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Study on the Factors Affecting the Assessment of Internal Audit in the Public Sector

2017; RELX Group (Netherlands); Linguagem: Inglês

1556-5068

Plamena Nedyalkova,

Banking, Crisis Management, COVID-19 Impact

The assessment as a practical activity never remains isolated from the influence of a number of external and internal factors for the organization itself in the public sector. The uncertain conditions under which the entire evaluation process is developed are prerequisites for the change of assessment methods, assessment criteria and the assessment basis. In control practice, the change of the assessment process is a prerequisite for changing the relationship between internal and external audit. Responsibility for the interaction between internal and external auditors is both the Head of Internal Audit, but also the Audit Committee and the management of public sector organizations.When changing assessment activity under the influence of various factors, the possibility of over duplication of internal and external assessment activities should be observed and eliminated. Part of the assessment audit procedures cannot be reperformed by internal auditors. Practice does not exclude cases where such repeated actions shall be performed, but they should be minimized. Otherwise, additional resources are spent and additional time commitment of the auditors in the evaluation process is required. This is a reason to assume that, on the one hand, the scope of the audit activity is not properly defined and, on the other hand, the assessment method is not appropriate. In the case of duplication of assessment activity, it might not be possible to investigate and analyze other objects and issues that are not considered by the internal audit. By examining the content of each particular factor, the prerequisites for its occurrence and its impact on the assessment process and evaluation as a whole have been reached. Ignoring a factor means enabling an appropriate adaptation of a problem in the control environment of public sector organizations.This article is part of a larger study addressing the assessment of the quality and condition of internal audit in the public sector of the Republic of Bulgaria. The survey was conducted in 25 municipalities in Bulgaria (Aytos, Vratsa, Varna, Vidin, Dobrich, Isperih, Kavarna, Kardzhali, Lom, Mezdra, Momchilgrad, Montana, Nesebar, Popovo, Samokov, Sandanski, Sozopol, Stara Zagora, Straldzha, Simitli, Troyan, Targovishte, Ruse, Razgrad and Shumen, where internal audit units have been established). For the purpose of this article, the author has used information based on various sources and sociological, documentary and statistical methods have been applied. EXCEL has been used to graph out the results. Because of the nature of the factors, it is necessary to make a significant distinction between factors that influence the internal audit (as a process) and those that influence the assessment process itself. We assume that the factors influencing the assessment process itself are all those conditions, considerations, prerequisites, and events that have an impact from moment of the assignment of the assessment process until the elaboration of the final assessment of the internal audit quality. Therefore, taking into account all of the above, the following main conclusions and recommendations can be made: 1. Each factor involved in the overall dependence within the determination and assessment of the state of internal audit has its own impact and effect. 2. Their influence on the internal audit is determined by the variables, the ability to measure factors by different measurement units, the predetermined criteria of adequacy of the model, the predetermined standard error of measurement and the coefficient of multiple correlation. 3. Тhe model presented and its testing for application in our practice confirmed the initial hypothesis that there is a strong dependence of the internal audit based on the influence of internal and external factors. The six factors examined (objectivity, competence, control activity, publicity, risk activity and consulting activity) have a linear relationship, with the points of the correlation field grouped around a straight line. 4. There is a positive correlation because the r values are greater than zero (0), i.e. the dependence between the variables is positive. This means that when objectivity, competence, consultancy, publicity and risk activity are positive, this impact affects the positive development of the internal audit. Conversely, when these factors evolve in a negative direction, this negatively affects the internal audit. The lack of a personnel development policy engaged in audit activity, the favorable opportunities for corruption, the lack of planned development of the organization, frequent structural changes, incorrectly defined responsibilities, inadequate compliance with the consistency of certain regulated procedures are still circumstances that lead to the negative impact of these factors. 5. Factors influencing the internal audit both in the public and non-public (private) sectors vary by type and specificity. Their diversity is determined, on the one hand, by the specifics of the sector itself, in which the respective organizations (enterprises) are developing. On the other hand, the variety of factors is determined by the particular features of the organization (enterprise) itself. 6. Factors should be considered and examined from two aspects, namely: factors that influence the control process itself and factors that influence the assessment process and the assessment itself (from its determination to the official publication and presentation). 7. Factors affect not only the assessment process, but influence the whole internal audit system as well. The internal audit system changes when the company grows, i.e. new departments are set up, new jobs are created, new technologies are introduced, etc. It is likely that all newly created structural units will not be covered by the current control system. In this case, it is necessary to update the overall internal control system, including the internal audit system and other subcontrol systems.