City Research Online

Abstract

This monograph describes an applied research project to develop a computer system to aid the planning process in large internal audit departments. The ultimate outcome was a sophisticated computerised planning system based around a formula, but with the important additions being able to plan at both audit subject and control objective levels and take into account previous audit coverage. The system is capable of producing a plan for up to five years ahead for well over 1.5 million audits involving over 1000 audit staff. The only real limitations to the system are the amount of disk storage available for the data files and the speed of the central processing unit. The system as derived will run on any industry standard micro computer and consists of over 80 separate modules comprising some 9,000 lines of code. The modules are linked to each other by a menu and the user is given information at each stage of the operation. The system is both fault tolerant and user friendly.

The main findings from the research are: it is possible to build a computer system to aid the internal audit planning process: spread sheets do not provide the level of sophistication, or the level of user friendliness required: risk analysis, as applied to internal audit planning, is a misnomer and it would be more appropriate to call the output from the process an "importance score", rather than a risk index: the use of a formula to indicate the relative importance of a particular area to the auditor is practical, but it does not necessarily provide an absolute rating to that area: if more than one formula is used to deal with different aspects of the business, then there is a danger that the auditor will be unable to rank items from one area against those of another area with any certainty of relative, or absolute merit: the formula is not the most important part of a planning system: the collection of the data to be manipulated by the formula is one of the most important aspects of the planning process, as it ensures that the auditor has a good understanding of the organisation which he is responsible for: the best time to collect the data required by the planning system is during an actual audit, which implies a link between the historic monitoring process and the future planning process: there is no correlation between the importance of an area, as rated by its importance score, and the resource required to audit it; there is a relationship between the complexity of the area to be audited and the resource that is required to do the work, but the relationship is not necessarily linear: an "override" facility is required to ensure that items with a low importance score can be forced into the scheduling mechanism.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences > HG Finance
Departments:	Bayes Business School Doctoral Theses Bayes Business School > Bayes Business School Doctoral Theses

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