Internal auditing for “one & all”


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The depth and scope of examination, time of audit, processing methods, etc. In deciding on a specific technique, also need to take account of the objective of the audit action and the capacities limited by time or other factors.

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Internal auditing for “one & all”

  1. 1. Internal Auditing For One & AllBy: Mohammad Wahid Abdullah khan
  2. 2. 14.2.1 Wahid Techniques – the Significance and dependability manner for PerformanceAUDIT (PART -01)Summary: The Wahid techniques technique will depend on the nature of the activityPerformance audited, the depth and scope of examination, time of audit, processingmethods, etc. In deciding on a specific technique, also need to take account of theobjective of the audit action and the capacities limited by time or other factors.These Wahid techniques are closely related to and directly determined by the methodhow the audit activity is performed. And may use a number of techniques to ensure thedependability of resulting data, its quality required detecting the true causes ofdeviations, and its extent needed to devise generalized conclusions at a desired level.For each audit action.I would like to explanation my techniques about the Performance audit and financialaudit activities prior to discuss the “WAHID techniques” I have tried to make clearmain parts of Performance audit in advance of the” WAHID techniques” because Ibelieve that the people who are related with accounts, finance, auditing and also thebusiness owners will recognize generally about the Performance audit by investigative,What is performance auditing?Performance audit and financial audit have much in common. These two types of auditmay involve the same kind of tasks, namely the measuring and explanation of theperformance of an auditor. They also rely on similar data collection methods. Whileperformance auditors have their sights on efficiency, financial auditors focus on theaccuracy and correctness of accounts. However, there are some differences betweenperformance audit and financial audit as wellPerformance audit refers to an examination of a program, function, operation or themanagement systems and procedures of a governmental or non-profit entity to assesswhether the entity is achieving economy, efficiency and effectiveness in the employmentof available resources. The examination is objective and systematic, generally usingstructured and professionally adopted methodologies Performances audit an activityassessing the degree of economy, efficiency and effectiveness in the use of human,financial and material resources at a level of organization unit, organization, or certainactions. This type of internal audit examines processes and systems of an auditor inparticularPerformance auditing is concerned with the audit of economy, efficiency andeffectiveness and embraces:(A) Audit of the economy of administrative activities in accordance with soundadministrative principles and practices, and management policies;209
  3. 3. (B) Audit of the efficiency of utilization of human, financial and other resources,including examination of information systems, performance measures and monitoringarrangements, and procedures followed by audited entities for remedying identifieddeficiencies; and(C) Audit of the effectiveness of performance in relation to achievement of theobjectiveness of the audited entity, and audit of the actual impact of activitiescompared with the intended impact’. Performance auditing is based on decisions made orgoals established by the legislature, and it may be carried out throughout the wholepublic sector.In difference: The concepts of “economy, efficiency and effectiveness (3Es)” aretermed as follows.“Economy” means the acquisition of the appropriate quality and quantity of human,financial, physical and information resources at the appropriate times and at the lowercost.“Efficiency” means the use of human, financial, physical and information resources suchthat the output is maximized for any given set of resource inputs, or input is minimizedfor any given quantity and quality of output.“Effectiveness” means the achievement of the objectives or other intended effects ofactivities. A performance audit assignment may include all/one or a combination of twoaspects of “3Es”. Regularity and propriety related issues which impact performance maybe considered in the conduct of performance audits.In most countries, performance audits of governmental activities are carried out by theexternal audit bodies at federal or state level. Many of these audit bodies haveestablished guides for conducting performance audits which explain how performanceaudits are planned, conducted and its results reported. Most of the countries payattention to financial audit but at the same situation without considering to the aspectsof audit may it be better to do value of money audit.The aspect of performance auditing?Performance auditing is not overly subject to specific requirements and expectations.Even as financial auditing tends to apply relatively permanent standards, performanceauditing is more flexible in its choice of subjects, audit objects, methods, and opinions.Performance auditing is not a regular audit with formalized opinions, and it does not haveits roots in private auditing. It is an independent examination made on a non-recurringbasis. It is by nature wide-ranging and open to judgments and interpretations. Thespecial feature of performance auditing is due to the variety and complexity ofquestions relating to its work. Within its legal mandate, performance auditing must befree to examine all government activities from different perspectivesThe basic questions in performance auditing?All government programs or activities (and most processes they generate) can, at leastin speculation, be analyzed with the use of a method that describes how to move from210
  4. 4. one position to another by certain means in order to achieve specific objectives. Inperformance auditing, this is often done by trying to answer two basic questions:• Are things being done in the right way?• Are the right things being done?What ideas form the basis of performance auditing?Performance auditing is a way for taxpayers, financiers, legislatures, executives,ordinary citizens and the media to ‘execute control’ and to obtain insight into the runningand Outcome of different government activities. Performance auditing also providesanswers to questions such as: Do we get value for money or is it possible to spend themoney better or more wisely? A criterion of good governance is that all public services(or all government programs) are subjected to auditing Legitimacy and trust areessential values in all government undertakings, and performance auditing may contributeto strengthening these values by producing public and reliable information on theeconomy, efficiency, and effectiveness of government programs.Need for Performance AuditPerformance audit is the outcome of the important efforts directed to improve thesystem of management to ensure authentic output from resources employed. Theconcept of performance auditing emerged in response to:Increasing demand for information on efficiency and economy in managing resources andthe effectiveness with which objectives are met; Need to determine whether: theoperations of audit entities were conducted in a way that ensures the best possible useof resources or considering the 3Es; Officials in the public sector have met theiraccountability obligations; reporting on performance is credible and adequate.Performance audit provides the legislature and the public with an assessment whetherthe audited entities are achieving real value-for-money. It intends to Arrive at averifiable condition for comparing what is being done and how well it is being done withthe plans, policies and standards. The mere attentiveness that the basis for decisionmaking is subject to scrutiny by the auditors may, by itself, compel public administratorsto exercise caution and prudence in their actions.Performance Audit versus Financial AuditAuditing is a process involving the examination of data, statements, records, operationsand performance of an auditor for a stated purpose. Performance auditing goes beyondthe consideration of promptness. It aims to determine to what extent the audited hasdischarged its financial or other responsibilities which imply assessment of the auditor’soperation in terms of the economy in acquiring resources, efficiency in using resourcesand effectiveness in achieving objectives. The major differences in the approach, scopeand objectives between financial audits and performance audits are explained in thefollowing table.Financial Auditing Performance Auditing a few examples presented following1. Uses financial data to express an opinion on financial position and compliance withexisting rules and211
  5. 5. 1. Uses financial as well as non-financial data to assess economy, efficiency andeffectiveness in2. The financial statements of the auditor fairly present the financial position, reflectresults of operations and cash flows or manifest changes in financial position inaccordance with generally accepted accounting principles;2. The auditor has complied with laws and regulations for those transactions that mayhave a material effect on financial statements. the management of resources anddetermines whether:3. Does not comment on the extent to which auditor is meeting target relating to outputand delivery of services to the targeted groups they are serving.3. Evaluates the extent to which audited is meeting the target relating to output anddelivery of services to target groups they are serving.4. Does not make recommendations for improving economy, efficiency and effectivenessof programmed or projects being audited.4. Offers general and specific recommendations for improving economy, efficiency andeffectiveness of the audited being audited.In additional:Performance Audit versus - Financial AuditThrough dissimilarity with financial audit performance audit involves:More judgment and interpretation more selective coverage criteria for evaluation arenot predefined evidence tends to be at best persuasive, rather than conclusive reportscontain more discussion and reasoned argument also in this bases thy have somedifferences:a) Study selection stageb) Study design Stagec) Consulting the audited entityd) Team workAdditional reviewI. Financial Audit has published generally accepted principles of performance auditing inits implementation guidelinesI. Performance audit is concerned with the audit of economy, efficiency andeffectiveness and embraces:Objectives and Scope of Performance AuditThe objectives of performance audits are to audit the economy, efficiency andeffectiveness of auditors and to evaluate the discharge of accountability and due careof probity in the use of resources.Performance audits focus on one or more of following interrelated elements:1. To provide objective assessment of the extent to which the auditor is currentlyPursuing the 3Es;212
  6. 6. 2. To identify major deficiencies in management and control practices;3. To encourages improvement in the system of performance reporting;3. To provides information and proposes recommendations that can lead to betterinternal control and public accountability.Performance auditing examines:Performance auditing covers a wide variety of issues to arrive at the conclusion relatingto the 3Es. It examines and evaluates the systems, procedures, operation and resultrelated to:1. Planning, budgeting, accounting and reporting systems;2. Development, appraisal and utilization of resources;3. Acquisition and utilization of property, equipment, plant, inventory and other assets;and4. Development, production and use of information.Performance audit process:Performance audit deals with all kinds of measures, including laws, which financialimpact. A measure can be either separate goal or interrelated goals, Measures mayrelate either to the expenditure or the revenue section of the state budget In financialaudits, the auditor finds audited transactions as being either "right" or "wrong", "legal"or "unacceptable", etc.. Performance audit differs from financial audit in many aspects,both in theory and practice; following is shown the Performance audit processInitiationInitiation > Planning > Conduct > Assessment > Briefing to agency > Report to ParliamentCriteria of performance audit:•Relevant – have an obvious relation to the achievement of a given performance goal;•Operative – specific enough for use in evaluation in practice;•Consistent – the criteria applied in an audit must be consistent both with one anotherand with criteria applied in earlier similar performance audits, provided they are stillvalid.In developing criteria, we may refer to multiple sources. Legislation, various directivesand regulations (including internal regulations of the organization), and current conceptdocuments are the basic and least controversial sources of criteria. It is also advisableto seek the opinion of independent experts, and draw on information from professionalliterature and relevant foreign experience.Wahid techniques performance audit:A good performance audit should rest on logic, an understanding of the background, andthe ability to ask the right questions we can form our opinion on a whole population oforganizations, people, etc., by investigative a representative. It should be a majorobjective in the financial management of any organization to put in place internalcontrols so that errors, misstatements and irregularities are prevented from occurring213
  7. 7. or detected if they have occurred. Internal controls can thus be either preventative(preventing the error) or detective (detecting errors which have occurred).Preventative controls are better as then no error should occur in the first place,Significance & perfect performance audit can ultimate solution whole of theorganizational errors, misstatements & irregularities, I want to make the all of reader,student & auditors understand my imagination through the Wahid technique , I am surethat this technique is the perfect for companies & organization performance audit ,I have developed techniques that is (Wahid techniques) expresses the Significance anddependability manner for Performance audit in any organization or companies thisformula is:Performance AUDIT = Written evidence + Analysis /Questionnaire. + Hub groups +Interviewing +Direct observation214
  8. 8. WAHID TECHNIQUES – THE SIGNIFICANCE AND DEPENDABILITY MANNER FORPERFORMANCE AUDIT (PART -02)Summary: The Wahid techniques technique will depend on the nature of the activityPerformance audited, the depth and scope of examination, time of audit, processing methods,etc. In deciding on a specific technique, also need to take account of the objective of the auditaction and the capacities limited by time or other factors.These Wahid techniques are closely related to and directly determined by the method how theaudit activity is performed. And may use a number of techniques to ensure the dependabilityof resulting data, its quality required detecting the true causes of deviations, and its extentneeded to devise generalized conclusions at a desired level. For each audit action.Outline: Performance auditing under the heading of internal audit, Performance auditing isalso practiced by foundations and public sector nonprofit organizations but the extent is notknown, and not believed to be extensive. In the private sector of for-profit and not-for-profitentities,Performance audit is more complex and challenging compared to the audit of compliance, Itsobjective is to engage more closely with the audited institution to establish a formal process touse audit evidence to enable the public auditor to form an opinion and thereby tocommunicate to the audited the extent to which that agency has utilized its resources in aneconomic, efficient and effective manner. Whilst such an exercise certainly involves anelement of value judgment on behalf of the auditor, a robust methodology does help toprovide a fairly objective framework for use of this judgment.Performance auditing is that it adds value by providing impartial, fact-based, informationthrough examining and reporting on the integrity, economy, and efficiency, of operations andthe effectiveness and results achieved by government programs.Performance Audit is a response to these new challenges in public sector managementPerformance auditing promotes concepts and principles that enable public auditors to gobeyond traditional compliance issues and enable them to examine performance of theexecutive in a wider situation. It promotes public accountability and is an aid to goodgovernance. Accountability continues to encompass the concepts of traditional audits – thefinancial, compliance and propriety audits – but it is also expected to address concernsrelating to equity, ethics and even environment while assessing the effectiveness of a programor activity. During this programmed, you will be discussing all these concepts as well as thebest practices in the field of performance audit.I am satisfied that I have established to a new performance audit techniques that is (Wahidtechniques) I am sure that this technique will help manner performance audit in a basic butvaluable way. I have includes to This article (Wahid techniques) Performance audit >definition, aspect, basic questions, ideas, Need, Perf- Audit versus Financial Audit, Objectivesand Scope, examines, process, Criteria, This article has investigational been experienced inthe performance audit,A good performance audit should rest on judgment, an understanding of the conditions, andthe ability to ask the right questions of organizations, people, etc., by investigative arepresentative. Wahid techniques is a major objective in the financial management of any215
  9. 9. organization .to put in place internal controls so that errors, misstatements and irregularitiesare prevented from occurring or detected , These Wahid techniques are performed by theSignificance and dependability manner following is showing :Introduction: One of the most significant reasons for performance auditing is to enablegovernment to demonstrate that public accountability responsibilities have been fulfilled.National and provincial government departments and municipalities, government-fundedinstitutions and public entities can greatly benefit from performance auditing.The selection of technique will depend on the nature of the activity audited, the deepness andscale of examination, time of audit, processing manners, etc. In deciding on a specifictechnique, also need to take account of the goal of the audit action and the capacities limitedby time & supplementary aspects,WAHID TECHNIQUES – (the Significance and dependability manner for Performance audit)These techniques are closely related to and directly determined by the manner how the auditactivity is performed. Wahid techniques use a number of methods to make sure thedependability of resulting data, its quality required to identify the true causes of variations,and its extent needed to develop generalized conclusions at a preferred level. Wahidtechniques to specify the main technique which will be Significance & dependable Solutionwhole of the performance audit, Wahid techniques classify the following techniques ofperformance audit,Performance Audit = Written evidence + Analysis /Questionnaire. + Hub groups +Interviewing +Direct observationA good performance audit should rest on common sense, an understanding of the situation,and the capability to ask the accurate inquiries,WRITTEN EVIDENCE:An auditor should use a form of the audit report that is appropriate for its intended use and isin writing or in some other retrievable form. For situations when audit organizations aresubject to public records laws. Auditors may present Different forms of audit reports includewritten reports, letters, briefing slides, or other presentation materials.Written evidence of the ability to carry out audit and performance assessment looks probableto be one of the five components of Wahid techniques. Written evidence an important elementof the performance audit cycle, written evidence is to manage the changes suggested by thefirst part of performance audit the cycle this paper seeks to raise the issues involved in thisprocess. The criteria which might be used to assess a written submission are presented. Apossible mechanism for marking and grading is suggested, and strategies for optimizing thevalidity and reliability of that assessment discussed. A timescale for implementation is alsosuggested.When asked to prove to the effectiveness, or verify the plan and accomplishment, of anorganization’s internal controls, auditors need to see written documentation that the controlsare planned to be effective, and be able to congregate evidence that they have beenimplemented and are functioning effectively.Written credentials should speak to a complete process from beginning to end. Thedocumentation should particularly tackle and emphasize areas where errors may be morelikely to happen in the financial reporting procedure, and the internal control processes and216
  10. 10. procedures that have been planned to check them. Credentials may be careful satisfactorywhen it:01. Attend to specific risks of errors (or fraud) in a process, or where controls are required02. Describes the controls to prevent and detect recognized risks03. Indicates who should perform these controls, including who should perform the controlwhen the person with primary responsibility is away04. Indicates how the control will be performed05. Describes what objective evidence, or credentials, is maintained to show that the controlshave been performed.06. Describes what physical evidence will stay behind,In the audit report, auditors should present satisfactory, proper evidence to support thefindings and conclusions in relation to the audit goals. Obviously developed findings, assistmanagement or mistake officials of the audited entity in understanding the need for takingcorrective action. If auditors are able to sufficiently develop the elements of a finding, theyshould provide recommendations for corrective action if they are significant within thecontext of the audit objectives.However, the extent to which the elements for a finding are developed depends on the auditobjectives. Thus, a finding or set of findings is complete to the extent that the auditors tacklethe audit goals.CRITERIA OF WRITTEN EVIDENCE:The following criteria are optional as being important in the assessment of a writtensubmission of a performance audit.Title: The title should give an signal of the area of investigational activity audited and theaudit question,Introduction: This should incorporate a report about how an area of audit came to beimportant. The principles against which performance is being experienced should be stated,and their source described. The technique of data collection and analysis should be clearlystated. Quantitative audit should comprise reports describing how the study population wasrecognized.Results: This part should control an appearance of all the applicable outcome report,tabulation and statistical tests should be used appropriately.Discussion: This section should include discussion of the following:01. The technique used including its advantages and restrictions, for example the validity andreliability of the dimensions and the likely sources of bias.02. The results and an expression on the difficulties in interpreting the consequences.03. The reasons why the calculated performance fell short of the principles which had beenset. If the performance was found to be acceptable there should be an details with reference tothe original reasons for suspecting that this would not be so.04. The proper terminations and implications of the results for the practice in terms ofrecommended areas where changes are required.05 If performance had been acceptable the author should converse the factors in the performwhich facilitated this.217
  11. 11. WAHID TECHNIQUES – THE SIGNIFICANCE AND DEPENDABILITY MANNER FORPERFORMANCE AUDIT (PART -03)Summary: The Wahid techniques technique will depend on the nature of the activityPerformance audited, the depth and scope of examination, time of audit, processing methods,etc. In deciding on a specific technique, also need to take account of the objective of the auditaction and the capacities limited by time or other factors.These Wahid techniques are closely related to and directly determined by the method how theaudit activity is performed. And may use a number of techniques to ensure the dependabilityof resulting data, its quality required detecting the true causes of deviations, and its extentneeded to devise generalized conclusions at a desired level. For each audit actionOPENING SUMMARY OF FINAL (03) PART:My endeavor this “WAHID TECHNIQUES” to be a valuable indication for not onlyaccounting and auditing professionals one but also for persons who must relate with auditors,such as company managers, bank loan officers, suppliers, current and potential investors, andworkers at governmental audit agencies such as the Securities and Exchange Commission. Ihave tried to explain through my article the values and their necessities fully, in clear words,using technical expressions only where necessary. My goal was to write a practical andeffective article that “how to” lead. “Performance audit” The important part of auditing. Atany Unacceptable auditing report in that circumstances Wahid techniques, are evidence of thecrucial importance of this article (WAHID TECHNIQUES)This article tools and techniques covered can be adopted any financial error or misstatementson the basis of auditing standard. Accounting and auditing students and job holder of auditdepartment will also benefit from this article; I hope they will keep this article for easyreference and daily use. Any confusing situation or problem may be solved by referring to thecomplete indicator. Corporate managers, internal auditors, and external auditors who closelywait to the Material, & suggestions, of this final partANALYSIS /QUESTIONNAIRE:Definition of Performance analysis/ Questionnaires:Assessment of various financial performance & indicators “Performance analysis” is the frontend of the front end (such as return on assets and return on equity) in comparison with theresults accomplished by synonyms are planning, scoping, auditing, and diagnostics. Its whatwe do to figure out what to do. SomeAuditors can apply a number of techniques to analyze data: simple comparisons andreconciliations; statistical methods, such as mean, mode, median, standard deviation Instatistics, the standard amount a number varies from the standard number in a series ofnumbers. The data collection methods adopted by the auditors should be explained; includingrationales for any unusual techniques or procedures Analysis / Questions regarding thereliability of the data collected through consultants would likely be of special interest. Ingovernmental planning and budgeting, the attempt to measure the social benefits of aproposed project in monetary terms and compare them with its costs. ; efficiency pricing;output budgeting; sensitivity testing; or cost-effectiveness analysis cost-effectivenessanalysis Cost-utility analysis Clinical trials A form of economic analysis in which alternativeinterventions are compared in terms of the cost per unit of clinical effect, this Analysis /218
  12. 12. Questions techniques used by the auditors along with reasons for reliance on a particulartechnique .In others: When start a main analysis for performance audit, auditor inform the ministries inquestion and any subordinate agencies about the purpose of the analysis, preliminary auditcriteria, audit questions, method to be useful and the meeting of facts. The ministry makescomments, particularly to the audit criteria the norms and values that are relevant for theperformance audit apprehensive. Audit is not an end in itself. However, it is an indispensablepart of a system aimed at disclosing deviations from customary values and violations of theprinciples of authority, efficiency, effectiveness and economy; so that actions may be taken.When audit is measured to have a corrective functionAnalysis /Questionnaire: Analysis /Questionnaires have an assortment in familiar asapparatus for collecting information. The Analysis /questions in an Analysis /questionnairetake more time and effort to develop,• It is more complex to prompt people to answer the questions in a questionnaire,• Allocation to respondents tends to be fairly complexAnalysis /Questionnaires are better suited for more experienced auditors. Interviews andquestionnaires have much in common as tools for collecting information. However, from theplanning perspective, questionnaires are different in that:• The questions in a questionnaire take more time and effort to develop,• It is more difficult to motivate people to answer the questions in a questionnaire.There are four most important make use of for performance analysis:1. Like currently have no performance problems, but you just want to correct the system togive better performance.2. An auditor wants to exemplify and adjust personal stand-alone communication as part ofthe documents of that communication, and for assessment with some future time when,possibly, they start behaving another way.3. A system is departing from previously identified objectives, and you want to find outprecisely where and why this is so. This inadequacy can usually be corrected by changingdifferent joystick. At slightest some small adjustments usually have to be complete to anynew system as it goes exist.4. A system may or may not have performance purposes, but it materializes to be afflictionrelentless performance evils.Characteristic of performance audit analysis:When preparation the annual year’s performance audit assessments all the parts of theposition of accounts are reviewed. Every third year a total analysis is approved. Whereasonly major modifies are reported in the intermediate years. Reviewing an area is base on thefollowing characteristic:1. Financial situation2. Previous reports and important memorandum to the PAC the audit form3. Organization – arrangement and complication4. political/public responsiveness and topicality5. cross-ministerial problems219
  13. 13. 6. Remarks from the financial audit7. Possibility for major disbursement programmesBefore creation a report, an opening assessment is completed in order to obtain sufficientinformation regarding an area, so that an enough assessment may be finished of whether ornot to start an assessment.HUB GROUPS:A hub group is a qualitative research technique. It is a selection of some individuals broughttogether to discuss specific issues in an informal setting. Selected participants are related tothe issue in a certain way. The reactions of the group are used to explore attitudes, beliefs,perceptions, and problems or to search for causes of problems and their solution. A facilitatoris used to direct the group discussion and to hub attention on the specific aims of the session -this might involve developing practical recommendationsStrategy of hub: The first port of identify for all troubled with policy making’ this site aimsto encourage tactical thinking and develop policy making and delivery across government. Itactivities to provide users with access to a range of perspectives on policy matters. However,their appropriateness and value is a matter for personal users to judge and Policy Hub cannotand does not approve any materials included on this site which begin in non- governmentorganizations.Quarterly, we spotlight an associate who has excelled in many areas of their work. This part isdedicated to showcase these skilled and highly talented folks who have exceeded ourexpectations and put our customers first in all they do with Quality Hub.In my mind, these kinds of results are no better than any "face for dollars" process and arewhats preventing corporate recruiters from competing effectively with their external agencycounterparts. A hub and spoke approach to sourcing passive candidates changes theunderlying rules here by leveling the playing field.In Supplementary: This is where the use of the hub and spoke model for passive candidatesourcing can have a significant impact on both productivity and quality. While manycorporate recruiters are successfully using Broad look to identify passive candidates, theirproductivity metrics are far below their external agency counterparts. The "too much work todo" excuse is part of the problem here, and this is a valid point. It does take more time tocontact, persuade, and recruit passive candidates into the fold. However, from what Ive seen,even with enough time, most corporate recruiters would still fall short. In my opinion, this istotally due to the use of unsophisticated recruiting techniques.Hub Group each individual incentive option we describe also can work for groups. That is,two or more employees can be paid for their combined performance. Group incentives makethe most sense where employees’ tasks are interdependent and thus require cooperation.INTERVIEWING:To recruit the best employees and reduce turnover in internal audit staff, employers needEffective interview techniques to identify candidates who possess the skills needed forsuccessful job performance. Traditional interview questions don’t necessarily reveals the mostpertinent information about internal audit candidates. Behavior description interviewing (anda related approach called situational interviewing) is a widely used technique for obtaininguseful information about candidate behaviors and characteristics relative to specific job skills.220
  14. 14. The premise of behavior description interviewing is that past actions are the best indicators offuture behavior. The interviewer begins by identifying necessary job skills and then developsinterview questions to assess the candidate s ability to handle those job skills.Interview: effective interview techniques can help set a cooperative tone for auditengagements. Interview is commonly an assisting technique used by the auditor to get a betteraccepting of the issue to be audited and obtain additional information, where examination orpaper study fail to recognize all relevant points.Information obtained through interviews gives the auditor certain clues when reviewing andassessing the actions of the audited, also by allowing him to compare the comments ofindividual staff members on certain issues and thus form his opinion on their professionalskills and moral virtues. In main questions, it is important to divide the interview into severaltopics or areas, and set their order:An auditors ability to gain the clients confidence and develop a rapport can significantlyaffect the level and quality of information obtained during an interview. Setting the right toneand approaching interview subjects with tact and diplomacy can ensure questioning elicitsuseful, honest responses. Moreover, auditors need adequate preparation and training to ensuretheir client interviews are handled appropriatelyPrior to the interview:Auditors should decide in progress the areas they want to cover, the correct questions theyneed to ask, and who best to perform the interview. Having these details in mind will hub theinterview assembly and help auditors achieve intended results. Interviewers should also learnas much as possible about the client before the interview.Beginning rapport:At the beginning of an interview, auditors may want to use some form of icebreakingtechnique to make the client feel more contented. Initiating a informal, non-work-relatedconversation can help start the interview on a positive note and defuse any possibleopposition.Although time constraints are always a worry during interviews, spending five or to minutesestablishing an initial correlation can actually help speed up the overall process. Subjects willlikely be more cooperative if they feel contented with the interviewer, which can help reducethe amount of time necessary for the initial assembly as well as the need for follow-upsessionsAcquired buy –in:Once rapport has been recognized, the interviewer can segue into the real purpose of theconference. Auditors should temporarily make clear why theyre performing the interview anddescribe how the outcome of the discussion might help lead to improvements in the clientscompany area. If clients know what to expect, as well as how the interview might benefitthem, they may be more inclined to assist.The interviewer can then elucidate that part of internal auditing job is to help clients identifyways that their work can be simplified, streamlined, and possibly realigned to establish moreeffective internal controls. Auditors can also emphasize that this process is helpful not only tothe clients immediate business area, but to the organization as a whole. Helping clientsunderstand the larger picture will make it easier for them to understand the need for theinterview221
  15. 15. Accomplish the interview:After ahead buy-in, the auditor can then begin the formal interview. Open-ended questionstypically yield the best results. Questions that cannot be answered with one word, such as"Tell me about your bank settlement process," prompt the client to offer more information.When encouraged to provide narrative responses, interviewees may offer useful details andunreliable information they may not have revealed otherwise.Avoiding "blocked" questions can also help stop false answers. When asked a exact questionlinked to performance, such as "Have you completed all projects on agenda?" intervieweestend to answer "yes," even if it constitutes a unfair reply.Helpful Listening:No substance how methodically a client answers questions during an interview, theinformation will be of little value if the auditor doesnt hear whats being said. Many tools canhelp auditors to listen, appreciate, and retain information from interview sessions. attractivenotes is one evident and extremely successful meansPackaging up:The internal auditor should also provide his or her contact information, in case clients laterthink of any details they may have forgotten to communicate during the interview. Inaddition, the auditor should mention that a follow-up conversation may be required for furtherclarification.The knack of the interview:By helping clients feel more comfortable during the interview process, auditors may be ableto obtain valuable information that would otherwise have been unavailable. The process mayalso reveal areas that, while not pertinent to the immediate audit, should be examined in thefutureIn interviews, data reliability and accuracy may be affected by:1. The person interviewed, its position and vested interests, if any,2, the situation during the interview,3. The competence of persons conducting the interview.If, for any reason, an interview was made under pressure or if others were near to hear it, thereliability and accuracy of this interview is likely to be lower. Likewise, the reliability ofanswers may also be affected by how you formulate the questionsAuditors can thus follow up on the progress of work Interviews and written documents shouldbe filed according to certain standard rules. Listed below are a few basic questions whichshould help the auditor file and classify data.Interview1 .who is the person being interviewed,2. Who are the interviewing persons?3. When did the interview take place?222
  16. 16. 4. How did the auditors contact the person interviewed,5. Was the person interviewed given any promise of confidentiality, etc?Documents1. Where do the documents come from?2. What is the content?3. Where can additional information are obtained,4. Who can be contacted for additional information?In the course of the audit, the auditor may learn "responsive information", such as employeesopinions on management, etc.. For this reason as well, auditors should make sure mystery.DIRECT OBSERVATION:Observation is a basic technique used in any financial activity. In the situation of audit,observation is a planned and embattled analysis of objects aspects of an action. The basicquality of observation, as an audit technique, depends on whether the auditor is part of thestaff concerned (manager or expert) or an employee of a superior or other state pressure.Depending on this, observation can be done either by an insider or outsider Insiderobservation offers more in-depth knowledge of audited areas and a better chance to see thebigger demonstration, as the auditor can think all possibilities and actions, is familiar with theissues concerned, and has a lot more experience gained through useful workFor impartial result, outsider observation therefore seems the more suitable option, even if ittakes greater effort to penetrate the issue, because its results are generally better. It is used inparticular where the auditor is advised about the center and the objective of an audit action. Insome cases, especially where there are suspicions of criminal activity, it is good to start theaudit as a hidden outsider observation and only switch to obvious observation after acquiringcompulsory proofObservation has to follow a certain procedure, consisting of the following stages:1. Definition of observation subject, objective, and problems,2. Creating conditions facilitating observation with a view to optimum results,3. Gaining access to the environment and establishing contact to the staff and issues observed,4. Actual observation,5. Documentation and interpretation of observation results,6. Audit of observation results.Only verified observation results, supplemented by results produced by other techniques, suchas document study, discussion of findings with responsible staff, etc., may be used in theimplementation.ConclusionsA performance audit may run for a long time, and there may be changes in awareness andactuality from the point in time when it in progress. In performance auditing it is oftendifficult to make a variety between the directions set out in the work plan and the explanationof the audit’s structure on the one hand, and the interest in studying questions that the finalstage in the analysis of data involves combining the results from different types of sources.There is no general method for doing this, but it is of central importance that the auditorworks systematically and carefully in interpreting the data and arguments collected. This223
  17. 17. stage involves weighing up arguments and assertions, consulting experts, and makingcomparisons and analyses. As the work continues, the draft report gradually takes shape.Direct observations are put into structured and as internal and external discussions progress,assessed and written; details are checked and conclusions are discussed. There is a need forexchanges of information based on discussion papers to discuss main issues that haveemerged during the way of the performance audit techniques.By definition of performance audit, a technique is the way and procedure leading to a certainaim, while a technique is the tool used to reach that intend. Also, the techniques applied inaudit work are the way and procedure leading to the objectives pursued by the audit and audittechniques are the tools engaged to accomplish the purpose pursued by audit techniques. Ingeneral, performance audits should use techniques which are specially designed and appliedin this particular activity. Above all, it is the comparison technique, which forms the basis foran array of other methods in that its application serves an essential audit need,224