auditors in CBE are
compliance with role, policy and regulations. Therefore these realize that adequate work
performed by internal auditors in line with internal auditing principle of the bank which
increase the effectiveness of the bank. To support the response given by the internal
auditors for presented questionable is used related interview that are expected to generalize
the response of questionnaire.

4.3. Discussion and Results Based on Interview

4.3.1 Internal audit practice

According to the responses of interviewees, the internal auditors of commercial bank of
Ethiopia Hawassa dato branch periodically assure the means of safeguarding asset. The
periodic examination and review of the organization asset safeguarded it from destruction.

The organization’s assets may see distracted by any means such as carelessness of the
workers, improper layout of material and facility in the organization, etc, since the major
asset of bank is cash of commercial bank of Ethiopia,Hawassa branch could be
safeguarded. Therefore, internal auditors need to adjust periodical review for the
safeguarding of organizations assets that is cash, receivable and other assets such as
computer, furniture etc.

According to the interviewees, training and development is given to those internal auditors
though it is not properly planned by the bank. From this we can understand that in the bank
the planed and properly design training and development program is not prepared.
However internal auditors can effectively do their work when they get training concerning
tasks being undertaken in the bank. For example tasks related to accounting audit
procedure and way of finding information that used for decision making process of the
auditors the training program helps them to control each activity done by the employees on
the daily basis in the branch.
4.3.2 Attitudes of employeesand management towards auditors
According to the manager, the internal auditors have skill in communicating with
people.

The communication skill of the auditors helps them to make close interaction with the
workers of organization. It also enables them to collect information important for decision
working in simplest manner. The communication skill they have may help them to create
health and careful relationship in the work environment in which they can measure and
evaluate the working performance of each unit of the organization. since, the internal
auditor of this branch have communicate skill, they can communicate effectively the duty,
control and responsibility with workers, they enable to establish the channel of
communications for people to up action by management resulting from communications
resaved from internal auditors, customers and other parties.
 CHAPTER FIVE

5.Summary, conclusion and recommendation

5.1 Summary
One of the key element in ensuring business success is to build a strong and efficient
internal auditing practice, especially in banking venture, efficient customer service are base
to remain business in operation and organizing an effective internal auditing practice for
safeguarding resources of the organization. The objective of this study is to assess quality
of internal audit work and importance of internal auditing practice. In order to achieve, the
planned objective the method of data gathering researcher are used both primary and
secondary source the primary data would be collected like annual report, manual. There is
no problems which face organization in case of internal auditor and the performance and
there is no obstacles to the succession of the organization due to the felicity of internal
auditor but the planned and properly deignedtrinity and development program is not
prepared over though there is trimly in the organization. The training program given at the
district level is not sufficient and it is not supported by any visual did and practice.

5.2 Conclusion
Based on the finding of the study, the following conclusions were made by the researcher;

1.Internal audit is very important for the overall operation of the organization in
ensuring the fairness of financial statement, evaluating whether the activities in the
bank operated effectively and detecting incorrect financial transaction records in
banking activities.
2.Internal audit function need competent and efficient auditors that have good computer
skill, good understanding of procedures and having detail accounting knowledge.
 However internal auditors of commercial bank of Ethiopia Hawassabranch are not
qualified because they lack knowledge and knowhow of current principles and
standard of audit function. From view point of the manager, these auditors lack good
computer skill, good understanding of audit procedure and accounting knowledge.
3.Procedures are not properly implemented by the employee of the commercial bank of
Ethiopia Hawassa dato branch the auditors of auditing to do the task as per the
procedures.
4.Internal auditors of commercial bank of Ethiopia Hawassabranch and periodically
measure, evaluate and review the bank’s assets whether its uses in the proper manner.
5.Employees did not sufficiently understand internal control system of the bank. The
auditors and the concerned body did not aware the employees about the activities and
tasks of internal auditors.
6.The planned and properly designed training and development program is not prepared
over through there is training in the organization. The training program given at the
district level is not sufficient and it is not supported by any visual aid and practice.
7.The auditors correct faults through review with the accountants and vice manager of
the branch after problem occurred. This indicates the auditors did not work more to
prevent errors and faults before it happens.

5.3 Recommendation
Based on the analysis and findily the researcher, the following workable recommendations
were forwarded to commercial bank of Ethiopia Hawassa dato branch to alleviate if
weakness and improve the effectiveness of internal audit practice,

 Since there some lace of experienced, the organization should hire on employee
whose are more professional.
 There should be high level of independence of auditors in doing their responsibility
 There should be training and experience sharing with other organization.
 The organization should use an audit technique that will result in reasonable
assurance.
 Internal auditors of commercial bank of Ethiopia Hawassabranch are not qualified
because they lack knowledge and knowhow of current principles and standard of
audit function. The recommend the commercial bank of Ethiopia Hawassa dato
branch would to academic skill and also to cape up with current principle and
 standardize rather have to hire CPA qualified auditors of it can match its auditing
activity with the current principle and standard.
 Procedures are not properly implemented by the employee of the commercial bank
of Ethiopia Hawassabranch. To Solve this problem auditors would like very
effective to ensure that all procedure are. Followed by employees. They have to
communicate the role of internal audit, its Procedures and its activities to all
workers closely and openly in order to make them aware of the internal control
system.
 The auditors and the concerned body did not aware the employee about the
activities and takes of internal auditors. There would be multidimensional
communication mechanism with top management, customer and other function
development that can help the auditors, and workers to understand interested
internal control system of commercial banks of Ethiopia Hawassa dato branch.
 The planned and problem designed training and development program is not
prepared and through there is training in the organization. To produce these
problem internal auditor should give special attain the organization because deals
with examining the fair preparation of the statements of financial position,
performance result and liquidity of the organization.
 Finally, the researcher know how that the organization data were needed by
different parties for different reasons. The commercial bank of Ethiopia Hawassa
dato branch date is not available for external parties. The researchers recommend
that the organization must change its perception in this regard and at least provide
the data needed for some purpose having no impact on the organization. Thus, it
helps the customers to understand the service delivered researcher to identify the
problem in the organization and suggest the possible solution for those problems to
cope with it.
Bibliography
Alvin A. Arens, 1997, auditing an iterated approach 7th edition, New Jersey (USA)
Alan M. and Jaht, 2006, auditing. 9thedition
David N. Rechuite, 1982. Auditing concept and standard. University of Nottre
Dame
David N. Ricchiute, 2006, International students
Harry F, Konrath, 2002, risk analysis approach 5th edition
JohennesKinfu and Auditing introduction to principle and practice 6th edition
Kine Abraham egziabher, 2002 Basic mekele university
K.B AKHILESH. Mathematics’ and statistics for management 6th edition( p-535)
Lorry f.Knorath, 199. Auditing concepts and Applications Approach. A risk
Analysis university of Todaro.
Shekham and Shekhars, 2003. Auditing Approach 5th edition.
William C.Bayntom, 1995. Modern Auditing 6th Ethiopian University of Micbigon.
 Table content
Title page

Acknowledge----------------------------------------------------------------------------------------------------------------I
Abestract--------------------------------------------------------------------------------------------------------------------II
Table content--------------------------------------------------------------------------------------------------------------III
CHAPTER ONE--------------------------------------------------------------------------------------------------------------1
1.INTRODUCTION---------------------------------------------------------------------------------------------------------6
1.1 Background of the study ........................................................................................................... 6
1.2. Statement of the problem----------------------------------------------------------------------------------------7

1.3.Objective of the study ............................................................................................................... 7

1.3.1. General objectives ................................................................................................................ 7
1.3.2. Specific objective of the study .............................................................................................. 7
1.4. Research questions .................................................................................................................. 7
1.5. Significant of the study ............................................................................................................ 8
1.6. Scope of the study ................................................................................................................... 8
1.7. Limitation of the study ............................................................................................................. 8
1.8. Organization of the study ........................................................................................................ 9
CHAPTER TWO-------------------------------------------------------------------------------------------------------------9
2.LITERATURE REVIEW---------------------------------------------------------------------------------------------------9
2.1.INTRODUCTION ......................................................................................................................... 9
2.2. Basic concepts of auditing ..................................................................................................... 10
2.3.Definition of auditing .............................................................................................................. 10
2.3 Types of auditing and auditors ............................................................................................... 10
2.3.1 Types of auditing .................................................................................................................. 10
 2.3.2 Types of Auditors ................................................................................................................. 11
2.4 Internal auditing .................................................................................................................. 12
2.4.1. Definition of internal auditing............................................................................................. 12
2.4.2. Objective and scope of internal audit ................................................................................. 12
2.4.3. The reason for internal auditing ......................................................................................... 13
2.4.4 Responsibility of internal audits .......................................................................................... 13
2.4.5 Code of ethics for internal auditors ..................................................................................... 14
2.5 The relationship of internal and external audits ................................................................ 15
2.5.1. Similarities ........................................................................................................................ 15
2.5.2. Difference............................................................................................................................ 16
2.6. Performance standards of internal auditing .......................................................................... 16
2.6.1. Managing the internal audit activity ................................................................................... 16
2.6.2 Applicability of internal auditing .......................................................................................... 17
2.6.3. Quantity of the internal audit personnel ............................................................................ 17
2.6.4. Degree of independence of the internal auditor and the objective ................................... 18
With which the workers performed ............................................................................................. 18
2.7. The nature of internal control ............................................................................................... 18
2.8. Summary ................................................................................................................................ 18
CHAPTER THREE---------------------------------------------------------------------------------------------------------19
3.RESEARCH METHODOLOGY----------------------------------------------------------------------------------------19
3.1. Research design ..................................................................................................................... 19
3.2. Data source and instruments ................................................................................................. 19
3.3. Target population and sampling design................................................................................. 19
3.4. Data processing and Analysis ................................................................................................. 20
CHAPTER FOUR----------------------------------------------------------------------------------------------------------21
4.DATA ANALYSIS AND PRESENTATION----------------------------------------------------------------------------21
4.1. Demographic Characteristics of Respondent ........................................................................ 21
4.2. Analysis and discussion based on questioners ...................................................................... 23
4.2.1. The CBEs Hawassa dato branch reliance on effectiveness of internal Auditing practice .. 23
4.2.2 The CBE Hawassa dato branch internal auditor activity ...................................................... 24
4.2.3 Internal auditor competence in CBE Hawassa dato branch ................................................ 25
4.2.4 Internal auditor’s perception toward staffing of asset in CBE Hawassa dato branch ......... 27
4.6.5 The application of internal auditing principle in practice in CBE, Hawassa dato branch .... 28
4.3. Discussion and Results Based on Interview ........................................................................... 30
4.3.1 Internal audit practice.......................................................................................................... 30
4.3.2 Attitudes of employeesand management towards auditors ............................................... 31
CHAPTER FIVE------------------------------------------------------------------------------------------------------------32
5.Summary, conclusion and recommendation-------------------------------------------------------------------32
5.1 Summary ................................................................................................................................. 32
5.2 Conclusion ............................................................................................................................... 32
5.3 Recommendation.................................................................................................................... 33
Bibliography .................................................................................................................................. 35
Appendix--------------------------------------------------------------------------------------------------------------------I
 AFRICA BEZA COLLEGE

DEPARTMENT OF ACCOUNTING

Dear Respondents
This questioner is designed to gather relevant information for the research paper on the
title of effectiveness of internal audit practice on the case of commercial bank of Ethiopia
Hawassa dato branch. The purpose of this research is for requirement of partial fulfillment
of BA Degree in Accounting and Finance. Your frank and honest opinion will have a
positive contribution to the success of the research. Assure you that any information you
provide below will be kept confidently and will not use for any other purpose your are not
required writing your name your cooperation will be greatly aggregated!

Direction

Put ( √ ) mark no the box of your choices or write your answer on the space provided

Part I personal information

1. Sex Male Female

2. Position top level Middle level Low level
3. Level of Education
Diploma BA Degree Masters Above
4. Experience 0 - 2 year 4-7year
3 - 5 year above

Part II questionnaire to employee

1. Did commercial bank of Ethiopia in Hawassa dato branch relied on internal audit
work

Yes No Low

2. If your answer for questions 1 is yes or partial how much is the reliance

High Medium Low

3. If you answer for question 1 is no or the level of reliance

Internal auditors are not competent
Internal auditors have not adequate scope of work
Internal auditors department is not stuffed proper
Internal audit department has lack of following up
4. The internal auditor in commercial Bank of Ethiopia have sufficient level of
training
 Strongly disagree
Agree strongly disagree

5. The internal audit in commercial bank of Ethiopia are free from confliction

of interest and able to investigate any area

Strongly agree Disagree

Agree Strongly disagree

Natural

6. Programs in commercial bank of Ethiopia of Hawassa dato branch are

Regularly revised to cover changes in the clients system

Strongly agree Disagree

Agree strongly disagree

Neutral

7. The internal auditor of commercial Bank of Ethiopia exercise due

professional care in performing internal audit

Strongly agree Disagree

Agree strongly disagree

Neutral

8. The internal auditor in commercial bank of Ethiopia is a skilled in dealing

With people and in communicating effectively

Strongly agree Disagree

Agree Strongly disagree

Neutral

9. The internal auditors prepare working paper to recorded test carried

Out the result of rest and conclusion drawn in the bank

Strongly agree Disagree

 Agree strongly disagree Neutral

10. Commercial bank of Ethiopia of Hawassa dato branch internal auditor

is review the means of a safeguarding assets and appropriate verity

the existence of such asset

Strongly agree Disagree

Agree strongly disagree

Neutral

11. Audit procedure including the testing and sampling techniques employed

is selected in advance where practicable and expanded

Strongly agree Disagree

Agree Strongly disagree

Neutral

12. The internal audit use reliable documentation for describing

the companies system as the basis for this procedure test. Such as

chart and company procedure manual.

Strongly agree Disagree

Agree Strongly disagree

Neutral

13. Financial record and report contain accurate reliable timely

Complete and use full information in CBE Hawassa dato branch

Strongly agree Disagree

Agree Strongly disagree

Neutral

14. In CBE the financial audit examine information properly

Strongly agree Disagree

Agree strongly disagree

Neutral

15. The financial Audit report and submitted to management and to the board.

Strongly agree Disagree

Agree Strongly disagree

Neutral

16. The financial auditor examine the control over all accounting operation which
materially affects the financial

Strongly agree Disagree

Agree Strongly disagree

Neutral

17. In the internal audit department of the bank report identify weakness

and recommendation for improvement

Strongly agree Disagree

Agree Strongly disagree

Neutral

18. The operational auditor passes the knowledge skill and discipline needed

to carry out it is audit responsibility

Strongly agree Disagree

Agree Strongly disagree

Neutral
 19. The operational auditor review operations or programs to ascertain whether result are
consistent with established obsessive and goals and whether the operations are being
carried out as planed

Strongly agree Disagree

Agree strongly disagree

Neutral

20 The operation auditor relied the reliability and integrity of operating information and the
means used to indentify measure classified and report such information

Strongly agree Disagree

Agree Strongly disagree

Neutral

21. In commercial bank of Ethiopia the purpose authority and repositions

Of the operation Audit is defined in a formal written document

Strongly agree Disagree Agree Strongly disagree Neutral