ASSESSMENT OF INTERNAL AUDITING PRACTICE IN CASE

OF DASHEN BANK KOTEBE ZERO HULT BRANCH

RESEARCH PROPOSAL SUBMITTED TO COLLEGE OF

BUSINESS AND ECONOMICS, DEPARTMENT OF
ACCOUNTING AND FINANCE FOR THE PARTIAL
FULFILLMENT OF BA DEGREE IN ACCOUNTING AND
FINANCE

May 2011 E.C

 AddisAbaba,Ethiopia
ASSESSMENT OF INTERNAL AUDITING PRACTICE IN CASE
OF DASHEN BANK KOTEBE ZERO HULT BRANCH

RESEARCH PROPOSAL SUBMITTED TO COLLEGE OF BUSINESS AND

ECONOMICS, DEPARTMENT OF ACCOUNTING AND FINANCE FOR THE
PARTIAL FULFILLMENT OF BA DEGREE IN ACCOUNTING AND FINANCE

PREPARED BY
NAME ID NO,

1. HAYMRO DESALEW ---------------EDACFN 061/09

2. MENGISTU BOGALE--------------- EDACFN 076/09
3. MISLEN LAKEW--------------------- EDACFN 0/09
4. ZELEKE TESHOME------------------ EDACFN 0/09
5. SURAFEL
6. MASERESHA

ADVISOR: EYERUSALEM

May 2011 E.C

AddisAbaba,Ethiopia
ABSTRACT
This study was conducted to asses internal auditing practice in Dashen Bank
in Kotebe Zero Hult branch. Internal auditing help an organization accomplish
its objectives by brining a systematic discipline to evaluate and improve the
efficiencies of risk management control and governance process. The study
fried to assess the factors, strength and weakness with regard to internal
audit in Dashen Bank of Kotebe Zero Hult branch. The sampling method
research will use to obtain the data is non probability or judgmental sampling
to find the target group of the study. This study also to analyze the data
collected. The researches will use descriptive approach method. The data
relevant to the study was collected from primary and secondary source of
data. Primary data collected through questionnaires and secondary sources
from journals written documents and reports. Based on the conclusion and
the finding the internal auditing practice of Dashen bank in Kotebe Zero Hult
branch relatively better and follow the theoretical aspects of internal audit
practice.

Key word: IAP (Internal Audit Practice),

i
ii
TABLE OF CONTENT

Contents page

CHAPTER ONE........................................................................................................................................1
1. INTRODUCTIONS............................................................................................................................1
1.1. Background of the study................................................................................................1
1.2. Statement of the problem..............................................................................................2
1.3.1. General Objective......................................................................................................3
1.3.2. Specific objective......................................................................................................3
1.4. Significance of the study................................................................................................3
1.5. Scope of the study............................................................................................................4
1.7. Organization of the paper..............................................................................................4
CHAPTER TWO.......................................................................................................................................5
2. REVIEW OF RELATED LITERATURE...........................................................................................5
2.1. Definition and Nature of internal Audit Activity......................................................5
2.2. Evaluation of Auditing.....................................................................................................6
2.3. Definition of internal Auditor.........................................................................................6
2.4. Objective of internal Auditing.......................................................................................7
2.5. Effect of internal auditor’s work on the audit..........................................................7
2.6. Professional Qualification to perform independent Audits.................................8
2.6.1. Importance of the Auditors independence.......................................................8
2.6.2. Integrity and Objectivity.........................................................................................8
2.6.3. Due professional care..............................................................................................9
2.7. Internal Control..................................................................................................................9
2.7.1. Objective of Internal control................................................................................10
2.7.2. Internal control Documentation.........................................................................10
2.7.3. Limitation of internal Control..............................................................................11
2.8. Audit practice in Relation to Internal Control........................................................11
2.9. Elements of internal Control........................................................................................12
2.9.1. Control Environment..............................................................................................12
2.9.2. Risk Assessment.............................................................................................................13
2.9.3. Control Activities.............................................................................................................14
2.9.4. Information and Communication.......................................................................14
2.9.5. Monitoring..................................................................................................................14

iii
CHAPTER THREE..................................................................................................................................16
3. METHODOLOGY............................................................................................................................16
3.1. Study Area.........................................................................................................................16
3.2. Types of data and source..............................................................................................16
3.3. Sampling method............................................................................................................16
3.4. Sample size.......................................................................................................................16
3.5. Data collection method.................................................................................................17
3.6. Methods of data analysis and presentation...........................................................17
3.7. Time and Budget Schedule..........................................................................................18
3.7.1. Time Schedule..........................................................................................................18
3.7.2. Budget Schedule......................................................................................................19
REFERENCE...............................................................................................................................................
Appendix 1................................................................................................................................................
Appendix 2................................................................................................................................................

iv
 CHAPTER ONE

1. INTRODUCTIONS

1.1. Background of the study

The internal control process is a mechanism for reducing instance for fraud,
misappropriation and errors. It has recently become more extensive
addressing all the various activities faced by the organizations it is now
recognized that internal control process in critical to organization ability to
meet is goals and objectives and to maintain its financial viability. Company’s
internal control consists of the policies and procedures established to provide
reasonable assurance that specific objective of the company will be achieve.
Internal Audit practice in the examination of accounts a business concern by
it employees specially appointed for the purpose. Internal auditors need to
be out in front, leading the business units with regards to the internal control
system and also focusing on strategic business objectives. The internal
auditors also need to establish themselves as vital cogs in their
organizations, rather than as observers who watch from the periphery and
wait for events to impact those (Sawyers, 1996).

When the properly designed and consistently enforced a good system of

internal audit will help management safeguard the organization resources,
product reliable financial reports and comply with laws as regulations. . It
will also reduce the possibility of significant errors and irregularities. Proper
internal auditing practice is the base for reserving the stability of any
company. The study focuses a describing and analyzing the important control
directions that will be related to internal auditing practice. Internal auditing
practices appraise the effectiveness of internal control systems, which is a
definition of internal auditing and which also includes an appraisal of the

1
actions by management to correct situations, which are at variance with
planned outcomes (Chambers, Selim & Vinten, 1987).

In regard to see the existing and applicability of attributer and the standards
in Dashen Bank Kotebe Zero Hult Branch performance to increase the quality
of audit work and raising awareness of the role and significance of internal
auditing to the achievement of specific objectives.

1.2. Statement of the problem

Internal auditing decomposes the examination and evaluation of the

adequacy and effectiveness of the organization system of internal control
and qualities of performance in carrying out assigned responsibilities.

Internal auditing is a service function established within the organization to

examine and evaluate its activities. Internal auditing may focus on financial
audits.

Compliance audit, fraud audit, internal auditors usually assist management

in ensuring that there is proper internal control system in place and the
operation of the enterprise (organization) is operated in effective and
efficient manner. It is clear that in adequate internal control can expose the
organization to various problems. Therefore, according to the above
information, the study was come up with some solution to the problem
identified before.

Those problems identified and are assumed to be the major causes of

internal auditing are:
1. Absence of internal auditing in the organization will result in lack of
continuous assurance services.

2
 2. The degree of independence of internal auditor since they are
employee of the organization so it is the related problem will be
existing.

After General Accepting Accounting Principle completing the study the

following basic research question will be get answers.

 Does the bank have internal auditing practice?

 Does the principle of internal auditing apply in the organization?
 What factors affecting internal auditing practice of Dashen Bank of
kotebe zero hult branch?
 What are the major drawbacks of auditing practice of Dashen Bank
kotebe zero hult Branch?

1.3. Objective of the study

1.3.1. General Objective

The general objective of this study is to assess internal auditing practice of

Dashen Bank in Kotebe Zero Hult Branch.

1.3.2. Specific objective

 To investigate the internal auditing practice.

 To identify the principle of auditing that applied in the bank
 To assess factors that affect internal auditing practice of Dashen Bank
kotebe zero hult branch.
 To identify the major drawback of internal auditing in Dashen bank
Kotebe zero hult branch.

1.4. Significance of the study

The major benefits of this study will be the following.

3
  It will enable the manager to aware of the importance and use of
internal audit in achieving intended objectives.
 It will help the auditor in the bank know application of internal auditing
principles.
 I will be used as an additional reference to the existing literatures and
can be used as spring boards for other researcher who wish to conduct
a research in the same area.

1.5. Scope of the study

Because of time and cost limitation the researcher enforced to limit the study
area in assessing internal auditing practice of Dashen bank Kotebe Zero Hult
branch. This study will focused to identify factors which affect the internal
auditing practice, the challenges, and the strategies used to alleviate the
problems in the bank.

1.6. Limitation of the study

During conducting this paper, the researcher will faced some limitations such
as involuntary of the respondent to give the necessary data especially
secondary data and also there will be time and cost constraint to do this
paper
1.7. Organization of the paper

In general the research paper will contain five chapters.

The first chapter contains background of the study, statement of the
problem, significance of the study, scope of the study and organization of the
study. The second chapter will deal with literature review of internal audit
study. The third chapter will deal the methodology of the study. The forth
chapter will consist of data analysis. The last chapter will describe the
summary, conclusion and recommendation.

4
 CHAPTER TWO

2. REVIEW OF RELATED LITERATURE

2.1. Definition and Nature of internal Audit Activity

Auditing is the process by which a competent independent person

accumulates and evaluates evidence about financial information related to
specific economic entity for the purpose of determining and reporting on the
degree of correspondence between the financial information and established
criteria. (Kamal. 2000)

Auditing was a process through which frauds and error discovered. There
were a few who through that auditing was concerned with checking with
their accounting records and bad been kept properly and up to date and that
is only created problems for efficient managers who might not have bothered
to keep their records up to date. The auditor examines the information
under audit and expresses his opinion on the same by way of written report.
(Kamal .2000)

Internal auditing activity, a department division consultant or the practitioner

that provides in dependent objective assurance and consulting services
designed to add value and improve an organizations operation. The internal
audit activity helps an organization to accomplish its objectives by bringing a
systematic disciplined approach to evaluate and improve the effectiveness
risk management control and governance processes. (Kamal .2000)

The internal auditing activities evaluate the adequacy and effectiveness of

controls encompassing the organizations governance operations and internal

5
system. Internal audit reviews include the reliability and integrity of financial
and operational information, effectiveness and efficiency of operations,
safeguarding of assets and compliance with laws regulations and contracts.
These reviews also a creation the extent to which operating and program
goals and objectives have been established and conform to those of the
organization, as well as the extent of which results are constant with
established goals and objectives and whether operations and programs are
being implanted or performed as intended. (Konrath, 2002)

2.2. Evaluation of Auditing

The present status of the auditor’s report and independent auditing

represents the culmination of a century of development. Initially audits were
performed mostly at the request of business owners who wished assurance
that their book keeping had been accurately handled and that all cash was
properly accounted for with the development of partnership. Audit also
becomes useful in the industrial revolution brought with large scale
enterprises that needed outside financing to supplement owner’s capital. In
other to prim it question of costly machines that had become available. It at
this point, of course, that the independent audit come and those third parties
displaced business owners at the principal beneficiaries of auditing services.
(Fabozzi2005)

On management that might otherwise find it expedient to endeavor to

deceive third party users by preparation of misleading financial statement.
Audit effectiveness also extends beyond the immediate statements that
have been examined to both un audited quarterly reports and
pronouncements about future expectations when it is known that the figures
will ultimately have to integrate with audited figures. (Fabozzi, 2005)

6
 2.3. Definition of internal Auditor

The internal audit is continuous review of operations and records taken with
in the business and is normally done by specially assigned staff. It should
operate independently of all the internal check and no care should divest any
one of the responsibilities placed up on him.
The institute of internal auditors, USA had defined internal audit as follows.
Internal auditing is an independent appraise activity within an organization
for the review of operations at a service to management. This a managerial
control which functions by measuring and evaluating the effectiveness of
other controls. (Arens2001)

2.4. Objective of internal Auditing

The objective of internal Auditing is to assist all members of management in

the effective discharge of their responsibilities, by furnishing them with
analysis appraisals, recommendations, and pertinent comments concerning
the activities reviewed. The internal auditor is concerned with any phase of
business activity. This involves going beyond the accounting and financial
records to obtain a full understanding of the operations under review.
(Johannes FBE, AAU)

Reviewing and appraising the soundness, adequacy and application of

accounting, financial and other operating controls and promoting effective
control of reasonable cost. Ascertaining the external of compliance with
established policies plan and procedures. Ascertaining the reliability of
management data developed within the organization. Appraising the quality
of performance in carrying out assigned responsibilities. Recommending
organizational 9functional0 units to improve their operation.

7
As a convenient summary of these objectives it might be stated that the
internal auditor is primarily concerned with evaluation compliance and
verification of operational performance. (Leksherkhar, 2003)

2.5. Effect of internal auditor’s work on the audit

Internal auditor work may affect the nature time and extent of the audit
including.Procedures the auditors perform when obtaining an understanding
of the entity’s internal control.

The auditor obtains a sufficient understanding of the design of control

relevant to the audit of financial statements to skin the audit and to
determine whether they have been placed in operation. Since a primary
objective of many internal audit functions is to review assess, and monitor
internal controls, the procedures performed by the internal auditors in this
area may provide useful information to the auditor. (sherkar2006)

2.6. Professional Qualification to perform independent Audits

In view of the reliance by third parties on the work of auditors engaged in

performing the attest function. It is understandable that there would be
concern for the professional qualification of the public accountants who do
this work. Because in some states anyone who wishes may assume the
designation public accountants such a designation gives an indication that
the person qualified to render competent service to the public. (Howard
2008)

2.6.1. Importance of the Auditors independence

In addition to possessing adequate training and professional experience the

accountant who makes an audit for the purpose of attesting to the fairness of
a client financial statement must act in an independent capacity. Because
the accountants is an employee of the business the accountant’s action are
not subject to supervision by the management of the business and this

8
situation alone creates considerable independence. Independence is also an
attitude of mind and independent though and action is equally as important
as the independent relationship between accountant and client. Unless the
accountant is independent the opinion expressed is no more reliable than the
statement which has been prepared by management. (Arens2001)

2.6.2. Integrity and Objectivity

Integrity and objectivity are per-eminent qualities expressed in all auditors.

An auditor should be straight forward, hones and sincere in this approach to
professional work. An auditor must be fair and should not allow prejudice or
bias to override this objectivity. He should ensure that he is maintaining an
important attitude he is reporting and the financial statement which are
subjected to his examination. He should both be and appear to be
independent of any interest which might be regarded whatever its actual
effect as being in compatible with integrity and objectivity. In other words, an
accountant who is practicing auditing profession should be and seen to be
independent in each professional assignment he under takes of any interest
which might detract him from objectivity.
(Leksherkhar. 2003)

2.6.3. Due professional care

This standard requires the auditors to carry out every step of the audit
engagement in an alert and diligent manner full compliance with this
standard with standard would rule out any negligent acts or material
omissions by the auditor of course auditors as well as members of other
professions inevitably make occasional errors in judgment but this human
element does not justify in difference or in judgment or intention to
professional responsibilities. (Raywhittingtion2007)

2.7. Internal Control

9
Spicer and Peglartomes authors in auditing literature define the system of
internal control as internal control is best regard as the whole system of
control. Financial and other wise established by the management in the
conduct of a business including internal cheek internal audit and other forms
of control.
This definition implies the following

The internal control is the system of controls.Controls are established over

financial and non-financial areas. The mechanism of controls may manifest
itself in the farms to internal cheek or internal audit or other forms.

The statement on auditing practice (SAP) of the institute of chartered

accountants of India describes internal control or “the plan of organization
and all the methods and procedures adopted by the management of an
entity to assist in achieving managements objective of ensuring, asfaras
possible, the orderly and efficient conduct of its business including
adherence to management policies, the safeguard of the assets prevention
and defection of Froud and error, the accuracy and completeness of the
accounting records and timely preparation of reliable financial information.
The system of internal control extends beyond those maters which relate to
functional of accounting system. (Tandon 2005)

2.7.1. Objective of Internal control

Internal control comprises all the method followed by an organization and

there by:
 Ensures efficient conduct of the business operations and prevents
wastage of resources by dishonest employees of the organization.
 Minimizes occurrence of fraud and error or irregularities if it is not
completely eliminated. Protect its assets of against improper
disbursement. Assures high degree of accuracy and dependability of all
the financial and operating information’s.

10
  Improves operating efficiency and high lights weaknesses. Above all
measures the adherence to established polices of the company.
(Ravinder 2001)

2.7.2. Internal control Documentation

Whenever the intendent auditors on the word carried out by the internal
audit department the same should be properly document along with the
reason supporting the secession. Such documentation should include the
examination and assessment on the quality of the internal audit personal the
defer of their independence the objectivity with which work is performed the
scope of the internal audit function and also the details of any specific tests
of transactions balances or working paper besides the extent of the internal
audit work to which the independent has relied and the conclusions arrived
at should be documented. (Lekshmy2000)

2.7.3. Limitation of internal Control

The existence of internal control system in any entity provides good clues
that aims of internal control, vit adherence to policy, safeguarding of assets,
detection and prevention of error (frauds) reliability and completeness of
accounting data might be achieve. One must not forget that clues that they
are and not assertion guaranteeing the fulfillment of control objectives
essentially, there are certain inherent, limitations attached to internal
control.

(SAP) official points out certain possible limitations, for instance the internal
control may not adequately cover all areas in view of cost considerations, it
cannot for see control mechanism for transactions of unusual nature it
cannot stand against deliberate circumvention of control procedures by
management. False manipulation of transaction by the entity with tacit

11
approval of management or ingenious breach of controls by staff by collusion
or controls may become absolute in changed see recognizing this vital fact
the auditor should proceed to evaluate the internal control. (Tandon 2005)

2.8. Audit practice in Relation to Internal Control

The features of internal control system and the efficiency and effectiveness
with which it is being operate from the basis for the auditor to decide the
extent of detailed he has to perform. As a general rule, where a fool proof
system of internal control for the satisfaction of the auditor is in successful
operation in detail but, to select groups of representative transactions. For
close and detailed examination, at the other end of the seal stand
organizations where the control and the system of internal control are so
seriously inadequate that not useful purpose could be served by embarking
up an any kind of extensive detail; checking because even the most
exhaustive cheeks would not enable him to form an opinion on the financial
statements. In between these two extremes in the system of internal control,
hence one of the first duties of the auditors is to examine and review the
accounting system and related internal control to determine the nature
timing and extent of the audit procedures to be performed in order to
establish the reliability of the records as basis for the preparation of the
financial statement which will present a true Answer fair view in other words
the auditor needs to study and evaluate the accounting system and related
internal controls instituted by the client business sour to enable him to
enable him to establish the degree of reliance which he can place there and
in determining the nature, timing and extent of his substantive procedure.
(lekshanyshekhar 2000)

2.9. Elements of internal Control

Internal control system operates at different levels of effectiveness

determining whether particular internal control system is effective judgment

12
resulting from an assessment of the five components. Control environment,
risk assessment, control activities, information and communication and
monitoring effective controls provide reasonable assurance regarding the
accomplishment of establish objectives. (Konrath, 2002)

2.9.1. Control Environment

The control environment as established by the organization’s administration

sets the tone of an institution and influences the control consciousness of its
people leaders of each department area or activity establish a local control
environment. This is the found for all other components of internal providing
discipline and structure. (Richiute2002 USA)

2.9.2. Risk Assessment

Every entity faces a variety of risk from external and internal sources that
must be assessed. A precondition to risk assessment is establishment of
objectives linked at different levels and internally consistent. Risk
assessment is the identification and analysis of relevant risks to achievement
of the objective forming a basis for determining by how the risks should be
managed. Because economics, regulatory and operating conditions will
continue to change.(Larry 2002).

Objective must be established before administration can identify and take

necessary steps to manage risks. Operations objectives related to
effectiveness and efficiency of the operations including performance and
financial goal and safe guarding resource against loss financial reporting
objective pertain to the preparation of reliable published financial statements
including prevention of fraudulent financial reporting compliance objectives
pertain to lows and regulations which establish minimum standards of
behavior. (Konrath 2004).

13
The process of identifying and analyzing risk is an ongoing process and is a
critical component of an effective internal control system. Attention must be
focused on risks at all levels and necessary actions must be take to mange.
Risks can pertain to internal and external factors. Aster risks have been
identified they must be evaluated. Managing change requires a constant
assessment of risk and the impact an internal controls economic industry
and regulatory environments change and entities activities value
mechanisms are needed to identify and react to changing conditions.
(Konrath, Larry, Auditing concepts & Applications USA, 1999).

2.9.3. Control Activities

Control activities are the policies and procedures that help to ensure
management objective are carried out they help ensure that necessary
action is taken to address to the achievement of the entity’s objectives.
Control activities occur throughout the organization at all levels and in all
functions. They include arrange of activities as diverse as approvals,
authorizations verification, reconciliations, predict reviews of operating
performance, security of and segregation of duties. Control activities usually
involve two elements a policy establishing what should be done and
procedures to affect the policy. All polices must be implemented through
fully, conscientiously and consistently.
(Shekhar, 2003).

2.9.4. Information and Communication

Pertinent information must be identified, captured and communicated in a

form and time frame that enables people to carry out their responsibilities.
Effective communication must occur in a broad séance, flowing down, across
and up the organization all personnel must receive a clear message from top
management that control responsibilities must be taken seriously. They must
understand their own role in the internal control system, as well as how

14
individual activities relate to the work of others. The must has a means of
communicating significant information up stream. (2003).

2.9.5. Monitoring

Internal control system need to be monitored a process that assess the

quality of the system’s performance over time on going monitoring occur in
the ordinary course of operations, and includes regular management and
supervisory activities, and other action personnel take in performing their
duties that assess the quality of internal control system performance.
The scope and frequency of separate evaluation depend primarily on an
assessment of risks and the effectiveness of ongoing monitoring procedures,
internal control deficiencies should be reported up stream. With serious
matters reported immediately your top administration and governing boards.
(Irwin, 2005)

Internal control system changes over time. The way controls are applied may
evolve, once effective procedures can become less effective due to the
arrival of new personal, varying effectiveness of training and supervision,
time and resources constraints, or additional pressures, furthermore,
circumstances for with the internal control systems was originally designed
also may change. Because of changing conditions, management need to
determine whether the internal control system continues to be relevant and
able to address new risks.
(Irwin, 2005)

15
16
CHAPTER THREE

3. METHODOLOGY

3.1. Study Area

This study will be conducted on Dashen Bank of Kotebe Zero Hult Branch.
The study area is located on Kotebe-Megnagn asphalt road.

3.2. Types of data and source

The researcher will use both primary and secondary sources of data to
achieve the objective of the study. The primary source of data will be the
actual collected data from individuals through interview and questionnaires.
The secondary sources of data will be different documents and internal
auditing reports of the bank.

3.3. Sampling method

The method of sampling the researchers will use to obtain the data is non
probability or judgmental, i.e., persuasive sampling technique to find the
forget group of the study. This method will be used due to the reason that it
is the most important technique to find persuasive sampling technique
peoples that provide the necessary data for the researchers. Because the
researcher may get facts, full and reliable information from the enterprise,
financial manager, clients, and other experienced employees of the Bank. It
will be also less costly and less time consuming.

3.4. Sample size

The population for this study includes all level of manager and employees
working in different department that organization to conduct the study

17
sample of employees will be taken as sample from the whole. The total
number of worker within the organization is 20 employees.

However the researchers will select audit department. Thus, three internal
auditors, eleven of total employees and the manager of the branch will be
used as the target group to gather the relevant data.

3.5. Data collection method

The primary data will be collected from primary source through interview and
questionnaires. The interview will be conducted by the researcher to all
internal auditors and the manager in order to find the important information
or data related to auditing practice. The secondary data will be obtained
from different internal auditing reports of the bank.

3.6. Methods of data analysis and presentation

Both primary and secondary data will be collected and analyzed after it is
edited. To analyze the data collected, the researchers will use descriptive
approach in which different factor or data collected will described by word
without any numerical measures.

Tabulation consists of simply counting the number faces that fall in to various
categories. It communicates the result of the study, can be used for several
propose.

18
3.7. Time and Budget Schedule
3.7.1. Time Schedule

No Activity Oct No Jan Feb Mar May Jun

v
1 Topic selection
2 Preparation of
proposal
3 Collection of useful
material
4 Data collection
5 Data analysis and
writing of final
research
6 Submission of
research
7 Presentation of final
research

19
3.7.2. Budget Schedule

The study will contain the following different types of expenditures that will incur in
the whole course of research.

Item Quantity Per Unit (Birr) Total Cost(Birr)

Equipment Paper 1 200 200

and
stationary Pen 6 5 30

Pencil 3 2 6

Binder 1 25 25

8GB Flash 1 200 200

Miscellaneous 130
Total cost - 591
Transportation - 100
Internet - 0.25 250
Printer 45 Page 2 80
Personal Typist 45 Pages 7 315
cost Total cost - 745
Contingency - 800

Over all total cost - 2,136

20
REFERENCE

Arens 1997. Auditing interatedappoabs 7th edition jersey (USA).

B.N Tondom (2005) “A hand book of practical auditing” SHAND and Company
TID.
David N. Richute, Auditing Concepts and Standard, South Western publishing
Co. 1982. USA.
Howard F (1980) “Auditing principle” 4th edition prentice Hall of India.

Johannes. Kinfu, Auditing introduction to Principles practices, FBE. AAU.

K.C shekhar and leksmy S (2000) “Auditing incorporating Companies” Vikas

publishing India
Kamal G (2000) “Fundamentals of Auditing” Hill publishing Company.

Konrath. Larry. Auditing Concepts & Applications. A risk Analysis. Approach

4th ed. South Western Colle USA. 1999.
O.Raywitting (1989) “Principle of Auditing” 9th edition Boston.

Ravinder K (2001) “Fundamentals of principle Auditing” prentice hall India

Shekhan and Shekhars, 2003, Auditing Apptoch 5th edition

Shekhar, Auditing. Vikas publishing House, 2003.

Walter B. Meigs&etal, Principles Auditing 9th edition, 1989.

Whitting ton & parry 11th edition, Irwin, 1995.

21
Appendix 1
Kotebe Metropolitan University
College of Business and Economics
Department of Accounting and Finance

Questionnaires filled by employees in Dashen bank (kotebe zero hult branch)

Dear respondents!
We are currently conducting a research entitled as “analysis” of the internal
control and auditing practice of Dashen bank (kotebe 02 branch) the main
objective of this questionnaires is to assess the internal control and the
importance or weakness of the auditing practice in the company. I am kindly
requesting you to give genuine responses.
Thank you in advance!

I. Please provide some information about your age, sex and work
experience in the bank.
1. Sex Male Female
2. Age 20-25 25-30 35-45 > 45
3. Your stay in the bank
0-5 years 5-10 years >10years
II. To what extent do you agree or disagree to the following statements
about Dashen bank?

Please use 1 Strongly agree, 2 agree 3, strongly disagree, and 4,

disagree, tick the boxes according to your reasons

N Item (activities the bank performs 1 2 3 4

o
1 Accept all types of deposits
2 Extend loans and advances for customers
3 Draw accept, buy and sell bills of exchange
4 Provide financial quarantine
5 Carry out international banking transaction and

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 interbank business
6 It gives domestic banking service in all branches
7 Assessing the risk that the bank will ace
8 Undressing internal control
9 Training of internal audit persons
10 Supervising reviewing, and controlling the activities in
the bank
11 Establishing goals and objective and check the
implementation
12 Set division of work among employees
13 Conducting (applying internal control system in
conformity with the environmental changes.

14. Is any application of internal control practices in bank are working in ?

Yes No

15. If your response to question No. “14” is yea please list the types of
internal control practices that are currently by the company.
------------------------------------------------------------------------------------------------------
------------------

16. Which the following limitations do you think that internal control will
mostly have in your bank? Use rating scale 1 strongly agree 2, agree 3,
strongly disagree, and 4 disagree

N Item 1 2 3 4
o
1 Chances of human error (being careless
misunderstandings, etc)
2 Ignorance of unusual activity
3 Collusion of employees with the outside parties
4 A person who is exercising may be irresponsible
5 A procedures for controlling may vary due to the
changes conditions

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6 What other factors do you think that affect the
internal control practice?

17. What are the mechanisms through which the bank uses to minimize the
aforementioned limitations of internal controls?

18. How do you evaluate the quality of internal auditing practice in general?

19. Do you think that there would be some risk management skills which are
required by the bank manager ?

Yes No

20. If your response is “yes” what are those skills and techniques the
manager should use? --------------------------------------------------------

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 Appendix 2
Kotebe Metropolitan University
College of Business and Economics
Department of Accounting and Finance

Interview questions for the manager of Dashen bank in kotebe

zero hult branch
General directions: Dear manager, the main purpose this interview is to
assess the internal auditing control practice used by Dashen bank kotebe 02
branch. These researchers kindly request you to give genuine response.
N.B: the response you are going to give us will be kept for research purpose
only.
Dear respondent!
We are currently conducting a research entitled as “analysis” of the internal
control and auditing practice of Dashen Bank “in kotebe 02 branch”. The
main objective of this questionnaire is to assess the internal control and
auditing particularly of the application the effect of internal control practice
of auditing and the importance or weakness of the auditing practice in the
company.
Thus we kindly request you to give genuine responses.

1. How do you think about internal control practice in your bank?

---------------------------------------------------------------------------------------------
2. Do you apply some of the principles for internal auditing?
A. Yes B. No

If yes, what are the principles do you use to control the general condition
of the bank including the way you control your employees.
---------------------------------------------------------------------------------------------
3. How do you see general nature of auditing in your branch?

25
4. Could you tell me about the bank and the way it functions?

5. Have you ever faced some challenge when you run and manage the
bank?

6. (If yes) what were those challenge that your prominently face?

7. What were the strategies you used to overcome the challenges?

8. In what way do you manage and set your employees?

9. What factors do you think that affect the internal auditing practice in your
company? (the major weaknesses)

10. What mechanism do you think should be taken?

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