ASSESSING INTERNAL AUDIT QUALITY IN QUASI-GOVERNMENT INSTITUTIONS: EVIDENCE FROM CHRISTIAN HEALTH ASSOCIATION OF GHANA HOSPITALS

ABSTRACT
The Auditor General of Ghana’s reports on the public accounts of Ghana takes a direction of consistently reporting of malpractices. The role of internal auditors in preventing these occurrences constantly comes into the spotlight. Other researchers found that internal auditors devoted less time to productive activities. The study therefore sought to evaluate the quality of internal audit in the quasi-public sector institutions in preventing mass financial malpractices. Specific attention was given to areas of audit coverage obtained, independence and value adding benefits provided to the organisations auditors work for and challenges faced by internal auditors in performing their duties. Using a purposive sampling technique, seventy - (70) respondents from ten (10) CHAG facilities in BA Region of Ghana were selected for data. The respondents comprised of members of institutional management in the various CHAG hospitals. Data were collected using close-ended questionnaires and in the case of internal audit executives, follow-up interviews were conducted on specific issues for better understanding of the issues involved. The findings of the research showed that internal auditors in the health facilities obtained an average of eighty percent (80%) coverage on issues of internal controls in the health facilities. The setbacks of the function was that auditors reported to and were appraised by the Administrators/CEOs of the health institutions due to the absence of audit committees. This cast doubt on the independence of the professionals in their duties. Their challenges were on non-availability of training programs and logistics to work with. The research recommends that audit committees be established to liaise with the internal audit in their duties.


CHAPTER ONE
INTRODUCTION
In recent times, because of corporate governance problems, the issue of internal auditing has become of great concern to all stakeholders in both the private and public sector of every economy. These concerns are as a result of the growing need and concerns for transparency in the management of corporate bodies. In many instances however, the performance of internal auditors has become a problem that stakeholders are eager to find out because of continuous reported instances of wrong management practices in corporations, resulting in malperformance of these institutions and in some cases, loss of funds (Fung, 2014).

In the Auditor General’s report for 2014 Financial year, among many issues reported included embezzlement of funds in excess of GH¢ 549,245.59 by eight district assemblies. The report further stated that amounts in excess of one million Ghana Cedis were not properly accounted for by 43 staff of some district assemblies because of lack of effective supervision, and failure on the part of management to sanction the people involved (Auditor General Report, 2014). In the Auditor General’s report for the 2016 fiscal year, it was also reported that management and staff of various MMDAs continued to violate various procedures and policy guidelines in place, which were to ensure effective, economic and efficient management of resources allocated to them. In the same report, financial irregularities in the public sector for the fiscal year was about GH¢2,165,542,375.14, which was an increase in the previous year’s irregularities (Auditor General Report, 2016). These and other similar cases in the various public sector institutions calls for concerns to be raised about how well internal controls have been designed, implemented and monitored in the various government organisations.

Previous studies however, in an attempt to help address the issue, have focused attention on assessing how internal auditors in public sector institutions that have total government control, monitor institutionalised internal controls and the audit coverage they obtained. It was therefore worth knowing how the situation is in the institutions with traits of both private and public ownership.

Background of the Study
Globally, the level of stakeholder expectations matching skills and capabilities help internal auditors to enhance the value they deliver to the organisation (PWC, 2014). Internal audit has become a growing wing in the managerial setup of many businesses, both private and government with many expectations in respect of performance, reportage and value adding.

Research suggests that many organisations around the world recruit new graduates into this very important function and use it as a training ground for future managerial positions. Thus, globally, the internal audit function in many organisations has become the incubator hub where most organisations equip new graduates with the skills to perform well as managers in the institution in the future.

This is reported as being a policy that the internal audit profession holds key (IIARF, 2014). This is because internal auditing cut across all aspects of the organisation, ranging from finances to human resources.

According to PWC (2014), the nature of African economies and the diverse nature of industries on the continent, make it daunting doing business and performing internal audit across the continent. These challenges notwithstanding, the internal audit on the continent seem to be navigating its way through in difficult business environments. The continuous changes in the world and business environment requires that internal auditing also change. Internal auditing in all aspects is no longer compliance driven, but risk based, and therefore must be seen to be adding value to an organisation.

Studies conducted in some South African companies suggest that, the reporting lines of internal auditors do not conform to best practices so far as corporate governance is concerned. Significantly, in many organisations, internal auditors and audit executives report to the Chief Finance Officers (Erasmus and Coetzee, 2018). This practice will invariably affect the independence of the audit executives, the quality of their work and reporting system.

In Ghana, the Institute of Internal Auditors reports that, the Internal Audit Agency Act 2003, Act 658, has established the Internal Audit Agency, which is a statutory body to be part of the public governance improvement programme, aimed at ensuring the active and mandatory development and practise of internal audit as a key function in the Public Sector. The Agency since its inauguration in 2005, has become part of the administrative structures of many public institutions including the MMDAs in their operations. Internal auditing in the public sector has therefore become a system of reducing malpractices and fraudulent conducts among civil servants.

In the private sector however, internal auditing has been a part of the corporate governance process for a long time. As part of best practices and improving transparency in the organisational practices, corporate governance practices have made prescription for the establishment of proper internal controls and monitoring systems of which the internal auditors and audit committees are part. This practice of corporate governance principles has ensured proper management of private sector institutions ensuring that, the agency relationship that exist between directors and shareholders are well protected (Omolaye & Jacob, 2017).

In Ghana, even though internal audit departments have been well established and are operational in the various government and quasi-government institutions, the Auditor General continuously reports in his annual report, instances of malpractices in government corporations and departments. The Auditor General’s reports since the year 2011, continuously reports of instances of poor cash management; resulting in poor revenue collected on behalf of government to be paid into the consolidated fund, issues of tax irregularities and un-authorised payments as well as non-availability of adequate records on revenue collected. The Auditor General’s department continuously reports on improper internal controls at the various MMDAs and government enterprises. These errors are the very things the internal auditors in the various departments are supposed to check and prevent (Auditor General’s reports, 2011-2015).

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Item Type: Ghanaian Project Material  |  Attribute: 69 pages  |  Chapters: 1-5
Format: MS Word  |  Price: GH110 ($20)  |  Delivery: Within 30Mins.
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