GENERAL INTRODUCTION

1 Background of the Study

Organisations all round the world, be them financial, commercial, industrial, service rendering or even
educational need auditing for the proper assessment of their activities. In order to realize their goals
and objectives, resources have to be properly managed in order to achieve the projected results.
An essential condition for the survival of a company or more generally of organisations lies on
the ability of its members to act reliably and efficiently to achieve the objectives of the organisation.
The substantial coordination of behaviour can be achieved in numerous ways. In a very small business
unit, the manager can verify directly that the tasks are performed on the way he thinks are suitable. But
the supervision of the manager and the mutual adjustment among various actors (Mintzberg, 1982, P.
25) have quickly become insufficient when the number of the firms increase. However, it may be wised
to maintain these ways of controlling but it would only be applied to the part of the organisation.
Company over its activities fulfills a certain number of objectives. Their realization is interesting not only
for those who directly intervene in the management but also for those who from one way or another
contribute to the financement or are interested by its performances. These are: the manager of the
company who needs proper information for better management, the owners or shareholders who seek
to know the management of the business, the results and the evolution of the financial situation, and
lastly the third parties in relation with the company. The company so appear as a milieu of interest for
that reason, it has to report following it accounting nature that is to produce a certain number of
information responding to its preoccupations.
The financial and corporate strategy of a company is underpinned by effective internal systems
in which the internal audit has an important role raising the reliability of the internal control system,
improving the process of risk management and above all satisfying the needs of internal users. The
internal audit also supports and enhances the system of responsibility that the executive directors and
employees have towards the owners and other stakeholders. The internal audit department provides a
reliable objective and impartial service to the management board of directors and audit committee
while stakeholders are interested in returns on investments, sustainable growth, strong leadership and
reliable reporting on the financial performance and business practices of a company.
Proper understanding of the role and importance of the internal audit is one of the
preconditions ffor successful strategy Implementation and achievement of company goals. In addition,
the development in internal audit profession brings change in the scope and functions of internal audit’s
customers. Previously, internal auditors were seen just as an assistant of accountant’s and an external
auditor but recently internal audit certainly is considered an independent profession which is playing a
significant role in the management of organisations. Besides, independent of internal auditors have
always been a sensitive issue while he/she is the employees of the organisation above all not clearly
organized structure or reporting line make the problem more complicated in such offices (Rupsye,
2005,P.22). Public sector offices are part of the public body which is partly or wholly financed by
government budget and concerned with providing basic government services to the whole society
(Ministry of Finance and Economic Development, 2004). The compositions of companies are varied by
their function and purposes but in most cases, they are designed in order to enable the organisation
achieve their goals.
Therefore, it is necessary that management put in place mechanisms to fill the gap in
supervision. Business performance is a major concern these days due to importance of the global
competition. One factor of this performance lies on the ethical and responsible behaviour of its
performance. But at the end of the 20 th century, the Enron and WorldCom scandals show that there was
a lack of control in organisations (Bertin, 2007, P. 90). Following these financial scandals, actions were
taken. It has become essential to provide an ethical control in the interest of leading, to better take into
account the content of internal audit, in order to overcome the weaknesses of economic and legal
support. In a common interest ways to measure the impact of moral decisions have been found and the
company must be able to justify its activities (Ethical norms and values); this control may be performed
by the internal audit (Mercier, 2000, P. 86). Organisational performance can also be “the ability of an
organisation to identify and implement appropriate strategies within the framework of the aims it
pursues” (Bouquin, 1997, P. 33). The objectives are varied; organisations may want to become the
largest company in the world or to remain a successful specialized business, or even be best able to
achieve the goals it has set. Once the purposes have been defined, success depends on the ability to
define appropriate strategies and to implement them. Organisational arrangements must ensure the
level of performance in both economic and strategic scopes and we call internal audit the combination
of such devices. It is necessary to periodically test the effectiveness and suitability of a particular aspect
of internal control. Auditing is the process of studying and evaluating internal control and certain of its
aspects, as well as its expected performance. The ensuing result may help to determine the
effectiveness of the company. It is something important because the challenges of every business day
are for the companies to be competitive so as not to be forced out of the market.
As it will be usedless to despose of information whose quality is doubted, we can now
distinguish the obligation to produce information and to control that information. Therefore, the
establishment of annual documents of companies is a way to control the importance of the objectives.
Surely, annuals financial statements constitute the synthesis of the activities of the company useful by
the external environment. They are helpful to different parties for evaluation purpose, decision making
or diagnostic by shareholders. The importance to dispose of good information for annual statement
explains the way of verification the financial statements giving by the managers to the external
environment.
Internal audit is an evaluation function available to an organisation to examine and appreciate
the proper functioning, consistency and effectiveness of its internal control. To this end, internal
autitors should review the various activities of the organisation, measure the risks and the arrangements
put in place to control them, ensure performance in carrying out assigned responsibilities and make
recommendations to improve its security and increase efficiency (IFACI, 1998, P. 71). Internal audit is
one of the essential mechanisms of the internal control system. No company can disregard it, even
partially, without losing at the same time control of a key to its survival. A vital member of company
management, the internal auditor is a party to an audit charter defining his independence. When the
internal audit department does not meet the expectations of senior management, it should take
adequate steps to upgrade it 9IFACI, 1998, P. 200).
In any event, the company must maintain control of the implementation process of internal
audit. The aim of internal auditing is to improve organisational efficiency and effectiveness through
constructive criticism. Internal audit is a method of controlling which allows different organizations’
partners such as shareholders, personnel, financial institutions, the state to ensure the quality and
reliability of the information provided. The subject is worthy of attention because internal auditors are
important, even crucial, in an economy that relies upon independently produced information
(Gansberghe, 2005, P. 33). It is a part of an integrated service to the structure of an organisation so that
the internal audit function is more likely to render better services to the organisation.
These definitions give us a broad clue about importance and contribution of internal audit
functions in the organisations. For example, internal auditing is involved in consulting activities, and
value added contributions for the evaluation and improvement of the effectiveness of risk management
and governance process (IIA, 2001, P. 108). This shows the roles of internal auditing is moving away
from the narrow scope of measuring and evaluating the effectiveness of internal controls towards a
broader scope of activities that creates opportunities for the internal auditing profession and to receive
more attention in corporate governances.