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  • October 2015

    INTERNAL AUDIT AGENCY (IAA)

    THEME: INTERNAL AUDITING: AN EFFECTIVE MANAGEMENT TOOL FOR GOOD GOVERNANCE

    10TH ANNUAL INTERNAL AUDIT FORUM

    PRESENTATION BY:R. KWAME ASANTE

    ON:IMPLEMENTING AUDIT RECOMMENDATIONS:

    CHALLENGES AND WAY FORWARD

  • RKA 2015

    OUTLINE OF PRESENTATION

    0.0 OBJECTIVE OF PRESENTATION

    1.0 INTRODUCTION

    2.0 AUDIT REPORT IMPLEMENTATION COMMITTEE (ARIC)

    3.0 PUBLIC ACCOUNTS COMMITTEE (PAC)

    4.0 CHALLENGES

    5.0 THE WAY FORWARD

    6.0 CONCLUSION2

  • RKA 2015

    0.0 OBJECTIVE OF PRESENTATION

    Ladies and Gentlemen, I have been tasked to do a presentation on the topicImplementing Audit Recommendations: Challenges and the way forward, withinthe overall theme: Internal Audit; An Effective Management Tool for GoodGovernance.

    I believe that the reference to Audit Recommendations will cover both Internal AuditWork and Reviews and, the Recommendations arising out of the work of theAuditor-General in relation to the public sector organizations (i.e. MDAs andMMDAs, Independent Constitutional Bodies, Government Business Enterprises,Public Corporations, Organizations, Institutions and Entities subsisting on PublicFunds).

    The presentation will seek to highlight the audit operational framework and contextand the challenges therein and drawing on the practice and experiences within ourPublic Sector.

    3

  • RKA 2015

    1.0 INTRODUCTION

    1.1 Governance/Stakeholders

    Just to throw in some context for our discussion today, I will definegovernance as describing the role of the persons and institutions entrustedwith the supervision, control and direction of an entity. So depending onjurisdiction different bodies have different responsibilities forCorporate/Institutional governance.

    Thus in Ghana, the following could be involved in the process of preparing accounts, audit, investigations and reviews and the implementation of audit recommendations and subsequent follow up actions.

    Executive Management of various Government Agencies

    Boards/Board Committees

    Internal Audit Units

    4

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    Audit Report Implementation Committee (ARIC)

    Internal Audit Agency

    Auditor-Generals Department

    Institute of Chartered Accountants/Members

    Parliament/Public Accounts Committee

    Attorney-Generals Department

    The Judiciary/Public Tribunals

    Institute of Internal Auditors and their members

    Association of Internal Auditors of Metropolitan, Municipal and District Assemblies (MMDAs)

    Sector Ministers/Ministries

    Office of the President

    5

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.2 Role of Audit in Corporate Governance

    Risk is inherent in the decisions that an organization takes to manageand run its business and in the business processes established to assistin the achievement of its business objectives. The economicslowdown in recent years; and the various fraud, related bankruptcyand poor performance of Institutions have led Board and AuditCommittees to leverage the internal audit function to mitigate a widearray of risks that businesses and institutions face.

    The Institute of Internal Auditors (IIA) describes internal audit as anindependent, objective assurance and consulting activity designed toadd value and improve an organizations operations.

    6

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.2 Role of Audit in Corporate Governance (Contd)

    The Institute of Internal Auditors (IIA) describes internal audit as an independent,objective assurance and consulting activity designed to add value and improve anorganizations operations.

    The scope of internal auditing within an organization is broad and covers anorganization's governance; risk management and management controls;efficiency/effectiveness of operations (including safeguarding of assets); thereliability of financial and management reporting; and compliance with laws andregulations. Internal auditing may also involve conducting proactive fraud audits toidentify potentially fraudulent acts; participating in fraud investigations under thedirection of fraud investigation professionals, and conducting post investigation fraudaudits to identify control breakdowns and establish financial loss.

    7

    https://en.wikipedia.org/wiki/Regulatory_compliance

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.2 Role of Audit in Corporate Governance (Contd)

    Consistent with its mission, the Internal Audit Unit provides management withinformation, appraisals, recommendations, and counsel regarding the activitiesexamined and other significant issues.

    Internal auditors typically issue reports at the end of each audit that summarizetheir findings, recommendations, and any responses or action plans frommanagement.

    The internal audit activity helps an organization accomplish its objectives bybringing a systematic, disciplined approach to evaluate and improve theeffectiveness of risk management, control and governance processes.

    8

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.2 Role of Audit in Corporate Governance (Contd)

    1.2.1 Quality of Internal Audit Report

    I will want us to take some time to look at what a good audit report should have as this affect the final implementation.

    a) Objectivity - The comments and opinions expressed in the Report should be objective and unbiased.

    b) Clarity - The language used should be simple and straightforward.

    c) Accuracy - The information contained in the report should be accurate and factual.

    d) Brevity - The report should be concise.

    e) Timeliness - The report should be released promptly immediately after the audit is concluded, within a month.

    9

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.3 Audit Recommendations/Implementation

    Basic to effective audit work are recommendations that, which when adequatelyimplemented will accomplish defined and worthwhile results. AuditRecommendations must state a clear convincing and workable basis forimplementation. The utility and continued relevance of recommendations should becontinuously re-evaluated as follow up actions progress.

    The recommendations in an internal audit report are designed to help anorganization achieve effective and efficient governance.

    Audit findings and recommendations tend to relate to particular assertions abouttransactions, such as whether the transactions audited were valid or authorized,completely processed, accurately valued, processed in the correct time period, andproperly disclosed in financial or operational reporting, among other elements.

    10

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.3 Audit Recommendations/Implementation (Contd)

    It is an entitys responsibility to manage the implementation of auditrecommendations to which it has agreed, including determining an appropriatestrategy to help achieve timely and effective implementation. Primary responsibilityfor implementing audit recommendations lies with senior Management in theorganization and also the business unit subject to the audit.

    While the implementation of audit recommendations is a managementresponsibility, the internal audit function is well placed to monitor the progress ofimplementation. Effective monitoring requires a system that accurately tracksprogress and records the actions of program managers responsible for progressingaction against timeframes.

    11

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.4 Audit Institutions

    1.4.1 The Internal Audit Agency (IAA)

    The Internal Audit Agency, Act 2003 (Act 658) established the Internal AuditAgency (IAA) as an oversight body with a mandate to co-ordinate, facilitate andprovide quality assurance for internal audit activities in Ministries, Departments andAgencies (MDAs) and Metropolitan, Municipal and District Assemblies (MMDAs).

    As required by the Act, IAA provides a means for keeping the MDAs and MMDAsfully and currently informed about problems and deficiencies related to theadministration of their programmes and operations and the necessity for appropriatecorrective action.

    Upon carrying out its mandate, the IAA reports to the Head of the various publicorganizations and agencies and makes recommendations on how to improve theirinternal processes and adhere to best standards and practices.

    12

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.4 Audit Institutions (Contd)

    1.4.2 The Ghana Audit Service (GAS)

    (a) Under existing governance arrangements, the assurance-seeking activity of citizens hasexclusively been conferred on the Office of the Auditor-General. In Ghanas case, thisfunction has not only been provided for in the Constitution but has also been entrenchedby the Constitution. The Auditor-General is thus required by the Constitution to auditannually the public accounts of Ghana and of all public offices including the Courts,Central and local government administrations, the Universities, public institutions,corporations and companies or any body or organization established with public funds, inother words, the funds of the people or citizens.

    (b) The Auditor-General is to report his findings and recommendations from auditsundertaken by his Office to Parliament, which is expected to debate this on behalf ofcitizens, as received and presented by the Public Accounts Committee and appoint,where necessary, in the public interest, a Committee to deal with matters raised.

    13

  • RKA 2015

    1.0 INTRODUCTION (Contd)

    1.4 Audit Institutions (Contd)

    1.4.2 The Ghana Audit Service (GAS)

    (c) An Audi

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