Internal control quality also has related with firms outside factors, such as higher quality of auditing, more auditor resignations, and more financial reports restatements. The corporate governance can also influence the internal control quality as well. (Tian et al., 2010; Li,
It is costly and takes time for a company to investigate a fraud case. Sometimes when fraud cases are prosecuted, the sentences they receive is very light compared to what they have done to the company. This discourages companies to report fraud. If the company doesn’t report a fraud on the other hand would have many problems. First of which, those who have acted illegally may think that they have not received any consequences to their actions and might repeat their actions in another workplace.
1. Internal control of a corporation must be improved to avoid the similar crisis to occur in the future. Failure to strengthen the internal control system will lead to collapse of the corporation. This is because a weak internal control will accumulate problem from the business operation and thus increase operation risk as a whole. This is a very common problem in the banking industry.
In most of the case, if insider threat activity is being recognized and reported to management level, the insider threat can be easily interrupted or vanish. One of the reason for the insider threat activity is that no one notices what they doing or done and no or weak information security exist, if the system have a strong information security, no one will dare to commit this. Organization should practice evaluation when hiring new staff of doctor, and monitoring them when individual works is carry out, this will make e-health system more safer and reduce insider
are core IA roles in ERM, legitimate IA roles with safeguards and roles IA should not undertake. In core IA Roles gives assurance on risk management process and risk are correctly evaluated, evaluating risk management process, reporting risk and reviewing management key risks. Legitimate internal audit roles with protections by developing risk management strategy for board to approve. By Maintaining and developing the Risk management framework, facilitating identify cation and evaluation of risks and thirdly, roles internal audit should not undertake through setting up risk appetite, imposing risk management procedures, managing assurance on risks, taking decision on risk responses, accountability for risk
Internal auditor encountered opportunities and pressure from the changing of corporate governance procedure. The new risk management focus provides the opportunity to occupy the organizational vacuum that was significantly improved by Turnbull. However, it has caused threat on the systems and processes rate of change which is unreasonable for traditional, compliance based internal audit role. However, internal auditor role is significant in risk management process due to their functions that spread throughout organizational boundaries. However, there is still difficulties eventhough the new interest in the internal audit potential that contribute in corporate objectives.
organization. This way the organization is in a better position to identify and address various factors and issues affecting the operations of the organization. Besides, internal auditors consult with their peers in other organization and this helps in recommendations that facilitate resolutions of issues affecting the operations of the organization. Necessary skills The primary role of internal auditors is to evaluate various organizational processes and identify weaknesses and any loop holes that needs to be sealed. Various business experts have come to an agreement that for a person to be a competent auditor, they need to possess some traits and acquire some specific skills.
Institute of Internal Auditing Standards along with characteristics of the internal audit team Compliance with standards Compliance with Institute of Internal Auditing Standards has great influence on the effectiveness of internal auditing, therefore when complied with these standards the effectiveness of internal audit is expected to increase (Little, et al., N/A). All internal auditors are accountable for complying with the standards related to individual objectivity, proficiency, and due professional care. The Chief audit executives are accountable for the internal audit activity’s overall compliance with the standards (The Institute of Internal Auditors (IIA), 2017). Compliance with standards and an effective internal audit activity ensures
• Unauthorized access,loss or damage of assets and records should be kept secure at all times,For ongoing operations the security of assets and records is essential,accuracy of information, privacy of personal information included in some records. Distribution of Duties One particular person has the sole control of transaction, no one should be able to initiate,record or authorize a transaction. The level of risk associated with a transaction should come into play when determining the best method for separating duties.Duties may be separated by departments or by individual within a department .Assess the potential for mistakes or fake. If the separation of duties is not sufficient to eliminate or adequately reduce the risk of discovering errors, the level of review of management should be increased over the
Prior to the introduction of audit committees, it was infrequent for internal auditors to report to more than one board member, and certainly not to a director without management responsibilities. The AC provides an environment in which a subset of directors can consider the scope and results of internal audit work and clarify matters for consideration by the main board. This ability should give four benefits; first, it will elevate the status of the internal audit function; secondly, it may encourage internal auditors to improve the quality of their work; thirdly, it will pressure management into acting on the recommendations made; and, lastly, it will lift their esteem among the company’s managers who will be aware that the internal auditors have this line of communication. Miller (1988) advocates that the ‘best liability insurance coverage a corporate board can have is an effective internal audit department’ and contends that the AC is critical in determining the effectiveness of the internal audit department as it ensures the independence of the function and reviews the scope, results and quality of its