Does the Internal Audit Function Play a Role in Mitigating Earnings Management?

This paper aims to investigate the effect of the characteristics of the internal audit function(IAF)on earnings management(EM)for a sample of 27 Tunisian listed companies.The authors employed the Correlated Panels Corrected Standard Errors model to estimate the regression equation.The results showed that EM is negatively associated with internal audit effectiveness,frequency of audit committee meetings with Chief Audit Executives(CAEs),the partial outsourcing of internal audit,and the firm’s size.Moreover,the authors found a positive relationship between EM and the use of IAF as a training ground for management and the private sector.This study is important to academics,regulators,and policymakers in introducing new governance reforms to strengthen the IAF as an important internal governance mechanism to reduce earnings management practices in emerging countries.The results also provide useful information for investors to examine the effect of internal audit characteristics on earnings management.

Study on Independent Supervision Function of Design Assurance System

The effective operation of a design assurance system cannot be achieved without the effective performance of the independent supervision function.As one of the core functions of the design assurance system,the purpose of the independent supervision function is to ensure that the system operates within the scope of procedures and manuals.At present,the function of independent supervision is a difficult and confusing issue for various original equipment manufacturers as well as suppliers,and there is an urgent requirement to put forward relevant requirements and form relevant methods.Based on the above mentioned objective,the basic requirements of the independent supervision function of design assurance system were studied,the problems and deficiencies in the organization,staffing,and methods existing in the current independent supervision function were analyzed,the improvement suggestions and measures for the performance of the independent supervision function from the aspects of the organization,staffing,procedures,and suppliers were put forward.The present work and conclusions provide guidance and direction for the effective operation of the design assurance system.

The Self-inspections(Internal Audits)Process as a Part of the Pharmaceutical Quality System:Formation of a Risk-Based Approach to Internal Audits Planning

The quality system of any modern pharmaceutical company is the pharmaceutical quality system(PQS),which extends the GMP standards to all stages of the medicinal productslife cycle,from pharmaceutical development to its withdrawal from production.The principal difference between PQS and GxP rules from other quality systems is that the medicinal product,its safety and efficacy is put at the forefront.At the same time,PQS implies a process approach to all components that should be aimed at achieving the main goal—ensuring and guaranteeing the quality of the medicinal product for the end user(patient)—and should be based on the quality risk management system.An integral part of PQS,as well as the GxP rules adopted in the European Union and PIC/S,is a process for self-inspections and/or quality audits,which regularly appraises the effectiveness and applicability of the PQS.This publication is dedicated to the definition of self-inspections(internal audits)as one of the PQS’s processes.The article defines the main standard stages and develops a model of a risk-based approach to the self-inspections’planning in relation to processes of the pharmaceutical quality system.

Research on Firm Size, Firm Performance and Internal Auditing Modes——Based on Listed Manufacturing Companies of China

This paper is based on the samples of listed manufacturing companies of China, taking the financial performance as criterion, and then does research on the firm performance with different internal auditing modes, using Cross-sectional data to analyze the distribution of internal auditing modes and the characteristics of the firm performance. The conclusion is that setting up internal auditing is good for the development of companies, but the function of internal auditing has not been widelv fulfilled.

Exploring the Internal Audit Practices of Electric Power Enterprises in the Context of the New Economic Normal

In the current economic landscape characterized by a decelerating domestic economy,rising investments,and an extended project construction timeline,power generation enterprises must enhance their internal audit efforts to sustain their competitive edge in business development.Addressing systemic shortcomings methodically and practically can enhance the internal audit effectiveness within electric power enterprises and contribute to the steady enhancement of their production and operation performance.

Constructing a Triangular Linkage Model of Government Audit,Social Audit,and Internal Audit to Promote High-Quality Development of Audit Services

It is a complex and important topic to study the linkage mechanism of government audit,social audit,and internal audit in the context of China’s high-quality economic development.The implementation of measures,such as establishing a sound and perfect organizational safeguard mechanism,strengthening project collaborative audit mechanism,enhancing the mechanism for utilizing audit results,and establishing an audit and rectification joint mechanism can promote the efficient operation of the audit supervision system and the high-quality development of audit services.

Applying Internal Control Procedures for Detecting and Preventing Money Laundering Operations in Banks＂ A Field Study in the Hashemite Kingdom of Jordan

This study aimed at identifying the role and importance of internal control procedures for detecting and preventing money laundering operations in banks through defining the internal control procedures which contribute to detecting money laundering operations. These procedures include the guide and policies issued by the administration of banks in order to combat laundering money operations as well as to train employees on matters pertaining to the money laundering operations. The study showed the role of the internal control procedures in detecting practically the money laundering through the automated programs and the system of saving the files and records. Furthermore, the study showed the factors affecting the internal control procedures to anti-money laundering operations. The researcher used an analytical descriptive approach for collecting data which relate to the main elements of the study, analyzing and explaining them. This study aimed at building the theoretical framework depending on audit literature which addressed internal control system, anti-money laundering systems, and control procedures of anti-money laundering. Through the theoretical framework, a questionnaire related to the application of internal control procedures and its relation to anti-money laundering operations was designed. It was distributed to the population of the study which includes internal and external auditors and the head of anti-money laundering operations unit in the Jordanian banks. The study found that applying internal control procedures is important for detecting and preventing money laundering operations in the Jordanian banks and that there are factors affecting the nature and the extent of internal control standards pertaining to anti-money laundering operations in the Jordanian banks.

Game analysis on the regulation of listed companies＇ accounting information-gaming between Internal Audit Department and Audit Office

Through the establishment of game model, this article formulates the intuitive and experiential understanding of regulation on listed companies＇ accounting information by using game analysis method, and from an economic point of view, it analyzes how various parameters affect Internal Audit Department＇s nonfeasance probability and Auditing Office＇s supervision probability. Hope that this article can provide a reference for regulation on accounting information.

Financial Management and Control and Internal Audit System in the Public Sector in BiH

The introduction and implementation of finansijsko upravljanje i kontrola(FUK,financial management and control[FMC])in Federation of Bosnia and Herzegovina(FBiH)aims to incorporate a modern public internal financial control(PIFC)system into traditional public resources management models.This area is one of the reform areas in which Bosnia and Herzegovina(BiH)is obliged to harmonize the legislative framework and practice with the good practices and regulations recommended by the European Commission.The establishment and development of the PIFC are also an obligation of Bosnia and Herzegovina established by the Stabilization and Association Agreement between the European Community and the member states,of the one part,and Bosnia and Herzegovina,of the other part.The public internal financial control(PIFC)system focuses on enhancing transparency,financial discipline,and dedicated use of public resources,that is,transparent,economical,efficient,and effective management of public resources,and control of the use of those resources.The topic of this paper is“financial management and control in the public sector”where the aim is to show,through the conducted theoretical research,the level of achievement of the establishment of this system in public sector institutions in BiH.The European Union wants to direct all potential member countries towards development of internal controls in the use of their own resources,but also to create a control environment that would ensure the dedicated use of EU funds.In Bosnia and Herzegovina,there is no single legal framework in terms of a single law governing public internal financial controls.The contents of the applicable legal provisions at all three levels(BiH,FBiH,and Republic of Srpska[RS])are largely congruent thanks to the Coordination Committee of Central Harmonization Units(CHJs)in Bosnia and Herzegovina,through which the harmonization of regulations and practices in the development of public internal financial controls is ensured.

A New-style Internal Auditing： The Governance-oriented Internal Auditing

The transformation of internal auditing （IA） from the function of supervision, management and control-oriented to governance-oriented are fulfilled while governance-oriented internal auditing emerging from the demand of corporate governance. The governance-oriented internal auditing （GOIA） is a risk-based assurance and consulting activity designed to add value into the organization focusing on the effectiveness of corporate governance in supervision and assessment by compound professional aims. Governance-oriented internal auditing includes board auditing, strategic auditing, management responsibility auditing and risk management auditing, etc..

Analysis of the Impact of the New Financial Accounting System on the Internal Audit of Colleges and Universities

The new financial accounting system is the reorganization and refinement of the contents of the old financial accounting system, which not only maintains the basic contents of the original system, but also has its new characteristics. As far as the applications of the new accounting system are concerned, its practicability is very strong, and especially the application of the accounting in colleges and universities is very convenient. Moreover, the levels of the financial management under the new financial and accounting system are gradually improving. The purpose of this article is to explore the impact of the new financial accounting system on the internal auditing work in colleges and universities, hoping that this research will be helpful to the related auditing work in colleges and universities in the future.

Quality of Accounting Information and Internal Audit Characteristics in Nigeria

The basic goal of accounting is to provide quality accounting information that will aid reliable decision-making. The quality level of this accounting information comes from the company＇s governance practices, thereby emphasizing the importance of corporate governance in companies. Recently, following the financial crises resulting in accounting scandals, attention has been moving towards internal audit function as an important factor in the structure of corporate governance. This paper therefore examined the extent of the relationship between internal audit function and the quality of accounting information of companies. The study adopted the survey research design. The research instrument employed was questionnaire which was administered to internal auditors of the ＂Big Four＂. Linear regression analysis was employed in the analysis of the data collected with the use of Statistical Packages for Social Sciences （SPSS）. The results revealed that there is a significant relationship between the internal audit characteristics and the quality of accounting information. It was recommended that in order to provide credibility to the financial statement, there should be a law in place mandating attachment of internal auditors report to the financial statement.

Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment

In a highly intertwined and connected business environment,globalized layout planning can be an effective way for enterprises to expand their market.Nevertheless,conflicts and contradictions always exist between parent and subsidiary enterprises;if they are in different countries,these conflicts can become especially problematic.Internal control systems for subsidiary supervision and management seem to be particularly important when aiming to align subsidiaries’decisions with parent enterprises’strategic intentions,and such systems undoubtedly involve numerous criteria/dimensions.An effective tool is urgently needed to clarify the relevant issues and discern the cause-and-effect relationships among them in these conflicts.Traditional statistical approaches cannot fully explain these situations due to the complexity and invisibility of the criteria/dimensions;thus,the fuzzy rough set theory(FRST),with its superior data exploration ability and impreciseness tolerance,can be considered to adequately address the complexities.Motivated by efficient integrated systems,aggregating multiple dissimilar systems’outputs and converting them into a consensus result can be useful for realizing outstanding performances.Based on this concept,we insert selected criteria/dimensions via FRST into DEMATEL to identify and analyze the dependency and feedback relations among variables of parent/subsidiary gaps and conflicts.The results present the improvement priorities based on their magnitude of impact,in the following order:organizational control structure,business and financial information system management,major financial management,business strategy management,construction of a management system,and integrated audit management.Managers can consider the potential implications herein when formulating future targeted policies to improve subsidiary supervision and strengthen overall corporate governance.

The effectiveness of internal audit in Malaysian public sector

Internal audit in Malaysian public and private sector organizations underwent a steady organic growth since gaining a foothold in the management process in the 1970s. The management of the Malaysian public sector is continuously maturing in facilitating foreign input in national development, echoing similar advances expounded by the internal audit units of private sector organizations. The main difference being the public sector addresses the interest of a much wider group of stakeholders. Rapid development in infrastructures and industries positioned Malaysia on the fringes of globalization and the world market. This enlarges the crucial role of internal auditing to ensure transparency, integrity, quality and improved service delivery; among myriad positive aims, remain the end point of any process area. This study explored the significance of internal auditing in the Malaysian public sector, and its subsequent extent and influence in public sector hierarchy and decision making. Data was collected from responses to a questionnaire distributed to head of internal auditors, internal auditors and other staff of internal audit departments from various categories of public sector departments and agencies in Malaysia. The study concluded that the internal audit function in the public sector in Malaysia is curtailed by understaffing and hampered by inadequate support from top management while, the auditors seldom extend their full cooperation. The auditors themselves lack appropriate knowledge and training on effective auditing approaches. The negative perception accorded to internal audit led to inaction by management on recommended remedies which only serve to nullify the positive contribution internal audit potentially holds to elevate the service delivery quality of the public sector.

Audit study of the new hospitalization for assessment scheme for forensic mental health in Japan

AIM: To clarify the components of hospitalization for assessment(HfA) and the management changes from the beginning of the scheme to the present.METHODS: This study is composed of two surveys. In 2013 survey, we created two paper questionnaires(facility and case questionnaires) for psychiatrists working in psychiatric hospitals accepting HfA patients. Questionnaires were sent to 205 hospitals that were identified as accepting the Hf A cases, and responses were requested via mail. The facility questionnaire was designed to clarify the following specifications and characteristics of each facility: the facility organizer(public sector or private hospital), and the number of beds, psychiatrists, psychiatric nurses, occupational therapists, psychiatric social workers, psychotherapists, public health nurses, and patients treated through Hf A during the survey period. The case questionnaire was then used to collect data of the patients under Hf A based on the Medical Treatment and Supervision(MTS) Act who were discharged between July 1, 2012 and June 30, 2013. Gathered information included: legal information of each case, demographic data, past history of the offenders, issued offense and the relationship to the victim, information regarding past psychiatric testimonies, psychiatric diagnoses, contents of the treatment during Hf A, information regarding seclusion and restraint during the Hf A, the verdict of the District Court panel, and so forth. Next, we compared those results with relevant data obtained in 2007. The 2007 survey comprised data of Hf A patients from July 15, 2005(the date the MTS Act was enforced) to January 15, 2007.RESULTS: We obtained 171 cases, approximately a half of whole contemporary cases of HfA, from 134 facilities, of which 46 were national, prefectural, or semi-official hospitals, and 88 were private hospitals, in 2013 survey. The majority of subjects were male, schizophrenic, and experienced previous psychiatric treatment. The most frequent type of the offense was injury, followed by arson. Most of the subjects were medicated, and a few cases took psychotropic injection during the Hf A. The frequency of injection was decreased in 2013(χ2 = 7.54, df = 1, P = 0.006) than in 2007. Psychiatric testimony was more likely to be conducted in 2013(χ2 = 8.56, df = 1, P = 0.004). The examiner psychiatrist was more likely to belong to the Hf A facility to which the patient was hospitalized(χ2 = 5.32, df = 1, P = 0.02). Hospitalization orders were more frequently selected in 2013(χ2 = 19.76, df = 3, P < 0.001), although the characteristics of the subjects had not changed.CONCLUSION: Although the management of HfA has improved in recent years, structural problems remain.

Differences between British and Japanese perspectives on forensic mental health systems:A preliminary study

AIM To clarify the differences in views on forensic mental health(FMH) systems between the United Kingdom and Japan.METHODS We conducted a series of semi-structured interviews with six leading forensic psychiatrists. Based on a discussion by the research team, we created an interview form. After we finished conducting all the interviews, we qualitatively analyzed their content. RESULTS In the United Kingdom the core domain of FMH was risk assessment and management; however, in Japan, the core domain of FMH was psychiatric testimony. In the United Kingdom, forensic psychiatrists were responsible for ensuring public safety, and psychopathy was identified as a disease but deemed as not suitable for medical treatment. On the other hand, in Japan, psychopathy was not considered a mental illness. CONCLUSION In conclusion, there are considerable differences between the United Kingdom and Japan with regard to the concepts of FMH. Some ideas taken from both cultures for better FMH practice were suggested.

Auditing the Auditors： The Audit Oversight Board and Regulating Audit Quality in Malaysia

The setting-up of the Malaysian Audit Oversight Board （AOB） in 2010 under the Securities Commission Amendment Act 2010 has extended the role of regulators into the statutory audit domain for public listed companies. Although the auditing profession in Malaysia has International Auditing Standards as prescribed minimum level of quality in the delivery of audit assurance services, self-regulation by the profession alone appears inadequate to ensure the delivery of quality audit services. With co-regulation, auditors now are monitored not just by the profession but also by a new statutory body with considerable regulatory powers to sanction auditors where quality of the audit process has been found wanting. This study solicits the opinions of auditors on their expectations of what the new regulator can achieve. Based on interviews with a sample of 30 auditors, the study finds that the majority believe that audit quality will be taken to a new level following AOB＇s remit of registration of auditors, compliance inspection with International Standard on Quality Control （ISQC）, monitoring of financial statement quality, and its power of sanctions. A review of AOB＇s early years＇ inspection confirms these expectations.

A Comparative Study about Internal Auditing Approach between Germany and China

While internal audit is one of the most important functions and procedures for internal control of the firms＇ normal operations from the perspective of financial terms, different countries, due to their stages of economic developments （developed countries VS. developing countries）, unique governmental regulations, and different societal and cultural traditions, have implemented different internal audit systems and approaches. This paper describes a comparative study exploring some key differences between the internal audit system in China and its counterpart in Germany---from the following five important aspects： the origin and development of internal audit, the structure of internal audit system, the relationship between firms＇ internal audit and the government agency, the responsibility and accountability of internal audit, and the quality of internal auditors. Based on the comparative analysis, four suggestions are made for future improvement on the internal audit system in China, along with managerial discussions.

The Effect of Audit Objectives on Audit Quality Why is There Little Disclosure of Significant Deficiencies in Japanese Internal Control Audits？

Many prior research findings indicate that audit quality differs between the Big 4 and non-Big 4 audit firms using an indicator variable. However, most previous research focuses on only outcome measures, such as audit fees, going concern reports, and non-audit services. This study investigates audit quality differentiation between the Big 4 and non-Big 4 audit firms hypothesis from an audit objective point of view. One of the material objectives of Japanese internal control audit institutions is to facilitate assessment and improvement of internal controls by corporations themselves. The findings of this study indicate that the Big 4 audit firms accomplish this objective better than non-Big 4 audit firms. Consequently, most Big 4 clients do not disclose significant deficiencies （SDs）, implying that they improve the quality of internal controls through internal controls auditing. This paper concludes that Big 4 firms produce a higher audit quality level than non-Big 4 firms, and this quality difference iS related to how an audit objective is interpreted and implemented.

Internal Control and Internal Audit in the Function of Supervising the Operations of Companies

The management of a modern company is faced with the need to make business decisions regarding the achievement of business goals.Increased interest in establishing internal control is affected by the presence increased corruption and the erosion of business morality.For internal controls,everyone is interested,from external auditors to management,board of directors,shareholders of large public companies and the state.With the constant growth of the company,the decentralization of business has been compounded by the management process.Therefore,in addition to internal control,internal audit is required.The company’s management cannot deal with oversight because it has to deal with strategic issues.This is where internal audit is performed as an expert service.The results of the conducted empirical research showed that the stages of development of internal control in enterprises in Montenegro do not correspond with the achieved degree of development of this profession in the countries of the developed market economy.