Promoting Good Corporate Governance in the University of Queensland - the Role of the Internal Auditor - Research Proposal Example

Promoting Good Corporate Governance in University of Queensland: The Role and Responsibility of the Internal Auditor Name Course Name and Code Instructor’s Name Date Introduction Across the world, internal auditor plays a major role in providing services to the management. In making decisions, management bases their decisions on information available and availability and determining whether the information is accurate is achieved through activities fulfilled by internal auditing systems. This study analyses the relationship between corporate governance and internal auditing in ensuring organisations operate efficiently. Background of the Study Australian government has created laws that govern the operations of internal audit. The internal auditor facilitates, coordinate and provide quality services to the accounting department and other organisational departments (Chang, Chou and Wang, 2006). The value of internal audit is determined by how he contributes towards meeting the organisations objective. The internal auditor should provided enough information that will allow the management to make decisions that will advance the goals of an organisation (Douglas, Jason, and David, 2009). However, the role that is played by an internal auditor is limited in terms of scope and this requirement should be addressed to ensure return on investment is achieved. Problem Statement In organisations, the internal audit plays an important role but this role is not appreciated or the credibility of the auditing department is not appreciated (Goodwin, 2004). The importance of internal audit is not understood and this factor has resulted in down playing the importance of internal audit in strengthening the oversight responsibility of internal audit. This is evident in the way in which the role of internal audit is viewed. In addition, the internal audit is not adequately funded and at those there are no funds allocated to the sector. This is because the internal auditor is seen as a fault finder rather than providing solution to strive an organisation to excellence. Research Questions The research question for this proposal is: 1. What contributes to low supported accorded to the internal audit sector by managers? Hypothesis The hypotheses for this research proposal are: Relationship does not exists between the manager’s attitude and the internal auditor’s quality of service Research Objectives The objections of this research proposal are: 1. To identify and examine the factors that contributes to low support that is accorded to internal auditors by management 2. Analyse the specific actions that are required to ensure the internal audit operates optimally 3. To establish the relationship between the internal audit and management based on support and quality of service Significance of the Study The significance of the research is to: 1. Improve and add on literature in understanding the contribution of internal auditors 2. To understand the contribution of internal auditors in achieving the objectives of the organisation Literature Review Internal Audit Internal auditing is an objective assurance and it is independent in nature (Karagiorgos et al., 2008). Internal auditing is aimed at adding value and improves operations of an organisation. Internal auditing helps an organisation to achieve its goals through employing disciplined and systematic approach to improve and evaluate the governance, control and risk management process (Barua, Rama, and Sharma, 2010). With the commitment to accountability and integrity, the internal audits provides valuable information to senior management and governing bodies as a basis in which independent advice can be sourced. These tasks are usually completed by internal auditors. The extent in which internal auditing operates within an organisation is broad and it can address numerous topics that include risk management, organisation’s governance and management control. The aim of control management is to guarantee effectiveness and efficiency in utilisation of organisation assets and resources (Arena and Jeppesen, 2010). The other responsibility accomplished by internal auditors includes conducting proactive fraud with the aim of identification of fraudulent acts. Moreover, internal auditors can be commissioned to participate in investigation of fraud incidents to identify and establish financial loss. The recognised international standard that supervises and manages internal auditors is the Institute of Internal Auditors (IIA). IIA is also carrying out certifications for internal auditors and awards qualified persons with Certified Internal Auditor certificate (Sarens, Allegrini, D'Onza and Melville, 2011). Internal auditors work for all organisations from government agencies to private companies. Corporate Governance Corporate governance can be defined as the process and structure among the shareholders, the board directors, stakeholders and top management in directing an organisation towards achieving its goals and objectives. Corporate governance can also be defined as mechanisms in which corporation stakeholders exercise control over organisation management (Davidson, Goodwin-Stewart and Kent, 2005). The stakeholders are not only the owners of the organisation but also debt holders (Gonzalez, Sharma, and Galletta, 2012). However, the appropriate definition is the one proposed by Organisation for Economic Cooperation and Development (OECD). OECD (2004) states “corporate governance is the system by which a business corporation (or a non profit organisation) is directed and controlled, at its senior level, in order to achieve its objectives, performance and financial management, but also accountability, integrity and openness”. Methodology Methodology presents means in which information will be collected (Karagiorgos et al., 2008). Some of the areas discussed in this section include population, research design, data collection and analysis, and sampling techniques. Research Design The research is aimed at understanding the role of internal auditor in ensuring organisations champion governance (Karagiorgos et al., 2008). In addition, the study is designed in a manner that ensures the objectives of the research are achieved. The entire research process is premised on relating corporate governance and internal auditing. Population The research analyses University of Queensland. This is aimed at determining whether there is preference in the way the university accord to internal auditor. Sampling Technique The researcher will utilise a survey type of research in collecting the appropriate information. 70 elements will be collected from a targeted population of 50. Qualitative method will be used in collecting and analysing the data. The sample details are: 10 managers/supervisors from administrative department 10 managers/supervisors from academic department 10 managers/supervisors from accounting department 10 managers/supervisors from procurement department 10 employees within auditing department Data Collection The centre of the research is perception and attitudes of managers towards internal auditors. This means that the primary data collected is important and it will be supported by secondary information. The researcher will visit the university to introduce, familiarise and seek permission for carrying the research. The research would then inform the institution on when the information could be collected. Data Collection Instrument A questionnaire will be utilised in collecting the data. The questionnaire will be structured in the same method as started objectives. Appropriately 15 questions will be on the questionnaire in which they will be divided based on the objectives. Data Analysis The data that will be collected from the close-ended questions will be converted into percentages. The percentage of the respondents will be tabulated and analysed. Microsoft Excel which is a computer software will be used to analyse the data. The data collected will be utilised in discussing the relationship between corporate governance and internal auditing. Timescale The following is the time period in which the research will be done: 1-15 April 2013: Literature review 16-30 April 2013: Completion of draft literature review 1-7 May 2013: Obtaining directions from supervisor 7-20 May 2013: Compile and pilot research June 2013: Collection of data July 2013: Data analysis August 2013: Handing in the completed research References Arena, M., and Jeppesen, K. 2010. The Jurisdiction of Internal Auditing and the Quest for Professionalization: The Danish Case. International Journal of Auditing, vol. 14, no. 2, pp. 111-129 Barua, A., Rama, D., and Sharma, V. 2010. Audit committee characteristics and investment in internal auditing. Journal of Accounting and Public Policy, vol. 29, no. 5, pp. 503-513 Chang, C., Chou, H. and Wang M. 2006. Characterizing the Corporate Governance of UK Listed Construction Companies. Construction Management and Economics, vol. 24, pp. 647–656. Davidson, R., Goodwin-Stewart, J. and Kent, P. 2005. Internal Governance Structures and Earnings Management. Accounting and Finance, vol. 45, no. 2, pp. 241-67. Douglas F., Jason, L. and David, A. (2009) Internal Audit Quality and Earnings Management. The Accounting Review, vol. 84, no. 4, pp. 1255-1280. Gonzalez, G., Sharma, P., and Galletta, D. 2012. The antecedents of the use of continuous auditing in the internal auditing context. International Journal of Accounting Information Systems, vol. 13, no. 3, pp. 248-262 Goodwin, J. 2004. A Comparison of Internal Audit in the Private and Public Sectors. Managerial Auditing Journal, vol. 19, no. 5, pp. 640-650. Karagiorgos, T., Drogalas, G., Pazarskis, M., and Christodoulou, P. 2008. Environmental Auditing; Conceptual Framework and Contribution to the Business Environment. 2nd International Conference on Accounting and Finance, Thessaloniki, Greece, Conference Proceedings. Organisation for Economic Cooperation and Development (2004), Principles of Corporate Governance, OECD, Paris. Sarens, G., Allegrini, M., D'Onza, G., and Melville, R. 2011. Are internal auditing practices related to the age of the internal audit function? Exploratory evidence and directions for future research. Managerial Auditing Journal, vol. 26, no. 1, pp.51 - 64 Read More