Professional Documents
Culture Documents
Zulfa Proposa Commentl
Zulfa Proposa Commentl
DURAME BRANCH
Wachemo University
Feb 2023
Durame, Ethiopia
Table of Contents
Content Page
Table of Contents........................................................................................................................................i
CHAPTER ONE........................................................................................................................................1
1. INTRODUCTION...............................................................................................................................1
1.1. Background of the Study.............................................................................................................1
1.2. Statement of the Problem.............................................................................................................3
1.3. Objectives of the Study....................................................................................................... 3
1.3.1. General Objective................................................................................................................3
1.3.2. Specific Objectives.............................................................................................................3
1.4. Research Questions...........................................................................................................................4
1.5. Scope of the Study...........................................................................................................................4
1. 7. Organization of the Study.............................................................................................................5
CHAPTER TWO.......................................................................................................................................6
2. Review of Related Literature................................................................................................................6
2.1. Definition and Nature of Internal Audit Activity.........................................................................6
2.2. Evaluation of Auditing...................................................................................................................7
2.3. Definition of Internal Auditor........................................................................................................7
2.4. Objective of Internal Auditing.......................................................................................................7
2.5. Effect of Internal Auditor’s Work on the Audit...........................................................................8
2.6. Professional Qualification to Perform Independent Audits........................................................8
2.6.1. Importance of the Auditors Independence.............................................................................8
2.6.2. Integrity and Objectivity.........................................................................................................9
2.7. Due Professional Care....................................................................................................................9
2.8. Internal Control..............................................................................................................................9
2.8.1. Objective of Internal Control................................................................................................10
2.8.2. Internal Control Documentation..........................................................................................10
2.8.3. Limitation of Internal Control..............................................................................................11
CHAPTER THREE.................................................................................................................................11
3. METHODOLOGY................................................................................................................................11
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3.1. Description of the Study area.......................................................................................................11
3.2. Sources of the Data.......................................................................................................................12
3.4. Data Presentation and Data Analysis..........................................................................................13
CHAPTER FOUR...................................................................................................................................14
4. TIME SCHEDULE AND BUDGET..................................................................................................14
4.1. Time Schedule...............................................................................................................................14
4.2. Budget............................................................................................................................................15
REFERENCE............................................................................................................................................16
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CHAPTER ONE
1. INTRODUCTION
1.1.Background of the Study
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 2015).
Internal auditing importance in Ethiopia was formally recognized in the early 1930’s by the
country first constitution. This document referred to the proper collection of government revenue
and necessary for procedures to control expenditures in 1944. Another milestone occurred a
proclamation established the commission for audit, changed with auditing the ministry of finance
accounting. The audit of state budget practice emphasizes on fraud difference and growth in
trade and industry subsequently added impetus to the growth of the profession.
Mora recently the government internal auditing manual, “published by the council of ministers
in 1985. The manual suggested that the responsibility of the management of each enterprise to
set up and run an efficient audit department, the situation at present is unsatisfactory and those
units that do exist are virtually defect”. The office of auditor general has since down up on the
IIAS standards to update the manual.
Perhaps the most direct impact on the current status of internal audit in Ethiopia came from
another important document issued in 1987 proclamation No. 13 not only reemphasized the
importance of internal audit function in government departments and public enterprises, it also
empowered.
The office of auditor general to direct the way internal auditors audit organizations activities in
those sectors and to ask them to perform specific audit of their organization. If deemed
necessary. Proclamation No. 13 also requires the office of auditor general to rate and classified
prospective internal auditors in public sector organization prior to employment, any training that
may be necessary is arranged by the. The office of auditor general also classified internal
auditors in government offices.
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In 1994, the office of auditor general conducted a brief survey of internal auditing in ministers,
commissions agencies and public enterprises. Established internal audit units were found in more
than 70% of budgetary institutions and 90% of public enterprises surveyed. The survey also
revealed that most internal audit function considered their responsibilities in broad terms.
Internal audit wanted to help the organization safeguarded its financial assets and property from
embezzlement, theft and other losses and they saw the need to perform additional function
outside those traditional responsibilities.
Ethiopia government has made many efforts to make the civil service efficient and effective. For
this reason the governments has also launched different programs and project us to help
undertake different activities. These major activities are many but to ensure efficient, effective
and economic use of public resources and to deliver fast and quality services take the lion share
because achieving the objectives can enhance the efforts of government to alleviate and ensure
sustainable development. In order to achieve the above objective the government can enhance
and motivate public sectors for proper utilization of public resource and government budge.
Internal auditing is plays a vital role in public organization and determine whether the
organization is a quire protecting and using its resources economically, effectively and
efficiently. For these reason the paper will make a detail study on practice and problem of
internal audit a countered to government budget of Dashen bank Durame branch.
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1.2.Statement of the Problem
Several problems in our times have controlled to a quiet revolution in internal audit. Among the
main problems are complexity risks, frauds, and rapid development of information technology.
Companies require effective and efficient internal audit system which will support continuous
quality service delivery improvement to their customers and minimize unnecessary expense.
Internal auditing is an independent, objective assurance and consulting activity designed to add
value and improve organization’s operations. 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 process. (ZELALEM S., 2018)
Thus the paper which is primarily identify and investigate the above mentioned problems, So the
practice and problems of internal auditing considered and possible suggestion should be
recommended for the existing performance. The paper will set what is the existing performance
of internal audit in the bureau and that consider the organizations control the property of
government and assess the overall performance and utilization of government budget in the
organization .(Robert Moller,2017).
Now a day auditing is an important concept which is used as an instrument for examining of
books, documents, and vouchers in order to determine the accuracy and reliability of accounting
system and reviewing the existence and operating of various controls in an organization either
government or private, besides these it enables the users to make decision and project plans.
Based on these facts, an accounting system is advantageous to determine the extent of usefulness
of auditing practice in actually present.
- To assess whether the organization is implement internal audit standard and ethics in its
auditing practice
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- To assess the implementation of internal audit practice of Dashen bank Durame branch.
- To evaluate the internal audit in assessing the risk faced by the Dashen bank Durame
branch.
- To assess internal auditors are professional well trained.
- To forward the possible solution on the study.
- To identify the principle of auditing that applied in the bank.
This study mainly focused to assess whether the organization implement internal audit standard
and ethics in its auditing practice and
Identify factors that affect the internal auditing practice, the challenges, and the strategies uses
to alleviate the problems in the bank. Because of time and cost limitation, the scope of the study
will be limited to assess internal auditing in Dashin bank of Durame branch the researcher
enforced to limit the study area in assessing internal audit.
The findings of this study elucidated the determinant factors of internal audit in dashen bank of
Durame branch. Hence, along with other research findings, it would contribute in designing
effective plans to alleviate determinant factors of internal audit practice. It will help to
recommend the concerned bodies to come up with possible solution to minimize the problem.
The study will used full for research to get basic research skills. Finally; it Provides baseline
evidence for researchers & pave the way for further studies on postnatal care service utilization.
The major benefits of this study will be the following.
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• It will enable the manager to aware of the importance and use of internal audit in
achieving intended objectives.
• It will be help the auditor in the bank know application of internal auditing principles.
• I will be used 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
The first chapter contains the background that introduces the topic and touched on some of the
issues concerning assessment of the implementation of the internal audit practice in Dashen
Bank of Durame branch. The literature review that forms the second chapter looks at the various
financing schemes available to assessment of the implementation of the internal audit practice in
Dashen Bank of Durame branch. Thirdly, the method used in gathering the data forms the third
chapter. Chapter four contains the data analysis, presentation and discussion of the findings. The
conclusion and recommendations will form the chapter five of this below shows the structure of
the study:
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CHAPTER TWO
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 expresses his opinion on the same by way of written report. (Kamal G .2015).
Internal auditing activity area department division consultants or the Fractioned 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.2015).
The internal auditing activities evaluate 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, 2017).
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2.2. Evaluation of Auditing
The present’s 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 bookkeeping had been accurately handled and that all
cash was properly accounted for with the development of partnership. Audit also becomes useful
in. The industrial revolution brought with large scale enterprises that needed outside financing to
supplement owners capital. In other to prim it question of costly machines that had become
available. It at this point, of course, that the independent audit come and that third party
displaced business owners at the principal beneficiaries of auditing services. (Fabozzi 2016).
On management that might otherwise find it expedient 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 UN audited quarterly reports and
pronouncements about future expectation when it is known that the figures will ultimately have
to integrate with audited figures. (Fabozzi, 2016).
The internal audit is continuous review of operations, 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, USA 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.
(Arens 2017).
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 2014). Reviewing and appraising the soundness, adequacy and
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application of accounting, financial and other operating controls and promoting effective control
of reasonable cost.
The auditor obtains a sufficient understanding of the design of control relevant to the audit of
financial statements to skin the audit and to determine whether they have been placed in
operation. Since 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 Leksherkhar, 2017).
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 2015)
In addition to possessing adequate training and professional experience, the accountant who
makes an audit for 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
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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 independent
though and actions 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 statements which have been prepared by management. (Arens 2017)
Integrity and objectivity are per-eminent qualities expressed in all auditors. An auditors should
be straightforward, 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 that
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. 2018) .
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.Raywhittingtion 2019).
Spicer and Pegler timeout authors in auditing literature define the system of internal control as
internal control is best regular 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.
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This definition implies the following
a. The internal control is the system of controls.
b. Controls are established over financial and non-financial areas.
c. The mechanism of controls may manifest itself in the farms to internal cheek or internal
audit or other forms.
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 Tandon 2017).
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has relied and the conclusions arrived at should be documented. (K.C shekhar and
Lekshmyshekhar 2018).
2.8.3. Limitation of Internal Control
The existence of internal control system in any entity provides good clues that aims of internal
control, vat 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 curtain 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 for see control mechanism for
transactions of unusual nature it cannot stand against deliberate circumuention 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
obsolete in changed see narrow recognizing this vital fact the auditor should proceed to evaluate
the internal control. (B.N Tandon 217) .
CHAPTER THREE
3. METHODOLOGY
3.1. Description of the Study area
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KembataTembaro is 217 kilometers of all-weather roads and 140 kilometers of dry-weather
roads, for an average road density of 249 kilometers per 1000 square kilometers. The Central
Statistical Agency (CSA) reported that 8,364 tons of coffee is produced in Gurage, Hadiya and
KembataTembaro in the year ending in 2005, based on inspection records from the Ethiopian
Coffee and Tea authority. This represents 8.33% of the SNNPR's output and 3.36% of Ethiopia's
total output.
Based on the 2007 Census conducted by the CSA, this Zone is a total population of 1,080,837, of
whom 536,676 are men and 544,161 women; with an area of 1,355.89 square kilometers,
KembataTembaro is a population density of 502.13. While 97,797 or 14.36% are urban
inhabitants, a further 35 individuals are pastoralists. 122,580 households were counted in this
Zone, which results in an average of 5.55 persons to a household, and 118,077 housing units.
The five largest ethnic groups reported is the Kambaata (72.48%), the Tembaro (13.73%), the
Hadiya (5.5%), the Donga (4.81%) and the Wolayita (1.75%); all other ethnic groups made up
1.73% of the population. Kambaata is spoken as a first language by 74.03%, 13.83% Tembaro,
and 5.56% spoke Hadiya, and 1.29% Wolayita; the remaining 1.13% spoke all other primary
languages reported. 83.6% of the population said they are Protestants, 6.55% practiced Ethiopian
Orthodox Christianity, 5.94% embraced Catholicism, and 3.07% were Muslim.
The data collection method used in this study was both primary and secondary sources. The
researcher will use primary data, the data will be conducted by distributing questioner in order to
set firsthand information from the respondent and the secondary data will be obtained from
reviewing journals and literature relevant to the subject matter of this research.
The total employers of the Dashen bank of Durame branch are 14. From the total population the
researcher will select 7 as sample size. The Simple random sampling method will be used for the
selection of the respondent to the questionnaire.
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3.4. Data Presentation and Data Analysis
The data collection through the questionnaires and interview were organized and analyzed.
Then tabulate in the form of tables and interpretation was made. The data that was gain from the
questionnaires was analyze quantitatively, whereas the data that was gain from the interview also
analyze qualitatively and conclusion and recommendation were give.
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CHAPTER FOUR
Ro
No Activities January February March April May Jun
1 Title selection
2 Proposal
development
3 Proposal 1st
draft
4 Proposal final
draft
5 Data collection
and analysis
6 Final research
paper submitted
7 Research
presentation
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4.2. Budget
1 Transportation 300
2 Typist 300
4 Paper 300
5 Pencil 120
6 Ruler 80
7 Printing 300
8 Binding 100
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REFERENCE
Arens 2015.Auditing interatedappoabs 7th edition jersey (USA).
B.NTondom (2017) “A hand book of practical auditing” SHAND and Company TID.
David N. Richute, Auditing Concepts and Standard, South Western publishing Co. 2012. USA.
Howard F (2015) “Auditing principle” 4th edition prentice Hall of India.
Johannes. Kinfu, Auditing introduction to Principles practices, FBE. AAU.
K.C shekhar and leksmy S (2016) “Auditing incorporating Companies” Vikas publishing India.
Kamal G (2015) “Fundamentals of Auditing” Hill publishing Company.
Konrath. Larry. Auditing Concepts & Applications.A risk Analysis.Approach 4th ed. South
Western Colle USA. 2015
O.Raywitting (2019) “Principle of Auditing” 9thesition Boston.
Ravinder K (2016) “Fundamentals of principle Auditing” prentice hall India
Shekhan and Shekhars, 2018, Auditing Apptoch 5th edition
Walter B. Meigs&etal, Principles Auditing 9th edition, 2017.
Whitting ton & parry 11th edition, Irwin, 2015.
Zelalem S. An Assessment Of Internal Audit Practice In Case Of Lion Insurance S.C, Smu
Addis Ababa, 2017.
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