6MADDAWALABU UNIVERSITY

COLLEGE OF BUSINESS AND

ECONOMICS
DEPARTMANT OF ACCOUNTING

TNTERNAL AUDITING PRACTICE

(ACACE STUDY OF AWASH INTERNATIONAL BANK OF

BALE ROBE BRANCH)
SUBMITTED BY: HUSSEN A/KADIR

A RESEARCH PROPOSAL SUBMITED TO DEPARTMENT

OF ACCOUNTING IN PARTIAL FULFILMENT OF THE
REQUIRMENT FOR BACHELAR OF ART
(BA) DEGREE IN ACCOUNTING
SUBMITTED TO: HUSSEN.J

JANUARY 2017

1
BALE ROBE,ETHIOPIA

Table of contents

1 INTRODUCTIONS..................................................................................................................................4

1.1 Background of the study....................................................................................................................4

1.2 Statement of the problem..................................................................................................................5
1.3 Objective of the Study.......................................................................................................................5
1.3.1 General Objective.....................................................................................................................5
1.3.2 Specific Objective.......................................................................................................................5
1.5 Significance of the study....................................................................................................................6
1.6 Research question..............................................................................................................................6
1.7 Scope and Limitation of the study.....................................................................................................6
CHAPTER TWO.........................................................................................................................................7

2 REVIEW OF RELATED LITERATURE................................................................................................8

2.1 Definition and Nature of internal Audit Activity...............................................................................8

2.2 Evaluation of Auditing......................................................................................................................9
2.3 Definition of internal Auditor............................................................................................................9
2.4 Objective of internal Auditing...........................................................................................................9
2.5 Effect of internal auditor’s work on the audit..................................................................................10
2.6. Professional Qualification to perform independent Audits.............................................................10
2.6.1. Importance of the Auditors independence................................................................................10
2.6.2. Integrity and Objectivity..........................................................................................................11
2.6.3. Due professional care...............................................................................................................11
2.7 Internal Control................................................................................................................................11
2.7.1 Objective of Internal control.....................................................................................................12
2.7.2 Internal control Documentation................................................................................................12
2.7.3 Limitation of internal Control...................................................................................................13
2.8 Audit practice in Relation to Internal Control..................................................................................13
2.9 Elements of internal Control............................................................................................................14
2.9.1 Control Environment................................................................................................................14
2.9.2 Risk Assessment.......................................................................................................................14

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 2.9.3 Control Activities......................................................................................................................15
2.9.4 Information and Communication..............................................................................................15
2.9.5 Monitoring................................................................................................................................16
CHAPTER THREE...................................................................................................................................17

3. RESEARCH METHODOLOGY...........................................................................................................17

3.1 Study Area.......................................................................................................................................17

3.2. Sources of Data and Data Collection Techniques...........................................................................17
3.3. Target Population and Sampling Techniques..................................................................................17
3.4. Research Design.............................................................................................................................18
3.4 Method of Data Analysis and Presentation......................................................................................18
PLAN OF ACTIVITIES............................................................................................................................19

4.1 Work schedule.................................................................................................................................19

4.2 Research Budget..............................................................................................................................20
Table 4.2. Budget breakdown/cost breakdown......................................................................................20
Appendix 1................................................................................................................................................22

Appendix 2................................................................................................................................................25

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CHAPTER ONE

1 INTRODUCTIONS
1.1 Background of the study
Auditing is a systematic process of objectively obtaining and evaluating evidence regarding assertions
about economic actions and events to ascertain the degree of correspondence between those assertions
and established criteria and communication the result to interested user (Konrath, 1999, P.2).Auditing is
an important activity for all types of organizations where governmental, private for profit, nonprofit or
any other

Internal auditing is an independent, objective assurance and consulting activity designed to add value and
improve as organizations operations it help an organization accomplish its objectives by bringing a
systematic disciplined to evaluate and improve the efficiencies of risk management, control and
governance processes(Chambers,1987).It helps an organization accomplish its objectives by
bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk
management, control, and governance processes.Generally Proper internal auditing practice is
the base for preserving the stability of any company (Ahrens ,1997,pp. 290). Internal auditors
need to be out in front, leading the business units with regards to the internal control system and
also focusing on strategic business objectives.

The internal control system plays an important role in the internal auditing practices since the
internal auditors might be considered as being specialists in management control (Chambers and
Selim, 1987). Internal auditing practices appraise the effectiveness of internal control systems,
which is a definition of internal auditing and which also includes an appraisal of the actions by
management to correct situations, which are at variance with planned outcomes (Ahrens pp.
292).

The internal control process is a mechanism for reducing instance for fraud, misappropriation
and errors. It has recently become more extensive addressing all the various activities faced by

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the organizations. It is now recognized that internal control process in critical to organization
ability to meet is goals and objectives and to maintain its financial viability. Company’s internal
control consists of the policies and procedures established to provide reasonable assurance that
specific objective of the company will be achieve. When properly designed and consistently
enforced a good system of internal control helps management safeguard the organization
resources, produce reliable financial reports and comply with rule and regulations. It also reduce
the possibility of significant errors and irregularities.
The study focus on describing and analyzing the important internal auditing practiceAwash
International Bank Robe Branch.

1.2 Statement of the problem

Internal auditing is an independent appraisal function established with an organization to

examine and control its activities as a service to organization. Internal auditing review
operational procedures to ascertain whether the results are consistent with established objective
and goal. It is clear that inadequate internal control can expose the organization to various
problems. The major problem is absence of internal auditing in the organization will result in
lack of continuous assurance services and the degree of independence of internal auditor will be
affected.( ) The other problem is that inadequate
internal control can expose the company to various identifiable risk, such as waste of company
available resource, fraud by employees and lack of control over asset.( )

1.3 Objective of the Study

1.3.1 General Objective
The general objective of this study is to assess internal auditing practice of Awash International
Bank Robe branch.

1.3.2 Specific Objective

The specific objectives of the study are:

 Identify the application of internal auditing practice.

 Identify the quality of internal auditing works.

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  Identify the principle of auditing that appliedin the bank
 Describe the factors that affect internal auditing practice of Awash International bank
Robe branch.

1.5 Significance of the study

The major benefits of this study will be the following.
 It enables the manager to aware of the importance and use of internal audit in achieving
intended objectives.

 To identify the quality of internal audit worker in Awash international bank

 It helps the auditor in the bank know application of internal auditing principles.

 It may use as an additional reference to the existing literatures and can be used as spring
boards for other researcher who wish to conduct a research in the same area.

1.6 Research question.

 Does the bank have internal auditing practice?
 Dose the internal auditing works have quality?
 Does the principle of internal auditing applied in the organization?
 What factors affecting internal auditing practice Awash International Bank Robe branch?

1.7 Scope and Limitation of the study

In order to make the scope of the study manageable, the researcher use enforced to limit the
study area in assessing internal auditing practice of Awash International Bank Robe branch. This
study is mainly focus to identify factors which affect the internal auditing practice, the
challenges, and the strategies used to alleviate the problems in the bank.
The research will bealso limited in its scope since it does not consider all primary and secondary
data. Because it difficult to get enough information from employees and manager of the bank.
The study used both primary and secondary data. Secondary data review for the period of 2015-
2016 and the secondary data is used as a supplementary to strengthen the finding drawn from
primary data. Accordingly the questionnaire is used to gather information from the employees of

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AwashInternational Bank Robe branch particularly for those employees who have actively
participate in Auditing and finance tasks in Awash international bank Robe branch.During
collection of data for this study purpose the researcher will face different limitation which will be
difficult to conduct the study as intended. Some of the limitation that will be expected are; fear
of audit staff to give information on internal control system, difficultyof getting audit report and
queries for study and, respondents unwillingness to respond to the questionnaires that is
distributed to them. In addition, theresearcher lack of experience is another limitation to do this
paper.

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 CHAPTER TWO

2 REVIEW OF RELATED LITERATURE

2.1 Definition and Nature of internal Audit Activity
Auditing is the process by which a competent independent person accumulates and evaluates
evidence about financial information related to specific economic entity for the purpose of
determining and reporting on the degree of correspondence between the financial information
and established criteria. (Kamal. G 1996)

Auditing was a process through which frauds and error discovered. There were a few who
through that auditing was concerned with checking with their accounting records and bad been
kept properly and up to date and that is only created problems for efficient managers who might
not have bothered to keep their records up to date. The auditor examines the information under
audit and express his opinion on the same by way of written report. (Kamal G.1996)

Internal auditor activity. A department division consultants or the practitioner that provides in
dependent objective assurance and consulting services designed to add value and improve an
organizations operation. The internal audit activity helps an organization to accomplish its
objectives by bringing a systematic disciplined approach to evaluate and improve the
effectiveness risk management control and governance processes. (Kamal G.1996)

The internal auditing activities evaluates the adequacy and effectiveness of controls
encompassing the organizations governance operations and internal system. Internal audit
reviews includes the reliability and integrity of financial and operational information,
effectiveness and efficiency of operations, safeguarding of assets and compliance with laws
regulations and contracts. These reviews also a creation the extent to which operating and
program goals and objectives have been established and conform to those of the organization, as
well as the extent of which results are constant with established goals and objectives and whether
operations and programs are being implanted or performed as intended. (Konrath, 1999)

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2.2 Evaluation of Auditing
The present status of the auditor’s report and independent auditing represents the culmination of
a century of development. Initially audits were performed mostly at the request of business
owners who wished assurance that their book keeping had been accurately handled and that all
cash was properly accounted for. With the development of partnership. Audit also become useful
in. The industrial revolution brought with large scale enterprises that needed outside financing to
supplement owners capital. In other to prim it the acquisition of costly machines that had become
available. At this point, of course, that the independent audit come and that third parties
displaced business owners at the principal beneficiaries of auditing services. (Fabozzi 1996)
On management that might otherwise find it expanding to endeavor to deceive third party users
by preparation of misleading financial statement. Audit effectiveness also extends beyond the
immediate statements that have been examined to both an audited quarterly reports and
pronouncements about future expectations when it is known that the figures will ultimately have
to integrate with audited figures. (Fabozzi, 1996)

2.3 Definition of internal Auditor

The internal audit is continuous review of operations and records taken with in the business and
is normally done by specially assigned staff. It should operate independently of all the internal
check and no care should divest any one of the responsibilities placed up on him.
The institute of internal auditors, ISA had defined internal audit as follows. Internal auditing is
an independent appraise activity within an organization for the review of operations at a service
to management. This a managerial control which functions by measuring and evaluating the
effectiveness of other controls. (Ahrens, 1997)

2.4 Objective of internal Auditing

The objective of internal Auditing is to assist all members of management in the effective
discharge of their responsibilities, by furnishing them with analysis appraisals,
recommendations, and pertinent comments concerning the activities reviewed. The internal
auditor is concerned with any phase of business activity.This involves going beyond the
accounting and financial records to obtain a full understanding of the operations under review.
(Johannes Kinfu FBE, AAU)

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Reviewing and appraising the soundness, adequacy and application of accounting, financial and
other operating controls and promoting effective control of reasonable cost.
 Ascertaining the external of compliance with established policies plan and procedures.
 Ascertaining the reliability of management data developed within the organization.
 Appraising the quality of performance in carrying out assigned responsibilities.
 Recommending organizational functional units to improve their operation.

As a convenient summary of these objectives it might be stated that the internal auditor is
primary concerned with evaluation compliance and verification of operational performance.

2.5 Effect of internal auditor’s work on the audit

 Internal auditor work may affect the nature time and extent of the audit including.
 Procedures the auditors performs when obtaining an understanding of the entity’s internal
control.

The auditor obtains a sufficient understanding of the design of control relevant to the audit of
financial statements to skill the audit and to determine whether they have been placed in
operation. Since a primary objective of many internal audit functions is to review assess, and
monitor internal controls, the procedures performed by the internal auditors in this area may
provide useful information to the auditor. (K.C sherkar and Lek sherkhar, 2003)

2.6. Professional Qualification to perform independent Audits

In view of the reliance by third parties on the work of auditors engaged in performing the attest
function. It is understandable that there would be concern for the professional qualification of
the public accountants who do this work. Because in some states anyone who wishes may
assume the designation public accountants such a designation gives an indication that the person
qualified to render competent service to the public. (Howard F 1980)

2.6.1. Importance of the Auditors independence

In addition to possessing adequate training and professional experience the accountant who
makes an audit for the purpose of attesting to the fairness of a client financial statement must act
in an independent capacity. Because the accountants is an employee of the business the
accountant’s action are not subject to supervision by the management of the business and this
situation alone creates considerable independence. Independence is also an attitude of mind and
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independent though and action are equally as important as the independent relationship between
accountant and client. Unless the accountant is independent the opinion expressed is no more
reliable than the statement which have been prepared by management. (Ahrens 1997)

2.6.2. Integrity and Objectivity

Integrity and objectivity are per-eminent qualities expressed in all auditors. An auditors should
be straight forward, hones and sincere in this approach to professional work. An auditor must be
fair and should not allow prejudice or bias to override this objectivity. He should ensure that he
is maintaining an important attitude he is reporting and the financial statement which are
subjected to his examination. He should both be and appear to be independent of any interest
which might be regarded whatever its actual effect as being in compatible with integrity and
objectivity. In other words, an accountant who is practicing auditing profession should be and
seen to be independent in each professional assignment he under takes of any interest which
might detract him from objectivity. (K.C sherkar and Leksherkhar. 2000)

2.6.3. Due professional care

This standard requires the auditors to carry out every step of the audit engagement in an alert and
diligent manner full compliance with this standard with standard would rule out any negligent
acts or material omissions by the auditor of course auditors as well as members of other
professions inevitably make occasional errors in judgment but this human element does not
justify in difference or in judgment or intention to professional responsibilities. (O. Ray
Whittington 1989)

2.7 Internal Control

Spicer and Pegler Timeous authors in auditing literature define the system of internal control as a
best regard as the whole system of control. Financial and other wise established by the
management in the conduct of a business including internal cheek internal audit and other forms
of control.
This definition implies the following
a. The internal control is the system of controls.
b. Controls are established over financial and nonfinancial areas.
c. The mechanism of controls may manifest itself in the farms to internal cheek or internal
audit or other forms.

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The statement on auditing practice (SAP) of the institute of chartered accountants of India
describes internal control or “the plan of organization and all the methods and procedures
adopted by the management of an entity to assist in achieving managements objective of
ensuring, as far as possible, the orderly and efficient conduct of its business including adherence
to management policies, the safeguard of the assets prevention and defection of fraud and error,
the accuracy and completeness of the accounting records and timely preparation of reliable
financial information. The system of internal control extends beyond those maters which relate to
functional of accounting system. (B.N Tendon 2005)

2.7.1 Objective of Internal control

Internal control comprises all the method followed by an organization and there by
1. Ensures efficient conduct of the business operations and prevents wastage of resources by
dishonest employees of the organization.
2. Minimizes occurrence of fraud and error or irregularity if not completely eliminated.
3. Protect its assets of against improper disbursement.
4. Assures the high degree of accuracy and dependability of all the financial and operating
information.
5. Improves operating efficiency and high lights weaknesses.
6. Above all measures the adherence to established polices of the company. (Ravinder K
2001)

2.7.2 Internal control Documentation

Whenever the independent auditors on the word carried out by the internal audit department the
same should be properly document along with the reason supporting section. Such
documentation should include the examination and assessment on the quality of the internal audit
personal the degree of their independence the objectivity with which work is performed the
scope of the internal audit function and also the details of any specific tests of transactions
balances or working paper besides the extent of the internal audit work to which the independent
has relied and the conclusions arrived at should be documented. (K.C shekhar and Lakshmi
shekhar 2000)

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2.7.3 Limitation of internal Control
The existence of internal control system in any entity provides good clues that aims of internal
control, it adherence to policy, safeguarding of assets, detection and prevention of error (frauds)
reliability and completeness of accounting data might be achieve. One must not forget that clues
that they are and not assertion guaranteeing the fulfillment of control objectives essentially, there
are certain inherent, limitations attached to internal control.

(SAP) official points out certain possible limitations, for instance the internal control may not
adequately cover all areas in view of cost considerations, it cannot see control mechanism for
transactions of unusual nature, and it cannot stand against deliberate circumventions of control
procedures by management. False manipulation of transaction by the entity with tacit approval of
management or ingenious breach of controls by staff by collusion or controls may become
absolute in changed scenario recognizing this vital fact the auditor should proceed to evaluate the
internal control. (B.N Tendon 2005)

2.8 Audit practice in Relation to Internal Control

The features of internal control system and the efficiency and effectiveness with which it is being
operate from the basis for the auditor to decide the extent of detailed he has to perform. As
general rule, where a fool proof system of internal control to the satisfaction of the auditor is in
successful operation in detail but to select groups of representative transactions. For close and
detailed examination, at the other end of the seal stand organizations where the control and the
system of internal control are so seriously inadequate that is not useful purpose could be served
by embarking up an any kind of extensive detail; checking because even the most exhaustive
cheeks would not enable him to form an opinion on the financial statements. In between these
two extremes in the system of internal control, hence one of the first duties of the auditors is to
examine and review the accounting system and related internal control to determine the nature
timing and extent of the audit procedures to be performed in order to establish the reliability of
the records as basis for the preparation of the financial statement which will present a true and
fair view in other words the auditor needs to study and evaluate the accounting system and
related internal controls instituted by the client business soar to enable him establish the degree
of reliance which he can place there and in determining the nature, timing and extent of his
substantive procedure. (K.C shekhar and lekshany shekhar 2000)

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2.9 Elements of internal Control
Internal control system operate at different levels of effectiveness determining whether particular
internal control system is effective judgment resulting from an assessment of the five
components. Control environment, risk assessment, control activities, information and
communication and monitoring effective controls provide reasonable assurance regarding the
accomplishment of established objectives (Konrath, 1999)

2.9.1 Control Environment

The control environment as established by the organization’s administration sets the tone of an
institution and influences the control consciousness of its people leaders of each department area
or activity establish a local control environment. This is the found for all other components of
internal providing discipline and structure. (David N. Richiute 1982)

2.9.2 Risk Assessment

Every entity faces a variety of risk from external and internal sources that must be assessed. A
precondition to risk assessment is establishment of objectives linked at different levels and
internally consistent. Risk assessment is the identification and analysis of relevant risks to
achievement of the objective forming a basis for determining by how the risks should be
managed. Because economics, regulatory and operating conditions will continue to change.
(Konrath, Larry, 1999).
Objective must be established before administration can identify and take necessary steps to
manage risks. Operations objectives related to effectiveness and efficiency of the operations
including performance and financial goal and safe guarding resource against loss financial
reporting objective pertain to the preparation of reliable published financial statements including
prevention of fraudulent financial reporting compliance objectives pertain to lows and
regulations which establish minimum standards of behavior. (Konrath, Larry, Auditing concepts
& Application ISA, 1999).

The process of identifying and analyzing risk is an ongoing process and is a critical component
of an effective internal control system. Attention must be focused on risks at all levels and
necessary actions must be taken to manage risks that can pertain to internal and external factors.
After risks have been identified they must be evaluated. Managing change requires a constant

14
assessment of risk and the impact an internal controls economic industry and regulatory
environments change and entities activities value mechanisms are needed to identify and react to
changing conditions. (Konrath, Larry, Auditing concepts & Application ISA, 1999).

2.9.3 Control Activities

Control activities are the policies and procedures that help to ensure management objective are
carried out they help ensure that necessary action are taken to address to the achievement of the
entity’s objectives. Control activities occur throughout the organization at all levels and in all
functions. They include arrange of activities as diverse as approvals, authorizations verification,
reconciliations, predict reviews of operating performance, security of and segregation of duties.
Control activities usually involve two elements a policy establishing what should be done and
procedures to effect the policy. All polices must be implemented through fully, conscientiously
and consistently. (Shekhar 2003).

2.9.4 Information and Communication

Pertinent information must be identified, captured and communicated in a form and time frame
that enables people to carry out their responsibilities. Effective communication must occur in a
broad sense, flowing down, across and up the organization all personnel must receive a clear
message from top management that control responsibilities must be taken seriously. They must
understand their own role in the internal control system, as well as how individual activities
relate to the work of others. The must have a means of communicating significant information up
stream. (Welter B. Meigs & Etal, 1989).

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2.9.5 Monitoring
Internal control system need to be monitored a process that assess the quality of the system’s
performance over time on going monitoring occur in the ordinary course of operations, and
includes regular management and supervisory activities, and other action personnel take in
performing their duties that assess the quality of internal control system performance.
The scope and frequency of separate evaluation depend primarily on an assessment of risks and
the effectiveness of ongoing monitoring procedures, internal control deficiencies should be
reported up stream. With serious matters reported immediately to top administration and
governing boards (Whitting & Pany, Irwin, 1995).
Internal control system change over time. The way controls are applied may involve, once
effective procedures can become less effective due to the arrival of new personal, verifying
effectiveness of training and supervision, time and resources constraints, or additional pressures,
furthermore, circumstances for with the internal control systems was originally designed also
may change. Because of changing conditions, management need to determine whether the
internal control system continues to be relevant and able to address new risks. Whitting ton &
Pany Irwin, 1995)

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 CHAPTER THREE

3. RESEARCH METHODOLOGY
3.1 Study Area
This study will be conducted on Awash international bank Robe branch.

3.2. Sources of Data and Data Collection Techniques

The researcher will beuse both primary and secondary sources of data.Primary data will be
collection of original information by researcher from the target population so that it can
addresses specific research issues and it also enable the researcher to have a higher control over
how the information is collected. The secondary sources of data are different documents and
internal auditing practice related reports of the bank.

To collect primary data the researcher will be used structured interview for the manager because
it’s being economical, providing a safe basis for generalization and requiring relatively lesser
skill on the part of the researcher, and questionnaires method of data collection will be also used
and distributed for employees. In the questionnaires the researcher is sued both open ended and
closed ended question. Secondary data will be collected from different documents, like
magazine, journals, reports and website of the bank.

3.3. Target Population and Sampling Techniques

To select the sample the researcher used non-probability judgmental sampling which is based on
the researcher judgment to select the sample from the whole population because it is important
for the researcher to choose and pick only those who best meet the purposes of the study which
the result obtained from analysis of deliberately selected sample may be reliable and also
judgmental sampling has time and cost advantage. Based on this the researcher selected 8
employees from the total population of 31 that have jobs related with finance and audit including
the manager.

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3.4. Research Design
The research design is plan in such a way to provide for proper performance of the research. It
helps for analyzing the data which are collected through various methods of collecting data (C.
R. Kothari, 2004). Based on the data which are relevant for the study, the research will be design
to use descriptive method. Descriptive study describe the characteristics of objects, peoples,
group, organizations or environments. It is a study designed to depict the participant in an
accurate way and it is also defined as a brief interview with an individual about a specific topic
or handling out questionnaires to fill out by respondent. The researcher will be selected
descriptive study because it is appropriate for researcher in consuming less time in other way it
helps to answer the research questions which are factual in nature and helps to go further and
draw conclusion from the data.

3.4 Method of Data Analysis and Presentation

The data collection through the questionnaires and interview will be organized and analyzed. The
data gained from these two instruments (structure interview and questioner) will be analyzed
both qualitatively and quantitatively. The data analysis will began with editing weather to know
the data collected will be accurate and consistent with other fact that will begathered. Pie chart
and tabulation which is the process of summarizing raw data and displaying the same in compact
form and percentage will be presented to analysis data and interpretation will be made. So the
analyzed data will be presented in easily understandable way to draw conclusion. The data that is
gain from the questionnaires willbe analyzed quantitatively, whereas the data that will be gain
from the interview willbe analyzed qualitatively and conclusion and recommendation will be
given.

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 CHAPTER FOUR

PLAN OF ACTIVITIES

4.1 Work schedule

Remark
Duration (Month)

Final date
2017
Activities to be performed

NO
April
March

May

June
1 General preparation for 
conducting research
2 Prepare research questionnaire 
3 Distribution the questionnaire 
4 Pretesting the questionnaire 
5 Collect data 
6 Organize data 
7 Analysis &Interpretation of data 
8 Send relevant data to advisers 
& apply comments
9 Submit the research to the 
department
Table 4.1 Work Schedule/Time Schedule

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Source: library and research centers

4.2 Research Budget

The table that follows represents the activities to be accomplished; data
required and detailed budget allotment of proposed research.

Table 4.2. Budget breakdown/cost breakdown

continued Description of Unit of Quantity/No Unit price Total cost Grand total
Measurement Days/
Activity
I Materials and Equipment
A Pan Packet 2 180 360
B Marker Packet 1 30 30
C Paper Desta 5 150 750
D Bag No 1 500 500
E Laptop No 1 12000 12000
F Tape Recorder No 1 600 1600
G Printing 140
H Cover page and cost 30
go with this work
Total 11 13460 14310 15410
I Miscellaneous Expenses
A Entertainment 1000
B Transportation 100
Total 1100 1100
Grand total 16510

Source: Library and research centars

References
 Alvin Ahrens, Randal Elder &Mark Beasley 14th edition
 Ahrens 1997. Auditing integrated approach 7th edition jersey (USA).
 B.N Tondom (2005) “A hand book of practical auditing” SHAND and Company TID.

20
 Chambers, Selim & Vinten, 1995 internal auditing London
 David N. Richute, Auditing Concepts and Standard, South Western publishing Co. 1982.
USA.
 Fabozzi, 1996, Foundation, 1988, Hayes (principle of Auditing)
 Howard F (1980) “Auditing principle” 4th edition prentice Hall of India.
 IIA (Institute of Internal Auditors), ISA International Standards on Auditing
 Johannes. Kinfu, Auditing introduction to Principles practices, FBE. AAU.
 K.C shekhar and leksmy S (2000) “Auditing incorporating Companies” Vikas publishing
India.
 Kamal G (1996) “Fundamentals of Auditing” Hill publishing Company. Konrath 1999.
 Konrath. Larry. Auditing Concepts & Applications. A risk Analysis. Approach 4 th ed.
South Western Colle USA. 1999.
 O. Ray witting (1989) “Principle of Auditing” 9th edition Boston.
 Ravinder K (2001) “Fundamentals of principle Auditing” prentice hall India
 Sawyer, Lawrence B. Sawyer’s Internal Auditing. Institute of Internal Auditors Research
 Shekhan and Shekhars, 2003, Auditing Approach 5th edition
 Shekhar, Auditing. Vikas publishing House, 2003.
 Walter B. Meigs & etal, Principles Auditing 9th edition, 1989.
 Whitting ton & parry 11th edition, Irwin, 1995.
 C.R. Kothari,2004 “Research methodology ,second revised edition”

Appendix 1
Madda Walabu University

College of Business and Economics

Department of Accounting and Finance

21
Questionnaire that will be filled by employers in Awash International bank Robe branch
Dear respondents!
I am currently conducting a research entitled as “analysis” of the internal control and auditing
practice of AIB (Robe branch) the main objective of this study is to assess the internal control
and the importance or weakness of the auditing practice of the bank. I am kindly request you to
give genuine responses.
Thank you in advance!
Put “X” in the space provided
Part One General Questions
1. Sex Male Female
2. Age 20-25 25-30 30-35 35-45 >45
3. Your stay in the bank
0-5 years 5-10 years >10years
4. Level of education

a) 12 completed B) Diploma

C) BA. Degree D) Masters

Part Two Data related to the study

1. To what extent do you agree or disagree to the following statements about OIB? Please
use 1 strongly agree, 2 agree 3, strongly disagree, and 4, disagree, tick the boxes
according to your responses

No Item (activities the bank performs 1 2 3 4

1 Accept all types of deposits
2 Extend loans and advances for customers
3 Draw accept, buy and sell bills of exchange
4 Provided financial guarantee
5 Carry out international banking transaction and interbank business

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6 It gives domestic banking service in all branches
7 Assessing the risk that the bank will face
8 understanding internal control
9 Training of internal audit persons
10 Supervising reviewing, and controlling the activities in the bank
11 Establishing goals and objective and check the implementation
12 Set division of work among employees
13 Conducting (applying internal control system in conformity with
the environmental changes.

2. Is any application of internal control practices in bank are working?

Yes No

3. If your response to question No. “2” is yes please list the types of internal control practices
that are currently by the bank.
---------------------------------------------------------------------------------------------------------------
---------

4. Which the following limitations do you think that internal control will mostly have in your
bank? Use rating scale 1 strongly agree 2, agree 3, strongly disagree, and 4 disagree

No Item 1 2 3 4
1 Chances of human error (being careless misunderstandings, etc.)
2 Ignorance of unusual activity
3 Collusion of employees with the outside parties
4 A person who is exercising may be irresponsible
5 A procedures for controlling may vary due to the changes
conditions

5 What other factors do you think that affect the internal control
practice?.......................................................................................................................................
........................................................................................................
6 What are the mechanisms through which the bank uses to minimize the aforementioned
limitations of internal controls?

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7 How do you evaluate the quality of internal auditing practice in general?
8 Do you think that there would be some risk management skills which are required by the
bank manager? Yes No
9 If your response for No 7 is “yes” what are those skills and techniques the manager should
use?
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-------------------

Appendix 2
MADDA WALABU UNIVERSITY
College of Business and Economics
Department of Accounting and Finance
Interview question for the manager of AIB in Robe branch
General directions: Dear the manager, the main purpose this interview is to assess the internal
auditing control practice used by AIB in Robe. These researchers kindly request you to give
genuine response.
N.B: the response you are going to give us will be kept for research purpose only.
Dear respondents!
I am currently conducting a research entitled as “analysis” of the internal control and auditing
practice of AIB “in Robe branch”. The main objective of this study is to assess the internal
control and auditing particularly of the application the effect of internal control practice of
auditing and the importance or weakness of the auditing practice in the bank.
Thus I am kindly request you to give genuine responses.

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 1. Do you apply some of the principles for internal auditing?
A. Yes B. No
If yes what are the principles do you use to control the general condition of the bank
including the way you control your employees.
2. How do you see general nature of auditing in your branch?
3. Have you ever faced some challenge when you run and manage the bank?
4. If yes, what were those challenge that you’re prominently faced?
5. What were the strategies you used to overcome the challenges?
6. In what way do you manage and set your employees?
7. What factors do you think that affect the internal auditing practice in your bank? (the major
weaknesses)

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