1、IndependentauditriskanalysisandpreventivemeasuresAbstractPreviousstudieshaveutilizedavarietyofapproachestodetermineappropriatecriteriatoevaluatetheeffectivenessoftheinternalauditfunction.Forexample,consideredthedegreeofcompliancewithstandardsasoneofthefactorswhichaffectsinternalauditperformance.A198

2、8researchreportfromtheIIA-UnitedKingdom(IIA-UK,1988)focusedontheperceptionsofbothseniormanagementandexternalauditorsofthevalueoftheinternalauditfunction.Thestudyidentifiedthedifficultyofmeasuringthevalueofservicesprovidedasamajorobstacletosuchanevaluation.Profitability,coststandardsandtheeffectivene

3、ssofresourceutilizationwereidentifiedasmeasuresofthevalueofservices.InitsrecommendationsithighlightedtheneedtoensurethatauditworkcomplieswithSPPIA.IntheUS,Albrechtetal.(1988)studiedtherolesandbenefitsoftheinternalauditfunctionanddevelopedaframeworkforthepurposeofevaluatinginternalauditeffectiveness.

4、Theyfoundthattherewerefourareasthatthedirectorsofinternalauditdepartmentscoulddeveloptoenhanceeffectiveness:anappropriatecorporateenvironment,topmanagementsupport,highqualityinternalauditstaffandhighqualityinternalauditwork.Theauthorsstressedthatmanagementandauditorsshouldrecognizetheinternalauditfu

5、nctionasavalue-addingfunctiontotheorganization.IntheUK,RidleyandD'Silva(1997)identifiedthimportanceofcomplyingwithprofessionalstandardsasthemostimportantcontributortotheinternalauditfunctionaddingvalue.KeywordsAudit,Risk,InternalControl,AuditingCompliancewithSPPIAAnumberofstudieshavefocusedonthe

6、SPPIAstandardconcernedwithindependence.Clarketal.(1981)foundthattheindependenceoftheinternalauditdepartmentandthelevelofauthoritytowhichinternalauditstaffreportwerethetwomostimportantcriteriainfluencingtheobjectivityoftheirwork.Plumlee(1985)focusedonpotentialthreatstointernalauditorobjectivity,parti

7、cularlywhetherparticipationinthedesignofaninternalcontrolsysteminfluencedjudgementsastothequalityandeffectivenessofthatsystem.Plumleefoundthatsuchdesigninvolvementproducedbiasthatcouldultimatelythreatenobjectivity.Therelationshipbetweentheinternalauditfunctionandcompanymanagementmoregenerallyisclear

8、lyanimportantfactorindetermininginternalauditorobjectivity.Harrelletal.(1989)suggestedthatperceptionsoftheviewsanddesiresofmanagementcouldinfluencetheactivitiesandjudgementofinternalauditors.Also,theyfoundthatinternalauditorswhoweremembersoftheIIAwerelesslikelytosuccumbtosuchpressure.Ponemon(1991)ex

9、aminedthequestionofwhetherornotinternalauditorswillreportsensitiveissuesuncoveredduringthecourseoftheirwork.Heconcludedthatthethreefactorsaffectinginternalauditorobjectivityweretheirsocialpositionintheorganization,theirrelationshipwithmanagementandtheexistenceofacommunicationchanneltoreportwrongdoin

10、g.TheindependenceofinternalauditdepartmentsCommentatorsandstandardsettersidentifyindependenceasbeingakeyattributeoftheinternalauditdepartment.Fromthequestionnaireresponses60(77%)oftheinternalauditdepartmentsstatedthattherewasawrittendocumentdefiningthepurpose,authorityandresponsibilityofthedepartmen

11、t.Innearlyallinstanceswheretherewassuchadocumentthetermsofreferenceoftheinternalauditdepartmenthadbeenagreedbyseniormanagement(93%),thedocumentidentifiedtheroleoftheinternalauditdepartmentintheorganization,anditsrightsofaccesstoindividuals,recordsandassets(97%),andthedocumentsetoutthescopeofinternal

12、auditing(90%).RespondentswereaskedtoassesstheextenttowhichtherelevantdocumentwasconsistentwiththespecificrequirementsofSPPIA.Inthosedepartmentswheresuchadocumentexisted27(45%)claimedfullcompliancewithSPPIA,23(38%)consideredtheirdocumenttobepartiallyconsistentwithSPPIA.Inmorethanone-thirdofthedepartm

13、entssurveyedeithernosuchdocumentexisted(n=18,23%)ortherespondentwasnotawarewhetherornotthedocumentcompliedwithSPPIA(n=10,13%).SPPIAsuggeststhatindependenceisenhancedwhentheorganization'sboardofdirectorsconcurswiththeappointmentorremovalofthedirectoroftheinternalauditdepartment,andthatthedirector

14、oftheinternalauditdepartmentisresponsibletoanindividualofsuitablesenioritywithintheorganization.Itisnoticeablethatin47companies(60%)theirresponsibilitieswithregardtoappointment,removalandthereceiptofreportslaywithnon-seniormanagement,normallyageneralmanager.SPPIArecommendsthatthedirectoroftheinterna

15、lauditdepartmentshouldhavedirectcommunicationwiththeboardofdirectorstoensurethatthedepartmentisindependent,andprovidesameansforthedirectorofinternalauditingandtheboardofdirectorstokeepeachotherinformedonissuesofmutualinterest.Theinterviewswithdirectorsofinternalauditdepartmentsshowedthatdepartmentst

16、endedtoreporttogeneralmanagersratherthantheboardofdirectors.Furtherevidenceofthelackofaccesstotheboardofdirectorswasprovidedbythequestionnaireresponsesshowingthatinalmosthalfthecompanies,membersoftheinternalauditdepartmenthaveneverattendedboardmeetingsandinonlytwocompaniesdidattendancetakeplaceregul

17、arly.Unrestrictedaccesstodocumentationandunfetteredpowersofenquiryareimportantaspectsoftheindependenceandeffectivenessofinternalaudit.Thequestionnaireresponsesrevealedthat34(44%)internalauditdirectorsconsideredthattheydidnothavefullaccesstoallnecessaryinformation.Furthermore,asignificantminority(n=1

18、1,14%)didnotbelievetheywerefree,inallinstances,toreportfaults,frauds,wrongdoingormistakes.Aslightlyhighernumber(n=17,22%)consideredthattheinternalauditfunctiondidnotalwaysreceiveconsistentsupportfromseniormanagement.SPPIAidentifiesthatinvolvementinthedesign,installationandoperatingofsystemsislikelyt

19、oimpairinternalauditorobjectivity.Respondentswereaskedhowoftenmanagementrequestedtheassistanceoftheinternalauditdepartmentintheperformanceofnon-auditduties.In37internalauditdepartments(47%)surveyedsuchrequestsweremadesometimes,oftenoralways,andonly27(35%)departmentsneverparticipatedinthesenon-audita

20、ctivities.Theinterviewsrevealedthatinsomeorganizationsinternalauditstaffwasusedregularlytocoverforstaffshortagesinotherdepartments.WoodworthandSaid(1996)soughttoascertaintheviewsofinternalauditorsinSaudiArabiaastowhetherthereweredifferencesinthereactionofauditeestospecificinternalauditsituationsacco

21、rdingtothenationalityoftheauditee.Basedon34questionnaireresponsesfrommembersoftheIIADhahranchapter,theyfoundtherewerenosignificantdifferencesbetweenthedifferentnationalities.Theinternalauditorsdidnotmodifytheirauditconductaccordingtothenationalityoftheauditeeandculturaldimensionsdidnothaveasignifica

22、ntimpactontheresultsoftheaudit.GiventheimportanceofcomplyingwithSPPIA,theprofessionalandacademicliteratureemphasizestheimportanceoftherelationshipbetweentheinternalauditdepartmentandtherestoftheorganizationindeterminingthesuccessorotherwiseofinternalauditdepartments(Mints,1972;Flesher,1996;Ridley&am

23、p;Chambers,1998andMoeller&Witt,1999).Thisliteraturefocusesontheneedforco-operationandteamworkbetweentheauditorandauditeeifinternalauditingistobeeffective.Bethea(1992)suggeststhattheneedforgoodhumanrelationsskillsisimportantbecauseinternalauditingcreatesnegativeperceptionsandnegativeattitudes.The

24、seissuesareparticularlyimportantinamulticulturalbusinessenvironmentsuchasSaudiArabiawheretherearesignificantdifferencesintheculturalandeducationalbackgroundoftheauditorsandauditeesWoodworthandSaid(1996).ReasonsfornothavinganinternalauditdepartmentOfthe92companyinterviewsexaminingthereasonswhycompani

25、esdonothaveaninternalauditfunction,themostfrequentresponsefrom52companies(57%)wasthatrelianceontheexternalauditorenabledthecompanytoobtainthebenefitsthatmightbeobtainedfrominternalaudit.Typically,intervieweesarguedthattheexternalauditorisbetter,moreefficientandsavesmoney.Interviewswiththeexternalaud

26、itorsrevealedthatclientcompaniescouldnotdistinguishclearlybetweentheworkandrolesofinternalandexternalaudit.Forexample,oneexternalauditorsaid,thereisamisperceptionofwhattheexternalauditordoes,theythinktheexternalauditordoeseverythingforthecompanyandmustdiscoveranyproblem.Havingsaidthis,oneexternalaud

27、itordoubtedthataninternalauditfunctionwouldaddvalueinallcircumstances.Whenreferringtotheinternalcontrolsystemhestated,aslongastheyarehappywiththefinaloutput,Ithinktheinternalauditfunctionwillnotaddvalue.Externalauditingeventuallywillhighlightanysignificantinternalcontrolweakness.Thesecondmostfrequen

28、treasonmentionedbyinterviewees(23firms,25%)fornotoperatinganinternalauditdepartmentwasthecost/benefittrade-off.Specifically,17firmsconsideredthatthesmallsizeofthecompanyandthelimitednatureofitsactivitiesmeantthatitwouldnotbeefficientforthemtohaveaninternalauditdepartment.Theexternalauditorsinterview

29、edwereoftheopinionthatthereadilyidentifiablecostsascomparedwiththemoredifficulttomeasurebenefitswasafactorcontributingtothisdecision.Anumberofotherreasonsweregivenbyintervieweesfornothavinganinternalauditdepartment.Asaconsequenceofthehighcostsofconductinginternalauditactivities,14firmsusedemployeesw

30、howerenotwithinaseparateinternalauditdepartmenttocarryoutinternalauditduties.Eightcompaniesdidnotthinktherewasaneedforinternalauditbecausetheybelievedtheirinternalcontrolsystemsweresufficienttoobviatetheneedforinternalaudit.Fivecompaniesdidnotthinkthatinternalauditwasanimportantactivityandthreefeltt

31、hattheirtypeofthebusinessdidnotrequireinternalaudit.Threerespondentsmentionedthattheydidnotoperateaninternalauditdepartmentbecauseprofessionalpeoplecouldnotbefoundtorunthedepartment,andsixcompaniesdidnotprovideareasonfornothavinganinternalauditdepartment.In10companiesaninternalauditdInternalauditris

32、ksincludetheinherentrisksandcontrolrisks.Theinherentrisksistheassumptionthathasnothingtodowithinternalaccountingcontrols,theunitsbeingauditedfinancialstatementsandtheoverallbalanceoftheaccountofabusinessorthepossibilityofamajorerror,thatiscausedbytheaudituniteconomiccharacteristicsofbusinessandaccou

33、ntingworkitselftheformationofthelackofauditrisk.Someenterprisessuchasthelackofdueattentiontotheaccountingsystem,accountsystemcomplex,reducingclarityofaccountinginformation,reports,useofdifficulty,cost,costoflackofcostaccountingconcepts.Controlriskreferstoasaresultofinadequateinternalcontrolsystemper

34、fect,weakinternalcontrolbehavior,nottimelydetectionandcorrectionofabusinessaccountoramajorerrorintheformationofauditrisk.Sometimes,eveniftheauditorsauditedunitstoconfirmtheinternalcontrolsystemisunreasonableoroutofcontrolinkeyareas,theamendmentsproposedbytheauditcanreallysuitableforoperatingactiviti

35、es,butwillalsocreateariskamendment.First,theinternalauditriskcauses1. TheindependenceoftheinternalauditagencyenoughInternalauditbodyissetupunitsininstitutions,intheunitundertheleadershipoftheresponsiblepersonstoworkasaunitofservice.Therefore,theindependenceofinternalauditassocialaudit,theauditproces

36、s,inevitablyaffectedtheinterestsoftheunitconstraints.OIAstafffacedwiththeunitleadershipwasamongtheleadershipandtheleadershipoftherelationship,aswellaswithvarioussections,therelationshipbetweencolleagues,peoplearenotinvolvedintheleadershipofmycolleaguesis,non-directlyrelatedtoalsoindirectlyrelatedtot

37、heauditprocessandconclusionswillinevitablyinvolvetheinterestsofspecificindividuals,whichinevitablyaffectedtheauditprocessforallcategoriesofpersonnelinterference.2. Internalauditoperationspersonnelill-equippedThequalityofauditorsistodeterminethesizeofauditriskfactors.Thequalityoftheauditincludingthos

38、eengagedintheauditofthepoliciesandregulationsneedtolevelofexpertise,experience,skills,auditprofessionalethicsandworkresponsibilities.Auditexperience,theauditstaffshouldhaveanimportantskill,theneedfortheauditpracticeoftheaccumulationofexperience.China'sinternalauditstaff,manypeopleonlyfamiliarwit

39、hthefinancialandaccountingoperations,someauditorsdonotunderstandthebusinessactivitiesofthisunitandinternalcontrols,auditlimitedexperience.Inaddition,theinternalauditstaffresponsibilitiesandprofessionalethicsistheimpactofauditriskfactors.BecauseofChina'sinternalguidelinesfortheworkofnormsandethic

40、alstandardsstillsomegaps,andmanyinternalorgansandpersonnellackofoccupationalnormsboundandguidance.Inshort,China'soverallqualityofthelowOIAstaffanddirectlyaffectedtheinternalauditworkcarriedoutbythedepthandbreadth.Facedwiththecomplexityoftoday'sOIAobjectandcontentdevebpment,internalauditstaff

41、andpowerfulsingleforcebook,whichwilldirectlyleadtotheselectionofauditrisk.3. InternalauditofthescientificmethodisnotstrongChina'ssystemofinternalauditisthebasisoftheaudit,withtheinternaloperationandmanagementofenvironmentalcomplicatedmodelsarenotsuitedtocarryoutthisauditinternalmanagementauditof

42、theneeds,becauseitisoverlydependentontheinternalmanagementofenterprisescontrolledtest,initselfahugepotentialtheriskofinternalauditgenerallyusestatisticalsamplingmethods,asaresultofthesampleitselfisbasedonasampleauditoftheresultsofthereviewcanbeinferredfromthegeneralcharacteristics,therefore,betweent

43、hesamplesandtheoverallformisboundtoacertaindegreeoferror,theformationofauditsamplingrisk.Withthedegreeofinformationtechnologyimproved,theauditedaccountinginformationwillbemoreandmoreerrorsandfalseaccountinginformationdopedthem,andfailedtoinvestigatethepossibilityofalsoincreasing.Althoughthesurveysam

44、pleisbuiltonthesolidfoundationofmathematicaltheory,butitsexistenceistoallowacertaindegreeofauditrisk.Similarly,alargenumberofanalyticalreviewwillalsohaveassociatedrisks,sothatthecompositionofthecontentsofauditriskismorecomplicated.4. InternalAuditmanagementsystemsInternalauditmanagementsystemconstru

45、ctionandimplementationofinternalauditistheprerequisiteandfoundation.Soundandeffectiveinternalmanagementsystemtodetectandcontrolofenterpriseeconomicactivityoccurringinavarietyoferrorsandfraud.Toensurethequalityofinternalaudit,internalauditorganizationsshouldestablishaperfectqualitycontrolsystem,howev

46、er,someauditinstitutionsstilllackofpriorauditplan,amatterofauditingproceduresandauditreviewofthereportingperiod;theauditworkingpapersincomplete,generallyonlyRecordsofauditmatters,nottherecordingofauditstaffthatthecorrectauditmatters,makingtheauditreview,auditqualitycontrolnoway;tocoordinatetherelati

47、onshipbetweentheauditreportasastartingpointtocertainperformance-based,qualitativeambiguousissues.Morethantheexistenceofthestatusquo,makingtheinternalauditqualityassurancebecomeanemptytalk,letalonewardoffrisks.Second,reducetheriskofinternalauditways1. StrengthentheinternalauditofthelegalsystemImprove

48、andperfectthelegalsystemfortheauditofinternalauditisthebasisofriskcontrolmeasures.Auditnorms,theauditstaffcodeofconductandguidelines,notonlytocontrolandreduceauditrisk,butalsotomeasureauditorsliabilitystandards.China'sinternalauditlatestartcomparedwithWesterncountriesintherelevantsystem-building

49、therearemanyimperfections.Inordertoadapttothecontinuousdevelopmentofmoderninternalauditrequirements,itisnecessarytostrengthentheauditworkoflegalizationandstandardizationconstructiontominimizetheauditworkofblindnessandrandomness.2. ToensuretheindependenceofinternalauditTheindependenceoftheinternalauditorcanmakeafairandimpartialprofessionaljudgment,whichisappropriatetocarryo