A letter report issued by the General Accounting Office with an abstract that begins "Multilateral Development Banks (MDBs) provide financial support to promote social and economic progress in developing countries and the countries of central and eastern Europe and the former Soviet Union. Under the Foreign Operations, Export Financing, and Related Programs Appropriations Act of 2001, the United States is providing $1.3 billion to support the MDBs, with $460 million going to the regional development banks and $840 million going to the World Bank Group. All of the MDBs GAO reviewed have received unqualified or "clean" opinions on their external audits. However, none of the MDBs GAO reviewed are required to report on their internal controls over financial reporting, lending operations, or compliance with their governing charters or policies. In addition, the regional MDBs' external financial statement audits are not intended to, and do not, provide assurances about internal controls over the MDBs' lending operations and whether funds are spent as intended. Most of the regional MDBs that GAO reviewed have developed anti-corruption strategies that recognize the importance of strong internal control systems. Each of the regional MDBs GAO studied has established internal audit functions as part of their controls."
Accounting errors and fraud are common in most businesses, but there is a difference between fraud and misinterpretation of communication or accounting regulations. The role of management in preventing fraud becomes important in the last decades and the importance of auditing in curbing corruption is increasingly revealed. There is a strong connection between fraud and corruption, accelerated by electronic systems and modern platforms.The most recent developments tend to confirm that external auditing is curbing corruption, due to international accounting and auditing standards at national and regional levels. Thus, a better implementation of accounting standards and high quality of external control could prevent errors and fraud in accounting, and reduce corruption, as well.The aim of this paper is to present some particular aspects of errors and fraud in accounting, and how external audit could ensure accuracy and accountability in financial reporting.
When the Lithuanian State was established in 1918, institutions of external audit began to form. The main audit institutions were State Control and Inspectorate of Publicly Accountable Firms and Institutions.January 16, 1919 can be considered the date of establishment of the institution of State Control in Lithuania. Then a temporary State Controller was appointed. In the beginning, there was no law to regulate the activity of the State Control, therefore conflicts between the State Control and the auditees, especially the Government regarding auditing procedures and realization of their results, were common.The Law on the State Control was adopted at the end of February 1919. It provided that the State Control was supposed to perform the check of the state's assets, finances, the correctness and legality of its operations. Subjects to audit by the State Control were all State institutions and municipalities, institutions that received financial support from the State and companies that took advantage of the credits and guarantees of the State. The auditees were supposed to provide the State Control arth all the working papers reflecting their activities. The State Control initiated and carried out auditing procedures at its discretion.The independence of the State Control was reinforced by the Temporary Constitution in which the status and activities of the State Control were defined clearly and at length.There were two kinds of audit: documentary and factual. During a documentary audit, papers were verified, and during a factual audit, physical verification and field audit were performed.The Inspectorate of Publicly Accountable Firms and Institutions audited credit and insurance institutions, exchanges, industrial companies and other companies and institutions that had to account in public.The above mentioned institutions analysed:1) whether the auditees' activities conformed to laws and other statutory acts;2) whether account books were in order;3) whether credits received from the State's budget were properly used.The activity of the Inspectorate was constantly criticized and law amendment projects were announced. State Control and the Inspectorate of Publicly Accountable Firms and Institutions existed till Lithuania became annexed by the Soviet Union.The major reforms began in July 1940 when the Inspectorate of Publicly Accountable Firms and Institutions was merged with State Control and, one month later. reorganized into the People's Commissariat of State Control (people's commissariat then stood for a ministry). Together with audit, the commissariat began to perform political and governmental functions. Employees of the commissariat participated in the nationalization of companies and institutions.The main institutions of the present external audit are the National Audit Office and independent auditing companies. The National Audit Office carries out the audit of:1) state budget implementation and use of State funds;2) management, use and disposal of State property;3) implementation of the budget of the State Social Insurance Fund and the Compulsory Health Insurance Fund;4) the use of funds of the European Union allocated to the Republic of Lithuania.The National Audit Office submits to the Seimas conclusions on the account of the execution of the State budget, on the Government report on public debt, and on State property.Independent audit companies can carry out audit, perform various checks, analyses, inventories, provide bookkeeping services, counsel on bookkeeping and taxes perform an expert examination of accounting and accountability in name of the court, evaluate the conditions of companies' reorganization, perform internal audit.The main goals of the activity of State Control in the interwar and present day Lithuania have not changed and are checking the management and use of State property and finances. In the interwar period inspection was performed, and today financial and performance audit are executed.In both cases, legality and rationality are the subjects of inspection.Nowadays, the focus is rather on the effectiveness of the use of property and funds and the correctness of financial accountability. However. these issues were not overlooked in interwar Lithuania, either. Therefore, it is true to say that National Audit was formed in interwar Lithuania. ; Straipsnyje nagrinėjamas ekonominės kontrolės atsiradimas ir raida tarpukario Lietuvoje, lyginama ekonominę kontrolę vykdančių institucijų padėtis ir funkcijos su dabar veikiančių analogiškų institucijų padėtimi ir funkcijomis. Aptariami kontrolės institucijų darbuotojų įgaliojimai ir darbo metodai.Remiantis archyviniais duomenimis, tarpukaryje galiojusiais įstatymais ir publikacijomis nustatytas ekonominės kontrolės transformacijos į šiuolaikinį auditą mechanizmas ir problemos.
The role of internal auditing has received significant attention from researchers in the recent past. Due to its enormous contribution to the banking system, it has been used extensively to support other governance processes. The objective of this research paper is to explore how internal audit activity plays a role in the acquisition of external audit services in the national banks of the United Arab Emirates (UAE). Internal audit activity and external audit services represent a dynamic process of the corporate governance process. The study uses both qualitative and quantitative data to determine the role that internal auditing plays in the acquisition of external audits. The data is collected from 27 national banks in the UAE using questionnaires, hence it gives the opinions that people have about auditing as well as the figures of respondents. The study aimed to understand how the functions of internal audits contribute to the acquisition of external audits. The main contribution of this study is supporting the arguments that auditing researchers have not been fully responsive to the issues associated with changes in internal audit, services that may be offered, and internal audit's growing function (Hayek, 2013)
Purpose The purpose of this paper is to analyse the influence of audit committee characteristics and external audit quality on the performance of non-financial public limited companies listed on the National Stock Exchange 100.
Design/methodology/approach One-way random effect panel data regression was applied to 74 non-financial firms in the Nifty 100 from 2014 until 2019. The overall audit committee index and external audit index were built based on the new Indian Companies Act, 2013 and on a review of the literature to capture the impact of the new Act on firm financial performance.
Findings The outcome of the study revealed that there is lack of evidence to show that audit committee characteristics improve the performance of top Indian non-financial listed firms. However, external audit quality was found to have a significant positive impact on the financial performance of firms as measured by Tobin's Q, while firm size and leverage were found to have a significant impact on the financial performance of firms as measured by return on assets and return on equity.
Practical implications This paper will be greatly beneficial for financial practitioners and policymakers because it provides practical suggestions and recommendations about the types of external audit that are indispensable for the overall effectiveness and performance of firms. The study findings may also aid strategic policy formulation and execution for better corporate governance practices for the purpose of profit and wealth maximisation.
Originality/value To the best of the authors' knowledge, to date, no previous research has evaluated the effects of audit committee features and external audit quality on the financial performance of firms in India after the implementation of the new Companies Act, 2013. Hence, this study fills this void in the present literature by examining the overall features of the audit committee and external audit and their impact on firm performance in the setting of India.
Purpose This paper deals with external audits, which are now commonly used in many industries (e.g. food, automotive and electrical). This study aims to assess whether a given organization meets the specific criteria. If the audit ends with a positive result, information about it is provided to selected interested parties, e.g. clients or contractors. Credibility is pivotal in adding value for all interested parties within the audit processes. This study seeks the factors which, in the opinion of the audited enterprises, have the most decisive impact on the credibility of external audits.
Design/methodology/approach In keeping with the extant literature, research questions were developed regarding the factors influencing the credibility assessment of external audits. Data collected from 100 companies in the Polish food sector were used to construct the model and carry out statistical analyses. Linear regression analyses were also applied to determine the key factors influencing the credibility of audits.
Findings This study is part of the research trend on the rationality of external audits and certification of quality management systems. This paper identifies nine main factors shaping the credibility of external audits. Two of them have the most decisive influence on credibility. The first one is the professional audit method (procedure). The second factor is the auditor's knowledge of the specificity of the audited area.
Research limitations/implications This study did not consider the impact that the image/credibility of the organization represented by the auditors may have on the reliability of audits. This is one of the fundamental limitations that should be considered when analyzing the obtained results. To recognize this type of dependence, additional research should be carried out. Another limitation is that the research covers the food industry only. It would be interesting to know the situation in other types of industries.
Practical implications This paper looks at the possibility of increasing the added value for audited enterprises. The proposed model can be used by managers of organizations conducting external audits and auditors to effectively use resources for process improvement, influencing the maximization of credibility of activities in the area of conformity assessment.
Originality/value The originality of this study lies in adopting the perspective of audited enterprises in assessing the credibility of audits. To the best of the authors' knowledge, this is the first study that adopts this approach. This paper contributes to the literature, particularly to better understand audited enterprises' behavior (trust in audit results, satisfaction with audits, etc.).
The global financial crisis of 2008 has been rivaled only by the Great Depression of the 1930s. The breadth and duration of this crisis had an adverse impact on every national economy, reflecting the systemic interdependence of an interconnected economic ecosystem, and the strengths and weaknesses of individual countries, regions, and monetary policies. The economic crises was particularly disparaging to the Greek state, which has a long history of excessive public spending, massive tax evasion, wage growth not supported by proportional productivity, and unsustainable debt levels. The health of the economy was further eroded as a result of a lack of confidence that was driven by questionable accounting practices and the misreporting of economic performance indicators by successive governments. The Court of Audit of the Hellenic Republic1 operates as the independent external auditor for the Greek state. Its effective and efficient operation within its mandated boundaries will be instrumental in the nation's economic recovery and a key preventing measure to arrest financial mismanagement in the future. This work will describe the context in which the CoA carries out its activities, and will explore the means through which the organization can apply a systems approach to its structure, function, and management paradigm for the purpose of reinforcing its strategic, operational, and tactical capacity.
