Theses and Dissertations (Auditing)

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Learning in audit firms : an ethnographic study
(University of Pretoria, 2024-02) Barac, Karin; Plant, Kato; charlene.roets@gmail.com; Roets, Charlene
Workplace learning is fundamental to developing competent professionals. Although the workplace learning concept has been widely researched, uncertainty exists about how the culture within audit firms influences workplace learning. Bridging this gap, this study investigates how the culture within an audit firm shapes the learning of trainees in that environment, considering the individual, social, and organisational levels of workplace learning. Following a qualitative research methodology, and using a focused ethnographic approach within a case study design, a Big 4 audit firm case was selected, with a second-year trainee, ‘Alex’, as the key participant. A total of 140 hours of observation and 20 in-depth interviews were conducted with Alex and his colleagues, to gain insights into workplace learning dynamics. The study’s findings show the complex interplay between individual, social and organisational factors as Alex fulfilled the roles of an active agent in his development, a valued audit team member, and an employee of the firm. Furthermore, evidence is provided that an audit firm's organisational culture can positively and negatively influence workplace learning. This study extends audit literature with a deeper understanding of the complexities of workplace learning in the context of audit firms, provides a Global South perspective and contributes to culture studies in audit literature by showing that hierarchical, clan and market culture types within the firm collectively shape trainees’ learning experiences. Valuable insights from the study can improve trainee learning in audit firms and regulatory and professional bodies can use it to improve their auditor training and monitoring guidelines.
An audit quality climate in audit firms
(University of Pretoria, 2023) Barac, Karin; kritzja@unisa.ac.za; Kritzinger, Johanna Alida
Audit quality is only achievable when audit firms have a quality-oriented culture reflected in their audit quality climate. Although audit quality has been widely researched, there is still uncertainty about how it takes shape among employees in audit firms. This study answers the following question: “What climate promotes audit quality among employees in audit firms?”. An institutional logic and organizational culture lens was adopted to investigate employees’ views of an audit quality climate in audit firms. Following a quantitative research approach, the study used Patterson's Organizational Climate Measure as a basis to develop an instrument to measure employee perceptions of the audit quality climate in audit firms. The dataset was responses from non-executive employees at large audit firms and the Auditor-General of South Africa. Two rounds of exploratory factor analysis identified six audit quality climate dimensions as perceived by employees of audit firms. Confirmatory factor analysis provided evidence of the construct’s validity. The outcome is an Audit Firm Quality Climate (AFQC) measurement instrument to measure employee perceptions of the audit quality climate in audit firms. The study contributes to practical interpretations of institutional logic at the frontline and expands the audit quality literature through the under-researched voice of audit firm employees without executive powers. The AFQC measurement instrument can be used by various stakeholders to monitor employees' perceptions of the audit quality climate in audit firms, identify causes of audit quality shortcomings and enable associated improvements.
Signalling internal audit effectiveness
(University of Pretoria, 2021) Barac, Karin; Plant, Kato; Steyn, Blanche; brendap@vut.ac.za; Pooe, Jabile Brenda
Internal audit effectiveness (IAE) has been the subject of academic research for many years. Extant IAE literature provides clues on IAE indicators or factors and ways to measure them. However, the question still remains: Is signalling IAE associated with higher company performance? Hence, this study set out to investigate the relationship between signalled IAE factors and company performance of the top 100 companies listed on the Johannesburg Stock Exchange in South Africa for the period 2012–2016. Being located within the post-positivist worldview, the study draws on agency and signalling theories and employs content analysis, multiple correspondence analysis (MCA) and regression analysis for data collection and analysis. Following the literature review, 54 IAE indicators or factors were identified and used to construct the IAE signalling frame. The latter guided the content analysis of integrated reports and other annual reports in which each IAE indicator was scored against the frame. After this, MCA was employed to reduce the 54 IAE indicators to 19 signalled IAE factors. Regression analysis was then used to determine the relationship between the signalled IAE factors and company performance. The regression analysis results showed a mix of positive and negative relationships between signalled IAE factors and company performance. The hypothesis was accepted for seven signalled IAE factors, rejected for three and was not significant for nine. The positive relationship between signalled IAE factors and company performance implies that disclosing IAE factors reduces information asymmetry in the agency relationship, and such signals improve investor confidence and company performance. The negative relationships were associated with compliance with regulatory measures. From a signalling theory perspective where disclosure addresses information asymmetry, the signalling of this information may not be value-adding because such information may possibly be assumed to be in place and may already have been factored in by internal and external stakeholders in their performance evaluation. As one of the first attempts at exploring IAE disclosure using a self-constructed IAE signalling frame and employing MCA as a factor extraction method, the study contributes to IAE discourse and research and could guide managers on the areas of IAE signalling that bear a relationship to company performance.
Conceptualising balanced reliance on internal audit work by external auditors
(University of Pretoria, 2020) Barac, Karin; De Beer, Estelle; Van Staden, Marianne
Reliance refers to the incorporation of internal audit work into audit evidence during statutory external audits. Inappropriate reliance undermines audit effectiveness and quality while fair reliance enhances audit efficiency. Reliance is complex, implementation problems are common and academic knowledge gaps prevail. Consequently, the research question of this study is formulated as follows: How can reliance on internal audit work by external auditors be conceptually explained, considering the reciprocal influences of the roles, interpretations, interests and practices of management, the audit committee and internal and external auditors? Responding to the research question, the major contribution of this study is the substantive theory of balanced reliance, explaining how management, the audit committee and internal and external auditors overcome disconnect between their reciprocal influences on reliance to achieve mutual agreement that reliance is appropriate and fair, balanced, whatever the reliance decision. The study is based on the classic grounded theory methodology of Glaser and Strauss (1967) and was implemented in three phases: Phase 1: Theoretical sampling included 32 interviews. Five key data sets (22 initial and three follow-up interviews) represented five diverse South African listed companies. Each data set comprised data from the key audit stakeholder groups of the company, namely, the chief financial officer, audit committee chair, chief audit executive and external audit engagement partner. A further data set of seven interviews involved other knowledgeable audit professionals. Joint data collection, open coding and analysis identified the main concern − the disconnect between the stakeholder groups’ reciprocal influences on reliance − and the core category (achieving mutual agreement that reliance is appropriate and fair (balanced), whatever the reliance decision. Phase 2: Joint theoretical sampling, selective and theoretical coding and analysis saturated the substantive categories’ properties and relationships. Phase 3: Theoretical sorting and writing delimited the substantive categories into theoretical constructs, explaining the substantive theory. Comparisons indicated how the substantive theory broadened and transcended extant knowledge. The substantive theory of balanced reliance developed in this study explains how the stakeholder groups’ willing reciprocal synchronisation resolves disconnect between the stakeholder groups’ roles, interpretations, interests and practices influencing reliance. This, in turn, renders viable their mutual agreement that reliance is appropriate and fair (balanced), whatever the reliance decision. With reciprocal synchronisation as a foundation, a voluntarily formed team mindset is the predominant mediator of habitual integration and fair alignment of internal and external audit work. These co-variant conditions change stakeholder groups’ mutual agreement from being viable to practicable, as the disconnect between internal and external audits is resolved. Stakeholder groups’ participation in facilitative communication and a strong audit committee’s balancing oversight create the context for sustaining stakeholder groups’ mutual agreement that reliance is appropriate and fair (balanced), whatever the reliance decision.
Student perceptions of blended learning interventions in teaching auditing
(University of Pretoria, 2018) Barac, Karin; Nagel, Lynette; bernice.beukes@up.ac.za; Beukes, Bernice
Education, and especially accounting education, has been criticised for not delivering graduates for the work place with the necessary skills and attributes. In an effort to address this criticism, lecturers incorporate more experiential learning into the curriculum. However, in a quest to include more experiential learning activities in the course delivery, lecturing time is reduced, and lecturers have to innovate in order to fit all the subject/course content into the allotted time. Incorporating technology to extend the classroom into the digital realm is one way to relieve the pressure of covering subject/course content. It opens up avenues for a blended or hybrid learning model, where a carefully considered combination of online and face-to-face teaching and learning is applied. Auditing as a discipline poses another challenge to educators. The subject is perceived by students to be very theoretical, while in fact it is an application subject which requires critical thinking and professional judgment. Students incur difficulties in comprehending how the theoretical knowledge is applied in practice, which manifests in them following a superficial approach to mastering the auditing subject matter. In an effort to breach the gap between theory and practice, various implementations of experiential learning in auditing, often in a blended learning environment, have been reported by scholars. However, those studies report the effect of fragmented interventions and fail to provide a holistic view of the effect of multiple blended learning interventions. Furthermore, literature on the effect of a blended learning approach incorporating experiential learning which focuses on learning is limited, and studies are mainly done in small class settings. This study aims to expand on the body of knowledge, by reporting on how students perceived different blended learning elements (flipped classroom, an online simulation and cooperative learning initiatives), incorporated in the holistic blended learning model in an auditing module/course, to contribute to their learning and engagement with the subject matter. Furthermore, the study investigates how the perceived contribution differs between students with different academic performance levels. The study also determines whether one of the blended learning elements (an online simulation) was perceived by students to be useful, easy to use and influenced their emotional perception (affect) of the learning experience. In order to achieve the objective of the study, a quantitative research approach was followed, whereby a custom-developed survey was distributed amongst third year auditing students at the university where the study was performed. The findings in this study indicate that respondents perceived weekly tutorials to contribute highly towards their learning of and engagement with auditing, while the other flipped classroom elements (videos and lectures) had a moderate contribution. Respondents perceived the online simulation, and peer feedback and mentoring (TUT Buddy and the BuddyM) elements to contribute least to their learning and engagement with the auditing subject matter. Statistically significant differences were identified between high performing and low performing students, with regard to the weekly tutorials, the online simulation and the TUT Buddy and BuddyM elements. Low performing students perceived the online simulation, the TUT Buddy and BuddyM elements to contribute more to their learning and engagement, than high performing students. These latter three elements (online simulation and Buddy activities) included more cooperative learning and were regarded as student-driven activities. The results also indicate that high performing students coped well with the blended learning model and exhibited characteristics of becoming self-directed learners, as they did not require as much support. The low performing students were more positive about cooperative learning activities. They also perceived the online simulation to be more useful, easy to use and enjoyed the experience more, compared to their medium and high performing counterparts. The results clearly show that students do have preference for specific elements in the holistic blend. The holistic blend allows room to meet the needs of diverse students with different learning preferences and it allows students to engage with the auditing subject matter in a way that meets their preferences, whilst developing additional skills. Therefore a holistic blended learning model appears to be an acceptable way of teaching auditing, even in large class settings.
Internal Auditors and Service Delivery in South African Local Government : a Limpopo Province Perspective
(University of Pretoria, 2017) De Jager, Herman; mrsepuru@gmail.com; Sepuru, Mmabatho Rebecca
Of late, when engaging with any form of media in South Africa, one is guaranteed to come across a story relating to service delivery protests in at least one, if not many parts of the country. Citizens throughout the country have resorted to protesting as a way of voicing their dissatisfaction and anger at the lack of service delivery by local government. Local government is the sphere geographically situated nearest to the communities it serves, consisting of municipalities. During the protests communities mainly complain about the lack of basic services such as water, electricity, housing delivery, unemployment and sanitation. Various studies relating to service delivery have focused on the causes of the protests, analysed reams of statistics and have even suggested various “solutions” to these country-wide problems. Some authors see the protests as evidence of deficient or absent internal controls and governance principles, or a lack of will to apply those controls that are in place. These protests are occurring despite the South African Government having brought into effect legislation such as the Municipal Finance Management Act (56/2003), to strengthen the governance landscape of local government. A key component of this legislation is that it prescribes the mandatory employment of internal auditors and performance/audit committees to reinforce the governance system. Various studies have investigated either the lack of service delivery or the functioning of internal audit in the public sector. However, none of the researchers appears to have comprehensively studied whether internal auditors can assist management in local government to achieve their service delivery targets and thereby minimise the occurrence of service delivery protests. The objective of this study therefore, is to determine whether the performance of internal auditors' roles and responsibilities can reduce or minimise service delivery protests in municipalities. In order to achieve this, the study will amongst other aspects of the objective, identify the roles internal auditors are expected to fulfil in local government, as recorded in various statutes prescribed and the International Professional Practices Framework (Institute of Internal Auditors, (2016) (the “Standards”). The study will further determine the extent to which these roles are being performed; as well as to identify obstacles (if any) encountered by internal auditors when carrying out their roles. Most importantly the study will also determine whether internal audit can assist management to address challenges which often leads to inadequate service delivery. Through a review of the published literature the study determines the statutory and prescribed roles and responsibilities of the internal audit units in local government as presented by the Institute of Internal Auditors’ “Standards” and various items of South African legislation and regulations. The literature review also investigates the contribution made by a lack of controls to management’s failure to achieve their service delivery objectives. A sample of ten municipalities was selected for the study, and semi-structured interviews were conducted with key personnel at each municipality’s internal audit unit. Data collected during these interviews was analysed and findings were noted. It emerged from the study that internal audit does have a role to play in assisting management to achieve their objective of providing services to their respective communities; and that they are already playing this role.
Accounting practitioners' perspectives of professional skills and audit capabilities of first year trainee accountants
(University of Pretoria, 2016) De Jager, Herman; rolien.kunz@up.ac.za; Kunz, Rolien
Accounting education at higher education institutions is influenced by various role players, each with their own expectations. Educators involved in accounting education are therefore required to balance the demands of higher education with those of the professional body that will accredit their students, while still delivering market-ready graduates fully equipped with the competencies employers expect, namely professional skills, technical knowledge and attributes such as values, ethics and professional attitudes. The importance of professional skills and technical knowledge to the accounting profession, as well as the degree of exposure graduates are expected to have received at university level, is known, but the specific levels of capability and competence expected of graduates have not yet been quantitatively determined. As a result of this unknown level of capability that the accounting profession expects of its newly employed graduates, the size of the expectation-performance gap has also remained largely unknown. Although earlier research has indicated that graduates' actual capabilities with regard to professional skills and technical knowledge did not meet the expectations of accounting practitioners at the beginning of their traineeships, the extent of the expectation-performance gap worldwide, and in South Africa, has not yet been quantitatively determined. The objective of this dissertation, in a research paper format, are to determine the expectation-performance gap firstly, by quantifying the levels of professional skills and technical auditing and assurance knowledge capability audit managers expect of newly employed first year trainee accountants, and secondly by determining whether the professional skills and technical auditing and assurance knowledge actually displayed by the newly employed first year trainee accountants meet the expectations of the audit managers. First year trainee accountants in the first three months of their training contracts will be referred to as newly employed first year trainee accountants for the remainder of the dissertation. The findings indicate that audit managers expect newly employed first year trainee accountants to be capable of demonstrating seven of the 22 individual professional skills, with minimal or without supervision, whilst their expectations regarding these newly employed first year trainee accountants' performance of technical audit and assurance tasks in the first three months of their training contracts are lower. Audit managers do not expect newly employed first year trainee accountants to be capable of performing any of the 12 identified technical audit and assurance tasks without or even with only limited supervision. The findings further show clearly that audit managers' expectations are not being met, as there were material expectation-performance gaps for all of the 22 individual professional skills being investigated, as well as for all 12 researched audit and assurance tasks. The sizes of the expectation-performance gaps for the professional skills being investigated varied between 37.9% (for newly employed first year trainee accountants' abilities to take responsibility for their own development) and 9.4% (for newly employed first year trainee accountants' abilities to display honesty and integrity). The audit and assurance task with the largest difference was the task requiring newly employed first year trainee accountants to consider and document the need to use computer assisted audit techniques to gather audit evidence (performance was 28.9% less than audit managers' expectations), and the technical task showing the smallest expectationperformance gap was that where newly employed first year trainee accountants were required to determine sample sizes and methods of selection to obtain sufficient testing for the performance of tests of controls or the design and implementation of controls (performance was 14.6% less than audit managers' expectations).
The impact of mandatory audit relief on the audit practice
(University of Pretoria, 2015) Barac, Karin; Seligmann, J.; carlac216@gmail.co.za; Coetzee, Carla
The South African Companies Act 71 of 2008, which came into effect on 1 May 2011, legislated that the financial statements of all public companies and state-owned companies should be audited annually but stipulated that the financial statements of private companies and personal liability companies are only subject to audit if an audit is in the public interest. As a result, certain companies are relieved from mandatory annual audits. This change in regulation had a direct impact on the audit practice, in particular on small and medium-sized audit practices since many of their clients no longer required an audit. This study determined the impact of mandatory audit relief on small and mediumsized audit practices in South Africa with reference to the need for an audit, organisational arrangements, social factors, technology, physical settings, organisational performance, and sustainability. A qualitative research approach was used in this study with constructivism as a philosophical worldview. For the purpose of this descriptive research a multiple-case study strategy was followed. The findings of the study showed a need for the audit of financial statements where an audit was in the public interest. Small and medium-sized audit practices participating in this study changed their goals and strategies as a result of mandatory audit relief with specific reference to a shift from audit services to other service offerings. As a result of the change in service offerings, the small audit practices and medium audit practices that participated in this study experienced an increase in staff with a lower level of qualification than in the past. Although several small and medium-sized audit practices experienced a decrease in the income from audit engagements, there was an increase in practice income from service offerings other than audits. It is clear that small and medium-sized audit practices participating in this study were challenged in their role as training offices for the South African Institute of Chartered Accountants and/or the South African Institute of Professional Accountants. Sole practitioners
A workplace learning framework for developing entry-level internal audit professionals
(University of Pretoria, 2015) Barac, Karin; De Jager, Herman; kato-plant@up.ac.za; Plant, Kato
In recent years, the need to develop professional competence in internal auditing has increasingly come under the spotlight. The main reasons for this are a growing need for competent internal auditors who can render value-adding services to a variety of stakeholders, and the need for an effective internal audit function, where internal audit competence and professionalism are regarded as determinants of internal audit effectiveness. Prior research has focused on internal audit education at a tertiary level, so research on workplace learning for internal audit auditors is limited. The IIA Research Foundation undertook a series of Common Body of Knowledge studies, and developed an internal audit competency framework indicating competency requirements for various levels of internal auditors. However, no reference is made to internal audit trainees or new internal auditors, or to the learning paths required to achieve the set competencies. The aim of this qualitative study was therefore to propose a workplace learning framework for developing internal audit trainees into entry-level internal audit professionals. The literature review discussed the evolution of the internal audit profession and its impact on the competency requirements of internal auditors. The dimensions of workplace learning were explored. In addition, workplace learning in the accounting and auditing professions was examined globally, and in South Africa, with reference to different professional bodies competency frameworks, and the workplace learning component of these frameworks. Data were collected from focus group discussions and semi-structured interviews held in South Africa with 65 participants, including internal audit employers, internal audit trainees, presenters and assessors of internal audit workplace learning, and members of the IIA (SA) Education and Training Committee to determine their views on internal audit workplace learning. Based on the findings, the study proposes a workplace learning framework for developing internal audit trainees into entry-level internal audit professionals involving five dimensions: workplace learning criteria, workplace learning content, workplace learning methods, determinants of workplace learning success and challenges to workplace learning. It is recommended that internal audit stakeholders take cognisance of these dimensions when embarking on workplace learning to ensure that all constituencies benefit from entry-level internal audit professionals acquisition of professional competence.
The application of analytical procedures in the audit process
(University of Pretoria, 2015) Barac, Karin; jana.dewet1@gmail.com; Kritzinger, Jana Alida
The application of analytical procedures has become an integral part of the audit process and indications are that the application of these procedures will increase in audits of the future. The factors that are causing a shift in audit methodologies towards increasing the application of analytical procedures are the adaptation of a business risk audit methodology, technological advancements and the incorporation of non-financial information in an audit. These factors enable the auditor to incorporate both financial and non-financial information into decision making and thus develop more precise expectations. Numerous studies have been conducted in various countries on the auditor s application of analytical procedures in the audit process. However, little is known about exactly how auditors in South Africa apply analytical procedures as part of the audit process. Owing to an ever-changing audit environment, a closer look into the application of analytical procedures by South African auditors was deemed both timely and appropriate. The overall objective of this study was to investigate the application of analytical procedures by auditors in the audit process. To achieve the objective of this study, a qualitative research approach was applied whereby semi-structured interviews were held with senior audit managers from large audit firms in South Africa. This provided the researcher with rich and detailed descriptions of the application of analytical procedures by auditors in the audit process. The findings of this study, which resulted from data analysis, indicated that there is a need to apply analytical procedures because this adds value to the audit and can enhance its efficiency and effectiveness. However, numerous challenges have been associated with the application of analytical procedures. The findings also indicated that the application of analytical procedures depends on the availability and integrity of clients data and that it is difficult to obtain reliable data for the development of an expectation. It also emerged from the findings that auditors are unsure of the results obtained from analytical procedures owing to a lack of guidance in the auditing standards on the extent of assurance that can be placed on analytical procedures and on how to apply professional judgement in drawing conclusions. Auditors competence to perform analytical procedures limits them in applying these procedures. There seems to be a gap between university studies and audit practice relating to the application of analytical procedures (also data analysis) and the use of information technology. The advantages, however, outweigh the challenges and it is therefore foreseen that the application of analytical procedures will increase in the future.
The Suspicious Transaction Reporting Responsibilities of Attorneys in Terms of South African Anti-Money Laundering Legislative Frameworks
(University of Pretoria, 2014) Du Plessis, Danie E.; Dorey, Frank C.
With the implementation of more and more stringent measures to prevent money laundering, criminals are resorting to the expertise of lawyers for assistance in the formulation of increasingly complex money laundering schemes. This expertise is provided both wittingly and unwittingly. The purpose of this research was to consider whether the South African anti-money laundering legislation places suspicious transaction reporting obligations, which are in line with and meet international directives, conventions and best practice frameworks, on attorneys. The study entails a consideration of the suspicious transaction reporting obligations of lawyers introduced by the Financial Action Task Force, the European Union, the United Kingdom and South Africa and provides an understanding of the concept of money laundering, the money laundering process and the areas in which lawyers are vulnerable to money laundering. The research found that the suspicious transaction reporting responsibilities of attorneys in terms of South African anti-money laundering legislation are not in line with international frameworks and best practice.
The role of internal auditing in providing combined Assurance : assessing internal financial controls
(University of Pretoria, 2014) De Jager, Herman; Lewis, Izelle
Internal auditors are playing a vital role in the corporate governance structure of an increasing number of organisations and are a fundamental component of the combined assurance task force. The objective of this study is to analyse the relevance and value of the written assessment regarding the effectiveness of internal financial controls in a combined assurance environment within the financial services industry from the chief audit executive’s (CAE) perspective. Survey research was selected as an inquiry strategy. The survey research that was conducted, was in the form of questionnaires. The financial service companies that appeared on the 2012 Top 200 African Listed Companies were utilized as the population of this research study. Based on the outcome of the results of the research study, the relevance and value of the written assessment regarding the effectiveness of internal financial controls should be customised for and by every organisation. The most important aspect, firstly, is that the significant financial risks relating to material misstatement of the organisation’s financial position are identified. Secondly, that the internal audit activity performs a formal assessment on the effectiveness of the internal financial controls relating to the above mentioned risks, in the form of a written report. The results of this research study endorse the fact that the King III Report on Corporate Governance emphasises the role of internal audit in combined assurance and corporate governance. It was further noted that internal audit is perceived by the CAEs within the financial services industry as one of the most important role players within an organisation’s combined assurance processes. The written assessment of the effectiveness of internal financial controls is seen as the result and/ or final outcome based on Principle 7.3.6 of the King III Report (Institute of Directors Southern Africa, 2009:45). If all the associated stakeholders and/ or assurance providers offer valuable and constructive feedback on how to assess, manage and mitigate the significant internal financial control risks facing the organisation, it has the potential to result in increasingly sound corporate governance for the organisation.
A framework for organisational governance maturity : an internal audit
(University of Pretoria, 2014) Coetzee, G.P. (Philna); naomi.wilkinson@up.ac.za; Wilkinson, Naomi
The concept of organisational governance has been researched and debated by many. However, the concept of organisational governance maturity and what exactly this entails has received significantly less attention. It is beneficial for an organisation to understand how far they have progressed with implementing the various governance elements, as this will enable them to implement the most appropriate and necessary next steps, while taking corrective actions in becoming more mature in respect of organisational governance. This will furthermore aid the internal audit activity to provide more effective internal audit services, as knowledge of the level of organisational governance maturity enables them to more accurately determine which service they should deliver – either an assurance (organisation is mature) service or a consulting (organisation is not mature) service. The question now arises: how does an organisation, and the internal audit activity in particular, determine the level of organisational governance maturity without a benchmark of some sort that details the structures, systems and processes required to support governance at various levels of maturity? Published maturity frameworks/models can be used for this, however, there is very little that pertains specifically, comprehensively and holistically to organisational governance. This created the opportunity for the development of an organisational governance maturity framework. The main objective of this study is to develop a framework that can be used for assessing the level of organisational governance maturity within South African private sector organisations. Firstly, a comprehensive literature review was conducted where eight governance-related maturity models were used to produce a preliminary organisational governance maturity framework for the private sector in South Africa. Secondly, interviews were conducted with key governance stakeholders at the selected organisation to obtain input in the preliminary framework. The research findings, which resulted from the data analysed, were used as a means to refine the preliminary framework developed from the literature. No significant amendments were made to the preliminary framework and input obtained during the interviews supported the relevance and contribution of the framework developed from the literature.
Internal audit capability : a public sector case study
(University of Pretoria, 2014) Coetzee, G.P. (Philna); Janse van Rensburg, J.O. (Jacobus Oosthuizen)
The South African public sector faces significant challenges that impact on its ability to deliver services to the public. There are several parties that can assist the public sector in addressing these challenges. One of these is the internal audit functions of government organisations. For internal auditing to support effectively the managements of the government organisations they serve, the internal audit function should be sufficiently capable. The questions remain as to whether South African public sector internal audit functions are sufficiently capable and how internal audit capability can be measured. The Institute of Internal Auditors Research Foundation published the Internal Audit Capability Model (IA-CM) in 2009. The main purpose of the model is to provide a capability self-assessment tool for public sector internal audit functions. This model could be used as a yardstick in measuring public sector internal audit capability within South Africa, should the elements and key process areas (KPAs) of the model be applicable to the South African context. This study therefore aims to determine whether the IA-CM can be applied within a South African context. The South African public sector, the role of internal auditing within the South African public sector as well as the IA-CM as a tool of measuring public sector internal audit capability were investigated. A literature review was conducted on these topics, as a foundation for the study. Specific data was obtained on each of the KPAs of the IA-CM through a case study design by selecting an appropriate South African national department and ranking the case against the KPAs of the IA-CM. The ranking was conducted based on a review of relevant documents and interviews with applicable internal audit and management staff and audit committee members of the selected case. The study concludes that 82.9% of the KPAs of the IA-CM appear to be applicable within a South African context and that, in essence, the model can be applied within a South African context. However, eight hindrances that may negatively affect the feasibility of implementing the remaining 17.1% of the KPAs or certain components of these KPA’s, have been also been identified.
Work-readiness of university graduates: an internal audit educational expectation gap in South Africa
(University of Pretoria, 2014) De Jager, Herman; hfourie@nmmu.ac.za; Fourie, Houdini
The research for this study was guided by the question whether an internal audit educational expectation gap exists between the level of work-readiness skills expected by employers in internal audit practice, and the actual level of capability of these skills transferred through the formal internal audit educational programmes offered by universities in the Republic of South Africa. An extensive literature study substantiated the research question. The research methodology used for this study consists of a descriptive, quantitative method and various statistical analysis techniques. An electronic internet-based research questionnaire was distributed to the members on the database of the Institute of Internal Auditors (South Africa). The responses were automatically recorded, after which these were exported to an electronic spread sheet. At this point statistical analysis software was used for statistical analysis and interpretation of the data. The results of the statistical analysis revealed that a large internal audit educational expectation gap exists between the expected and actual levels of skills capabilities of entering trainee internal auditors. The largest gap is perceived in respect of the Institute of Internal Auditors’ Internal Audit Standards and Practice Advisories. On average, employers expect a significantly higher level of skills capability where behavioural skills are concerned than what they expect in respect of technical skills capability levels. In addition, the results revealed that entering trainee internal auditors are perceived to be sensitised insofar as cultural differences are concerned.
The Internal Auditor's responsibility to detect financial statement fraud
(University of Pretoria, 2014) Du Plessis, Danie E.; vwykbm@unisa.ac.za; Van Wyk, Beatrice Maud
The reporting of the financial results of an organisation is the responsibility of the management of that organisation. However, value may be added to the financial statements by the auditing of such financial statements and by the opinion expressed by the external auditors. Furthermore, there is the expectation on the part of the users of the financial statements that the auditors are also responsible for detecting fraud and, more specifically, financial statement fraud. It was stated in the Association of Certified Fraud Examiners 2010 Report to the Nations that it is the high-level perpetrators who cause the greatest damage to their organisations. The costs arising from financial statement fraud were found to be more than three times higher than the costs arising from fraud committed by lower-level managers and nine times more than the costs involved in employee fraud. The question, thus, arises as to why the auditors would not detect financial statement fraud timeously. The external audit profession has formulated a specific standard which addresses the responsibility of the external auditor as regards the detection of fraud during the audit of financial statements. The aim of this research was to determine the adequacy of the internal auditor standards as regards providing guidance to the internal auditors in terms of detecting financial statement fraud. This research highlighted the lack of guidance in the internal audit standards regarding the responsibility of internal auditors relating to financial statement fraud. In the main, both the directives and the guidance refer to fraud in general but not specifically to financial statement fraud and, thus, the professional internal auditor is forced to seek guidance outside of the internal audit standards as regards the detection of financial statement fraud.
The Role of internal audit in the Independent review of anti-money laundering compliance in South Africa
(University of Pretoria, 2013) Du Plessis, Danie E.; thapelo.modisagae@gmail.com; Modisagae, Thapelo
The dilemma of money laundering is an undeniable problem faced by many institutions all over the world. Due to its prevalence, the need for organisations to deal with the problem has become a global priority, regardless of the size of the financial institutions. Despite the compliance AML efforts undertaken by various institutions, AML compliance appears to be a daunting challenge, the question posed by this research is whether there is a need for independent anti-money laundering (AML) compliance reviews, given the invasive nature of money laundering in financial institutions. Secondly, the research addresses the question of who is well positioned to perform the independent AML compliance reviews. In addressing the second question, the research will discuss why internal audit is an invaluable resource in terms of risk management processes and the reasons why they are an integral part of the AML solution.
Focus of internal audit departments on strategic risks of listed companies
(University of Pretoria, 2013) De Jager, Herman; Foxcroft, Liezl
No abstract available.
The South African anti-money laundering regulatory framework relevant to politically exposed persons
(University of Pretoria, 2013) Du Plessis, Danie E.; cahlers@moonstonecompliance.co.za; Ahlers, Christelle
Politically exposed persons have become a specific risk factor in money laundering. The Financial Action Task Force has formulated clear and specific requirements for dealing with these individuals. Internationally, various jurisdictions such as the United Kingdom and the European Union have adopted effective legislation encompassing the 2003 Financial Action Task Force Recommendations. In South Africa the requirement to apply appropriate, risk based procedures to politically exposed persons has been limited to banks. The aim of this research study was to identify whether the South African anti-money laundering regulatory framework, adequately addresses managing the risks of politically exposed persons. The regulatory frameworks of the United Kingdom and the European Union, as well as the requirements of the Financial Action Task Force, were used to determine whether best practice is followed in South Africa with regard to politically exposed persons. The process of how money is laundered has been examined as well as the methods that corrupt politically exposed persons use in order to launder money. The study has shown that politically exposed persons are not regulated in South Africa in accordance with the Financial Action Task Force Recommendations issued in 2003, while the South African Anti-Money Laundering Regulatory Framework does not adequately address the risk posed by corrupt, politically exposed persons. Both international best practice and the recommendations of the World Bank were considered in terms of the way in which to address the risks posed by these persons effectively.
The code of conduct of the South African public service compared with international guidelines
(University of Pretoria, 2012-09-27) Du Plessis, Danie E.; kanthin@telkomsa.net; Nagiah, Kanthi
The overall aim of this research was to understand the essential elements/factors that contribute to the effectiveness of the content of codes of conduct in the public service in addressing corruption. The ultimate objective was to compare the South African public service code of conduct with practical guidelines to determine whether it complies with international practice. The international guidelines used in this research were that of the Organisation for Economic Co-operation and Development on codes of conduct, the Technical Guide to the United Nations Convention against Corruption, the United Nation’s International Code of Conduct for public officials and the Council of Europe’s Model Code of Conduct for public officials. The findings of this research confirmed that the South African public service code of conduct is deficient in some areas and it is recommended that these deficiencies be addressed, having regard to the provisions of the International Guidelines.

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