Thesis (MPA)--Stellenbosch University, 1998. / ENGLISH ABSTRACT: In this study the assumption is made that the delivery of a professional internal audit service has a direct bearing on the improvement of effectiveness of services delivered. Internal auditing in the public sector, compared to the private sector, is still at an early stage of development. A change in emphasis brought about by the new Constitution has led to a demand for stronger accountability and transparency. The internal audit profession has an important role to play by assisting management in the effective, efficient and economic reaching of goals and objectives. To fulfil this role successfully it is necessary for the internal auditor to possess specific skills and knowledge to perform audit tasks unique to the public sector. The hypothesis as formulated emphasises the relationship between professional internal auditing and organisational effectiveness. Through the content of this study project it is endeavoured to prove this point. An investigation into the field of internal auditing was undertaken by means of a study of the available literature, including the Standards for Professional Practice of Internal Auditing. Opinions and information were obtained from management and other persons involved with auditing by means of a questionnaire. The opinions and information were. integrated to obtain a comprehensive picture. A study of the literature revealed that internal auditing is supported by four pillars, namely: - Achieving objectives - Safeguarding and using of assets - Economic, effective and efficient execution of functions - Compliance with policy, prescripts and regulations. The literature also describes a definite process followed during an audit. During the audit process risk factors must be taken into account. Technical aspects relating to internal auditing is covered in the literature, but references to examples in the public sector are lacking. This deficiency was identified during the field study by means of a questionnaire. Respondents indicated in questionnaires that effectiveness of management, financial information and compliance with controls must be subjected to internal auditing. Management views the internal audit as a source of information on the activities of every department. The recommendations for professional internal auditing in the public sector are aimed at promoting accountability and transparency in the organisation. To ensure effective internal auditing it is necessary for the internal auditor to take note of the environment in which the organisation's activities play a role. A study of public administration as a management science is therefore important for the internal auditor to obtain insight into a holistic approach regarding the activities of public sector organisations. / AFRIKAANSE OPSOMMING: In hierdie studie word as uitgangspunt die aanname gemaak dat daar 'n verband bestaan tussen die lewering van 'n professionele diens deur die interne ouditeur en die effektiwiteit van dienste wat aan interne ouditering onderwerp word. Interne ouditering in die openbare sektor in vergelyking met die privaatsektor, is nog in 'n begin stadium van ontwikkeling. 'n Klemverskuiwing wat teweeggebring is deur die nuwe Grondwet het daartoe gelei dat groter rekenpligtigheid en deursigtigheid vereis word. Die interne oudit beroep het 'n belangrike rol te speel deur bestuur by te staan in die effektiewe, doelmatige en ekonomiese bereiking van doelwitte. am hierdie rol suksesvol te vervul is dit nodig dat die interne ouditeur oor bepaalde vaardighede en kennis sal beskik om oudittake uniek aan die openbare sektor professioneel uit te voer. Die hipotese soos geformuleer beklemtoon die verband tussen professionele interne ouditering en organisatoriese effektiwiteit. Met die inhoud van die werkstuk word daar gepoog om die punt te bewys. 'n Ondersoek na die gebied van interne ouditering is onderneem deur 'n studie te maak van beskikbare Iiteratuur, insluitend die Standaarde vir Professionele Praktykvoering van Interne Ouditering. Deur middel van 'n vraelys is menings en inligting van bestuur en persone betrokke by ouditering verkry. Die menings en inligting is saamgevoeg om 'n geheelbeeld te verkry. 'n Studie van die Iiteratuur toon dat interne oudit deur vier pilare ondersteun word naamlik: - Bereiking van doelwitte - Beveiliging en aanwending van bates - Ekonomiese, effektiewe en doelgerigte uitvoering van funksies - Nakoming van beleid, voorskrifte en regulasies. Die Iiteratuur beskryf 'n bepaalde proses wat gevolg word tydens ouditering. Gedurende die ouditproses moet risikofaktore in ag geneem word. Tegniese aspekte verbonde aan interne ouditering word gedek, maar verwysings na voorbeelde uit die openbare sektor ontbreek grootliks in die Iiteratuur, vandaar die noodsaaklikehid vir 'n veld studie wat deur middel van 'n vraelys gedoen is. Respondente het in die vraelyste aangedui dat effektiwiteit van bestuur, finansiele inligting en die nakoming van kontroles aan interne ouditering onderwerp moet word. Bestuur beskou die interne ouditeur as 'n bron van inligting oor die aktiwiteite van elke departement. Die aanbevelings vir professionele interne ouditering in die open bare sektor is daarop gemik om rekenpligtigheid en deursigtigheid van 'n organisasie te bevorder. Om effektiewe interne ouditering te verseker is dit noodsaaklik dat die interne ouditeur ook kennis dra van die omgewing waarin die organisasie se aktiwiteite 'n rol speel. 'n Studie van Publieke Administrasie as 'n bestuurswetenskap sal dus vir die interne ouditeur van belang wees om insig te verkry in 'n holistiese benadering tot aktiwiteite van openbare sektor-organisasies.

published_or_final_version / Business Administration / Master / Master of Business Administration

published_or_final_version / Business / Master / Master of Philosophy

This study analyzes the concept of auditor independence and develops a theoretical model for examining an auditor's independence and the methods that can be used to assess, instill and maintain independence. In addition, this research reports the results of an empirical test of a portion of the model. In this work, independence is described as a multifaceted concept that includes both independence in appearance and independence in fact. By incorporating literatures from economics and sociology, relationships between these two forms of independence are developed to show that the observable structures and behaviors of the profession (independence in appearance) form the basis for implying the level of an individual auditor's independence (independence in fact). In this context, independence is operationally defined as: an auditor's perceived right to make audit judgments free from client and firm influences. The model further suggests that the observable structures of the profession form the socialization contexts for an individual's professional development. A survey of newly hired employees from five national accounting firms was conducted to examine the multidimensional aspects of auditor independence and the link between educational socialization processes and professional development. The results provide some support for the theoretical model and provide a basis for refining the linkages between educational socialization and professional development.

This dissertation examines how differences between the strategic-systems audit approach and the traditional, transaction-based audit approach affect the content and complexity of client business knowledge in long-term memory, how these mental representations develop with experience, and how the representations affect risk assessment. Knowledge of the client?s business is essential to conducting an effective and efficient audit, but researchers have devoted little attention to how this knowledge is represented in memory and what effect it has on audit judgment. Moreover, proponents of the strategic-systems approach argue that this approach leads to the formation of a more-complex client business model and results in better audit judgments than the transaction-based approach. The study?s results contradict these claims, with the strategic-systems auditors having less-complex models than their TBA counterparts. Also, no experience-related differences were found in the client models, and risk assessments were only weakly affected by content and complexity differences between client models. After a variety of supplemental analyses, it was concluded that there is no evidence from this dissertation to suggest that the SSA methodology does not result in an auditor possessing an enhanced knowledge of the client?s business compared to that possessed by an auditor employing a traditional audit approach.

This paper will examine the effectiveness of the Sarbanes-Oxley Act of 2002 (SOX) in improving ethics within the external auditing profession. The first chapter explores well-known ethical theories and professional code of conducts related to the auditing profession. The second chapter details the generally accepted auditing standards and changes that have been made throughout the years. The third chapter examines past corporate fraudulent scandals (Waste Management, Lincoln Savings and Loan Association, Enron) and studies the role of auditors in contributing to the collapse of these corporations. The forth chapter details the objective of the SOX and how it plans to protect the investing public and improve the reliability of financial information. Finally, the fifth chapter compiles various research studies that examine the effects of the SOX and its impact on audit quality. The author discovered that regulation could help enhance ethics through indirect measures that aim to improve audit qualities, and thus, promote virtue ethics within the auditing profession. Some of these measures include establishing an oversight board to strengthen regulation and enforcement (section 101), reducing the scope of non-audit services (section 201), requiring auditors to attest to a client’s internal control operating effectiveness (section 404) and promoting principles-based standards within the profession (section 108). Through these measures, the Sarbanes-Oxley Act has managed to regain the public trust and improve audit quality, thereby, enhancing ethics within the auditing profession.

M.Comm. / Selde in die geskiedenis van die mens was daar so 'n ingrypende mate van verandering soos wat tans plaasvind. Nuwe dinge word daagliks beproef, verbeterde metodes word ontwikkel, bestaande rekords word gebreek en hoer hoogtes word bereik. Die besigheidswereld is insgelyk aan verandering onderhewig. Veranderinge van die afgelope agtien maande behels eerder 'n totale omwenteling vir Suid-Afrikaanse besighede. Skielik is Suid-Afrika weer deel van die internasionale sakegemeenskap. Dit impliseer dat Suid-Afrikaanse besighede met buitelandse maatskappye op die wereldmark op gelyke voet moet meeding. Die voldoening aan IS09000 blyk deel van die internasionale spel te wees. IS09000 is `n internasionale kwaliteitstandaard wat modelle vir kwaliteitstelsels voorstel. Indien Suid-Afrikaanse besighede internasionaal wil meeding, is hierdie 'n belangrike aspek om in gedagte te hou. Hierdie skripsie handel juis oor hierdie eksternse bedreigings (of geleenthede) vir Suid- Afrikaanse besighede. Dit is veral die toepaslikheid van die IS09000-standaard op die ouditprofessie wat onder die loep geneem word. `n Verdere oefening is die ondersoek van die vereistes waaraan voldoen moet word ten einde IS09000-sertifisering te verkry. Die redes en voordele van sertifisering word aangespreek asook literatuur oor die kwaliteitsbestuur. Die huidige mate van voldoening aan die IS09000-standaard by Onderneming A is gemeet. Hierde proses het verskeie gestruktueerde onderhoude met sleutel bestuurspersoneel ingesluit. Die gevolgtrekking waartoe gekom word, is dat Onderneming A tans the aan die IS09000-kwaliteitstandaard voldoen the. Dit is egter the 'n negatiewe weerspieling van die Onderneming of sy mense the, maar eerder te wyte aan die eiesoortige standaard van die vereistes van IS09000. Klem word op die formele dokumentasie geplaas en dit beInvloed die resultaat van die studie. Dit het verder geblyk dat opvattings en persepsies oor die bestuur van kwaliteit van mens to mens, asook oor verskillende posvlalcke heen, verskil. 'n Aksieplan word voorgestel wat Onderneming A in staat behoort te stel om aan die standaardvereistes te voldoen.

Auditors form judgments by integrating the evidence they gather with information stored in memory (knowledge). As they acquire experience, auditors have the opportunity to learn how different patterns of evidence are associated with particular audit problems. Research in experimental psychology has demonstrated that individuals with task-specific experience can match the cues they encounter with patterns they have learned, and form judgments without consciously analyzing the individual cues. Accounting researchers have suggested that auditors develop judgment templates through task-specific experience, and that these knowledge structures automatically provide decisions in familiar situations. I examined whether auditor knowledge leads to reliance on judgment templates. To test this thesis, I synthesized a theoretical framework and developed research hypotheses that predict relationships between task-specific experience (my surrogate for knowledge) and (1) measures of cognitive effort, (2) accuracy of residual memory traces, and (3) performance with respect to identifying potential problems. To test these predictions, I provided senior auditors with comprehensive case materials for a hypothetical client and asked them to use analytical procedures to identify potential audit problems. Subjects acquired information and documented their findings on personal computers using software that I developed to record their activities.

The author examined whether contextual variables impact internal auditors' self-assessed likelihood of whistleblowing. The author synthesized a theoretical framework and developed research hypotheses that predict relationships between the self-assessed likelihood of whistleblowing and (1) magnitude of the consequences (2) channels of communication and (3) type of wrongdoing. To test these hypotheses, the author provided internal auditors (n=123) with a scenario and asked them to self-assess the likelihood of reporting evidence of a malfacation to their internal audit director even though their audit manager told them to ignore the wrongdoing.

The objectives of the thesis research were twofold. One objective was to conduct an exploratory investigation of the underlying response mechanism to an auditor's request for confirmation of accounts receivable. The second objective was to investigate the validity of confirmation evidence. Validity was defined in terms of detection of errors.