Capacity Development Training for
Internal Auditors of Public Sector
in Wolaita Zone Organized by
WSU/ College of Business and
Economics
Project Team Members
1. Bereket Sorsa (Asst. Prof)
2. Netsanet Bibisso (Asst. Prof)
3. Negalign Nigatu (Asst. Prof)
4. Tesfamlak Mulatu (Lect.)
5. Mathewos W/mariam (Lect.)
Objectives of the training
• To enable the participants to conduct independent
internal audits in the public sector according to the
audit methodology, by applying the knowledge
gained in the theoretical part of training
• To enable the participants to directly practice
knowledge and skills gained at the theoretical part
of training
Modules for Training
Module 1
Part 1: Audit and Audit professionalism
Part 2: Internal control system & Risk assessment
Part 3: Planning internal audit
Module 2
Part 1: Internal Audit Fieldwork
Module 3
Part 1: Internal audit reporting & Follow up
MODULE 1
Part I: Audit and Audit profession
• Historical development of auditing
• Definition and Concept of auditing
• Standards for Internal auditing
• Professional ethics and principles
• Qualification of Internal Auditors
Evolution of Auditing
• Auditing originated over 2000 years ago when
firstly in Egypt and subsequently in other
world classes
• The term audit is derived from the Latin term
‘’audio, audire’’ which means to listening or
hearing.
• In early days a person used to listen to the
accounts read over by an accountant in order
to check them. He was known as auditor.
Evolution of Auditing
• In the early 20th century, the reporting
practice of auditors, which involved submitting
reports of their duties and findings, was
standardized as the “Independent Auditor’s
Report.”
Exercise
Discuss the development of Audit profession in
Ethiopian context.
In Ethiopian context
• In Ethiopian context, the development of
auditing is strongly related with the changes in
government ideology (capitalism, nationalism
and free market economy)
Concept and Definition of Audit
• It is quite difficult to give a single and precise
definition of the term “Audit”.
Comprehensive defintion
• Auditing is a systematic process of (1) objectively
obtaining and evaluating evidence regarding
assertions about economic actions and events
to ascertain the degree of correspondence between
those assertions and established criteria and (2)
communicating the results to interested users.
Definition of Internal Auditing
“Internal auditing is an independent,
objective assurance and consulting activity
designed to add value and improve an
organisation’s operations. It helps an
organisation accomplish its objectives by
bringing a systematic, disciplined approach
to evaluate and improve the effectiveness of
risk management, control and governance
processes.”
Operationalizing the definition of IA
Independent – Freedom to work in an unbiased manner.
Objective – Unbiased mental attitude with no compromises.
Assurance – Objective assessment of evidence to provide an
independent opinion or conclusion.
Consulting – Advisory in nature and generally performed at the specific
request of a client.
Add value – Providing objective and relevant assurance, and
contributing to effectiveness and efficiency of governance, risk
management and control processes.
Systematic, disciplined approach – Leads to reliability and
trustworthiness, and distinguishes an internal audit engagement from a
casual enquiry.
Evaluate and improve – Internal Audit needs to have an improvement
focus.
?????????...
• How do internal and external
auditors differ and how should they
relate?
Critical Tasks of Internal Auditors
• Determine whether controls are adequate
• Suggest improvements to increase efficiency and
effectiveness or to lower operating costs
• Determine whether policies and procedures are followed
• Determine whether laws and regulations are being
obeyed
• Detect fraud or manipulation of records
• Acts as a catalyst for improvement in risk management,
control and governance.
• Is an adviser that tells management what it needs to
know, when it needs to know it.
What would you say…
• If someone asked
you whether or not
their organization
needed internal
auditors?
Common Features of Auditing
IA Professional Standards
• The IIA’s International Standards for the
Professional Practice of Internal Auditing
(Standards) is essential in meeting the
responsibilities of internal auditors and the
internal audit activity.
The purpose of the Standards
• Guide adherence with the mandatory elements of
the International Professional Practices Framework.
• Provide a framework for performing and promoting a
broad range of value-added internal auditing
services.
• Establish the basis for the evaluation of internal audit
performance.
• Foster improved organizational processes and
operations.
Gov’t Internal audit Standards
• The Standards form two groupings. The
first encompasses the organizational and
structural aspects; the second
encompasses the activity and operation
of internal audit:
Standards …. (cont’d)
1. Organizational Standards
1.1. Independence
1.2. Relationships with management, other auditors and review
bodies
1.3. Staffing, training and development
2. Operational Standards
2.1. Audit strategy
2.2. Management of audit assignments
2.3. Due professional care
2.4. Reporting
2.5. Quality assurance
Professional Codes of Ethics for IAs
“Educating the mind without
educating the heart is no
education at all.”
Mahatma Gandhi
Thursday, March 7, 2024 24
Discuss:
The inherent personal qualities
common among successful
internal auditors
Inherent Personal Qualities….
• Integrity
• Passion
• Work ethic
• Curiosity.
• Creativity
• Initiative
• Flexibilty
Code of Ethics ….(cont’d)
The Code of Ethics extends beyond the definition of
internal auditing to include two essential components:
A. Principles that is relevant to the profession and
practice of internal auditing;
B. Rules of Conduct that describe behavioral norms
expected of internal auditors, helping to interpret
the Principles into practical applications, intended
to guide the ethical conduct of internal auditors.
Codes of Ethics ….
Internal auditors are expected to apply and uphold
the following principles:
•Integrity
•Objectivity
•Independence
•Confidentiality
•Competency
Integrity, Objectivity , Independence &
Confidentiality
• Straightforward, honest and sincere in his
approach to his professional work
• Maintain an impartial attitude
• Immediately bring any actual or apparent
conflict of interest to the attention of the
appropriate level of management
Confidentiality
• Maintain the confidentiality of the information
acquired in the course of his work
Due Professional Care , Skills & Competence
Due professional Care to be applied:
• In Deciding the extent of work required to
achieve the objectives of the engagement.
• In assessment of risk management
• Control and governance processes and
• Cost benefit analysis.
• Obtain skills and competence through general
education, technical knowledge through study
and formal courses.
What happens when internal auditors don’t
want to go along with unethical requests?
According to the report,
• 33 percent said they’d be excluded from meetings,
• 18 percent would lose opportunities,
• 4 percent saw budget cuts,
• 1 percent were demoted, another
• 1 percent had their pay cut, and
• 13 percent said “other.”
Professional Qualification of Internal Auditors
• Nobody is an expert internal auditor when they graduate from
college.
• Internal auditing, like any other profession, is learned primarily by
doing; in other words, through on-the-job experience.
• It is like learning how to drive a car. It is impossible to learn how to
drive merely by reading about it, listening to someone talk about
it, or watching someone else drive.
• It must be experienced it is necessary to get in a car and practice,
preferably under the supervision of a well-qualified instructor.
• Such is the case with internal auditing it is learned by doing it
under the watchful eyes of experienced supervisors and mentors.
End of Part 1
Thanks
