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Chapter One: 1.1 Back Ground of The Study
Chapter One: 1.1 Back Ground of The Study
1. INTRODUCTION
1.1 Back ground of the study
All the public listed firms have to get their accounts audited by an independent
auditor before they declare their result for any quarter.
There are four main steps in the audit process. The first one is to define the
auditors role and the term of engagement which is usually in the form of the
letter which is duly signed by the client. The second step is to plan the audit which
would include details of deadlines and the department the auditor would cover. Is
it single department or whole organization which is the auditor would be
covering. The audit could last a day or even a week depending upon the nature of
the audit.
The next important step is compiling the information from the audit. When an
auditor audit the account or inspection key financial statement of company, the
finding are usually put out in a report or compiled in a systematic manner. The
last and most important element of an audit is reporting the result. The result are
documented in the auditors report.
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organization accomplish its objective by bringing a systematic, disciplined
approach to evaluate and improve effectiveness of risk management, control and
governance processes.
The state bank of Ethiopia was established in 1942 with on objective the duties of
both commercial and central bank is 1960 established as a share company to take
over the commercial banking activities of the state bank of Ethiopia. In the 1974
revolution, commercial bank of Ethiopia got its strength by emerging with
privately own addis ababa bank. Since that it has been playing significant role in
the development end over the country.
On April 30, year 2011 the number of branches reached 364 stretches a cross the
length breadth of the country. CBE combines a wide capital base with more than
9700 talented and committed employees. In 2011 whom it regard as its key asset
for employees. In 2011 whom it regard as its key asses for banking development.
The state owned commercial bank of Ethiopia still dominates the market in terms
of asset capital and customer base and Branch Network, deposit the growing
competition from Private Bank over the last 15 years. Currently CBE has more
than 22million account holders and the number of mobile and internet banking
users also reached more than 2.5 million as of June 30 th 2019 active ATM card
holders reached more than 8million. This makes it one of the most reliable and
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strong commercial Bank in the country and the region. Its strong capital base
above 67 years of rich experience in the market and large branch network
through the country enable the bank to accommodate large demand for banking
service, Bank from private and public companies and to increase its over all
revenue on sustainable base the fundamental component of our mission
statement includes customers. These are the most important asset we
continuously revise our attitude to wards the customers with the view to
securing.
So, a periodic internal control audit is required to monitor the banks system of
internal control and procedure. good internal audit process help the management
in the effective discharge of its responsibilities. It gives them the assurance of the
risk and operation performance of the bank.
Internal audit serves and acts as an effective tool that court be used to bridge the
gap between top management and the operators in or to assure that the policies
and all the control system laid down are adhered to there for with out internal
audit procedures and problems in banking institution there will be the high level
of fraud and misappropriation of fund in bank.
The following problems are may raised and this research will provide solutions to
the following basic research questions
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1.4 objective of the study
General objective
The general objective of the study will focus on internal auditing practice of
commercial bank of Ethiopia in head office.
Specific objective
# the study may use to identifying and describe advantage of internal auditing
and suggesting possible recommendation.
# it may reflect the researcher internal audit practice with its limitation and
weakness and give possible commentive idea or solution as to how the internal
auditor of the bank should do auditing practice
# the study will be uses as partially as policy and manual making guideline for the
auditing sector
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Here the researcher knows that the study includes the whole banks internal
auditing practice but the time and financial constrains the researcher will force to
focus on the internal auditing practice of commercial bank of Ethiopia addis
abeba head office.
After this study the community will expect to compare the internal auditing and if
is internal auditing problem give possible solution or advices.
During conducting the study the researchers has been faced the following
problems.
The study will consist of five chapter. The first chapter deals with general
introduction, this chapter includes background of the study, scope of the study,
statement of the problem, objective of the study, significant of the study,
limitation of the study and organization paper. Chapter two deals with literature
review. Chapter three is about methodology and design. Chapter four contain
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data analysis presentation. Chapter five also contain conclusion and
recommendation.
CHAPTER TWO
LITERATURE REVIEW
All the public listed firms have to get their accounts audited by an independent
auditor before they declare their result for any quarter.
There are four main steps in the audit process. The first one is to define the
auditors role and the term of engagement which is usually in the form of the
letter which is duly signed by the client. The second step is to plan the audit which
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would include details of deadlines and the department the auditor would cover. Is
it single department or whole organization which is the auditor would be
covering. The audit could last a day or even a week depending upon the nature of
the audit.
The next important step is compiling the information from the audit. When an
auditor audit the account or inspection key financial statement of company, the
finding are usually put out in a report or compiled in a systematic manner. The
last and most important element of an audit is reporting the result. The result are
documented in the auditors report.
Types of auditing
Among the various types of audits, financial audit are the most popular followed
by operational and strategic audit.
Audit plan:- internal audit function begins with the audit plan includes the timing
and frequency of the internal audit work to be carried on and its based on control
risk assessment. The plan should cover the resources required for carrying out the
audit.
Audit procedures:- the objectives firmed in the audit plan are achieved through a
detailed audit program which lists down the procedure to be carried out for each
specific audit area
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- regular internal audit at banks gives better comfort and assurance to the
statutory auditors too.
Internal auditors
Internal auditors are specialist called a bank auditor which is run as an
employee of the financial institution. assess the company’s risks and the
efficacy of its risk management efforts .ensure that the organization is
complying with relevant laws and statutes. and also responsible for the
examination and review of the policies and activities. In addition an internal
auditor is responsible to ascertain that the proper authority is given for the
purchase and disposal of banks asset and that there in an insurance cover for
each of the asset is provided. He must also be satisfied that assets are used
effectively for the banks benefit so as to keep wastage to the nearest
minimum. And see that the assets of the bank are effectively safeguarded.
- reviewing the organization’s compliance with state and federal policies and
laws
CHAPTER THREE
3. Research methodology and design
The study will conduct on the internal auditing practice of commercial bank of
Ethiopia Addis abeba head office
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For this study descriptive design type of research, will going to be use. Because,
the aim of the study will describe the actual internal auditing practice of
commercial bank of Ethiopia Addis Abeba head office
For this study, the researchers will use both quantitative and qualitative data type
especially the later one. The researchers also use both primary and secondary
source of data.
From a total population employees of CBE Addis Abeba at head office 5% will be
select a sample size by using judgmental sampling techniques .
After necessary data will collect from the primary source and secondary sources
the data will processing and Analyzing data processing is an activity which
involves interpretation data to make the data appropriate for analysis. Data
analysis will be done both by using qualitative and quantitative data processing
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from the data get the data presenting will be descriptive data presentation by
using tables and others.
We estimated that we will use this time schedule until the final paper
TI
ME PERIOD
3 Proposal 10 days
submission
4 Data collection 10 days
5 Data processing 7 days
and analyzing
6 Report writing and 15 days
presentation
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COST BUDGET
Transportation 5 50 250.00
For proposal
writing
Pays of 5 100 500
researchers
For taxi and food
paper 2 pad 170.00 340.00
Printing cost
Internet cost 5 15 75
Sub total 775
Contingency (15%) 116.25
Total cost 891.25
REFERENCE
www.investopedia.com
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Economictimes.com
APPENDIX
DEAR RESPONDENT
The purpose of this questionnaire will to collect data for requirement for partial
for the following questions is extremely important for the successful completion
of this paper the information provide used for purpose indicated and will be kept
highly confident I would like to thank you in advance for your cooperation and
I. General
Would you be kind enough to answer and making (√) mark the box
provided
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If you have any personal opinion for a questionnaire, kindly
comment on the space provided
No need to write your name
1. Personal
25 years or below
26-30 years
36-45 years
45 years or above
Your sex
Female Male
2. Education
Diploma
Degree
2nd degree
3. Work experience
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Excellent Good Average
2. Does the bank’s internal audit activity comply with the standards in place?
Agree Disagree
4. how do you evaluate the quality of intrernal auditing practice in your bank?
good excellent
5. Internal auditors evaluate the risk and internal control systems of the
Yes No
6. when the internal auditor meet with the directors at least to discuss written
reports of audit?
Quarterly annually
7. In the operation of the bank how do you rate the internal audit position?
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8. Do you think there is good working relationship between management and
Yes No
10.Does the verification of internal auditing practice system in the bank insures
Yes No
high level?
12.what factors that affect the internal auditing practice in your bank and what
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