Internal Audit Efficiency as a Tool for Improving Profitability of a bank

DEDICATION

This research is dedicated to my mother who made wise choice of sending me to school. This piece of work is equally dedicated to my cousin Atem  Maper  Ayuel, who has given me encouragement for my studies, and my sisters Arual  Nuer, Ajak  Nuer, Apuk  Nuer and Adut  Nuer

I wise to extend my gratitude to colleagues who always provide me with energy to make me active in study for the last two semester. I sincerely thank you guys for the continuous prayers, encouragement and support.

ACKNOWLEDGEMENT

I would like to express my deepest appreciation to all those who provided me the possibility to complete this research in one way or another through their prayers, resources and encouragement.

I would also like to acknowledge with much appreciation my family, classmates and friends for their encouragement which has kept me going, and for that am sincerely grateful. It is because of your support that I have managed to get this far. May God bless you abundantly?

A special thanks goes to my supervisor for his guidance, direction and advice accorded to me throughout the period of under taking this project. Your efforts, counsel and supervision are highly appreciated.

My grateful thanks goes to my beloved mother CATHERINA STEPHAN ULA  for her support during my studies, from nursery, primary, secondary, and up to this level of high education in the University, let the Almighty God protect her and give her a good health.

LIST OF ABBREVIATIONS

IIA: Institute of Internal Auditors

IA: Internal Audit

PC: Professional Competency

IAS: Internal Audit Standards

IC: Internal Controls

CEO: Chief Executive Off

IPPF:  International Professional Practice Framework

COSO: Committee of Sponsoring Organization

CIA: Chief Internal Auditor

ICBSS: International Commercial Bank South Sudan

CEO: Chief Executive Officer

ROA: Return on Assets

ROE: Return on Equity

IPPF: International Professional Practice Framework.

APBG: Auditing Practices Board Guidelines.

KYC: Know Your Customer

Table of Contents

DEDICATION.. I

ACKNOWLEDGEMENT. II

LIST OF ABBREVIATIONS. III

Table of Contents. IV

List of tables. VI

CHAPTER ONE.. 1

1.0 Introduction:. 1

1.1 Background of the study. 1

1.2 Statement of the problem.. 1

1.3 Objectives of the study. 2

1.4 Research questions. 2

1.5 Purpose of the study. 2

1.6 Significant of the study:. 2

1.7 Organization of the study:. 2

CHAPTER TWO.. 4

2.0 Literature review.. 4

2.1Review of Empirical Studies. 4

2.2 Historical background and evolution of Internal Audit. 6

2.3 Definition of Internal Audit. 7

2.4Nature and scope of Internal Auditing. 7

2.5Types of internal audit. 8

2.5.1 Operational audit:. 8

2.5.2 Compliance Audit:. 8

2.5.3 Financial Audit:. 8

2.5.4 Follow up Audit:. 8

2.5.5 Investigation:. 8

2.5.6- IT Audit:. 8

2.6 Functions of internal audit:. 8

2.7 Objectives of internal audit. 9

2.8 Standards for effective Internal Audit.9

2.9 Roles and duties of internal auditor. 10

2.10 The roles of internal audit in an organization. 10

2.10.1 Role in Safeguarding of Assets. 10

2.10.2Role in risk management. 10

2.11 Independence of Internal Audit. 11

2.12 Internal Audit Quality. 11

2.13 Internal audit report:. 12

2.14 Qualities of internal audit report. 12

2.15 Internal control12

2.16 Evaluation of Internal control by Auditor.12

2.17 Categories of Internal Control12

2.17.1 Segregation of duties. 13

2.17.2 Authorization and approval13

2.17.3 Safeguarding of assets. 13

2.17.4 Supervision. 13

2.18 Internal Auditing and profitability Performance. 13

2.19.1 ICB-SS Services. 14

2.20 Internal audit department. 15

CHAPTER THREE.. 17

3.0 Introduction. 17

3.1 Study population. 17

3.2 Research design. 17

3.3 Sample size. 17

3.4 Data analysis. 17

3.5 Research instruments. 18

3.5.1 Interviews. 18

3.5.2 Focused group discussions. 18

CHAPTER FOUR.. 19

FINDINGS AND ANALYSIS. 19

4.1 Introduction. 19

CHAPTER FIVE.. 26

SUMMARY CONCLUSIONS AND RECOMMENDATIONS. 26

5.1 summary. 26

5.2 Conclusions. 26

5.3 Recommendations. 27

References:. 29

APPENDEX.. 30

                                                                    List of tables

Table 4.1 Indicates whether the internal audit term of reference are sufficiently visible to    everyone in the bank………………………………………….………...………………………. 19

Table 4.2 Indicates whether the structure of the internal audit facilitate the delivery of              value to the bank…………………………………………………………...…………………….20

Table 4.3 Indicates whether the internal audit indicates areas where business process may be improved upon…………………………………………………………..……………………….20

Table 4.4 Indicates whether internal audit contribute to the committee’s understanding of the overall assurance framework within the organization and the role internal audit plays in this framework………………………………………………………………………………………..20

Table 4.5 Shows response to the question whether auditing is a management technique that is   been recognized to provide management with a general situation regarding resource       utilization and other services within the organization……………………..…………………….21

Table 4.6 shows response to the question whether internal audit function is not just to monitor   and detect fraud but also to investigate fraud incidences when they arise………………………21

Table 4.7 shows response to the question internal audit function that is well perform serves as    one of the strongest means to monitor and promote good governance system in any organization.……………………………………………………………………………………...22

Table 4.8 Indicates whether the recommendation in the internal audit report are designed to   help the organization achieve efficient and effective risk control process associated with operation activities, financial and management reporting objective……………………….....…23

Table 4.9 Indicates whether the internal audit system has a direct effect with performance          of an organization………………..…………………………………………..…………………..23

Table 4.10 Indicates whether the principle of profession, independence, integrity and confidentialness helps internal auditors to safeguards assets and improve performance………..24

Table 4.11 Indicates whether an organization without proper control system would normally  suffer a lot of problems such as rise of cost and loss of cash……………………………………24