Internal Audit And Inspection Director
Internal Auditing is defined by IIA as “an independent and objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing in a systematic and disciplined approach to evaluate the effectiveness of risk management, control and governance process.
Policy and strategy, guidelines ..
1. PROCLAMATION NO. 648/2009. A PROCLAMATION TO PROVIDE FOR THE FINACIAL ADMINSTRATION OF THE FEDERAL GOVERNMENT OF ETHIOPIA
2. PROCLAMATION NO. 649/2009. THE ETHIOPIAN FEDERAL GOVERNMENT PROCUREMENT AND PROPERTY ADMINISTRATION PROCLAMATION
3. Internal audit Directive No.7/2003 and The others Several kinds of Financials Directives has been prepared by the Ministry of Finance and Economic Development.
4. The Internal Audit Manual has been prepared by the Ministry of Finance and Economic Development.
Scope and concept of post audit. The scope of post audit may be grouped into two general categories:
• Financial accountability and legality – the verification of accounting records and review of internal controls;
• Value for money – the examination of the efficiency, effectiveness and economy of operations which includes the broad examination of the extent to which objectives are accomplished.
These categories tend to overlap, but they are useful in demonstrating the changing concepts of auditing. The basic limitation of the post audit is that it concentrates on detection of irregularities rather than preventing their occurrence as in the case of pre-audit.
1. The same regulation defines internal audit as a systematic, independent appraisal of all operations including administrative activities for the purpose of advising on management practices and controls. The responsibilities of internal auditors are to:
• Conduct internal audits at specific time intervals to ascertain that public money and property are used for intended purposes;
• Develop audit programs and audit procedures which are specifically designed to meet the requirements of the public body;
• Develop a monitoring system which will at regular intervals test and report to management on the public body’s compliance with applicable internal and external directives and procedures;
• Advise management at regular intervals on its internal practices and controls and on whether they are efficient, effective and economical;
• Submit audit reports to the head of the public body.
2. The focus of the above provisions is mostly on financial and compliance audits. This focus is reflected in this audit manual.
3. Internal audit units are established in public bodies, for the purpose of carrying out internal audits. In large public bodies there will be a Head of internal audit and under that person, several members of staff (senior and junior internal auditors). Smaller public bodies have smaller internal audit units. The responsibility of the Head of internal audit is to:
Respect the Internal Audit Standards of Government of Ethiopia including the Code of Ethics;
• Supervise and lead the internal audit unit;
• Monitor, counsel and advise internal audit staff;
• Consult with the management of the public body on internal audit and internal control;
• Advise on and approve audit topics proposed by internal auditors;
• Propose internal audit topics and summary programs to management;
• Consult with internal auditors on audit programs, fieldwork and draft audit findings;
• Advise on and approve the audit reports of internal auditors and ensure that for each audit carried out there is a final audit report;
• Provide quality control on all aspects of internal auditing;
• Report audit findings to management and monitor management’s follow up of findings;
• Respond to the enquiries and requests for information of external auditors and send copy of responses given to management.
4. The duties of internal auditors are to:
• Respect the Internal Audit Standards of Government of Ethiopia including the Code of Ethics;
• Consult with the head of Internal Audit unit and respect the leadership on all aspects of auditing;
• Propose audit topics and draft audit programs;
• Carry out all aspects of auditing in accordance with the most appropriate standards and guidelines (including those appearing in this manual);
• Ensure that the Head of internal audit conducts all final audit reports and official dealings with management.
5. For internal audit to be successful it must fully respond to management needs. Internal auditors are therefore expected to:
• Make efforts to understand management’s needs;
• Work in a spirit of cooperation rather than confrontation;
• Choose topics leading to audit findings which will be relevant and significant and which will help management to improve the relevance and integrity of its controls;
• Report audit findings clearly and present them in a way that leads naturally to the necessary remedial actions;
• Explain clearly what is to be done in response to adverse audit findings and how it might be done, and ensuring that auditors are not directly involved in taking the necessary remedial actions which are the sole responsibility of management;
• Explain audit findings and recommendations orally as well as in writing to enable management to “own” the findings.
6.At the same time Internal auditors have to maintain a degree of independence by:
• Not accepting assignments which would result in carrying out audits of procedures and systems that they themselves have designed or maintained;
• Declaring conflicts of interest (or declining to accept assignments) where they are not fully independent of the activities which they audit;
• Presenting objective and reliable findings to management;
• Responding objective and reliable findings to management;
• Responding to external auditors when they request access to findings and working papers;
• Management of the public body has to be informed when formal communications occur; the Head of internal audit should make such communication.