Professional Documents
Culture Documents
1. INTRODUCTION
1.1. Background of the study
Auditing in ancient time is land owner assign some individual to control or manage in assets
and assigned percent some evidence orally causing report in ancient time) to the owner of the
land. This is auditing in ancient time, but now auditing is systematic process of obliging and
elevating evidence about information to determined establish criteria or is a professional and
experienced person can gather economic evidence and investigate how they prepared,
comparing with the previous plan and finally on the variation from the plan and report the
result presented to the client of audit information. The current day audit is more widely in
scope and levels of responsibility than the ancient year. The current day internal audit
efficiency and effectiveness, improving performance by showing different problems live
embattlement, completion and fraud. It is advisable for the hospital to have internal audit
control. The objective of internal audit is to assess the management of the hospital in the
effective discharging of the respective responsibility.
Internal audit is very significant to the hospital and it has following importance reduce risk of
fraud, improve efficiency and effectiveness, assessing control over the production of asset
and management ability. Therefore, the hospital mass follow the audit procedure for
obtaining the above benefit. So, this research is live a direction internal audit practice in
Mizan-Aman Hospital in Aman town.
1.2.
Internal audit is one key areas of hospital in hospitals, but the following problems in MizanAman hospital in Aman town. There is lack of audit trading and there are in efferent audit
performance between auditors that leads to reduce the efficient and effectiveness of the hospital,
lack of experience sharing with the other hospital, auditor does not share experience with the
other auditor has good performance by doing these the auditor of the hospital over come
mistuned standing, mistakes and increase levels of performance level of the hospital, in other
problem associated with internal audit drafted government rules, principles, standards and
polices on internal audit those rules and principles, standards are carelessness in reading the audit
manual, and also lack of segregation of duties among auditor with audit type (compliance,
financial and performance) which is performed only audit staff these results no separation of
power (duty) and also cash collection among auditors.
Mizan-aman hospital is the following value added by examining the above problem. Improve to
the hospital efficiency and effectiveness, improving the hospital financial report and obtain back
ground information about purchase and stores. Determining resources necessarily to perform the
audit financial resource, material resources, improving performance by solving different problem
live embattlement corruption and fraud.
1.3.
The general objective of this study is to assess internal audit practice in mizan-aman hospital in
Aman town.
statement
To indentify the problem associated with employee training and explain internal audit.
To identify the role of internal audit in areas monitoring the effectiveness of internal
control
1.4.
The reason donning this research is to indentifying that exist in mizan-aman hospital internal
audit activity. After indentifying the problems the hospital has proper authorization of translation
and activities, physical control over asset and records, adequate separation of duties and
checking the departmental audit level performance. The other, importance of this study may be
used for other hospital as are fernce to search what problems they have and also used for other
potential research as a source material and it is significant for as to gain knowledge and
experience on the research area.
1.5.
Basically the study is concerned with internal auditing practice in Mizan-Aman hospital. The
research is emphasized on now internal auditing principle is applicable in practice. In addition to
the study focused on internal auditing system and application of the system in general and its
application in particular mizan-aman hospital.
1.6.
There are some problems that limit this research study among there the following are some
limitation.
-
Lack of information
Lack of resource, like intermit access, reference, etc
Lack of finance and enough time
Lack of experience
Lack of voluntary person to fill the questionnaires
Is the objectives of auditor to assist the No
internal control system of they hospital?
Yes
No
Total
respondent
4
3
7
of % of respondent
57%
43%
100%
From the above table indicates 43% of the respondent is the objective of auditor is not assist
internal control and 57% of the respondent is says that the objective of auditor is assist the
internal control.
CHAPTER-TWO
2. Literature review
Audit gas with the planning and designing, accumulates evidence test and controls
transaction, use to perform procedures and test of detailed of balance final complete the audit
and is issue an audit report. Describe the financial statement cycles approach to segmenting
the audit and use this approach as basics for further study.
Describe how the auditor develops general and specific audit objective from management
assertions.
2.2.
2.3.
Continuous audit: a situation where the audit work is carried on almost of throughout
F. Accounting principles:- a member shall not express opinion or state affirmatively that the
financial statement or other financial data of an entity represent in conformity with
GAAP or states that he/she is not aware of a material modification that should be made to
such statements or data in order this to be in conformity with GAAP. If such stamtenst
(data) contain any departure from an accounting principle.
(Alin A. Arrens)
To know the employees of the organizations has separate of duty segregation power and has
good quality proficiencies and experience. Discussion of the audit plan and making stratify for
the auditor program.
Internal auditor is accountability of compliance with standard (fund and economic ministry,
1998, 3-17).
Internal audit shall develop on over al audit strategy taking account integralities of available
resource knowledge of the university the work of external auditors and internal assurance
provider the university risk management process and internal auditor on assumption of risk.
Based on the over all audit strategy internal audit will undertake medium term and annual
programs of work to provide the required assurance. This will be drawn up by internal audit in
consolation with the president and the approval of the audit committee.
(http://www.dcu.ie/internslaudit/duties.shtml)
Develop extent professional oral and written communication in order to establish working
relationship with client personal and communicate engagement result.
Exercise professional segment on engagement and assist in development of proactive solution
and recommendation (internet).
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http://en.wikipedia.org/wiki/internalaudit
2.8. Advantage of internal audit
It keep safeguard of asset
It make financial information and documentation free from errors
It is very important to the external auditors by minimizing csot and time
It is very important for the organization by achieving its overall objectives
Effective internal control reduce deviation amount of the audit risk
Internal audit is useful to know the amount of persons needed in the organizations
Generally internal audit is very important to assessing the overall audit plan, program and
how it is effective
(Finance and economic minister, 1998. 58-61).
1. Establish and communicate the scope and objective for the audit to appropriate
management
2. Develop an understanding of the business area under review. This includes objectives,
measurements, and key transaction types. This involves review of documents and
interviews. Flowcharts and narrative may be created if necessary
3. Describe the key risks facing the business activities within the scope of the audit
4. Identify control procedures used to ensure each key risk and transaction type is properly
controlled and monitored
5. Develop and execute a risk-based sampling and testing approach to determine whether
the most important controls are operating as intended
6. Report problems identified and negotiate action plans with management to address the
problems
7. Follow-up on reported finings at appropriate intervals. Internal audit departments
maintain a follow-up database for this purpose.
Audit assignment length varies based on the complexity of the activity being audited and internal
audit resources available. Many of the above steps are integrative and may not all occur in the
sequence indicated.
By analyzing and recommending business improvements in critical areas, auditors help the
organization meet its objectives. In addition to assessing business processes, specialists called
information technology (IT) auditor review information technology controls.
IMF\s internal audit is overseen by the external audit committee (three members, all external and
with the accounting and financial expertise required); the OSCEs office of internal oversight
reports to the secretariat general and the permanent council.
http://en.wikipidia.org/wiki/intenral...audit
Management is responsible for internal control. Managers establish policies and policies and
process to help the organization achieve specific objectives in each of these categories. Internal
auditors perform audits to evaluate and privde recommendations for improvement.
In the united states, internal auditors may assist management with compliance with the SarbanesOxley act (SOX).
Http://.wikipidia.org/wiki/internal...audit
The preliminary plan of engagements is documented and prioritized. Audit resources and
expertise are the considered and a final plan is presented to senior management and the audit
committee. The presentations very based on the needs of the stakeholders and may include the
following:
Summary of key goals, risks and corresponding major audits, to illustrate alignment:
Analyses of audit effort along a variety of dimensions (e.g., by business segment,
COSO objective category, IT, Sarbanes-Oxley, vs. prior year, etc.) along with
resources;
Required co-sourcing effort, typically where outside expertise is required or during
peak periods;
Coordination with other risk functions, such as legal, compliance or insurance, to
may relate to effectiveness (i.e., whether goals were met or compliance with standards was
achieved) or efficiency (i.e., whether the outputs were generated with minimum inputs).
Audit findings and recommendation also relate to particular assertions about transactions, such
as whether the transactions were valid or authorized, completely processed, accurately valued,
processed in the correct time period, and properly disclosed in financial or operational reporting
among other eleemtns.
http://en.wikipidia.org/wiki/internal..audit
The internal audit establish risk base plane to date remain the consistence with the
organization goal.
Coordination the chief audit executive should share information and coordination
activities with other internal and external provides of relevant assurance and
consulting services to issuer proper coverage and minimize duplication of efforts.
1. audit planning phases once the auditor is appointed and issue and engagement letter to the
management, the next stage is to plan the audit. Planning is very important to the following
reason
it enable the auditor to get sufficient and competent evidence this will reduce the
opinion, when financial statement contain immaterial misstatement. Materiality determines the
scope of audit procedure. Factors affecting materiality are size of the items and the nature of he
item and other circumstance
Audit risk:- is the possibility that auditors may fail to appropriate modify their opinion on
financial statement that are materially misstated. Audit risks is the chance that a material
misstated exists in financial statement and auditors do not detect the misstatement with their
audit procedure audit risk has there components:
a.
Inherent risk
Control risk
Detection risk
Inherent risk_ is the measure of auditors assessment of likelihood that error
(misstatement) exceeding a tolerable amount exist in the client before considering
CHAPTER-THREE
3. Research design and methodology
3.1. Methodology of the study
The method used in achieving the objective of this study is to called relevant information from
various sources. There for, the researcher used both primarily and secondary data sources. The
researcher used primarily data by using of questionnaire, inquiry and interview with the
concerned audit staff, managers of the hospital who had possession financial area. The secondary
data sources used was books, and different unpopulated documents.
3.2.
Important information for this research is collected from internal auditor management of the
hospital and finance, departments by suing well and standardized questionnaires and inquiry. In
this research used both open ended and close ended questionnaires.
Close ended questions include a possible answer which contain ticks among choices and most
respondent can easily and answer the valued information.
Open ended questions are accrued to respondent to answer in heir own words (based on
subjective filling), it containing black space and explanation space can be filled by respondent.
3.3.
Sampling technique
This research focused to collect information from the office of finance management audit. So,
the number of population is very small in number and not needed sampling rather than used
census methods of collection information are appropriate and it is very difficult to analysis, these
implies the work of this research was more of qualitative research.
CHAPTER-FOUR
4. Data presentation and analysis
This parts of the research deals with the presentation and analysis of data of athered through
interviews to the management and the auditors.
4.1.
To achieve the objectives of the study the researcher used questionnaires for gathering the
necessarily data from the respondent. After distributing the questionnaires the following results
are obtained.
Table 4.2.1. sex competition of the respondent
Sex
Male
Female
Total
As indicated the above
are female
Table 4.2.2. martial status
Martial status
No of respondent % of respondent
Divorce
Single
3
43%
Married
4
57%
Total
7
100%
As have see from the above table the martial status of the respondent are 43% sigee and 57% the
married respondent
No of respondent
5
% of respondent
71%
Degree
Other
Total
1
1
7
14.5%
14.5%
100%
From the above table among the respondent 75% of respondent are diploma. 14.5% degree,
14.5% other.
Table 4.3.1. age composition of respondent
age
No of respondent
Below 30
3
31-45
3
Above 45
1
Total
7
From the above table the age compensation of the
% of respondent
43%
43%
14%
100%
respondent with percentage of 43% below
4.2.
% of respondent
hospital?
Yes
7
100%
No
Total
7
100%
As indicates the above table 100% of the respondent says that agree auditor sis important
for hospital.
No of respondent
% of respondent
Yes
No
7%
100%
Total
7
100%
From the above table 100% of the respondent says, that the existing auditor is not enough
to hospital.
% of respondent
% of respondent
of % of respondent
of % of respondent
qualified?
respondent
Yes
No
7
100%
Total
7
100%
All respondent do not believe the existing auditor is not qualified (100%)
Could the audit report comply with standard?
No
Yes
No
Total
respondent
1
6
7
of % of respondent
14%
86%
100%
The respondent say the audit report comply with standards 14% and 86% is the audit report do
not comply with standards
4.3.
Interview presentation
Data gathered through interview from the management and auditors of the Felege Hiwot referral
hospital in Bahir Dar town. The interviewee are one management and two auditor.
Does the auditor have structural work relation to the management and head?
The management state that auditor has no structural work relationship with the
management and the head. The only relationship that the auditor has to the management
and head is meetings and panel discussions, of the organization but not related to the
work interactions.
The management respond that the board of audit of the organization has no effective control and
cannot effectively utilize his powers in proper way (carelessness). So, they are weakly organized
materially and morally by the management.
In the organization, there is only one audit staff and no segregation among the
auditor. How they effective in controlling and achieving their goal?
As the operation in the organization is very wide and complex that cant be controlled by
only one staff auditor. In this case achieving the goal and controlling is very difficult.
How audit play major roles in protection of the employment fraud over asset? Most
of the time employment fraud over asset cannot be occurred, but the major role ro
procedures are comparing the list of asset with the physical existing one or on hand
balance assets.
Did the auditors of the organization sharing experience with other experienced
organization auditors? Most of the time they could not share experience but are
These are the problems of the organization head or board of audit big problems. Due to these, the
organization audit type is only financial audit but there are no other types of audit.
Could the auditor use the document assessing methods such as performance,
reconciliation, tracing and vouching?
The organization auditor is lack of experience and auditor knowledge to those document
assessing methods. Among those reconciliation and tracing is the only procedures used by the
organization auditors.
How many times could the auditors prepare audit report per year?
The auditor prepare quarterly report one copes to the management and one copes to the finance
and economy minister of the organization. In their report they include the deviations and
misstatements amount facing them in the audit of 3 months period. Their report is not formal but
rather subjective to the auditors. The finance and economic minister of the organization ha sthe
responsibility to control this error and make it to pay.
The big problem is employment collusion this is caused by each department heads carelessness
and the heads cannot support the work of audit because the auditor find out his fault actions.
We mad interview with two auditors of the FHRH of Bahir dar town and the following data is
our presentation of interview from auditors.
Could the management of the organization give permission to take audit training to
auditors?
The organization manager is also weak in internal control and lack of knowledges to analysis the
quality levels of the auditors. Because of these problems management cant provide permission
to the auditors to increase the work efficiency among them.
The management is also weak to know the quality and ethical standards of auditors. Partially the
auditor is ethically standard and independent and experienced. Among the auditors one auditors
is come from management department and the work and position of work cant match to each
other.
How do you audit the financial audit and follow-up the improvement as per the
given common needed?
The financial audit procedures are tracing the voucher amount to the deposit slip accounts. And
also attaching the documents of the remittance advices, bill of lading with each available
document. The financial audit is the only audit in FHRH.
The audit report does not compliance with standards as a result of lack of auditors knowledge
and trainings and also managements weak by providing them compliance with standard their
reports.
Data analysis
Because of the population member is very small used census method of data gathering and
analysis is based on subjective judgments. For our research topic using qualitative data analysis
technique is appropriate
Lack of structural work relation between the auditor and the management
The management of the hospitals controlling is not affective in materially,
vouching etc.
There is no audit of performance, compliance and other type audit but the only audit
is financial audit.
There is lack of audit training
The audit procedure of the hospital cannot follow the GAAP and their report cannot
follow GAAS.
The major problems related to internal audit control in EHRH is lack of segregation
fod duty, shortage of audit staff and there is not audit type of compliance and
performance.
There is shortage of auditor, when comparing the organization activity.
The auditor lacks knowledge and work on with out their professions area.
Lack of information forwarding to the auditors.
Lack of immediate action taken by management for audit opinion to implement it.
Lack of consideration the advantage of internal audit in FHRH
Lack of improvement achieve on the area of fianc and other operational matters due
to audit performance.
CHAPTER FIVE
5. CONCLUSION AND RECOMMENDATION
5.1. CONCLUSION
The objective of this research was to assess the problem of internal audit practice. Based on the
analysis and finding of the previous chapter we colluded:
Accordingly the finding of this research shows the main problems related to internal
audit control is shortage of skilled profession man powers, lack of audit training
among the existing audit, no segregation among the auditor (segregation fo duty) and
performance and special audit. The only audit performed is financial audit.
The auditor of the hospital cant follow the techniques of data gathering by
confirmation, performance and reconciliation etc.
The audit procedures, audit report and audit work of the organization cannot be
compliance with the GAAS, rules and regulations of audit manuals. But based on the
collection.
Lack of implanting the audit program but the only method is comparing the audit
organization.
Lack of knowing the importance of the internal auditors.
5.2.
Recommendation
For the improvement of audit performance in Mizan-Aman hospital in Aman town. The
following idea is recommended to minimize the problems related to internal audit control.
should be segregation of duty and responsibility among auditor with audit type.
The management group provide to the auditor training program and the auditor
important and improving the existing only audit financial audit, mizan aman
To be effective the organization should apply documentation techniques of analytical
and detail testing procedure and use of confirmation, performance and reconciliation
of audit procedure data gathering is very important to be effective.
The hospital auditor should follow the internationally accepted rules and regulation
of audit standards such as general accepted audit standards (GAAS) and general
To be effectives the needs of structural work relationship between the auditor and the
management group is needed.