Inside job comes out
Roger Trapp on a new look at internal audit in the public sector
Wednesday 16 April 1997
In fact, the Chartered Institute of Public Finance and Accountancy has been aware of difficulties for some time. Its 1992 publication Promoting Internal Audit stressed that internal audit must make sure that it is aware that the needs of customers - that is, individual departments - are of primary importance. The same document emphasised that audit's performance will in the end be judged by the extent to which it has communicated what it is trying to do to the organisation as a whole.
A report published today to coincide with the opening of the Cipfa's annual audit conference claims to confirm that there is a "quality expectations gap" in relation to internal audit in the public services. It points to the finding that 71 per cent of chief financial officers believe that internal audit has an image problem, a view apparently amplified by the rest of the study.
More important, perhaps, are the answers to questions set by Cipfa's audit panel in its quest for more detail about specific areas of concern.
Among these questions are: what are the key variables affecting the quality of audit as perceived by audit providers and the people they serve; how do such variables interrelate?; where does the expectations gap lie; and what are the consequences for auditors, customers and organisations?
The survey, The Nature of Audit Quality, was carried out by Bob Hopkins, of the centre for public sector management at Liverpool John Moores University's Liverpool Business School, and covered 140 organisations and 800 individuals. It demonstrates clearly that in several areas auditors and "auditees", or those being audited, have very different perceptions of the meaning and "quality value" of key auditing concepts. At a more basic level, it says, "there are significant differences of opinion among the groups as to what the primary role of internal audit actually is".
Auditors recognise that that the historical, "probity-centred" role of auditing has been replaced by a positive, forward-looking emphasis on auditing systems and operations. They see themselves as adding value to their organisations through providing appraisal and advice on internal systems, supported by more general business skills.
However, the survey shows that those on the receiving end of audits, particularly non-financial managers, still mainly associate internal audit with finding errors and preventing and detecting fraud. As a result, there is a tendency to view the audit process as "some sort of personal integrity assessment", even though the auditors themselves actively reject that picture.
The divergence extends into views on what needs to be done. The survey uncovered a strong desire among those being audited for greater involvement and consultation at all stages of the process, while auditors themselves were less enthusiastic about that - "probably because of fears about loss of independence". At the same time, auditors put greater importance than auditees on being consulted about changes to organisational systems.
Within that, though, there are different attitudes, depending on age, management level, experience of competitive tendering and method of audit provision. Older managers, for instance, tend to attach greater importance to the probity role than their younger colleagues. The expectations gap is widest in organisations where audit is provided by an external organisation, while both auditors and auditees involved in competitive tendering seemed to be establishing closer relationships and moving away from the old approach.
Mr Hopkins proposes in his report a new role for internal audit, with the traditional focus on compliance with internal controls being superseded by an emphasis on identifying, measuring and controlling weaknesses in organisational effectiveness.
The greatest "organisational risk" for public services, the document suggests, is a failure to deliver "quality" from the resources expended.
Given the findings of the survey, it should be "a natural step to move from the standard audit of routine, mainly financial, systems to the audit of strategic quality mechanisms and control structures", the report says.
Quite how natural, should tax the minds of those gathering in Cardiff over the next couple of days for the audit conference that will feature presentations from Chris Hurford, the audit panel's chairman and associate director of district audit, and Norman Buckley, controller of internal audit at the Inland Revenue.
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
- 1 If these extraordinarily powerful images of a dead Syrian child washed up on a beach don't change Europe's attitude to refugees, what will?
- 2 Senior British politicians tell David Cameron: When dead children are being washed up on beaches – it's time to act
- 3 Make your voice heard: Sign The Independent's petition to welcome refugees
- 4 Refugee crisis: Aylan's life was full of fear - in death, he is part of 'humanity washed ashore'
- 5 German police forced to ask public to stop bringing donations for refugees arriving by train
Senior British politicians tell David Cameron: When dead children are being washed up on beaches – it's time to act
Britain to take more refugees as Cameron bows to pressure after more than 200,000 back our campaign
Jeremy Corbyn calls Osama bin Laden's killing a 'tragedy' - but was it taken out of context?
If these extraordinarily powerful images of a dead Syrian child washed up on a beach don't change Europe's attitude to refugees, what will?
If you're not already angry about the refugee crisis, here's a history lesson to remind you why you really should be
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...
£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...
£14000 - £16000 per annum: Recruitment Genius: This company was established in...
£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...
Day In a Page
With four bedrooms, this spacious maisonette in a mid-terrace period-style house in Holland Road is well-maintained and offers high ceilings and period features.
The terraces of this two-bedroom penthouse apartment offer panoramic views that stretch over fifty miles from the cliffs of Beachy Head.
In the heart of the coastal village of Mumbles and moments from the pier, this five-bedroom Victorian terrace is set over three floors and retains many original features.
In a sandbanks location, moments from the beach, this three-bedroom apartment has a large open-plan living area and a south-west facing balcony.
This four-bedroom home has an annexe accessed from the side of the house, with potential for improvement and conversion subject to the necessary permissions.
In the heart of the hamlet of Wardley, this five-bedroom period home offers countryside views and a stylish interior, with original features and open fireplaces.
Offering countryside views and landscaped gardens, this three-bedroom Grade II-listed lodge has a spacious conservatory and a large cellar that could serve as a workshop.
Set in approximately 1.5 acres, this four-bedroom home comes with a second, detached property that's currently used as an annexe.
In the hamlet of Newchurch, this former parish church is now a four-bedroom home complete with clock tower and eyrie.
Offering scenic views from a large balcony and sun terrace, this four-bedroom home has a wraparound garden and a heated swimming pool.
Offering views across the Humber and East Yorkshire Wolds from a glass panelled balcony, this four-bedroom barn-style home befits a life of leisure.
This four-bedroom home offers versatile accommodation with annexe potential; features include a hot tub, sauna and Norwegian BBQ hut.
Well-located for schools, colleges and the town centre, this contemporary thatched cottage offers flexible living space with six bedrooms.
Built in 1907, this four-bedroom Edwardian period home has been refurbished by the current owners, retaining many original period features.
Surrounded by landscaped gardens, this five-bedroom home offers living space across three floors.
This lovely country home in Burnham Market is currently run as a popular holiday cottage, with five en suite bedrooms and colourful gardens.
This three-bedroom 17th-century former village bakery is just a few miles from the East Sussex coast.
Set on a landscaped plot, this light and airy four-bedroom home comes with a log burner in the lounge, a fitted kitchen and an open-plan ground-floor layout.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Built on a former chapel site, this impressive four-bedroom home boasts balconies, stunning views and contemporary modern living.
This three-bedroom house is situated in a quiet mews and set over three floors. Features include glazed staircases and high ceilings.
A period townhouse set over four floors, this five-bedroom home was built in the 18th Century and retains many original features.
With five bedrooms, this spacious home offers beautiful gardens and modern interiors - set within the popular market town of Bingley.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
In the pretty market town of Bungay, this grade II-listed Mill House is arranged over four floors, offering four bedrooms and three reception areas.
This first-floor flat comes with two bedrooms, an impressive open-plan reception room and two lovely roof terraces.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Moored at Taggs Island and reached via a pretty garden, this two-bedroom houseboat has a vaulted reception room and skylit garden studio - currently a beauty salon.
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
A contemporary house spread over three storeys, this three-bedroom detached home has large sliding doors that open out to the River Quaggy.
Moored in Chelsea's Cheyne Walk, this houseboat offers two double bedrooms and a teak deck that's ideal for al-fresco dining.
This former village bakery, dating back to the 17th century, is now a three-bedroom detached home just a few miles from the East Sussex coast.
On the picturesque Isle of Man, this four-bedroom character home has a ground-floor shop that's currently run as a newsagents and a flat that would make an ideal holiday let.
In a new collection of flats, this first-floor two-bedroom apartment offers ample entertaining space and a prime view of Furze Green from a private balcony.
This three-bedroom stone-built cottage currently trades as the village store with a restaurant in the annexe and family accommodation on the upper floors.
Previously two semi-detached properties, this five-bedroom home is spread over three floors with a large breakfast kitchen, orangery, office and gym on the second floor.
This five-bedroom home enjoys countryside views over the Blyth estuary to Southwold, offering flexible living space with a ground-floor annexe - ideal for use as a holiday let.
Close to the market town of Eye, this four-bedroom detached home offers a double-height living room which takes the place of the original, 19th-century, chapel nave.
Dating back to the 19th century, this four-bedroom home needs modernising. Spanning three storeys, the red-brick house has a fireplace, a small terrace and a cellar.
Just outside of Cambridge, this single-storey home offers three double bedrooms, a living room with vaulted timber ceiling and ladder steps that lead to a mezzanine study area.
This six-bedroom Georgian home is on three floors with open fireplaces, a two oven Aga, an annexe, and cottage gardens with outbuildings and a car barn.
A former coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, an attached office, kennels and an outbuilding that's currently used as a gym.
Located beside an impressive Victorian viaduct, this four-bedroom home has an open-plan living area that is glazed on two sides, with skylights and high ceilings.
A former furniture workshop, this three-bedroom home has high ceilings and painted brick walls, in a village setting only fifteen miles from the coast.
This five-bedroom stone townhouse features a pine staircase and an Inglenuk fireplace, double doors from the lounge give access to an enclosed courtyard.
This five-bedroom, detached home blends traditional and modern design; the sleek kitchen features a gas hob and oven set within an exposed chimney breast.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B or countryside retreat, subject to change of use permissions.
This Grade II-listed three-bedroom home is situated on a private road, just a short walk from the sandy beaches of Frinton-on-Sea.