Professional Documents
Culture Documents
AAAnteneh Research-1
AAAnteneh Research-1
OCT;-2019
CHIRO,ETHIOPIA
i
ACKNOWLEDGEMENT
First and foremost, I want to thank the Almighty God for his guidance, protection, divine
provision and brightened direction of my personal and academic journey.Secondly, we
would also like to express my deepest gratitude to my advisor Mr. Belay:M for
his unreserved follow up, constructive comments and overall partners that
helped us to preparing this research paper. My special thanks also to my
friends for his unreserved moral andfinancial support.
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ABSTRACT
This study conducted to Evaluate Internal auditing practice in Awash Bank in
Bedessa branch. Internal auditing helps an organization accomplish its
objectives by bringing a systematic discipline to evaluate and improve the
efficiencies of risk management control and governance process. The study
fried to assess the factors, strength and weakness with regard to internal audit
practice in Awash bank of Bedessa branch. The data relevant to the study was
collected from primary and secondary source of data. Primary data collected
through questionnaires and secondary sources from journals written
documents and reports. Based on the conclusion and the finding the internal
auditing practice of Awash bank in Bedessa branch relatively better and follow
the theoretical aspects of internal audit practice.
Acronyms
iii
IIA Institute of Internal Auditors
iv
Table of Contents
ACKNOWLEDGEMENT....................................................................................................................ii
ABSTRACT......................................................................................................................................iii
Acronym........................................................................................................................................ iv
CHAPTER ONE................................................................................................................................ 1
INTRODUCTIONS............................................................................................................................1
1.1.Background of the study..........................................................................................................1
1.2.Background of the organization...............................................................................................2
1.3.Statement of the problem.......................................................................................................2
1.4 Research Question..................................................................................................................3
1.5 Objective of the study............................................................................................................4
1.5.1 General Objective...............................................................................................................4
1.5.2 Specific objective................................................................................................................ 4
1.6 Significance of the study....................................................................................................... 4
1.7 Scope of the study................................................................................................................. 4
1.8 Limitation of the study...........................................................................................................5
1.9 Organization of the paper......................................................................................................5
CHAPTER TWO............................................................................................................................... 5
REVIEW OF RELATED LITERATURE................................................................................................. 5
2.1. Definition and Nature of internal Audit Activity..................................................................5
2.2.Evaluation of Auditing..............................................................................................................6
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...........................................................................9
2.6.2.Integrity and Objectivity....................................................................................................... 9
2.6.3.Due professional care......................................................................................................... 10
2.7.Internal Control..................................................................................................................... 10
1
2.7.1.Objective of Internal control...............................................................................................11
2.7.2.Internal control Documentation.........................................................................................11
2.7.3.Limitation of internal Control............................................................................................. 11
2.8.Audit practice in Relation to Internal Control........................................................................12
2.9.Elements of internal Control..................................................................................................12
2.9.1.Control Environment.......................................................................................................... 13
2.9.2.Risk Assessment..................................................................................................................13
2.9.3.Control Activities.................................................................................................................14
2.9.4.Information and Communication........................................................................................14
2.9.5.Monitoring.......................................................................................................................... 14
Chapter Three.............................................................................................................................. 15
3. Methodology........................................................................................................................... 15
3.1. The research Approch..........................................................................................................16
3.2. Source of data.......................................................................................................................16
3.3 Methods of Data Collection.................................................................................................. 16
3.4 Population size and sample Technique..................................................................................16
3.5 Sampling techniques.............................................................................................................16
3.6 Data Analysis........................................................................................................................17
CHAPTER FOUR............................................................................................................................ 18
4. Data Presentation and Analysis............................................................................................... 18
4.1. Background of Respondents.................................................................................................18
4.2 Analysis of responses to the Questionnaire..........................................................................19
4.3 Analysis of interview responses.............................................................................................24
4.4. General discussion................................................................................................................ 25
CHAPTER FIVE.............................................................................................................................. 27
5. Summery, Conclusion and Recommendation..........................................................................27
5.1. Summery...............................................................................................................................27
5.2. Conclusion............................................................................................................................ 27
5.3. Recommendation..................................................................................................................28
REFERENCE.................................................................................................................................. 29
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APPENDIX 1..................................................................................................................................30
Appendix 2................................................................................................................................... 32
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CHAPTER ONE
INTRODUCTIONS
1
1.2.Background of the organization
The bank of Awash in Bedessa branch was established in the year September
20 2003 G.C. The bank has been four hundred eight six(486)
shareholderscapital 24.2 birr million during the starting period and now there
are above thousands shareholders and current capital of Awash bank is above
Birr 4.4 billion.Awash bank were create job opportunity for above 30 employees
in all over the country and above 20 employees in Bedessa branch currently
the bank of Awash is a good player of effective activities and sufficient banking
service in the country by facilitating customer deposit and credit for customer.
The bank has the following general objectives.
To meet the needs of the emerging private sector for quality and dependable
domestic and international banking services;
To expand and diversify commercial banking services in response to the
growing demands of customers; and
To contribute towards the economic and social development of the country and
to operate profitably in a sustainable manner.
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1. Absence of internal auditing in the organization will result in lack of
continuous assurance services.
2. The degree of independence of internal auditor since they are employee of
the organization so it is the related problem will be existing.
1. Does the bank have internal auditing practice In Awash Bank Bedessa
branch?
2. Does the principle of internal auditing apply in the Awash bank bedessa
branch?
3. What factors affecting internal auditing practice of Awash Bank of
bedessa branch.
4. What are the major drawback of Auditing practice of Awash Bank
bedessa Branch.
3
4. To identify the major drawback of internal auditing in Awash bank
bedessa branch.
4
CHAPTER TWO
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objectives and whether operations and programs are being implanted or
performed as intended. (Konrath, 2002)
2.2.Evaluation of Auditing
The presents 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 owner’s capital. In other to prim it
aquestion of costly machines that had become available. It at this point, of
course, that the independent audit come and that third parties displaced
business owners at the principal beneficiaries of auditing services.
(Fabozzi2005)
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 expectations when it is known that the figures will ultimately have to
integrate with audited figures. (Fabozzi, 2005)
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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 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. (sherkar2006)
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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.
(Leksherkhar. 2003)
2.7.Internal Control
Spicer and Peglartomes authors in auditing literature define the system of
internal control as internal control is 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
The internal control is the system of controls are established over financial and
non-financial areas. The mechanism of controls may manifest itself in the
farms to internal cheek or internal audit or other forms.
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all the methods and procedures adopted by the management of an entity to
assist in achieving managements objective of ensuring, asfaras possible, the
orderly and efficient conduct of its business including adherence to
management policies, the safeguard of the assets prevention and defection of
Froud 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. (Tandon 2005)
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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, vit 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 for see control mechanism for transactions of unusual nature it cannot
stand against deliberate circumvention 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 see recognizing this vital fact the auditor
should proceed to evaluate the internal control. (Tandon 2005)
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other words the auditor needs to study and evaluate the accounting system
and related internal controls instituted by the client business sour to enable
him to enable him to establish the degree of reliance which he can place there
an in determining the nature, timing and extent of his substantive procedure.
(lekshanyshekhar 2000)
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. (Richiute2002 USA)
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.(Larry
2002).
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
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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 2004).
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 take to mange.
Risks can pertain to internal and external factors. Aster risks have been
identified they must be evaluated. Managing change requires a constant
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 USA, 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 is
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 affect the policy. All
polices must be implemented through fully, conscientiously and consistently.
(Shekhar 2003).
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 your top administration and governing boards.
(Irwin, 2005)
Internal control system changes over time. The way controls are applied may
evolve, once effective procedures can become less effective due to the arrival of
new personal, varying 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.
(Irwin, 2005)
2.10 Empirical Evidences Review
Different researches were conducted on the existing practices of internal
Ethiopian context. The focus of those papers varies in terms of sectors,
industries and institutions. Highlights of some previous research papers on
similar subject areas including the research conclusions and recommendations
are discussed auditing in the as part of the evaluate of previous empirical
evidences and presented as follow:
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Yisehak Tigabu (2013) in the research entitled “ Internal audit practices in the
Ethiopian Financial sector, as compared to the International Professional
Practicing Framewor (IPPF) pronounced by the IIA” to compare the existing
internal audit practices in the Ethiopian financial sector by taking the
framework as a benchmark. The financial sector in Ethiopia comprises of
banks, insurance companies and microfinance institutions. A mix of sample
was taken from all and the research deployed three data collection methods:
questionnaires, interview and document review. The results of the research
revealed that the current practices of internal audit activities (IAAs) in the
Ethiopia financial sector did not comply with the IPPF guidelines that
promulgated by the IIA. Furthermore, there were no quality assurance and
improvement programs in place by those financial institutions that can make
their internal audit practices head towards the level of being IPPF complaint.
The research recommended that the c urrent IAAs in the Ethiopian financial
sector should comply with IPPF to make them value adding in the areas of risk
management, internal control and governance. It was also recommended that
those institutions need to introduce quality assurance and improvement
programs, both internal/external and/or periodic/ongoing, to periodically
review and improve the quality of their IAAs.(Yisehak Tigabu, 2013)
Hamdu Kedir, Dr Arega Seyom and Addisu Gemeda in their article entitled
auditing standards and its practice the case of East Arsi Zone, Ethiopia”
“Internal presented the result of their case study that evaluated the current
practices of internal auditing in the internal audit departments o f selected
public enterprises in East Arsi Zone, Ethiopia as compared to major internal
audit standards. The purpose of the study was to investigate how major
internal audit standards are applied in the internal audit departments of
selected Public enterprises in East Arsi Zone of Ethiopia, taking competency,
compliance, Independency, Riskmanagement and quality assurance as major parameters
of the IIA standard for he comparison. The result of the study showed that the scope of the
internal audit function in enterprises surveyed did not yet go far from the traditional practices
and much time is devoted in performing financial and compliance audits. Regarding quality
15
assurance program, none of the respective public enterprises’ audit departments have quality
assurance programs. Thus, CAE should be able to develop quality assurance programs. (Hamdu
Kedir, 2014).
Bethlehem Fekadu conducted research on “Internal Audit Practices: A Case of Ethiopian
Governmental Higher Educational Institutions for the purpose of investigating challenging
factors that have influenced the Ethiopian higher governmental institutions’ internal audit
practices. The study was done on four universities, Adama, Hawasa, Haramaya and Addis Ababa
Universities. Seven internal auditors who wer e selected using convenience sampling
techniques were used as data source and open ended and closed ended questionnaires were
used as data gathering tools. Then qualitative approaches were employed to analyze and
interpret the filled in data. The findings of the study showed that IAAs in the sample
Universities lacked the following: none of the sample universities have established the audit
committee, their Internal Audit departments were not sufficiently resourcethat affected their
effectiveness, no developmental programs for their internal auditors, risk based internal audit
plans were not established and none of the respective universities’ audit departments have
quality assurance program including the internal and external quality evaluate processes as
required by ISPPIA No.1300. Proper management commitment and other organizational factors
were critical factors influencing effectiveness of IAF in the respective universities. The research
concluded that proper management commitment, lack of capacity development programs for
internal auditors and other organizational factors were critical factors influencing effectiveness
of IAF in the respective universities. To alleviate those problems, it was recommended that
management and the audit division of the respective universities has to work jointly to improve
the IAF of their respective universities as perrequirements of international standards. (Fekadu,
2009)
Previously very few researches have been done regarding internal auditing related topics at
various organizations in Ethiopia. By the definition of IIA, the internal audit is expressed as a
profession that is moving from its traditional view (approach) to the new risk (approach) based
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view . Since internal auditing in today is different from internal auditing yesterday and before, it
is under a continuous review and progress (Reding et., 2013).
Therefore, as a global guidance setting body, the IPPF organizes authoritative guidance that
promulgated by the IIA. The IIA provides internal audit professionals worldwide with
authoritative guidance organized in the IPPF as guidance mandatory guidance and
recommended.Conformance with the principles set forth in mandatory guidance is required
and essential for the professional practice of internal auditing. These mandatory guidance
elements are categorized into two namely attribute standards and performance standards. The
standards together with the code of ethics encompass all mandatory elements of the IPPF. As it
is a mandatory guidance, no previous research was made in Awash Bank Bedessa branch by
taking into account the mandatory guidance elements the revised International Standards for
the Professional Practice of Internal Auditing (Standards) that was released by the International
Internal Audit Standards Board (IIASB) effective January 2017 and the code of ethics.
It could be seen from the above discussion that majority of the previous studies were
concentrated on the effectiveness of internal audit in various organizations in Ethiopia. Very
few studies were conducted on the area of assessing the internal audit practices in different
sectors and industries. As well, since todate, no research has been done by paying a special
attention to assess the practices of internal audit in Awash Bank of Bedessa Branch by taking
the mandatory guidance elements: the revised international auditing standards and the code of
ethics as a benchmark. So the forgoing research gaps were identified and derives the attention
the researcher to do well his time on the stated gaps.
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Chapter Three
3. Methodology
3 Study area
This study would been conducted on Internal Auditing Practice in Awash Bank Bedessa
Branch.Located far away thirty seven(37.Kms) from Oda Bultum University.
18
3.4 Population size and sample Technique
The target population for the research was 24 employees and the sample size was to be12
employees of Awash Bank in the bedessa branch.The selection of the sample was judgmental
method for the study. The reasons for this is specially those staff members are directly or
indirectly involved in the internal audit activity of the Awash Bank in bedessa branch, and they
were participate in the study as respondents to the questionnaire.
19
interview and questioner) has been analyzed both qualitatively and
quantitatively. The details of the data presented and analyzed to be discus.
No N o % T o t a l
1 S e x M a l e 1 0 83. 3 3
Female 2 1 6 . 6 7 12 100%
2 0 - 2 5 2 16. 6 7
2 Age 2 5 - 3 5 5 4 1 . 6 7 12 100%
3 5 - 4 5 4 33. 3 3
> 4 5 1 8 . 3 3
3 Work Experiences 0-5 years 4 33. 3 3
5-10years 7 5 8 . 3 3 12 100%
>10years 1 8 . 3 3
Source: Primary data (Questionnaire; 2019)
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experience above 10 years. This reflects that the bank has well experienced
employees to adapt new technologies related with internal control system.
Table 4.2.
R e s p o n s e s
Strongly agree A g r e e D i s a g r e e Strongly disagree T o t a l
No Item No. % No % No. % No. % No. %
1 Accept all types of deposits 6 5 0 5 41.67 1 8 . 3 3 0 0 1 2 100%
2 Extend loans and advance for customer 7 58.33 4 33.33 1 8 . 3 3 0 0 1 2 100%
3 Draw accept buy and sale bills of exchanges 4 33.33 6 5 0 2 16.67 0 0 1 2 100%
4 Provided financial guarantee 5 41.67 4 33.33 2 16.67 1 8 . 3 3 1 2 100%
5 Carry out international banking transaction and inter bank business 5 41.67 5 41.67 2 16.67 0 0 1 2 100%
6 It gives domestic banking service all branches 8 66.67 3 2 5 1 8 . 3 3 0 0 1 2 100%
7 Assessing the risk the bank will face 6 5 0 4 33.33 1 8 . 3 3 1 8 . 3 3 1 2 100%
8 Understanding internal control 7 58.33 4 33.33 1 8 . 3 3 0 0 1 2 100%
9 Training of internal audit personness 5 41.67 4 33.33 1 8 . 3 3 2 16.67 1 2 100%
10 Supervises, reviewing and controlling the activities in the bank 9 7 5 0 0 3 2 5 0 0 1 2 100%
11 Establishing goals and objectives and check the implementation 7 58.33 3 2 5 2 16.67 0 0 1 2 100%
12 Set division of work among employees 9 7 5 1 8.33 2 16.67 0 0 1 2 100%
13 Conducting internal control system in conformity with the environment all changes 5 41.67 4 33.33 3 2 5 0 0 1 2 100%
Source: Primary data (Questionnaire;2019)
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Understand form the table (4.2) above the results show that majority of the
respondents 11(91.67%) positively responded that the bank accepts all types of
deposit. This means that 11(91.67%) of the population is with a total
agreement of the fact that the bank accepts all types of deposits. 11(91.67%) of
the respondents agree or strongly agree that the bank extend loans and
advances for customer. For item number 8, on the other hand 11 (91.66%) of
the respondents agree or strongly agree that the bank understand control
practice. From item number 3, 10 (83.33) of respondents respond reveled that
bank draw accepts, buy and sell bill of exchange. from item number “4” 9
(75%) respondents respond revealed that the bank provides financial
guarantee5(41.67) of the strongly agree and 4(33.33) of the agree to this item.
For item number 6. all respondents agree that the bank give domestic banking
service in branches 8(66.67%) of the strongly agreed to the idea. Still
10(83.33%) at the respondents equally with items number 5, 7, 11 and 12 this
means that the bank carries out international banking transaction and
interbank business, it assesses the risk that the bank will face. It also
establishes goals and objectives and cheek the implementation and the bank
also set division of work among employees. It is indicated in the above table,
majority of the employees agree to the application of the activities in the bank
regardless of being strongly or agree. Only few number of respondents
responded in a number in another way. Therefore, the aforementioned
activities are used by Awash bank.
For item number 7.6(50%) of the employees strongly agree that the bank
assess the risk it will face 4(33.33%) of the respondents, on the other hand
agree to this item. In other words, 10(83.3%) of the respondents agree that the
bank assesses risk it will face.
22
Regarding item number "8"7(58.3%) of the employees strongly agreed that the
bank where they are working understand internal; control practice. For item
number “9” 5(41.67%) of the respondents strongly agree that the bank trains
audit personnel 4(33.33%) of the respondents on the other hand agree to this
item .this means that Item number "10” 9(75%) of the respondents strongly
agree that Awash bank supervises, reviews and control activities in the bank.
This response is confirmed with the managers response to the interview
questions. The managers noted that having close supervisions is one advantage
of internal control auditing practice.
With respect to item number 11,10(83.3%) respondents respond that the bank
establishes goals and objectives and cheek the implementation 3(25%) of them
agree and 7(58.33%) of them strongly agree to this item. For item 12 on the
other hand 9 (75%) the employees strongly agree that the bank sets division of
work among employees.
For item number “13” 5(41.67%) of the respondents replied that they strongly
agree to this item this is to mean that they strongly agree that the bank
conducts internal control system in conformity with environmental changes. In
addition 4(33.3%) of the respondents also agree to this item. This means that
9(75%) of the respondents agreed that the bank conducts internal control
system in conformity with environmental changes.
For the question number “14” that means is there any application of internal
control practices in the bank the respondents that there is an application of
internal practice in Awash bank.
23
I t e m R e s p o n s e s
Yes % N o % Total
Is there any application of internal control practice in your bank 1 0 83.3 2 16.67 1 2
Source: Primary data (Questionnaire;2019)
For item number “15” the respondents have also mentioned the types of
internal control practice as per audit and post audit.
Question number “16” was about the limitation that internal Audit practice
with have. This question contains 5 closes ended 1 open ended question. For
the close ended question 4 Likert scaler questions were given. But the open
ended one was analyzed qualitatively. 1 represents strongly agree 2 disagree
and 4 strongly disagree. The result is indicated in table 4.4. below.
Table 4.4. Respondents response about the limitation of internal control have
in the bank.
R e s p o n s e s
No Items 1 2 3 4
N o % N o % N o % N o % Total
1 Chance of human error (being careless) misunderstanding 5 41.67 4 33.33 0 0 3 2 5 1 2
2 Ignorance of unusual activity 4 33.33 4 33.33 3 2 5 1 8.33 1 5
3 Collusion of employees with the outside parties 41.67 2 0 4 26.66 3 2 0 1 5
4 A person who is exercising control may be irresponsible 2 16.67 6 5 0 4 33.33 0 0 1 2
5 Procedures for controlling may vary due to different condition changes 3 2 5 5 41.67 0 0 4 33.33 1 2
Source: Primary data (Questionnaire;2019)
Regarding the limitations internal control practice experienced by the bank the
results from the above table indicates that chances of human errors (being
careless, misunderstanding) has been chosen by most of the respondents to be
a limitation for internal control practice. The means that 9(75%) of the
24
respondents agree and strongly agree that the item could be one limitation. In
addition, most of the respondents 8(66.67%) have chosen item number 2 and 5
to be other limitations of internal control practice in Awash bank. In other
words, ignorance of the unusual activity, and the change in conditions and the
way the procedures very can be considered to be other limitations of internal
auditing practice.
Questions 17-20 are more of open ended question. In this case, in analyzing
their responses, the researcher emerged the respondents which are almost
similar.
The responses of the employees also show that to evaluate the quality of
internal auditing practice, it is good and important to the well being of a
company and its employees. Others also have commented that it should be
valuable to the company as well as to the employee. Thus, the general
evaluation of the internal auditing practice seems to be good but should be
improved further.
Regarding question number “19” the employees suggested that there should be
some risk management skills required of managers. (see table 4.5)
Table 4:5
R e s p o n s e s
Item Y e s N o
N o . % N o . %
Do you think that there would be some risk management skil s which are required by the bank manager
11 91.67 1 8.33
Source: Primary data(Questionnaire;2019)
As we understand from the above table 11(91.67%) of the employer stated that
there should be some risk management skills required by manager. These
skills most of the employees mentioned that
25
The skill of anticipating of the future based on the current internal and
external environment.
Understanding all the activities and interests of the organization.
Applying specific methods, procedures, and auditing techniques to
customers and employees question about job tasks.
The manager should develop managerial skill operational skill and
technical skill.
The interviewees also responded that they apply some of principles for internal
auditing like rotation of employees hiring of competent and sufficient
employees, segregation of duties & responsibility, physical safeguarding of
assess and separation of accounting and operation.
The interview noted that the general nature of auditing seems to be safe and is
not time consuming. The bank functions through loan, “Hawala money
transfer, deposit exchange and all these activates are performed.
Have you ever faced some challenges when you run and manager the bank? He
replied that challenges are inevitable but it reeds effort and commitment to
solve the challenges. Of these challenges, violating the rules and regulations of
the bank, the auditors afraid the managers. This decreases the auditing
practice. The major drawback of Awash bank in bedessa branches shortage of
skilled man power (competent Auditor) and also independent less of the
Auditor were a draw back as the researcher found out from questionnaires and
interviews.
26
responder reviled that of activates the bank perform given domestic banking
service for the customers has been chosen by all of the responders. There
seems to have consistency between the managers response and the employees’
responses to research question number both of the respondents replied that
the internal auditing is applicable in this bank. Through this internal auditing
is applicable it has found out there are several limitations of the bank faced
these limitations were accepted by majority of the respondents to be the
problems in the system for instance chance of human error (being careless)
revertantignorance of unusual activities. The collection of employees with the
outside parties and the presences of in responsible persons.
The post audit is practiced in the morning from 2:00-3:00. the interviewees
also responded that they apply some of principles for internal auditing like
rotation of employees. Hiring of competent and sufficient employees,
segregation of audities and responsibility, physical safeguarding of assets and
separation of accounting and operation. For the third question, the interview
noted that the general nature of auditing seems to safe and is not time
consuming. As to this interviewee, the bank functions through loan, “Hawala”
money transfer, deposit, foreign exchange and foreign exchange rate. All these
activities are performed.
For the question “have you ever faced some challenges when you run and
manager the bank” he replied that challenges are inevitable but it need effort
and commitment to solve the challenges. Of these challenges, violating the
rules and regulation of the bank, the auditors afraid the managers. This
decreases the auditing practice. The other problems are auditors come to the
office late the auditors are not capable of auditing and some others less
competent in an area of auditing. The interviewee has also noted the strategies
to be used by the bank to minimize the above-mentioned challenges. Include
the organization set restricted rules and regulations. He stated that the way he
mange the employee is somewhat good. For the factors affect the internal
auditing the manger mentioned some of the factors like presence of old rules
27
and regulations, auditor fear of the manger to report the cares corresponding to
these problems the respondents have also suggested some techniques to be
used in to reduce limitations. (Secondary data)
CHAPTER FIVE
5.1. Summery
The study was aimed investigating the internal auditing practice used by
Awash bank of bedessa branch. To collect necessary information, the
researcher used questionnaire and interview from primary data source and
journals, reports and other written documents from secondary source. The
finding was based on the research question. According to the finding Awash
banks of Bedessa branch properly applied internal auditing practice and the
bank also practice (applied) some of the internal auditing principles like due
professional care, independence and proper planning and supervision etc. The
factors affecting internal auditing practice of Awash bank in bedessa branch
were rules and regulations of the bank, the auditors independent less, like of
competency of auditors. The major drawback of intrnal auditing in Awash bank
Bedessa branche shortage of skilled manpower (competent auditor) and also
28
independent less of the auditor were a draw back as the researcher found out
from questionnaires and interviews
5.2. Conclusion
From the data the researcher gathered and analyzed the following points are
convened.
5.3. Recommendation
Based on the finding and conclusion the researcher forwards the following
recommendation.
29
The ever all internal auditing practice of the Awash Bank in Bedessa
branch is relatively better and for future the bank give attention for
developing skilled man power specially in the audit area and the system
of internal auditing be free without the any influence by management or
other body to do the audit practice.
REFERENCE
B.N Tondom (2005) “A hand book of practical auditing” SHAND and Company
TID.
Howard F (1980) “Auditing principle” 4th edition prentice Hall of India.
K.C shekhar and leksmy S (2000) “Auditing incorporating Companies” Vikas
publishing India.
Kamal G (2000) “Fundamentals of Auditing” Hill publishing Company.
O.Raywitting (1989) “Principle of Auditing” 9thedition Boston.
Ravinder K (2001) “Fundamentals of principle Auditing” prentice hall India
Shekhan and Shekhars, 2003, Auditing Apptoch 5th edition
Konrath 1999.
Arens 1997. Auditing integratedappears 7th edition jersey (USA).
Fabozzi, 2000.
Johannes. Kinfu, Auditing introduction to Principles practices, FBE. AAU.
30
David N. Richute, Auditing Concepts and Standard, South Western publishing
Co. 1982. USA.
Konrath. Larry. Auditing Concepts & Applications. A risk Analysis. Approach
4th ed. South Western Colle USA. 1999.
Shekhar, Auditing. Vikas publishing House, 2003.
Walter B. Meigs&etal, Principles Auditing 9th edition, 1989.
Whitting ton & parry 11th edition, Irwin, 1995.
APPENDIX 1
Oda Bultum University
College of Business and Economics
Department of Accounting And Finance
I. Please provide some information about your age, sex and work
experience in the bank.
1. Sex Male Female
2. Age 20-25 25-30 35-45 > 45
3. Your stay in the bank
0-5 years 5-10 years >10years
31
strongly disagree, and 4, disagree, tick the boxes according to your
response
Yes No
15. If your response to question No. “14” is yea please list the types of internal
control practices That are currently by the awash
bank.-------------------------------------------------------------------------------------
-
16. 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 I t e m 1 2 3 4
1 Chances of human error (being careless misunderstandings, etc)
32
2 I g n o r a n c e o f u n u s u a l a c t i v i t y
3 Collusion of employees with the outside partie s
4 A person who is exercising may be irresponsible
5 A procedures for controlling may vary due to the changes conditions
17. What are the mechanisms through which the bank uses to minimize the
aforementioned limitations of internal controls?
18. How do you evaluate the quality of internal auditing practice in general?
19. Do you think that there would be some risk management skills which are
required by the bank manager ?
Yes No
20. If your response is “yes” what are those skills and techniques the manager
should use?
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Appendix 2
Oda Bultum University
College of Business and Economics
Department of Accounting And Finance
Interview question for the manager of Awash bank in Bedessa Branch.
General directions: Dear the manager, the main purpose this interview is to
assess the internal auditing control practice used by Awash bank in Bedessa
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!
33
I am currently conducting a research entitled as “analysis” of the internal
control and Auditing practice of Awash Bank “in bedessa branch”. The main
objective of this questionnaire is to Evaluate 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 Bank.
Thus, we kindly request you to give genuine responses.
If yes, what are the principles do you use to control the general condition of
the bank including the way you control your employees.
---------------------------------------------------------------------------------------------
3. How do you see general nature of auditing in your branch?
4. Could you tell me about the bank and the way it functions?
5. Have you ever faced some challenge when you run and manage the bank?
6. (If yes) what were those challenge that your prominently face?
7. What were the strategies you used to overcome the challenges?
8. In what way do you manage and set your employees?
9. What factors do you think that affect the internal auditing practice in your
Bank? (the major weaknesse)
34