Home » Accounting » EXAMINATION OF CHALLENGES ENCOUNTERED BY INTERNAL AUDITORS IN PUBLIC SECTOR AUDI...
EXAMINATION OF CHALLENGES ENCOUNTERED BY INTERNAL AUDITORS IN PUBLIC SECTOR AUDIT OF CAMEROON
Sold By: | Item Type: Project Material | Report this? | Attributes: 54 pages | 1-5 chapters | Amount: ₦5,000 | Marked useful: 723 times
Delivery: Within 24 hoursEXAMINATION OF CHALLENGES ENCOUNTERED BY INTERNAL AUDITORS IN PUBLIC SECTOR AUDIT OF CAMEROON
CHAPTER ONE
INTRODUCTION
1.1 Background of the study
The demand for internal auditing mostly arises from the necessity for an independent verification mechanism to mitigate record-keeping errors, asset misappropriation, and fraud in both company and non-commercial organisations. Auditing has its origins in a historical period not much later than that of accounting. As civilisation progressed, it became necessary for one person to be entrusted with another person's property to some degree. This highlighted the need for some type of mechanism to ensure the trustworthiness of the person being entrusted (Brown, 2021: Kester, 2017). Historians believe that as early as 4000 B.C., organised enterprises and governments in the Near East implemented formal record-keeping systems to address their concerns regarding accurate accounting for receipts and expenditures, as well as tax collection (Ghorbel, 2019). An audit is a thorough and impartial evaluation of an entity's financial statements or related financial information, regardless of its size or legal structure. The purpose of an audit is to provide an opinion on the accuracy and reliability of the information presented (Ghana National Accounting Standards) (GNAS, 2021). Auditing is a meticulous procedure conducted by a competent individual or organisation, in which the records and financial statements of an institution are thoroughly examined to determine the accuracy and fairness of the financial statements.
Auditing, as described by Champ (2022), is the process in which an auditor checks accounting data, assesses the accuracy and dependability of accounting statements, and provides a report on the truth and fairness of the financial statement. Opinion is the articulation of the auditor's expert perspective on the financial statement, formed by applying their judgement to the audit material they have collected. Financial statements encompass a variety of essential records, including sources documents, books of main entry, ledgers, income statement, balance sheet, cash flow statement, directors and management report, and minutes of directors and shareholders (Cenker, 2017).
According to the Institute of Internal Auditors (IIA), internal auditing is a separate and unbiased activity that provides assurance and advisory services with the goal of enhancing an organization's operations and adding value to it (Nagy et al., 2018). By implementing a systematic and disciplined approach, it aids an organisation in achieving its objectives by evaluating and enhancing the efficacy of risk management, control, and governance systems. This definition aims to illustrate the comprehensive nature of the internal audit function within an organisation, in contrast to its earlier focus on analysing payment transactions over time. Contemporary internal audit encompasses, or should encompass, all functions of the business. Hence, the extent of internal audit is no longer limited to the procedures and systems within the accounting and finance department. Although internal audit has gained more attention, there is a scarcity of study on the advantages and significance of this job. Previous research has employed an agency cost framework to demonstrate the significance of the internal audit function in terms of its value relevance (Carrey et al., 2020). According to Carrey et al. (2020), the availability of an internal audit function in Australian family-owned enterprises is not influenced by variables such as size, debt, or agency. However, these organisations do utilise both internal and external audits as alternatives for monitoring purposes.
An alternative method of assessing the performance of internal auditors is to analyse their proficiency in identifying faults within an organisation. However, there is a scarcity of research conducted on this particular subject. A study conducted by Wallace (2019) revealed that organisations with an internal audit department had much less errors that required adjustment by the external auditor, both in terms of quantity and severity, compared to entities without an internal audit department. In recent times, there has been increased focus on the function of auditors in detecting both fraud and errors. In Australia, external auditors are obligated to take into account the potential occurrence of fraud while doing an audit, as stipulated by AUS 210 (Australian Accounting Research Foundation [AARF]) and more recently ASA 240 (AUASB) (Benny, 2021). The heightened focus on fraud awareness and detection likely impacted the responsibilities of the internal auditors as well. As early as the late 1990s, there was indications of the inclusion of fraud detection in internal audit work in Australia, as indicated by a survey conducted by Baklouti et al. in 2019.
Internal auditing is a component of the public financial management system that conducts independent assessments to provide assurance on the operations of institutions and guarantee the organization's objectives are met (Institute of Internal Auditors (IIA, 2019). The enactment of the Internal Audit Agency Act, 2003 (Act 658) led to the creation of internal audit departments in the public sector. The main objective of internal audit is to assess the adequacy and effectiveness of an institution's risk management, internal control, and corporate governance systems (Ankrah, 2017). The purpose of this initiative was to improve the effectiveness, responsibility, and openness in the administration of resources in the public sector (Orji, 2019).
The establishment of internal audit units in public sector organisations implies that organisational efficiency would be improved, leading to a reduction in scandals, misuse of public funds, and corruption (Dunn, 2018). Nevertheless, the occurrence of financial mismanagement in the public sector persists at a concerning pace. Historically, internal auditing served as a means to verify the accuracy of the numerous financial transactions recorded in the accounts on a weekly basis. During the 1950s and 1960s, the examination of accounts was limited to simple examinations aimed at identifying mistakes and abnormalities (Balsam, 2018). The public sector in Cameroon comprises a diverse range of ministries, departments, and agencies that are tasked with the management of substantial public resources. Efficient internal auditing is essential for preserving the integrity and ensuring the accountability of these organisations. Nevertheless, internal auditors in Cameroon encounter various obstacles that hinder their capacity to carry out their responsibilities efficiently. The objective of this study is to emphasise the difficulties faced and propose effective remedies to enhance the internal audit function in the public sector of Cameroon. The ultimate goal is to enhance governance and enhance the management of public resources.
1.2 Statement of the problem
While there are sufficient rules in place for the effective functioning of internal audit services, such as the Charter, Code of Ethics, Manual, and localised standards, there are still prevalent concerns and obstacles that arise in the field of internal audit. The inaugural external quality assessment report of Internal Audit Services in Bhutan, carried out in 2019 by an international consultant from the Institute of Internal Auditors (IIA) in Malaysia, highlighted that the public sector's Internal Audit Services have not yet met certain international performance standards. However, the report also noted that there is significant potential for them to reach level 3 of the international competency model, with level 5 being the highest (Kwame, Henry & Kweku al., 2021). The report indicated that the majority of Internal Auditors did not utilise analytical techniques, which must be addressed promptly in order to progress beyond level three of the international competence model. The report suggests the establishment of an audit committee and the implementation of quality assurance and improvement programs for internal audit services (Kwame et al., 2021).
Furthermore, the expertise in auditing is based on a deep understanding, proficiency, and practical know-how in the field of the profession (Raphael, 2021). Enhancing capacity can be achieved by the inclusion of supplementary skills such as certification, training, and mentoring programs. Regrettably, Cameroon does not provide any courses or programs aimed at augmenting the proficiency of the internal audit profession (Mahmour et al., 2022). Furthermore, the future advancement in the auditing profession depends on the level of demand from client agencies for internal audit services. Similarly, the effectiveness of internal auditors in the public sector is determined by their abilities to supply services that meet the specific requirements of client agencies. If regular courses or programs were available for the internal audit profession, similar to those offered for accounts, procurement, IT, etc., the problem of competency and career development would not exist, and performance would improve significantly (Raphael, 2021).
Moreover, the lack of expertise among newly hired internal auditors has posed significant difficulties for client agencies and existing internal auditors in Cameroon (Adebayo, 2020). Currently, newly enlisted individuals are solely provided with orientation trainings conducted by their more experienced colleagues. In the absence of a senior internal auditor, both the internal auditor's ability to carry out their job responsibilities and the client agency's utilisation of the service are compromised. The majority of internal auditors who possess knowledge and expertise have departed from their positions, either under the guise of pursuing further education or in search of transfers to other locations (Joffrey et al., 2020). A lack of enthusiasm, an antagonistic work atmosphere, and a restricted pool of candidates are among the factors contributing to the failure to achieve the authorised staffing level in the internal audit service (Adebayo, 2020). The elevated turnover rate within the internal audit service can be attributed to the aforementioned concerns and obstacles. Therefore, the necessity for doing this investigation arises.
Objectives of the study
The primary objective of this study is to critically examine the challenges encountered by internal auditors in public sector audit of Cameroon. Specific objectives of this study are to:
To determine the challenges that internal auditors encounter in the public sector in Cameroon
To Assess the Impact of Resource Constraints on Audit Effectiveness
To evaluate the effect of Training and Professional Development on internal auditors
To offer recommendations for addressing the identified challenges and improving the overall effectiveness of internal auditing in the Cameroonian public sector
1.4 Research Questions
The following research questions which are in line with the objectives of this study will be answered in this study:
What are the challenges that internal auditors encounter in the public sector in Cameroon?
What is the Impact of Resource Constraints on Audit Effectiveness?
What is the effect of Training and Professional Development on internal auditors?
What are the recommendations for addressing the identified challenges and improving the overall effectiveness of internal auditing in the Cameroonian public sector?
1.5 Research Hypotheses
To determine the effectiveness of this study, the following research null hypotheses will be formulated to guide the study and it will be tested at 0.05% levels of significance.:
Ho: Resource constraint have no significant impact on audit effectiveness.
Ha: Resource constraint have significant impact on audit effectiveness.
1.6 Significance of the study
This study is important because it has the potential to improve the efficiency of internal auditing in the public sector of Cameroon by identifying and resolving the issues faced by auditors. The objective of the study is to enhance the quality of audits, facilitate the creation of policies and regulations, reinforce the development of skills and capabilities, and foster transparency and accountability in the administration of public sector finances. The report enhances governance and enhances the management of public resources by offering practical insights and recommendations.
The study aims to get insights into areas of weakness or ineffectiveness in internal audit practices by identifying and analysing the problems encountered by internal auditors. Tackling these obstacles can result in enhanced audit quality and more precise evaluations of public sector operations. Gaining insight into the challenges faced during audits can assist in enhancing audit procedures and processes, hence increasing their efficiency and effectiveness.
Moreover, the study will emphasise the influence of forensic audits on enhancing financial controls in the Ministry of Transport. This can result in enhanced supervision and administration of public resources. Forensic audits are essential for promoting accountability by examining and revealing instances of financial malfeasance. The study aims to enhance comprehension regarding the role of these audits in ensuring individuals are held responsible for financial misconduct.
Moreover, the presence of effective internal audits is crucial in guaranteeing accountability inside public sector institutions. The study aims to address the issues encountered by internal auditors, with the goal of enhancing accountability mechanisms and ensuring the management of public finances. Tackling the obstacles in internal auditing can result in improved clarity in financial reporting and operations in the public sector, thereby bolstering public trust and confidence.
Moreover, the report offers policymakers significant insights into the challenges encountered by internal auditors. This can provide guidance for the formulation of policies and regulations that are designed to enhance internal audit functions and address specific difficulties that have been identified. The study can advocate for essential reforms to enable more effective internal auditing methods by identifying deficiencies in the current legal and regulatory frameworks.
In conclusion, this study contributes to the existing information on the difficulties faced in internal auditing within the public sector. It serves as a foundation for future research and analysis. The acquired evidence can enhance future investigations on internal auditing procedures and issues, so enriching the academic and professional comprehension of the topic.
1.7 Scope of the study
Broadly, this study focus is to critically examine the challenges encountered by internal auditors in public sector audit of Cameroon. Specifically, this study seeks to determine the challenges that internal auditors encounter in the public sector in Cameroon and assess the Impact of Resource Constraints on Audit Effectiveness.
Further, this study will focus on evaluating the effect of Training and Professional Development on internal auditors and it also seeks to offer recommendations for addressing the identified challenges and improving the overall effectiveness of internal auditing in the Cameroonian public sector.
The study is carried out in Cameroon.
1.8 Limitations of the study
As with any human endeavour, the researchers faced many minor constraints during the investigation. The main limitation was the lack of extensive literature on the subject, due to the limited availability of data regarding the difficulties faced by internal auditors in conducting public sector audits in Cameroon. Hence, a significant allocation of time and exertion was necessary to ascertain the appropriate materials, books, or information and amass data.
Furthermore, this study is constrained by its small sample size and narrow geographical scope, focussing solely on Cameroon. Therefore, the conclusions of this study cannot be extended to other situations, thus requiring further investigation.
Moreover, the researcher's restrictions were primarily due to financial constraints, as they are a student without any source of income to sustain themselves. The exorbitant transportation charges at the research location posed a significant challenge in covering the expenses for transportation fees.
Furthermore, the researcher faced a time constraint due to the need to conduct this study while still fulfilling the obligations of attending lectures and participating in other educational activities.
1.9 Definition of terms
Internal audit: Internal audit refers to an independent service to evaluate an organization’s internal controls, its corporate practices, processes, and methods. An internal audit helps in securing compliance with the various laws applicable to an organization.
Corporate governance: Corporate governance is the structure of rules, practices, and processes used to direct and manage a company. A company's board of directors is the primary force influencing corporate governance.
Accountability: Accountability is the practice of being held to a certain standard of excellence. It is the idea that an individual is responsible for their actions and, if that individual chooses unfavorable actions, they will face consequences.
This material content is developed to serve as a GUIDE for students to conduct academic research
Delivery: Within 24 hours
Reference(s):
Yes availableMethodology: Yes available
Advertise Here
Not what you were looking for? Perform a search
What's your project topic?
Comment on Facebook:
Related Project Materials
- 1.
INVESTIGATING FORENSIC AUDIT AS A PANACEA FOR PREVENTING CORPORATE FRAUD IN CAMEROON'S PUBLIC SECTOR
CHAPTER ONE INTRODUCTION 1.1 Background of the study The proliferation of financial crimes in these developing economies is concerning and catastrophi...More »
Item Type: Project Material | 54 pages | 806 engagements |
- 2.
INTERNAL AUDIT: EXAMINING ITS ROLE IN ENSURING ETHICAL CONDUCT IN CHENWI-ASSOCIATES, CAMEROON
INTERNAL AUDIT: EXAMINING ITS ROLE IN ENSURING ETHICAL CONDUCT IN CHENWI ASSOCIATES, CAMEROON CHAPTER ONE INTRODUCTION Background of the Study Auditin...More »
Item Type: Project Material | 54 pages | 696 engagements |
- 3.
EXTERNAL AUDIT AND QUALITY OF ACCOUNTING AND FINANCIAL INFORMATION IN THE CAMEROONIAN PUBLIC SECTOR
CHAPTER ONE INTRODUCTION 1.1 Background of the study The main purpose of external audit as a governance mechanism is to enhance the accuracy and trust...More »
Item Type: Project Material | 54 pages | 771 engagements |
- 4.
EXAMINING THE ROLE OF FORENSIC AUDIT IN DETECTING FINANCIAL FRAUDS IN THE CAMEROONIAN PUBLIC SECTOR:...
CHAPTER ONE INTRODUCTION 1.1 Background of the study Forensic auditing and forensic accounting are often used interchangeably. It has been officially ...More »
Item Type: Project Material | 54 pages | 701 engagements |
- 5.
EXAMINING THE IMPACT OF THE AUDIT REPORT ON INVESTMENT IN FINANCIAL INSTITUTIONS IN CAMEROON
CHAPTER ONE INTRODUCTION 1.1 Background of the study According to the Companies Act, all registered companies must present audited accounts to their s...More »
Item Type: Project Material | 54 pages | 676 engagements |