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05/17/2012

Research proposal on the premium people place on internal auditing and attitude towards internal auditors


Research problem

The rule regarding independence states that the certified public accountant (CPA) will be independent with respect to the services provided. Interpretations of this rule indicate that independence is impaired if there is any material or direct monetary interest in the company for which the services are provided. Public accountants have had much experience in entering an environment that is seemingly different from any experienced earlier. Such a situation does not unnerve the public accountant (Bragg 1999). The public accountant does not function with mental recipes for what is to be done. Instead, the public accountant has much skill in getting to the heart of the matter. Making professional judgments is well understood by the public accountant. In a new situation in which a specified engagement is to be performed, the public accountant is an astute diagnostician. Experience and reflection of human behavior in organizations have prepared public accountants to provide extended assurance in many areas. A large financial services company was stunned at the revelation that a massive fraud had occurred in their organization. How could this have happened? As the executive committee talked among themselves, they could not believe the revelation was true. However, they knew that it was. They reflected on what their organization stood for: high values, integrity, respect for individuals. How often these terms had appeared in annual reports and in speeches given by key executives in all types of forums. They realized that they had a professional internal audit staff, well-educated supervisors and managers (Calhoun, Oliverio & Wolitzer 1999). This paper is a proposal to create a research study on the premium people place on internal auditing and attitude towards internal auditors.

Aims and objectives

1.    Determine the benefits of internal auditing.

2.    Know the concept behind internal auditing.

3.    Analyze the premium people place on internal auditing.

4.    Understand the attitude against internal auditors.

Literature review

A problem for CPA firms is the outsourcing of the internal audit function by certain corporations. In some cases, the outside audit firm is used. It is easier to maintain the perception of independence when a firm other than the independent accountant is used. However, as is typical in a business situation, the CPA firm performing the attest function may be reluctant to refuse an offer to serve as a client's internal auditor. The internal audit function is the responsibility of management. However, some CPA firms are very active in soliciting the business. Erecting a Chinese wall between the attest function and providing consulting services is not easy (Bragg 2001). Many people believe the perception of independence is flawed when the CPA firm is performing the audit as well as performing the internal audit function. The fear is that the competition for the fee income will compromise independence and raise serious ethical concerns. Public accountants would like to have the additional business in the internal audit area, but can they perform internal audit functions and remain independent with respect to the financial audit? The independence problem arises when the audit team of a CPA firm performs the audit function, while the internal audit team of the same CPA firm performs the internal audit process. Continuous monitoring by the independent directors on the board as well as the outside auditing firm of the outsourcing aspects of the internal audit function is necessary to make sure that the public confidence in the independence of the CPA is not impaired. CPAs can provide audit services beyond the year-end audit without impairing independence, as long as the auditor does not act as an equivalent member of management or employee; perform ongoing control activities that affect the execution of transaction; maintain custody of assets; prepare source documents on transactions (Roslender 2000).

Methodology

Sample collection

To determine the number of respondents that will be asked to participate and give information regarding the study convenience sampling will be used. Convenience sampling means to collect or interview individuals who actually experience the phenomenon. Convenience sampling will focus on individuals that experienced diabetes mellitus or has someone in the family that experienced such disease.

Methodology/Data Collection

Primary and secondary sources of data would be used for the study. Surveys will the primary method of data collection.  Internet surveys would be the primary source of data. Internet surveys have been both hyped for their capabilities and criticized for the security issues it brings. Internet surveys would also require less time for the researchers and the respondents.  Secondary source of data would involve the use of books and journals.

Data Analysis

            In analyzing the collected data, the paper will be divided into the demographic profiles of the respondents and the ideas of respondents. The data that will be acquired will be put into graphs and tables.

References

Bragg, SM 2001, Just-in-time accounting: How to decrease costs

and increase efficiency, John Wiley & Sons, New York

Bragg, SM 1999, Managing explosive corporate growth, John Wiley

& Sons, New York.

Calhoun, CH, Oliverio, M & Wolitzer, P 1999, Ethics and the CPA:

Building trust and value-added services, Wiley, New York.

Roslender, R 2000, Sociological perspectives on modern

accountancy, Routledge, New York

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