INDEPENDENCE AND PERFORMANCE OF INTERNAL AUDIT IN PUBLIC SECTOR ORGANIZATIONS
CHAPTER ONE
INTRODUCTION
The purpose of this chapter as the opening interval is to envelop the background to the study, thus the dramatic environment where the research is being taken, a statement of the problem demonstrating the problems which drove the need for research. Other crucial aspects such as research objectives, research purpose, and aim and research questions will also be covered in the opening episode. The section has also wrapped the delimitation of the study, limitations, definition of terms and a summary. This would be of major importance to various entities such as the general public mainly residents, local authorities mostly Ifo municipality.
1.1 Background of the study
Internal auditing has gradually become a crucial profession in good governance especially in public sectors. However, much emphasis has been credited to external auditing which left importance and independence of internal audit a nagging question in the minds of many.
Independence is the cornerstone of the internal auditor’s profession. Proficient and qualified auditors draw their significance and credibility from the deep-seated postulation of independence of behaviour, mentality, appearance and functionality. Preamble research of auditing and its purpose for many years has been designed for the context of external audit. Apart from this, countless record keeping errors, asset misappropriation and fraud has escalated the need for autonomy and impartiality of internal audit. The inspiration for this study is mainly channelled to the gradually transforming duties, functions and growing responsibilities of internal audit in local authorities. Independence of internal audit is the most distinctive corporate governance’s transparent and accountability mechanism .The main functions of internal auditing are financial controlling, management, internal safe guarding of funds and assets, internal consultancy service and risk management.
Much emphasis has been put on effective components of public good governance relating to internal audit. Effective powers and authority has been mandated to external auditors than internal auditors. Furthermore, according to Stewart and Subramaniam (2009) the main rationale why internal auditors have grown in importance is that they reduce self-review, social pressure, economic interest, personal relationship and familiarity, cultural and cognitive biases. They also produce and identify a variety of safeguards against these threats. The current situation in the world is full of substantial pressures on public finances and resources; this demand requires all national and local authorities to manipulate public resources objectively and efficiently with a developmental vision, ensuring that essential basics have been given brisk attention. The pressures of fraud, corruption and misuse of resources have been evidenced by workshops of Public Internal Control Systems worldwide for instance, the European Union compendium which was initiated by 27 countries in order to refurbish internal audit operations in public sector organizations, according to the compendium of Public Internal Control Systems of European Union members (2012). More over the Southern Africa Development Commission Protocol on Corruption (2001) emphasised much on the improvement of public sector auditing in order to promote economic development among its member states.
INDEPENDENCE AND PERFORMANCE OF INTERNAL AUDIT IN PUBLIC SECTOR ORGANIZATIONS