ACCRA TECHNICAL UNIVERSITY

THE EFFECTIVENESS OF THE INTERNAL AUDIT UNITS IN THE

PUBLIC SECTOR IN PROMOTING GOOD CORPORATE
GOVERNANCE: A CASE STUDY OF NSAWAM GOVERNMENT
HOSPITAL AT THE EASTERN REGION OF GHANA

By

ANGEL SENAWO HELLEN

01201664B
AND
EMMANUELLA ADU-BOAHENE
01200800B

RESEARCH PROJECT REPORT/ THESIS Submitted to the

DEPARTMENT OF …………………………………………..,

FACULTY OF ……………………………………..,

In Partial Fulfilment of the Requirements for the

AWARD OF BACHELOR OF TECHNOLOGY (BTECH) DEGREE

In

ACCOUNTING

OCTOBER, 2022
 1 DECLARATION
This project is submitted as part of fulfilment for the award of a BTech in Accounting: The
work is a result of our investigation. All section of the text and results which have been
obtained from other works/ sources are fully referenced. I understand that cheating and
plagiarism constitute a breach of Accra Technical University and will be dealt with
accordingly.

NAME SIGNATURE DATE

ANGEL SENAWO HELLE …………… ………………

(CANDIDATE)

EMMANUELLA ADU-BOAHENE ……………… ………………

(CANDIDATE)

DECLARATION BY SUPERVISOR
I hereby confirm that the above student is a B.Tech. Students in the Department of
Accounting and Finance under my academic and research supervision in accordance to the
requirements in Accra Technical University. The student is currently in the final year of study
and is expected to complete in 2022.

NAME SIGNATURE DATE

DR. IBRAHIM ZUBAIRU ……………… ………………

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 DEDICATION
We dedicate this study to the Most High God, our lovely parents, siblings, friends and all our
lecturers for their support assistance throughout our training.

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 2 ACKNOWLEDGEMENT
This study was made possible by the grace of Almighty God, our Redeemer and our inspirer.

We would like to thank our supervisor Dr. I sincerely thank Ibrahim Zubairu for his immense

support and guidance. He opened our eyes to the virtue of hard work. Without him this

project would have been commonplace. We would like to thank all lecturers of the

Department of Accounting and Finance who gave us the necessary support and experience.

Our deepest gratitude goes to our entire family for their love, support and encouragement.

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 3 ABSTRACT
Internal audit has been acknowledged as the most effective control method to maintain strong

corporate governance in the public sector. Corporate governance has attracted substantial

public and regulatory attention as the antidote to corruption in today's global environment.

Therefore, the purpose of this study was to determine how successfully the internal audit

department of the Nsawam Government Hospital promoted good corporate governance. The

effectiveness of internal audits was examined along with the history of internal audits,

corporate governance, internal controls, and other factors. The research approach chosen was

descriptive. Internal auditors and hospital employees were contacted to collect data using

processes and purposeful sampling. The statistical methods employed were mean and

percentage. The audit committee at the hospital is ineffectual, according to the study, and

internal auditors have less management assistance. It is also obvious that the internal auditing

department lacked sufficient manpower. This suggests that the internal auditor at the public

hospital is not doing his or her job properly. Therefore, the internal audit units should have a

suitable governance structure, enough suitable resources, and qualified employees to ensure

excellent corporate governance.

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 TABLE OF CONTENT
DECLARATION.......................................................................................................................2
DEDICATION...........................................................................................................................3
ACKNOWLEDGEMENT.........................................................................................................4
ABSTRACT...............................................................................................................................5
TABLE OF CONTENT.............................................................................................................6
LIST OF TABLES.....................................................................................................................9
LIST OF FIGURES..................................................................................................................10
CHAPTER ONE......................................................................................................................11
INTRODUCTION....................................................................................................................11
1.1 Background to the study............................................................................................11
1.2 Statement of the problem...........................................................................................12
1.3 Objectives of the study..............................................................................................13
1.4 Research questions....................................................................................................13
1.5 Significance of the study...........................................................................................13
1.6 Scope of the study.....................................................................................................14
1.7 Limitations of the Study............................................................................................14
1.8 Organization of chapters............................................................................................15
CHAPTER TWO.....................................................................................................................16
LITERATURE REVIEW.........................................................................................................16
2.1 Introduction...............................................................................................................16
2.2 Brief History of Internal Audit..................................................................................16
2.3 Establishment of Internal Audit Service in Ghana....................................................17
2.4 Corporate Governance...............................................................................................18
2.5 The Relationship between Internal Auditing and Corporate Governance.................19
2.6 Internal Control System.............................................................................................20
2.7 Internal Control in the Public Sector.........................................................................21
2.8 Internal Control and Internal Auditing......................................................................22
2.9 Existence of Audit Committee..................................................................................23
2.10 The professional audit standards and codes of ethics............................................23
2.10.1 Management Support.........................................................................................24
2.10.2 Organizational Setting........................................................................................26
2.10.3 Organizational Policies and Procedures.............................................................26

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 2.10.4 Internal audit status and organizational independency......................................26
2.10.5 Unrestricted Access............................................................................................28
2.10.6 Budgetary Status of the Internal Audit...............................................................28
2.10.7 Internal Audit Quality........................................................................................29
2.10.8 Numerical Strength and Expertise of Staff........................................................29
2.10.9 Due Professional Care........................................................................................31
2.11 Audit Planning.......................................................................................................31
2.12 Communication......................................................................................................32
2.13 Fieldwork and Quality Review..............................................................................33
CHAPTER THREE..................................................................................................................35
METHODOLOGY...................................................................................................................35
3.1 Introduction...............................................................................................................35
3.2 Research design.........................................................................................................35
3.3 Population..................................................................................................................35
3.4 Sample and Sampling Method...................................................................................35
3.5 Method of data collection..........................................................................................36
3.6 Instrument for data collection....................................................................................36
3.7 Instrument Validity and Reliability...........................................................................36
3.8 Procedure of data collection......................................................................................37
3.9 Method of data analysis and presentation of results..................................................37
CHAPTER FOUR....................................................................................................................38
RESULTS AND DISCUSSIONS............................................................................................38
4.1 Introduction...............................................................................................................38
4.2 Demographic analysis of responders.........................................................................38
4.3 Elements of good corporate governance...................................................................40
4.4 Internal control activities...........................................................................................41
4.5 Factors that hinder the effectiveness of the internal audit.........................................43
4.6 Management support.................................................................................................44
4.7 Existence of Audit Committees.................................................................................45
4.8 Organisational Settings..............................................................................................46
4.9 Internal audit quality..................................................................................................48
4.9.1 Expertise, strength and experience of internal audit staff..................................49
4.9.2 Scope of service.................................................................................................49
4.9.3 Audit communication.........................................................................................49
4.9.4 Existence of Approved internal audit charter, standards and mandate..............50

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 4.10 Advisory roles do internal auditors play in the assemblies...................................50
4.11 Determinants of effective internal audit................................................................51
CHAPTER FIVE......................................................................................................................54
SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS..................54
5.1 Introduction...............................................................................................................54
5.2 Summary....................................................................................................................54
5.2.1 Elements of good corporate governance............................................................55
5.2.2 Activities that the internal auditors perform at the hospital...............................55
5.2.3 Factors that contribute to the effectiveness of internal audit units in the public
sector 55
5.2.4 Advisory roles of the internal auditors at the hospital.......................................56
5.3 Conclusion.................................................................................................................56
5.4 Recommendations.....................................................................................................57
REFERENCE...........................................................................................................................58
APPENDIX A..........................................................................................................................62

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 4 LIST OF TABLES
Table 4-1:Gender distribution of respondence.........................................................................36

Table 4-2:Age Distribution of respondents..............................................................................37

Table 4-3:Academic qualification of respondents...................................................................37

Table 4-4:Elements of Good Corporate Governance...............................................................39

Table 4-5:Internal Control activities........................................................................................40

Table 4-6:Management support...............................................................................................42

Table 4-7: Organisational Settings...........................................................................................45

Table 4-8: Determinants of the effectiveness of internal audit................................................51

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 5 LIST OF FIGURES
Figure 4-1: Elements of Good Corporate Governance............................................................40

Figure 4-2: Management support.............................................................................................43

Figure 4-3: Existence of Audit Committees.............................................................................45

Figure 4-4: Advisory roles of internal auditors........................................................................50

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 1 CHAPTER ONE

1 INTRODUCTION

1.1 Background to the study

Auditing is crucial since it entails assessing different controls, looking into any deviations

from the rules that apply and any instances of irregularity, inefficiency, or ineffectiveness

with the goal of taking corrective action (Aikins, 2011). Internal audit has recently attracted

more attention, especially when looking at its contribution to management in the public or

private sector in terms of organizational resources (Alberta, 2005; Dhamankar &

Khandewale, Effectiveness of internal audits, 2003; Hany & Maged, 2009; Rupsys &

Boguslauskas, 2007; Theofanis, Drogalas, & Giovanis, 2011; Ussahawanitchakit &

Intakhan). When one individual has to entrust another person with the care of their resources,

financial accountability becomes necessary. In order to run the company or institution

effectively, the management was obliged by the owners to provide a report. However, issues

with corporate governance have arisen as a result of the challenges in managing managers

and the challenges in assessing if the information provided by management is truthful and

provides a genuine and fair view of the organization. This is what (Iain & Stuart, 2000) refer

to as agency theory.

Internal auditing is an impartial, unbiased assurance and consulting activity intended to

provide value and enhance an organization's operations, according to the Institute of Internal

Auditors (IIA, 1999). By applying a systematic, disciplined approach to assessing and

enhancing the efficacy of risk management, control, and governance procedures, it aids a

company in achieving its goals. This concept would be the starting point for evaluating how

well internal audit works in the public sector to support good corporate governance.

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1.2 Statement of the problem

One of the good controls for strong public sector governance is internal audit, which is

crucial to ensuring the effectiveness and sufficiency of controls. He verifies adherence to

current financial regulations, directives, and procedures; assesses the efficiency and

effectiveness of resource use; evaluates the effectiveness of selected internal controls; looks

into irregularities; ensures that revenue is recorded and accounted for; and checks inventory

records and their correspondence with physical inventory (INTOSAL, 2006). When internal

audit produces the intended results it was expected to, it is effective. According to (Zekele,

2007), internal audit operations ensure effective and efficient use of resources to accomplish

corporate goals and help avoid corruption, misappropriation of funds, and other financial

irregularities.

The global economic crisis of 2008–2009 (also known as the "credit crunch”), however,

compromised the fundamental functions and goals of internal audit and, more crucially,

diminished the integrity of internal audit units in advancing sound corporate governance. Due

to lax internal control systems, theft of funds and corruption are now frequent in the public

sector across all nations (Van Gansberghe, 2005). According to the (Centre for Democracy

and Development (CDD), 2000) report, public funds are being misused by government

employees, especially at the local government level, not to mention government hospitals.

This has led to a significant budget deficit for the government, low living standards, and a

weak economy. As the foundational component of any organization's internal control

systems, the question that everyone will be asking is: Are the internal audit units effective in

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this current situation? The researcher was inspired by this to investigate the matter at

Nsawam Government Hospital.

1.3 Objectives of the study

The following are the objectives of this study:

 Find out the elements of good corporate governance.

 Find out the activities that the internal auditors perform at the hospital.

 Bring into light the factors that contribute to the effectiveness of internal audit

units in the public sector.

 Find out the advisory roles of the internal auditors at the hospital.

1.4 Research questions

The following questions have been developed to guide the study.

 What are the elements of good corporate governance?

 What are some of the activities performed by internal auditors?

 What factors make the internal audit units effective?

 What advisory roles do internal auditors play in the hospital?

1.5 Significance of the study

The researcher is convinced that a broad range of people would benefit from the study's

findings. Hospital administrators, the federal government, the Ghana Internal Audit Agency,

internal and external auditors, organizations that develop standards for accounting and

auditing, and the general public are among these.

The scope of internal audit work must be specifically outlined in the internal auditor charter

for the internal audit unit to function effectively. The Internal Audit Agency and other

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regulating organizations will use this information to define the duties, responsibilities, and

audit requirements of internal auditors in the charter. According to the study, doing so will

further boost the internal auditors' independence and increase their efficiency. Additionally, it

will help the hospital's management, higher-up bodies, audit committee, and any other

governing bodies in the public sector understand the value of using internal audit and provide

information on how to do so effectively. This study also has the essential benefit of assisting

internal auditors in their professional endeavors. In order to significantly contribute to the

achievement of the organization's goals, it underlines the necessity for internal auditors to

approach their work with professionalism, integrity, secrecy, excellent ethical behavior, and

competence.

Some public sector organizations continue to hold incorrect beliefs about the function of

internal audit units and are unwilling to set them up. The results of this study will encourage

these firms to include internal audit units in their functional areas in order to manage risks

effectively and boost their performance. Not to mention, it will add to the body of knowledge

for individuals who do future research in this area or other closely linked fields.

1.6 Scope of the study

The internal audit department at Ghana's Nsawam Government Hospital in the Eastern region

is the subject of the study. Based on the acknowledgment these factors have gotten from

empirical studies som, the study's focus was primarily based on the professional skill of

internal audit personnel, quality of the audit work of internal auditors, organizational

independence of internal auditors, career and promotion prospects available for internal

auditors, and the support internal auditors receive from senior management (Karagiorgos,

Drogalas, & Dimou, 2010).

1.7 Limitations of the Study

It is our desire to carry out the research work on the selected topic for accuracy, reliability

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and efficiency. But the following may be difficulties that may bring limitations to our scope:

 Secrecy: some information we may require might be tagged confidential.

 Lack of cooperation of some respondents: the reluctance of officers of organizations

involved may limit our scope since we might not get full details.

 Time: The researcher was confronted with the non-availability of time by the staff of

the Nsawam Government Hospital to provide the needed information in much detail.

 Another limitation was the fact that the researcher had to redistribute some of the

questionnaires to the respondent because they misplaced earlier copies.

The questions which were closed ended were not properly answered by the respondents

hence it made it difficult in coding them for analysis.

1.8 Organization of chapters

The project is organized with subdivisions as follows:

Chapter one covers the background to the study, statement of the problem, objective of the

study, significance of the study, scope and limitation, definition of terms and organization of

chapters of the study.

Chapter two is the review literature. It looks at the work of other writers in the research area

that have similar documentation in books, newspapers, periodicals and on the internet.

Chapter three is the methodology. This chapter focuses on the study design, the population

sample and sampling procedure, and instrumentation.

Chapter four termed the results of the study. It looks at the findings and discussions of

results.

Chapter five focuses on summary, conclusion and recommendation.

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 2 CHAPTER TWO

2 LITERATURE REVIEW

2.1 Introduction

This study focuses on how well the public sector's internal audit unit promotes sound

corporate governance. Both empirical and opinion literature on internal auditing were

analyzed in order to accomplish the goals of this study.

2.2 Brief History of Internal Audit

Beginning in the 20th century, the emergence of numerous huge, scattered, complicated

organizations sped up the internal audit function's development. Modern internal auditing

owes much of its early development to the Institute of Internal Auditors (IIA), which was

founded in 1941 in large part as a reaction to this development. The gradual enlargement of

the internal audit operations' purview and the practice's professionalization fall under this

category. The Institute of Internal Auditors (IIA) didn't release its first Statement of

Responsibilities until 1947. Standards were released in 1979, and the Code of Ethics in 1968.

In 1974, the first Certified Internal Auditor (CIA) exams were given, suggesting that internal

audit professionals had access to what was at the time thought to be a recognized body of

knowledge. Internal audit has advanced significantly over the past two or three decades,

claims Pickett (2004). Internal auditing was once thought of as a way to verify the tens of

thousands of financial transactions that were added to the account each week. It was limited

to simple account tests in the 1950s and 1960s with the aim of identifying errors and

inconsistencies. Today's internal auditors, in contrast, assist in the creation of appropriate

controls as part of a larger risk strategy and offer guarantees regarding the dependability of

these controls. There has been a great shift away from extensive low-level monitoring of a

large volume of transactions toward high-level corporate risk management (Rudasingwa,

2006). Because a company functions in a world full of uncertainty, risk management is

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crucial. As a result, internal auditing in the modern global economy should focus more on

risk management and control rather than the conventional examination of transaction volume.

That is, rather than emphasizing error and fraud detection, it should concentrate on error and

fraud prevention.

2.3 Establishment of Internal Audit Service in Ghana

Internal Audit Agency was formed in 2003 by Act of Parliament to significantly strengthen

Ghana's internal audit service. Each internal audit unit must submit an annual report to the

agency via the Regional Coordinating Council. The agency is an autonomous entity that

appoints internal audit personnel for the Ministries, Departments and Agencies (MDAs) and

the Metropolitan, Municipal and District Assemblies (MMDAs). Within the Ministries,

Departments and Agencies (MDAs) and the Metropolitan, Municipal and District

Assemblies, the agency's goal is to organize, facilitate, and offer quality assurance for internal

audit. The agency's duties consist of:

1. For the MDAs and MMDAs to conduct internal audit activities, the Agency shall

establish standards and processes..

2. The Agency shall ensure that:

 financial, managerial and operating information reported internally and externally is

accurate, reliable and timely;

 the financial activities of MDAs and MMDAs are in compliance with laws, policies,

plans, standards and procedures;

 National resources are adequately safeguarded; iv. national resources are used

economically, effectively and efficiently;

 plans, goals and objectives of MDAs and MMDAs are achieved; and

 Risks are adequately managed in the MDAs and MMDAs.

3. The agency shall:

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  promote economy, efficiency and effectiveness in the administration of government

programmes and operations;

 prepare plans to be approved by the Board for the development and maintenance of an

efficient internal audit for the MDAs and MMDAs;

 Provide a way to keep the MDAs and MMDAs fully and up-to-date on issues and

shortcomings relating to the administration of their programs and operations and the

requirement for appropriate corrective action; facilitate the prevention and detection

of fraud; and iv..

4. The Agency shall monitor, undertake inspections and evaluate the internal auditing of

the MDAs and MMDAs.

2.4 Corporate Governance

Over the past two decades, corporate governance has drawn more attention and scrutiny.

According to Fama and Jensen (1983), corporate governance is the entirety of an

organization's operations and controls or a comprehensive, structured set of rules (Toronto

Stock Exchange Committee on Corporate Governance in Canada, & Dey, P., 1994).

According to a thorough description offered by (John & Senbet, 1998) in their study,

corporate governance is the study of the controls that shareholders of a corporation have over

the company's management and insiders in order to safeguard their interests. The interactions

between the board of directors, senior managers, and stockholders are what is now more

recently defined as corporate governance (Roe, 2004).

The principles of corporate governance include maintaining accountability to shareholders or

stakeholders (Keasey, Thompson, & Wright, 1997). It is regarded as one of the most widely

researched subjects that can be used to reduce conflicts of interest between management and

investors. Corporate governance primarily seeks to safeguard capital owners against

management's opportunistic actions (Jensen & Meckling, 1979; Pandya, 2011; Abdurrouf,

8
2011). Additionally, corporate governance gives directors the power to make wise choices

that advance the interests of the shareholders in order to achieve objectives (Shleifer &

Vishny, 1997). It is clear that businesses with excellent corporate governance improved their

operational efficiency (Irina & Nadezhda, 2009). The "system by which firms are directed

and managed" is known as corporate governance (Cadbury, 2000). The concepts of

compliance, accountability, and openness are all part of the control aspect of corporate

governance (MacMillan, Money, Downing, & Hillenbra, 2004).

2.5 The Relationship between Internal Auditing and Corporate Governance

The importance of the internal auditor's role in developing sound corporate governance

systems has long been acknowledged (Allegrini, D'Onza, Paape, Melville, & Sarens, 2006).

Internal auditors are increasingly giving management a far wider variety of information about

the company's financial, operational, and compliance activities in order to increase the

effectiveness, efficiency, and economy of management performance and activities (Rezaee,

1996). The job of the internal auditor is anticipated to be enhanced by corporate governance,

and the internal auditor also benefits the external auditor (Holm & Laursen, 2007). The

efficacy of internal control and the impact of corporate governance on companies listed on

the Bucharest Stock Exchange were examined in (Mihaela & Iulian, 2012). A fair

presentation of the financial accounts is the result of an effective internal control, which

boosts stakeholders' confidence in the financial statements. Additionally, a study was

conducted in 2012 by Yassin, Ghanem, and Rustom to investigate the connection between

internal audit and corporate governance in several commercial banks in Lebanon. The

statistical analysis revealed a number of noteworthy tests that supported the claim that

internal auditing raises the bar for corporate governance. (Kibet, 2008) He conducted a poll

on how internal auditing may help State Owned Enterprises (SOEs) promote strong corporate

governance. However, the purpose of his survey is to examine how internal audit functions

9
are used to support strong corporate governance in public sector organizations as well as the

difficulties faced by internal auditors in SOEs. The investigation came to the conclusion that

the role of internal auditing was considerable.

2.6 Internal Control System

In the private sector, firm directors are in charge of creating the policies, assessing

performance, and taking remedial action when necessary if the policies or the way they are

implemented are flawed. Internal control offers a way to verify that the company's goals are

being met. Internal control is defined by the institute of internal auditors (The Institute of

Internal Auditors (IIA), 2006) as:

A process within an organization designed to provide reasonable assurance regarding the

following primary objectives:

 the reliability and integrity of information;

 compliance with policies, plans, procedures, laws and regulations;

 the safeguarding of assets;

 the economic and efficient uses of resources;

 The accomplishment of established objectives and goals.

As a result, internal control systems are crucial to an organization's performance and survival.

They established a company on the trails. Organizations do, however, occasionally stray from

the path. The Treadway Commission's findings on misleading financial reporting and the

establishment of the COSO Committee in 1992 were both a response to this issue (the failure

of large US corporations). The COSO Model is committed to enhancing the integrity of

financial reporting through sound corporate governance, ethical business practices, and

efficient internal controls. Internal control is a procedure that involves an entity's board of

directors, management, and other people and is intended to give reasonable confidence

10
regarding the following categories, according to (Committee of the Sponsoring Organization

of the Treadway Commission (COSO), 1992):

1. Effectiveness and efficiency of operations.

2. Reliability of financial reporting.

3. Compliance with applicable laws and regulations.

The COSO Model identified the key concept of internal control as:

1. Internal control is a process. It is a means to an end and not an end itself.

2. Internal control is affected by people. According to the model, internal control

is not merely policy manuals and forms, but people at every level of an organization.

3. Internal control can be expected to provide reasonable assurance, not absolute

assurance, to an entity’s management and board.

4. Internal control is geared to the achievement of objectives in one or more

separate but overlapping categories.

The rationale behind the COSO Model include:

1. Weak internal control systems lead to corporate losses and failure as in the

case of Enron and WorldCom.

2. Internal control systems are the responsibility of directors, management and

employees. However, they are particular responsibility of the board of directors.

3. Internal control is a moving target. It must be monitored and adapted to fit the

circumstance. If it is neglected, it will deteriorate, lose relevance or prove ineffective.

2.7 Internal Control in the Public Sector

The Metropolitan, Municipal, and District Assemblies, together with the Ministries,

Departments, and Agencies, do not have directors. Their affairs are governed by rules and

regulations at the national level. The people who occupy some assets, such buildings and

infrastructure, may not have control over them. Government organizations are also exempt

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from reporting to shareholders, unlike private firms, and rarely, if ever, fail owing to internal

control breaches. Everyone could wonder how important internal control is in a government

setting. It is pertinent because individuals want the government to use their resources

effectively and efficiently to foster economic growth and development. The government is

the custodian of these resources. According to the Centre for Democracy and Development

(CDD), 2000, a lack of internal control or a weak internal control system in a government

entity can result in fraud, misappropriation of funds, and systemic inefficiencies. Low living

standards, a deficit in the government budget, and unequal resource redistribution are some of

the combined results of corruption, misuse of funds, and inefficiencies.

Consider government entities as corporate bodies and consider how big private sector entities'

usage of internal control systems relates to management advancements to better appreciate

the necessity for government systems of internal control (International Federation of

Accountants (IFAC), 2005). Each level of local government should create its own internal

control system to guarantee openness, public accountability, effectiveness, and

responsiveness.

2.8 Internal Control and Internal Auditing

These two names are frequently taken to indicate the same thing. They differ in terms of

scope and goals, though. Internal audit is a subset of the larger idea of internal control.

Internal auditing's goals are to help the organization, particularly managers and board of

directors members, carry out their duties efficiently. They get analyses, evaluations,

recommendations, advice, and information from internal audit regarding the activities under

scrutiny. (2006) The Institute of Internal Auditors Described how internal audit can be seen

as a way for management to determine whether or not its internal control mechanisms are

effectively planned and operating. Internal auditing is the foundation of internal control.

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Internal auditors are in charge of making sure that top management and staff adhere to

internal control systems, and any flaws in the system need to be found and fixed. Internal

audit is therefore a crucial instrument for assuring the effectiveness and efficiency of internal

controls.

2.9 Existence of Audit Committee

An audit committee is a separate body made up of professionals from several organizational

departments. It contributes significantly to the advancement of sound corporate governance.

The audit committee is one of the essential stakeholders in ensuring that resources are

protected and used effectively and efficiently to achieve organizational goals as part of the

corporate governance system. One of the traits of auditors is independence, which is

protected by the establishment of an audit committee in an organization. (Bishop,

Hermanson, Lapides, & Rttenberg, 2000) contend that effective corporate governance

includes cooperation between the audit committee and internal auditors. Internal auditors and

the audit committee have a critical working relationship that strengthens each other's

respective roles (Goodwin & Yeo, 2001). By safeguarding their independence and ensuring

that management implements audit recommendations, the audit committee can strengthen the

internal audit function. On the other side, internal auditors can be valuable resources for the

audit committee as it works to fulfill its obligations (Turley & Zaman, 2004). The claim made

by Turley and Zaman (2004) is consistent with that made by Bishop, Hermanson, Lapides,

and Rttenberg (2000), who state that internal audit is a useful resource that may give the audit

committee the data they need to fulfill their governance duty.

2.10 The professional audit standards and codes of ethics

The assignment of internal auditors and the determination of their reporting structure have

historically been handled by management. This has enabled management to interfere with the

independence of internal auditors by giving them complete control over their work. Internal

13
auditors now have access to IIA's standards and code of conduct. According to standards and

with approval from the organization's audit committee, the goal, scope, and responsibilities of

internal audit activities should be clearly stated in a charter (The Institute of Internal Auditors

(IIA), 2009). According to standards and codes of ethics, a successful internal audit unit

performs independent, unbiased assurance and consulting tasks that are intended to enhance

and improve an organization's operations. The standards and code of ethics have defined the

expected methodology, values, and conduct for internal auditors since 1978. The standards

and code of ethics are the cornerstone and gold standard of the profession, having been

ratified by all IIA members as well as international standard-setting agencies in the public

sector. Internal auditors can offer their organizations an efficient, impartial assurance and

advisory service by adhering to standards and a code of conduct.

The corporate governance board, which includes the audit committee, should establish an

internal audit charter in order to decrease the frequency of impairment of internal auditors'

independence. The Institute of Internal Auditors (IIA), 2006 states that internal auditors

should derive their duties and powers from the charter rather than following management's

directives. (The Institute of Internal Auditors (IIA), 2009) The section 1000 Specifies that the

internal audit charter must identify the type of assurance service to be offered to the

organization. The charter must acknowledge the mandatory character of the internal audit

definition, the code of ethics, and the standards.

2.10.1 Management Support

The level of management support for the internal audit unit also has a significant role in

determining how well the unit can accomplish its goals. Effective internal auditing requires

the commitment and backing of top management. Management can show that it supports

internal auditing by highlighting the importance of independent, unbiased internal auditing in

discovering opportunities to raise performance standards and by putting internal audit unit

14
recommendations into practice. The chief executives and other senior government officials

should demonstrate a strong commitment to enhancing the caliber of internal audit in the case

of district, municipal, and metropolitan legislatures. In order to ensure that the auditors are

treated with respect, the internal audit unit needs support from all areas of the company. It

would be crucial for the organization to have a clear understanding of the internal audit

function and its authority.

Internal audit is largely only as helpful as management permits it to be. If internal audit

produces reports that are critical of a particular aspect of the organization and management

does nothing as a result of political considerations, this will only serve to undermine the

purpose of internal audit and limit its effectiveness (Gray & Manson, 2000). In accordance

with (Mihret & Yismaw, 2007), management's failure to follow internal audit

recommendations has significant ramifications for the auditor's attitude toward enhancing

audit quality and their commitment to pursuing careers as internal auditors. This is also

consistent with the ideas put forth by (Van Gansberghe, 2005), who claims that the

effectiveness of internal audits is directly related to how audit recommendations are

implemented. (2007) Mihret and Yismaw Additionally, it was stated that unless management

is dedicated to implementing the audit findings and suggestions, they won't be very useful.

The results of these studies suggest that if people do not see how their work contributes to the

overall achievement of an organization's goals, they will not find the internal audit profession

to be appealing to them. Even those who accept internal audit appointments may not carry out

their duties with the utmost professionalism.

(Adams, 1994) used agency theory to demonstrate why it is in management's best interest to

keep a potent internal audit department. Although there is some ongoing communication

between internal auditors and management, top management shouldn't be in charge of

internal auditors, and there shouldn't be any management interference to influence the audit

15
outcomes. The internal audit charter should make all decisions on the scope, technique, and

outcomes without consulting top management.

2.10.2 Organizational Setting

The organizational setting includes the position of internal audit within the organizational

structure, the integrity of the internal audit office, the internal audit office's financial

situation, the organization's policies and procedures, the presence of sound established

criteria to assess the practices of the auditee, and the organizational independence. It gives the

internal audit's operating environment. As a result, the level of effectiveness that internal

audit may accomplish might be influenced by the organizational setting (The Institute of

Internal Auditors (IIA), 2009).

2.10.3 Organizational Policies and Procedures

Clear policies and processes against which to compare organizational practices must exist for

internal auditing to be effective. Internal auditors must comprehend the policies and

procedures thoroughly in order to contribute to their improvement. This element of the

organizational context factor has a fair rating in terms of its impact on audit effectiveness,

according to (Mihret & Yismaw, 2007). According to (The Institute of Internal Auditors

(IIA), 2009), the chief executive is required to set up policies and procedures to direct the

internal audit work. The roles and responsibilities of internal auditors, as well as the format

and recipients of audit reports, would be laid out in these policies and procedures.

2.10.4 Internal audit status and organizational independency

Organizational independence enables the audit activity to operate independently of the

subject of the audit. So that it can work independently and appear to be able to without

interference, the audit activity needs to have enough distance from people it is mandated to

audit. Organizational independence, when combined with objectivity, improves the accuracy

of the auditor's job and their ability to rely on the findings and report (Zekele, 2007).

16
Depending on their position within the organization, internal auditors can contribute in

varying degrees to enhancing risk management and organizational performance. An

organization's internal audit function should be given a high enough position in the

organizational structure to allow for improved contact with senior management and to

guarantee the internal auditor's independence from auditees (Mihret & Yismaw, 2007). This

position was consistent with that of (Zekele, 2007), who maintained that organizational

independence enables the audit unit to carry out its duties free from interference from the

subject of the audit. The audit unit needs to be sufficiently separate from those it is supposed

to audit in order to be able to work independently and appear to be able to do so.

(The Institute of Internal Auditors (IIA), 2009) places emphasis on the need for independence

in internal auditing and objectivity in internal auditors' work.

According to (The Institute of Internal Auditors (IIA), 2009), organizational independence is

the absence of circumstances that can compromise the ability of the internal audit activity or

chief audit executive to carry out their duties objectively. Practically speaking, internal

auditors cannot be independent of management; rather, independence has to do with the

auditors' mental outlook and objectivity. In order to provide the management with effective

internal audit services, independence is of the utmost importance since it allows for an

environment of objective and unconstrained appraisal and reporting of findings without

interference from the units being audited. Internal audit, in the opinion of (Van Gansberghe,

2005), must enhance management without serving it and instead faithfully report on the

situation to the bard or other appropriate regulating authority. Any interference that could

compromise audit's objectivity needs to be kept out of the picture. Internal auditors should

have job security due to the status of internal audit, preventing termination for the purpose of

delivering unbiased results. Internal auditor organizational structures vary among institutions,

17
highlighting two persistent problems with objectivity: statutory independence and budgetary

independence. Involved management frequently wants to get involved in the audit reviews,

the scope of work, and the outcomes. The head of internal audit should occupy a sufficiently

powerful position to be shielded from such influences in order to prevent such attempts. The

best method to lessen outside influence is to have a clear audit charter that binds all parties to

it.

2.10.5 Unrestricted Access

Access to all audit evidence, including people, property, internal control system policies and

procedures, and important information required for the audit, should be complete and

unrestricted (Zekele, 2007). According to (The Institute of Internal Auditors (IIA), 2009),

internal auditors must have complete access to all assets, personnel, documents, and audit

evidence needed for their work. The organization's internal audit charter has to explicitly

indicate that internal auditors have full access to audit.

2.10.6 Budgetary Status of the Internal Audit

The audit activity needs adequate finance in relation to the scope of its audit duties. Because

the budget affects the audit activity's ability to carry out its responsibilities, this crucial

component shouldn't be under the control of the entity that is being audited. The availability

of resources affects the internal audit unit's efficiency and effectiveness. The audit work's

scope will be constrained by insufficient resources.

According to (The Institute of Internal Auditors (IIA), 2009), the chief audit executive is

responsible for making sure that internal audit resources are used appropriately, sufficiently,

and profitably to carry out the authorized plan. In order to be included in the organization's

master budget, the required resources for the internal audit unit are often specified early on in

the audit plan. The audit activity needs adequate finance in relation to the scope of its audit

18
duties. Because the budget affects the audit activity's ability to do its work, this crucial

component shouldn't be left under the authority of the organization that is being audited.

Duties (Zekele, 2007). Utilizing the right technology and using technology as a subject of

audit as well as training staff members are all requirements of modern auditing. The ability to

seek outside assistance when necessary could also improve the effectiveness of internal audit

(Zekele, 2007).

2.10.7 Internal Audit Quality

Internal auditors must have the knowledge, abilities, and other skills required to carry out

their duties. Knowledge, skills, and other abilities are a collective phrase used by The

Institute of Internal Auditors (IIA), 2009, to describe the professional proficiency needed by

internal auditors to successfully carry out their professional tasks. Internal auditors would be

able to organize their audit work appropriately, carry it out, and promptly communicate the

results and recommendations to the appropriate parties with the knowledge, abilities, and

other competencies. The work of internal auditing entails such things as personnel numerical

prowess and expertise, service scope, audit preparation, fieldwork, quality assessment, and

audit communication.

2.10.8 Numerical Strength and Expertise of Staff

If the internal audit unit has the necessary personnel and the necessary training, it can

effectively plan, carry out, and communicate the findings and recommendations. In order to

meet the quantitative and qualitative requirements of the audit process, internal audit needs to

be well-resourced. The total quality of the internal audit job will be determined by both the

quantitative audit effort and the level of professional care used. According to (Zain,

Subramaniam, & Goodwin, 2004), the size of the internal audit function and the breadth of

the internal audit staff's prior audit expertise are likely to improve the quality of the internal

audit. According to Zain et al. (2004), a larger internal audit unit will have more workers,

19
which means the breadth of the work covered by the internal audit would be significantly

more than it would be in a smaller unit. The breadth of the task is constrained by insufficient

internal audit staff, and more significantly, because audit work is time-sensitive, internal

auditors may not be able to complete it by the deadline. A chance and flexibility in staff

rotation will be offered by the internal audit unit with the increased personnel. Staff rotation

is likely to foster a more positive relationship, leading to a more objective audit probe since

internal audit staffs are likely to become familiar with organizational and operational workers

over time (Zain et al., 2004).

Internal audit staff rotation will improve the independence of the internal and this will help

with successful internal audit, according to the research findings of Mihret & Yismaw

(2007a). This claim backs up the arguments made by Zain et al (2004). The investigations by

Zain et al., (2004) and Mihret & Yismaw (2007) are consistent with the empirical results by

(Gul & Subramaniam, 1994). According to an experimental research of internal auditors,

those who had a high level of familiarity with operating employees tended to be less

objective when confronted with an audit conflict than those who had a low level of

familiarity. In addition, Zain et al. (2004) contend that the greater the internal staff's

knowledge and prior audit experience, the higher the quality of the internal audit. Because

experienced workers should be more knowledgeable and versed in carrying out their

obligations given prior work experience, it is predicted that a functional unit with experienced

staff will carry out tasks more effectively. For instance, more experienced staff members will

be able to handle challenging situations or complex multi-tasks more swiftly and effectively

than their less experienced counterparts. Additionally, it is envisaged that internal audit staffs

with past experience and skill in auditing will contribute more highly to enhancing the

organization's internal controls. The quality of the internal audit work should be improved by

20
having a larger percentage of internal audit professionals with past audit experience,

increasing the likelihood that external auditors will depend on the internal audit work.

2.10.9 Due Professional Care

Internal auditors must approach their task with the appropriate professionalism in accordance

with the internal audit standard. The care and expertise required of a reasonably cautious and

competent internal audit must be used by the internal auditors (The Institute of Internal

Auditors (IIA), 2009). The standard mandates that internal auditors use appropriate

professional judgment by taking into account:

1. Extent of work needed to achieve the engagement’s objectives.

2. Relative complexity, materiality, or significance of matters to which assurance

procedure are applied.

3. Adequacy and effectiveness of governance, risk management and control

process.

4. Probability of significance errors, fraud, or non-compliance.

5. Cost of assurance in relation to potential benefits.

6. Objectivity and professional judgement of materiality and risk assessment.

Internal auditors must take into account the usage of technology-based auditing and other

data analysis while exercising appropriate professional care. The internal auditors need to be

aware of major risks that could have an impact on goals, operations, or resources.

2.11 Audit Planning

Preparing a strategic plan, annual plans, and programs for specific audit jobs are all examples

of planning, which is widely seen as a crucial activity. A thorough audit plan that outlines the

goals, the scope of the work throughout time, the timeline for each individual audit

assignment, and the resources required to complete the audit job is necessary for internal

21
audit to be effective. According to (Mihret & Yismaw, 2007), audit plans give audit staff

members the ability to assess risk and find high-risk areas that require more scrutiny. The

head of the internal audit office must regularly report to senior management or the audit

committee on the function, scope, and results of the internal audit activity in relation to the

plan in order for the internal audit function to be effective.

2.12 Communication

Before the correct individuals receive the findings and recommendations at the appropriate

time, the audit process is not finished. Upon completion of the audit, the internal auditors

should provide a written audit report and conduct a follow-up to make sure the

recommendations are carried out. The Institute of Internal Auditors (IIA), 2009, states that

audit communication needs to be precise, impartial, clear, succinct, constructive, full, and

timely. In it, it is said;

 Accurate communications are free from errors, distortions and are faithful to the

underlying facts.

 Objective communications are fair, impartial and unbiased and are the result of a fair-

minded and a balanced assessment of all relevant facts and circumstances.

 Clear communications are easily understood and logical, avoiding unnecessary

technical language and providing all relevant information.

 Concise communications are to the point and avoid unnecessary elaboration,

superfluous detail, redundancy and wordiness.

 Constructive communications are helpful to the engagement client and the

organization and lead to improvement where needed.

 Complete communications lack nothing that is essential to the target audience and

include all significant and relevant information and observations to support

recommendations and conclusions.

22
  Timely communications are opportune and expedient, depending on the significance

of the issue, allowing management to take appropriate corrective actions.

The chief audit executive must deliver updated information to all persons who received the

original communication if the final message has a material error or omission.

An open line of communication between and among pertinent entities should be made

possible by the internal controls and organizational structure in place at government

institutions. Internal auditors have an obligation to provide a follow-up to make sure that

management implements the advice, but management has responsibility for the risk of not

acting on the audit recommendations (Walker D. , 1996). According to (Keating, 1995), when

audit results are published, the internal audit process has just begun. This implies that a

follow-up is essential to get results. The audit recommendation's drive will be lost if a follow-

up is inadequate or nonexistent, and internal audit's credibility will suffer (Mihret & Yismaw

2007). This suggests that unless the audit report is of high professional quality to inspire the

readers to take corrective measures regarding the deficiencies cited, it is possible that the

report will become ineffective no matter how well the internal auditors planned and carried

out the audit; how significant the findings. Additionally, as auditors utilize the audit reports

as a starting point for later audits, higher-quality reports will help future audits be of higher

quality. Allowing for some freedom while creating an audit report is a good idea.

2.13 Fieldwork and Quality Review

Fieldwork entails carrying out the tasks listed in the audit programs in order to gather data for

evaluation of the auditee's current operations in light of audit criteria. The fieldwork should

be accurately and consistently documented in the audit working papers. According to (The

Institute of Internal Auditors (IIA), 2009), internal auditors must also create and document

work plans that help them meet the goals of their engagements. The information they utilize

must also be adequate, trustworthy, and practical in order to meet those goals. According to

23
the IIA, there was enough information if it was accurate, sufficient, and persuading enough

for a prudent, well-informed individual to draw the same findings as the auditor. The best

kind of information is reliable information, which can be obtained by using the right

interaction strategies.

24
 3 CHAPTER THREE

3 METHODOLOGY

3.1 Introduction

This chapter covers the study design, study population, study sample, and study sampling

technique. Additionally, it describes the method of data gathering and data measurement. The

chapter ends with a discussion of data analysis methodology.

3.2 Research design

Based on the results of the questionnaires and interviewing guides that were used to acquire

the required data, this study uses qualitative research tools.

3.3 Population

This included all of the Nsawam Government Hospital's staff and management, including all

of the contract and temporary employees as well as the medical and non-medical staff.

3.4 Sample and Sampling Method

Due to the distinctive roles they held within the hospital, the majority of the hospital

management members were purposefully chosen. This allows the researcher to produce

insightful findings that contribute to a deeper understanding of the research phenomenon by

choosing the participants who are most suited to its particular requirements. A non-

probability sampling technique called "purposeful sampling" involves choosing key

individuals (informants) who are thought to be the study's most pertinent data sources. So, a

predetermined set of criteria is used to choose responses. You can use your judgment to

choose examples through intentional or judgmental sampling in order to best answer your

research question(s) and achieve your goals (Saunders , Lewis , & Thornhill, 2009). The

accounting department's entire workforce was guaranteed to be chosen for the study, but the

other staff members were chosen based on convenience.

25
3.5 Method of data collection

It was quite proper to employ a qualitative analysis method given the type of data that was

gathered. Referencing and comparing qualitative data to information from the past and

present was done. In the analysis, we also used our personal judgment where we thought it

was absolutely required.

3.6 Instrument for data collection

Primary and secondary data sources were the main sources of information used to compile

the study's data. Detailed interviews and structured questionnaires were used to collect the

main source of data. The firm records, yearly reports, and use of the internet served as the

secondary sources of data.

3.7 Instrument Validity and Reliability

The degree to which a questionnaire actually measures what it claims to assess is known as

its validity (Mugenda, 2003). We created questionnaires to assess the validity of the data,

then provided them to our supervisor for review and comments on the information's

applicability, clarity, and relevance. Subsequently the boss offered advice, which was then

integrated into the final version.

Research instrument reliability is a measurement of how well an instrument produces

consistent results or data after numerous trials. The researcher delivered the questions, put

them through a pilot test with 15 (fifteen) respondents, and then made the required

adjustments to the questionnaires to determine the validity of the research instruments.

3.8 Procedure of data collection

The Nsawam Government Hospital's personnel and management were given the

questionnaires by hand and electronically. Staff members were given five (5) days to

26
complete hand-delivered questionnaires before they were manually retrieved. By

interviewing some of the company's important employees, additional data were gathered. The

results are presented in accordance with the format of the study's questionnaire.

3.9 Method of data analysis and presentation of results

Both quantitative and qualitative data analysis techniques were used to collect and analyze

the data. Descriptive and inferential analysis are both used in the quantitative approach.

Frequencies and percentages were used in descriptive analysis to show quantitative data as

tables and graphs. Statistical Package for Social Science was used to code and record the data

from questionnaires (SPSS). To do basic descriptive analyses and obtain reports on the state

of the data, this involved coding both open-ended and closed-ended items. Absolute and

relative frequencies, measures of central tendency, and measures of dispersion were all used

in descriptive statistics, which is how the data will be shown.

27
 4 CHAPTER FOUR

4 RESULTS AND DISCUSSIONS

4.1 Introduction

The presentation of data and analysis of the replies provided by research participants are the

focus of this chapter. Tables and figures are included where appropriate to show the results

and support them. Frequency and percentage tables were created based on the respondents'

replies to the likert kind of scale for the purpose of analyzing the data in relation to the

research topics posed. A few questionnaire questions were also analyzed using the mean and

standard deviation. The research questions served as the basis for the analysis.

4.2 Demographic analysis of responders

Table 4-1:Gender distribution of respondence

Cumulative

Frequency Percent Valid Percent Percent

Valid Male 23 56.1 57.5 57.5

Female 17 41.5 42.5 100.0

Total 40 97.6 100.0

Missing System 1 2.4

Total 41 100.0

Source: Field survey

From Table 4.1, it is observed that 56.1% of the respondents are males and 41.5% of them are

females while 2.4% of the respondents did not specify their gender.

28
Table 4-2:Age Distribution of respondents

Cumulative

Frequency Percent Valid Percent Percent

Valid 21-25 14 34.1 34.1 34.1

26-30 13 31.7 31.7 65.9

31-35 10 24.4 24.4 90.2

36 and above 4 9.8 9.8 100.0

Total 41 100.0 100.0

Source: Field survey

It can be deduced from table 4.2 that, majority (14) representing 34.1% of the respondents

were between 21 to 25 , 13 (31.7%) of them were between 26 to 30 years and those above 36

years were 4 representing 9.8% while respondents between 31 to 35 were 10(24.4%).

Table 4-3:Academic qualification of respondents

Cumulative

Frequency Percent Valid Percent Percent

Valid Post graduate 7 17.1 17.9 17.9

Degree 25 61.0 64.1 82.1

Diploma 6 14.6 15.4 97.4

HND 1 2.4 2.6 100.0

Total 39 95.1 100.0

Missing System 2 4.9

Total 41 100.0

Source: Field survey

29
In terms of education, more than half of respondents (61.0%) held degrees; seven

respondents, or 17.1% of the total, also held postgraduate degrees; six respondents, or 14.6%,

held diplomas; and one respondent, or 4.9%, held an HND. Two respondents chose not to

respond.

4.3 Elements of good corporate governance

The Nsawam Government Hospital's corporate governance is crucial, and the researcher was

interested in why. According to the respondents, corporate governance is essential for the

hospital to achieve its goals of becoming a center of excellence in the delivery of high-

quality, client-focused, results-oriented, and reasonably priced health services in Ghana's

Eastern Region, as well as improving its reputation and recognition on a global scale through

medical elective placements. Others agreed, saying corporate governance would guarantee

effective and efficient resource use. Corporate governance that works lowers corruption rates

and increases the public's trust in public servants.

The factors that guarantee sound corporate governance in the public sector were also inquired

about by the respondents. The respondents were instructed to use a 5-point rated likert scale

to answer the closed-type questions on the components of excellent corporate governance.

Each element's relevance is denoted by a number on the scale, ranging from very significant

(5) to very unimportant (1). Responses to item 7 from Ghana Audit Service branch chiefs and

internal auditors were used to address this query. Below is a summary of their responses.

Table 4-4:Elements of Good Corporate Governance

Transparency Accountability Effective Responsible Equitable

Very Unimportant 0.0% 0.0% 0.0% 0.0% 0.0%

Unimportant 0.0% 0.0% 0.0% 0.0% 0.0%

Somehow Important 0.0% 2.4% 0.0% 0.0% 0.0%

Important 4.9% 7.3% 12.2% 12.2% 17.1%

30
Very Important 95.1% 90.2% 87.8% 87.8% 82.9%

Source: Field survey

Figure 4-1: Elements of Good Corporate Governance

Source: Field survey

The table and figure above provide statistical evidence that all 41 respondents, or 100%,

believed that good corporate governance at the hospital depends on transparency at all levels

of government, accountability to the people, responsibility to the people, equity, and effective

and efficient resource use.

This data suggests that the fundamental principles that should be a part of any successful

corporate governance system include transparency at all levels of government, equitable

treatment of citizens, responsibility and accountability to people, effective and efficient

resource use, and information accessibility. Any of these principles that are lacking will make

it difficult for the government to accomplish its goals.

4.4 Internal control activities

Internal control systems are essential to an organization's existence and success, and they are

an essential component of the corporate governance framework in the public sector. The

31
extent of internal auditors' activity determines how much they can do to advance effective

corporate governance. In light of this, respondents were given 5-point rated likert-type scale

items to answer questions about the tasks they complete at the hospital. Item 16 of the

internal auditors questionnaire was used to provide the response to research question number

two. The results are shown in the table below.

Table 4-5:Internal Control activities

Occasionally
Rarely Done Done Often Done Always Done
Coun Row N Row N Row N Row
t % Count % Count % Count N %
Compliance with law and 36 92.3% 3 7.7% 0 0.0% 0 0.0%
regulations
Checking budget 0 0.0% 2 5.0% 17 42.5% 21 52.5%
implementation
Evaluating keeping of 2 5.0% 4 10.0% 13 32.5% 21 52.5%
accounting errors
Evaluating management’s 0 0.0% 2 5.0% 14 35.0% 24 60.0%
efforts to the recovery of
receivable, taxes and other
collectables
Assessing reliability and 0 0.0% 2 5.0% 15 37.5% 23 57.5%
soundness of financial
information
Examine and assess the 0 0.0% 1 2.5% 16 40.0% 23 57.5%
policies, procedure and
manuals and recommend
best practices
Examine use of hospital 0 0.0% 0 0.0% 0 0.0% 0 0.0%
resources and safeguard of
assets
Examine productivity 1 2.5% 1 2.5% 15 37.5% 23 57.5%
Assessing Unethical 2 5.0% 3 7.5% 14 35.0% 21 52.5%
behaviour of management
and recommending best
practices
Model control environment 3 7.5% 1 2.5% 16 40.0% 20 50.0%
Evaluate projects/programs 2 5.0% 5 12.5% 11 27.5% 22 55.0%
accomplishment

32
Source: Field survey

According to the response results in the table, it is evident that internal auditors consistently

carry out internal control activities like evaluating management's efforts to recover

receivables, taxes, and other collectibles (60.0%), evaluating the validity and soundness of

financial information (57.5%), inspecting and evaluating policies, procedures, and manuals

and recommending best practices (57.5%), inspecting productivity (57.5%), and evaluating

the success of projects and programs (55.0%). They rarely (92.3%) verify for compliance

with laws and regulations, but they never (0.0%) examine how hospital resources are used or

how assets are protected.

The aforementioned data proof shows unequivocally that the internal audit units in the

hospital place more of an emphasis on risk management and productivity than on the

traditional paradigm of internal audit functions, which involves assessing financial

irregularities and fraud detection.

4.5 Factors that hinder the effectiveness of the internal audit

According to the literature review, the organizational settings, the presence of an approved

internal audit charter, adequate resources, the existence of an audit committee, management

support, and the quality of internal audit are all necessary for the internal audit unit to

successfully deliver good corporate governance. In order to determine how well internal audit

functions in each of the aforementioned areas promote good governance, research question

three's critical factors were identified. The researcher then asked internal auditors and the

hospital's heads of the accounts department for their opinions on each of these areas (3).

4.6 Management support

According to the Institute of Internal Auditors' professional standards, management

assistance is one of the crucial factors in ensuring the successful delivery of internal audit

33
services in the public sector. The results of management support provided to hospital internal

auditors are shown in the table and figure below.

Table 4-6:Management support

Implementation
of Relationship
recommendatio with Management Commitment of
ns management interference management
Very Dissatisfied 9.8% 9.8% 10.0% 4.9%
Dissatisfied 9.8% 0.0% 17.5% 9.8%
Somehow Dissatisfied 19.5% 14.6% 20.0% 19.5%
Satisfied 51.2% 63.4% 52.5% 56.1%
Very Satisfied 9.8% 12.2% 0.0% 9.8%
Source: Field survey

Figure 4-2: Management support

Source: Field survey

According to the answers given above, respondents felt that management support for the

internal audit units was good (56.1%). The respondents were satisfied with management's

implementation of internal audit recommendations (51.2%), their commitment to supporting

the internal audit units' budgetary status (56.1%), their positive relationship with management

(63.4%), and management's lack of interference with internal audit work at the hospital.

However, the level of satisfaction was minimal because all responses fell below 65%.

34
The aforementioned data demonstrates that management at the hospital supports the internal

audit units. The findings of (Mihret & Yismaw, 2007) who discovered that internal audit

units in the public sector received less management support do not support this outcome.

Internal audit staff receives the negative message that their job is not valued by the

organization when management refuses to act on internal audit recommendations, which

reduces the efficiency of these departments. In some organizations, management sees internal

auditors as problem-solvers rather than as assets to the company. Internal audit units will be

less effective at performing their professional task when they are seen as fault finders, which

will lead to unhealthy relationships between management and the internal audit staff.

4.7 Existence of Audit Committees

The researcher wanted to find out whether the assemblies have audit committees. The result

is presented in the figure below.

Figure 4-3: Existence of Audit Committees

Source: Field survey

92.7% of the respondents, as shown in figure 4-3, reported that the hospital has an audit

committee. According to the respondents, an audit committee is essential for enhancing the

independence of the internal audit unit. Additionally, they think that the audit committee

would assist internal auditors by seeing to it that their recommendations are carried out.

35
4.8 Organisational Settings

The state of the internal audit units in the assemblies, the policies and practices of the

assemblies relating to the internal audit units, the budgetary situation, the location of the

units, and the reporting structure were all investigated in this section. Respondents were

asked to state how much they agreed or disagreed with the items, which were presented in the

form of a likert-type scale. Table 4.5 below presents the findings.

Table 4-7: Organisational Settings

Strongly Strongly
Neutral Disagree Disagree Agree Agree
Coun Row N Coun Row N Coun Row Cou Row N Row Mean
t % t % t N% nt % Count N%
Internal audit department is 11 26.8% 2 4.9% 9 22.0% 12 29.3% 7 17.1 3.048
given low status % 8
Inadequate budget 8 19.5% 2 4.9% 9 22.0% 12 29.3% 10 24.4 3.341
allocation for the % 5
department
policies and procedures are 7 17.1% 2 4.9% 11 26.8% 15 36.6% 6 14.6 3.268
not clearly defined % 3
Management view internal 6 14.6% 3 7.3% 10 24.4% 9 22.0% 13 31.7 3.487
auditors as fault finders % 8
No regular in servicing 9 22.0% 2 4.9% 9 22.0% 14 34.1% 7 17.1 3.195
training for internal auditors % 1
No opportunity to seek the 9 23.1% 3 7.7% 7 17.9% 14 35.9% 6 15.4 3.128
assistance of experts % 2
Internal Auditors are not 8 19.5% 3 7.3% 13 31.7% 9 22.0% 8 19.5 3.146
given a representation in % 3
Board meetings
The unit is not free to 13 31.7% 4 9.8% 6 14.6% 11 26.8% 7 17.1 2.878
choose any transaction or % 0
area of interest for audit
The unit is not allowed pre- 9 22.0% 2 4.9% 13 31.7% 14 34.1% 3 7.3% 3.000
transaction audit 0
Source: Field survey

Table 4-7's statistical evidence revealed that the internal audit units' budget allocation was

insufficient (3.3415), the hospital's internal audit units lacked clear policies and procedures

36
(3.2683), and management thought internal auditors were just looking for problems rather

than contributing to good corporate governance (3.4878). The respondents concurred that

they do not receive frequent in-service training (3.1951). The respondents claimed that they

do not have representation on the board during board meetings regarding important hospital

problems (3.1463). Additionally, it appears that internal auditors are free to select any

transaction of their choosing but are not permitted to conduct pre-transaction audits (3.0000).

(2.8780). Based on this statistical data, it is possible to infer that the organizational structures

at the hospital limit the ability of the internal audit units to encourage effective corporate

governance.

Regarding the issue of reporting relationships, the medical superintendent, who serves as the

administrative head of all hospital departments, is directly responsible to the internal auditors.

The internal auditors' independence is not improved by this reporting arrangement. The

researcher also sought to know if all records, information, employees, and other audit

evidences are accessible to internal auditors. According to the respondents' comments,

internal auditors have limited access to audit evidence (61.0%). This proof supports Belay's

(2007) research, which found that Ethiopia's public sector internal audit units had only

limited access to records. Internal auditors provide thorough and trustworthy audit reports as

a result of having total access to all audit data. As a result, one can conclude that internal

auditors are being misled and that their audit reports might not be trustworthy.

Internal auditors shouldn't participate in other activities that could lead to conflicts of interest

in order to increase their independence. In order to determine whether internal auditors are

assigned additional unrelated audit duties, the researcher sought to learn this information. The

results show that 12.3% of the respondents, or 12 people, said they also prepare budgets,

discuss about stocks, and prepare financial statements. Because there will be a conflict of

interest, the internal auditors cannot audit any transaction in which they have previously been

37
involved. Internal auditors can therefore participate in budget formulation but not

implementation.

When asked if the units had necessary resources, including the use and availability of

relevant technology, 12, or 29.3% of the respondents, firmly agreed that they do not.

Meanwhile, 19, or 46.3%, also agreed that the resources that are now available are

insufficient. Internal auditors must be knowledgeable about the relevant tools to use in this

technological age. This would guarantee quick, accurate, and reliable audit reports.

4.9 Internal audit quality

One of the factors the literature review found as influencing how effectively internal audit

promotes corporate governance is the quality of internal audit. The unit's ability to offer

insightful audit findings and suggestions is shown by the internal audit quality. This includes

the level of knowledge, experience, and strength of the internal audit team, as well as the

rationality of the service scope, successful planning, execution, and communication of

internal audits. A questionnaire and an interview were used to gather data in order to evaluate

the quality of the internal audit. To bolster the case, additional papers including the audit

strategy, audit report, and engagement letter were examined.

4.9.1 Expertise, strength and experience of internal audit staff

Each assembly has an average of two (2) internal audit personnel, according to the study's

findings, and 41.5% of respondents said this number is appropriate, compared to 34.1% who

said it is insufficient. The majority of respondents6 or 14.6% have a diploma, followed by 25

or 61.0% who have degrees, and 7 or 17.1% who have additional post-graduate degrees.

However, the majority of them lack an accounting degree. 95 percent of internal auditors

have less than a year of experience in their current positions. Competence, objectivity,

38
professionalism, independence of thought, sound judgment, honesty, and secrecy are among

the traits that internal auditors should exhibit.

4.9.2 Scope of service

The answers to the questionnaire and an examination of the audit reports show that the

internal auditors focused on legal and regulatory compliance, reviewing the accuracy and

soundness of financial information, and examining accounting errors and fraud detection.

However, risk management, project appraisal, and productivity receive less attention from

internal auditors. This can be the result of a lack of knowledge and experience in these fields.

4.9.3 Audit communication

The internal audit departments create thorough and succinct annual auditor reports. But 75%

of the internal auditors admitted that they didn't make the deadline for turning in their reports.

They cited a lack of resources, including the proper technology, a delay in accessing audit

material, and a delay in getting audit assignments from hospital management as their

justifications. The units lack a clear follow-up process to make sure that the recommendations

are implemented in the form of remedial measures. Although it is the management's

obligation to assume the risk of not acting on the suggestions, it is the internal auditors' duty

to conduct a follow-up to see whether management values their services.

4.9.4 Existence of Approved internal audit charter, standards and mandate

Internal Audit Agency Act, 2003 (Act 658), Ghana Audit Service Act, 2000 (Act 584),

Financial Administration Act, 2003 (Act 654), Public Procurement Act, 2003 (Act 663),

Internal Audit Charter, and Internal Audit Manual are the laws from which internal auditors

derive their authority. However, internal auditors depended on the Internal Audit Agency Act

because 80% of public organizations lacked an internal audit charter. The scope of internal

work and the authority of internal auditors were not specified in this Act, but rather only their

obligations and tasks were. The internal audit charter obligates management to give internal

39
auditors complete freedom to do their jobs and to carry out their recommendations. In the

absence of this, the internal audit unit is less able to do high-quality audit work. The Ghana

Audit Service's internal auditors and branch leaders all vehemently concur that the internal

auditors cannot function successfully without an internal audit charter. Management was able

to specify the internal auditors' area of responsibility because there was no internal audit

charter. Internal auditors' job would be constrained, and their independence would be

compromised.

4.10 Advisory roles do internal auditors play in the assemblies

The modern internal audit function includes consultancy and consultative functions in

addition to record verification. Finding out what kinds of advising roles internal auditors fill

at the hospital was the goal of research question number four. The outcome is displayed

below.

Figure 4-4: Advisory roles of internal auditors

Source: Field survey

According to statistical evidence from figure 4-4, internal auditors in the government hospital

serve as advisors. The internal auditors constantly give management recommendations on

ethical behavior and anti-corruption practices (56.1%), excellent corporate governance

systems, and (50.0%). They frequently counsel management on developing and

implementing internal control systems (56.1%), sound business practices (48.8%), and

effective risk management (51.2%). They always give management advice on program

40
evaluation (53.7%) but frequently give management assistance on project management

(53.7%). According to the research above, the hospital's internal audit unit satisfies the IIA's

2009 modern definition of internal audit, which includes consulting work and giving value to

an organization. In order to ensure sound corporate governance in the public sector, these

advising services are required. It is crucial to note that although internal audit units may

provide useful advisory services, the value of those services may vary depending on their

level of excellence and applicability to government hospitals. The level of advising services

the internal auditors can provide will depend on their knowledge and experience.

4.11 Determinants of effective internal audit

The following elements that improve the work of internal auditors were listed since the

researcher was interested in how much respondents agreed or disagreed with each one. The

respondents were asked to answer to the criteria using a five-point Likert scale that ranged

from strongly agree (5) to Undecided (1). The table below provides a summary of the results.

Table 4-8: Determinants of the effectiveness of internal audit

Statistics
N Std. Error of
Valid Missing Mean Mean Std. Deviation
Existence of Audit 41 0 4.3171 .15397 .98588
committee
Competencies and 41 0 4.3902 .14766 .94546
experience
Existence of Approved 41 0 4.2683 .18487 1.18373
internal audit act
Management support 41 0 4.2439 .20297 1.29962

41
Organisational 41 0 4.3171 .18623 1.19246
independence
Implementation of 41 0 4.2195 .20216 1.29445
internal audit
recommendations
Adequate resources 41 0 4.0976 .20602 1.31918
Unrestricted access to 41 0 4.3171 .15397 .98588
records
Quality leadership of 41 0 4.1220 .21582 1.38194
internal audit chief
executive
Rotation or transfer of 41 0 4.0732 .20775 1.33023
internal audit staff
Job satisfaction and 41 0 4.1220 .18869 1.20820
security
Regular In-service 41 0 4.1707 .19096 1.22275
training
Opportunity to take part 41 0 4.0244 .21094 1.35070
in the decision making
Opportunity to seek for 41 0 3.5854 .22893 1.46587
outside expertise
Source: Field survey

Scale: mean of 4.6 to 5 is Strongly agreed, 4.0 to 4.5 is Agreed, 3.5 to 3.9 is Disagreed, 2.9 to

3.4 is Strongly disagreed and mean below 2.9 is Undecided.

The respondents to table 4-8 agreed that the following factors are important: the existence of

audit committees (4.3171); the skills and experience of internal auditors (4.3902); the Act or

charter (4.2683); the organization's independence (4.3171); management support (4.22439);

the implementation of audit recommendations (4.2195); adequate resources (4.0976);

unrestricted access to records (4.3171); and the regular training of internal auditors (4.1230).

The respondent concurred that internal audit staff rotations (4.0732), job satisfaction

(4.1220), and the chance to participate in decision-making (4.0244) might all contribute to

internal auditor effectiveness. They objected to the possibility of obtaining outside expertise

(3.5854). This outcome is consistent with those of Belay (2007), who carried out comparable

research in Ethiopia. The data from the study showed that the existence of an audit

committee, the skills and abilities of internal auditors, management support, the existence of

approved internal audit standards, full access to all audit evidences, and organizational

42
independence are all elements that contribute to effective internal audit. However, this study

also found additional aspects, including work satisfaction, the ability to seek outside

knowledge, the ability to participate in decision-making, and the rotation of internal auditors.

This finding indicates that internal auditors' expertise and competencies are the most crucial

of all the parameters. This might be because a skilled and knowledgeable internal audit

personnel can interpret and implement audit standards without being easily swayed by

management.

43
 5 CHAPTER FIVE

5 SUMMARY OF FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

5.1 Introduction

The study's findings are compiled in this chapter. There are also prepared conclusions on the

major subjects of the study and suggestions. Examining the effectiveness of internal audits in

the public sector in fostering good corporate governance in Ghana was the goal of this study.

Recently, there has been a rise in interest in the public sector's internal audit function as a

means of enhancing corporate governance. The public expects government to be accountable

and transparent, and it can safeguard itself by strengthening internal auditing practices that

offer some level of assurance that it is not squandering taxpayer money. The recent financial

crisis necessitated greater development of the internal audit departments. Countries are

expected to develop their own public auditing standards, using the local Consider the

environment and keep it consistent with the internal perspective. The Institute of Internal

Auditors (IIA) has issued auditing standards to guide the public sector auditing and

accounting profession in response to this crisis. In order to promote openness, accountability,

equity, and efficient use of public resources, Ghana established internal audit units in all

governmental departments in 2003. Ghana doesn't, however, have its own internal auditing

requirements. The Internal Audit Agency Act and the Ghana Audit Service Act serve as the

internal auditors' guides.

5.2 Summary

The Nsawam Government Hospital in Ghana's eastern area served as the site of this

investigation. Through the use of questionnaires and interviews, the data were gathered. It

44
was a descriptive survey research. To direct the investigation, four research questions were

devised. Percentages and means were used to analyze the results of all four questions.

5.2.1 Elements of good corporate governance.

The results showed that accountability to the public, transparency at all levels of government,

fair resource allocation, inclusive policy, responsibility to the populace, and efficient,

effective, and cost-effective resource usage are all essential components of excellent

corporate governance.

5.2.2 Activities that the internal auditors perform at the hospital

The internal control operations of the internal audit units in the hospital are more concerned

with risk management and productivity than with the traditional paradigm of internal audit

functions, which includes compliance with laws and regulations, assessing accounting errors,

and fraud detection. This is because internal auditors worked hard to evaluate management's

attempts to recover receivables and assess initiatives and accomplishments.

5.2.3 Factors that contribute to the effectiveness of internal audit units in the public
sector

The essential support for the internal auditors is not provided by management. The units lack

sufficient resources and the internal audit recommendations are not carried out. On

sometimes, management obstructs internal auditors' efforts. The majority of responders

concurred that the government hospital does have an audit committee. But according to the

answers, the hospital needs an audit committee to guarantee the organizational independence

of the internal auditors. Additionally, the hospital lacks well defined policies, processes, and

programs for its internal audit units. Internal auditors' roles are constrained in how they

provide their services by the hospital's organizational structure. They are only given limited

access to audit evidence, and the assemblies lack clear internal auditor policies and processes.

The units were accorded low status in the assemblies because management saw them as fault-

45
finders. Internal auditors must be knowledgeable about the relevant tools to use in this

technological age. This would guarantee quick, accurate, and reliable audit reports.

5.2.4 Advisory roles of the internal auditors at the hospital

Internal auditors have advising duties in areas including risk management, ethical business

conduct, creating and implementing internal controls, and good company governance. The

following elements have been identified as enabling efficient internal audit in the public

sector: the presence of an audit committee, the skill and experience of the internal auditor,

management support, approved internal audit mandate and standards, unrestricted access to

documents, implementation of audit recommendations, enough resources, organizational

independence, frequent training, and the caliber of leadership of the chief internal audit staff.

5.3 Conclusion

Evidence from the study suggests that internal auditors at the hospital are examining

management's efforts to recover debts rather than the management's compliance with rules

and regulations, the discovery of errors and fraud, or the management's unethical behavior.

The limited extent of the internal audit efforts can be inferred from this information. Project

appraisal and risk management receive less attention. Internal audit is currently focused on

risk management, and if the internal audit unit doesn't give it much thought, the corporate

governance structure won't function well.

The findings made it quite evident that management provides minimal assistance for internal

auditors and that organizational policies limit their ability to do their jobs. Despite the fact

that the hospital has an audit committee and an internal audit charter to improve the

independence of the internal auditors. These data indicate that the units are not successful in

maintaining a sound corporate governance framework in the hospitals.

46
5.4 Recommendations

The hospital management, internal auditors, and internal audit agency are suggested to take

into account the following recommendations based on the findings.

 The internal audit units need to have enough resources, including the right kind of

tech. If resources were available, internal auditors could complete their duties on time

and to a high standard.

 Every hospital needs a unique internal audit charter. The audit committee and internal

auditors should be included in the drafting of the charter by management. This would

obligate management and internal audit to carry out their assigned responsibilities.

 Internal auditors should receive regular in-service training and short-term courses.

They could grow as a result and better prepare for the difficulties of an internal audit

in the modern world.

47
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 7 APPENDIX A

RESEARCH QUESTIONNAIRE
THE EFFECTIVENESS OF THE INTERNAL AUDIT UNITS IN THE PUBLIC

SECTOR IN PROMOTING GOOD CORPORATE GOVERNANCE: A CASE STUDY

OF NSAWAM GOVERNMENT HOSPITAL AT THE EASTERN REGION OF

GHANA

You have been chosen to respond to this questionnaire on the topic, “The effectiveness of the

Internal Audit Units in the Public Sector in promoting good Corporate Governance: A Case

Study of Nsawam Government Hospital at the Eastern Region of Ghana”.

You are guaranteed that any information you provide is exclusively meant for the research

and nothing else. There are no wrong or right responses in this exercise.

Your answer to the questions will be kept confidential.

A. BACKGROUND CHARACTERISTICS

1. Gender: Male [ ] Female [ ]

2. Age: 21-25 [ ] 26-30 [ ] 31-35 [ ] 36 and above [ ]

3. Academic Qualification:
[ ] Post graduate
[ ] Degree
[ ] Diploma
Other Specify ……………………………………………………………….

4. Professional association (if any)

[ ] ACCA
[ ] CIMA
[ ] ICA
[ ] None of the above

52
B. GOOD CORPORATE GOVERNNACE

1. Do you think good corporate governance is necessary at the Nsawam

Government Hospital? [ ] YES [ ] NO

2. How important are the following elements in ensuring good corporate

governance? Give your response by ticking Very Important (VI), Important
(I), Somehow Important (S I), Unimportant (U) and Very Unimportant (V U)

Elements VI I SI U VU

Transparency at all levels of Government 5 4 3 2 1

Accountability to the public 5 4 3 2 1
Effective, efficient and economical use 5 4 3 2 1
of resources

Responsible to the people 5 4 3 2 1

Equitable distribution of resources and inclusive 5 4 3 2 1
policy

Other (Specify) 5 4 3 2 1

C. ORGANISATIONAL SETTING

1. Do you have an internal audit unit at the hospital?

2. Is the internal audit unit allowed access to all information, records and
employees to come to an informed judgement in the audit work?
[ ] fully allowed
[ ] partially allowed
[ ] Not allowed
3. Apart from audit work, do they play other non-related audit role(s) (eg.
Preparing accounts, budget preparation etc)
[ ] Yes
[ ] No
If yes, state the role(s)………………………………………………………………

53
 4. Indicate how much you agree or disagree with the following statements
relating to your department by ticking Strongly Agree (SA), Agree (A),
Disagree (D), Strongly Disagree (SD) and Neutral (N).

Statements SA A D SD U
a. Internal audit department is given low status at 5 4 3 2 1
the Nsawam Government Hospital in the
assemblies management structure
b. Inadequate budget allocation for the 5 4 3 2 1
department
c. Nsawam Government Hospital policies and 5 4 3 2 1
procedures are not clearly defined for the internal
audit department
d. Management have wrong perception about 5 4 3 2 1
internal auditors as fault finders rather than
adding value to good corporate governance

e. No regular in servicing training for internal 5 4 3 2 1

auditors
f. No opportunity to seek the assistance of 5 4 3 2 1
experts during audit process especially when
assessing value of a contract, property.

g. Internal Auditors are not given a representation 5 4 3 2 1

in
Board meetings
h. The unit is not free to choose any transaction or 5 4 3 2 1
area of interest for audit

i. The unit is not allowed pre-transaction audit 5 4 3 2 1

5. There are no adequate resources including utilisation and availability of

appropriate technology to enhance the work of the internal audit
department in the Assemblies. To what extent do you agree with this
fact? Provide your response using Strongly Agree (SA), Agree (A),
Disagree (D), Strongly Disagree (SD) and
Undecided
[ ] Strongly Agree (5)
[ ] Agree (4)
[ ] Disagree (3)
[ ] Strongly Disagree (2)

54
 [ ] Undecided (1)

D. INTERNAL AUDIT QUALITY

1. How long have you been working as an internal auditor?

………………………………………………….........

2. State the number of internal audit staff you have. .............

3. How do you assess the staff number you mentioned above?

[ ] Very adequate (5)
[ ] Adequate (4)
[ ] Somehow adequate (3)
[ ] Inadequate (2)
[ ] Very inadequate (1)
4. Examining the internal control system
(Please mark the corresponding box for the audit activity applicable to your
audit unit) using Always Done (AD), Often Done (OD), Occasionally Done (OCD),
Rarely Done (RD)

Internal Audit Activities in the Nsawam AD OD OCD RD

Government Hospital

Compliance with law and regulations 4 3 2 1

Checking budget implementation 4 3 2 1
Evaluating keeping of accounting errors 4 3 2 1
(mistakes, delays etc.) and fraud detection

Evaluating management’s efforts to the 4 3 2 1

recovery of receivable, taxes and other
collectables
Assessing reliability and soundness of 4 3 2 1
financial information

Examine and assess the policies, procedure 4 3 2 1

and manuals and recommend best practices

Examine use of hospital resources and 4 3 2 1

safeguard of assets

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Examine productivity 4 3 2 1
Assessing Unethical behaviour of 4 3 2 1
management and recommending best
practices
Model control environment (risk management 4 3 2 1
system and controls)

Evaluate projects/programs accomplishment 4 3 2 1

(effectiveness)

5. Tick as many as possible the following qualities in your opinion you think
internal auditors need to posses in order to be effective
[ ] Competencies
[ ] Objectivity
[ ] Professionalism
[ ] Independent attitude of mind
[ ] Exercising good judgement of materiality

Other(Specify)……………………………………………………………….

E. EXISTENCE OF AUDIT COMMITTEE

1. Do you have Audit committee in your hospital?

[ ] Yes
[ ] No
2. To what extent do you agree with the following roles perform by audit
committee in ensuring the effectiveness of the internal audit unit?
Provide your response using Strongly Agree (SA), Agree (A), Disagree (D),
Strongly Disagree (SD) and Neutral (N)
Statements SA A D SD N
it protects the independency of internal auditors 5 4 3 2 1
it supports the budget of internal audit 5 4 3 2 1
department
it receives recommendations and ensures their 5 4 3 2 1
implementation

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Other (Specify) 5 4 3 2 1

F. MANAGEMENT SUPPORT
1. What is the reporting relationship (that is, who do you report your audit
findings to in the hospital)? ……………………………………………………
2. Assess the support you receive from management using Very Dissatisfied
(VD), Dissatisfied (D) Somehow Dissatisfied (SD), Satisfied (S) and Very
Satisfied (VS) on the basis of the following items
Items VS S SD D VD
Implementation of recommendations and 5 4 3 2 1
timely feedback from management

Relationship with management 5 4 3 2 1

Management interference with internal 5 4 3 2 1
audit work

Commitment of management in 5 4 3 2 1
supporting the budgetary status of the
internal audit unit

G. RELIANCE ON INTERNAL AUDITORS BY EXTERNAL AUDITORS

1. How frequent do external auditors rely on you?
[ ] Always
[ ] Often
[ ] Occasionally
[ ] Not at All
Give reason(s) for your choice
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………

H. ADDING VALUE AND ADVISORY ROLE OF INTERNAL AUDIT

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1. Please rate the following possible advisory roles of the internal audit to
management applicable to your hospital using Always Done (AD), Often Done
Occasionally Done OCD and Rarely Done (RD).

Advisory roles AD OD OCD RD

a. Good Corporate Governance 4 3 2 1

b. Ethical practices and Anticorruption 4 3 2 1
c. Effective risk assessment and management 4 3 2 1
d. Designing and implementing internal
control
4 3 2 1
System
e. Sound business practice 4 3 2 1
f. Project management 4 3 2 1
g. Program evaluation 4 3 2

2. The following factors make internal auditors effective. To what extent do you
agree or disagree with the following factors. State your response using,
slightly agree (SA), Agree (A), Disagree (D), Strongly Disagree (SD) and
Neutral (N), mark appropriate column for each factor.

Factors SA A D SD N
a. Existence of Audit committee 5 4 3 2 1
b. Competencies and experience of internal 5 4 3 2 1
audit staff
c. Existence of Approved internal audit act, 5 4 3 2 1
standards
d. Management support 5 4 3 2 1
e. Organisational independence 5 4 3 2 1
f. Implementation of internal audit 5 4 3 2 1
recommendations
g. Adequate resources 5 4 3 2 1
h. Unrestricted access to records, assets, 5 4 3 2 1
employees etc
i. Quality leadership of internal audit chief 5 4 3 2 1
executive
j. Rotation or transfer of internal audit staff 5 4 3 2 1

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k. Job satisfaction and security 5 4 3 2 1
l. Regular In-service training 5 4 3 2 1
m.Opportunity to take part in the decision 5 4 3 2 1
making process in the organisation

n. Opportunity to seek for outside expertise 5 4 3 2 1

28 State other factors in your opinion you think can make internal auditors
effective
………………………………………………………………………………………
………………………………………………………………………………………
29 State the challenges the internal audit unit in your Assembly faces
………………………………………………………………………………………
………………………………………………………………………………………
………………………………………………………………………………………

30 Suggestions and Comments …………………………………………………

………………………………………………………………………………………

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