A

PROJECT REPORT
ON

‘A STUDY OF INERNAL AUDIT FUNCTIONS AND PERFORMANCE'

AT
IMPROSYS
Submitted by
KOMAL SANJAY HIRAVE
Under the guidance of

PROF. TEJALI DESARDA

Submitted To

University of Pune

SAVITRIBAI PHULE PUNE UNIVERSITY.

In partial fulfillment of the requirement for the award of the degree

Of
MASTER OF BUSINESS ADMINISTRATION (MBA)
Through

PDEA’S
Institute Of Technical Education, Research and Management,
Akurdi, Pune-411035
2018-2020
 DECLARATION

I the undersigned , hereby declare that Project Report on “A STUDY

OF INTERNAL AUDIT FUNCTIONS AND PERFORMANCE. “
at Improsys. Written and submitted by me to the Savitribai Phule
Pune University in Partial Fulfillment of the requirement for the
award of degree of Master of Business Administration under the
guidance of Prof. Tejali Desarda is my original work and the
conclusion drawn therein are based on the material collected by
myself. this declaration will hold good & in my wise belief with full
consciousness.

Date: Komal Hirave

Place: MBA (Finance)
 ACKNOWLEDGEMENT

It has given immense pleasure to me in completing this project

and submitting the project report. for that purpose this project started
a journey to me. the two months internship at IMPROSYS has taught
me a lot. During this period 15th May 2019 to 15th July 2019 my
journey was filled with knowledge, hard Work, encouragement,
determination, efficiency and effective evaluation of work.
I feel grateful to take this opportunity to express my sincere
gratitude towards many people who made this experience memorial
one. First of all I am indebted to Mr. Laxmikant Kathare sir for giving
me such an excellent opportunity to work with him. I would like to
express my gratitude to Director of our institute Dr. Manohar G.
Chaskar for his everlasting support & motivation.
I would like to express my gratitude and regards to my project
guide Prof. Tejali desarda for her exemplary guidance monitoring &
constant encouragement throughout the course of this summer
internship I would also like to thank each and every person of the
concerned organization for their guidance and co-operation.

Date:-
Place:- Akurdi,Pune
 Executive summary
The general definition of an audit is an evaluation of person
organization system, process, enterprise, project or product. The term
most commonly refers to audits in accounting, internal auditing and
government auditing, but similar concepts also exist in project
management, quality management. Water management and energy
conservation. Auditing is defined as a systematic and independent
examination of data statements, records, operations and performances
(financial or otherwise) of an enterprise for a stated purpose. In any
auditing the auditor perceives and recognizes the propositions before
him for examination collects evidence, evaluates the same and on this
basis formulates his judgment which is communicated through his
audit report. the Internal Auditing profession evolved steadily with
the progress of management science after World War II It is
conceptually similar in many ways to financial auditing by public
accounting Improsys, quality assurance and banking compliance
activities While some of the audit technique underlying internal
auditing is derived from management consulting and public
accounting professions, the theory of internal auditing was conceived
primarily by Lawrence Sawyer (1911-2002), often referred to as "the
father of modern internal auditing" and the current philosophy, theory
and practice of modern internal auditing as defined by the
International Professional Practices Framework (IPPF) of the Institute
of Internal Auditors owes much to Sawyer's vision Traditionally,
internal auditing involved measuring compliance with the entity's
policies and procedures. However, internal auditors are not
responsible for the execution of company activities, they advise
management and the Board of Directors (or similar oversight body)
regarding how to better execute their responsibilities As a result of
their broad scope of involvement internal auditors may have a variety
of higher educational and professional backgrounds. Developments in
internal auditing have moved away from “compliance” which is a
function of management control, towards Risk Based Internal
Auditing (RBIA) which results in monitoring and evaluation of the
risk based control framework to manage enterprise risk.
 PRELIMINARY PAGES
Sr.no Particulars Page No.
1. Title of Project
2 Institute Certificate I
3 Company Certificate II
4. Declaration III
5. Acknowledgement IV
6. Executive Summary V

INDEX
Sr.no TITLE
PAGE NO

1 Introduction 1-2

2 Company Profile 3-6

3 Theoretical Perspective 7-18

4 Objective of the Study 19

5 Scope of the study 20

6 Research Methodology 21

7 Data Analysis and interpretation 22 -31

8 Observation and Findings 32-33

9 Limitations 34

10 Suggestion or Recommendations 35

11 Conclusion 36

12 Bibliography 37

13 Annexure 38-40
 INTRODUCTION
The word audit is derived from the Latin word “audire” which means
to hear. It is an important tool of management. It is concerned with
making an analytical and critical analysis of the books of accounts,
checking and verification of evidence in support of entries appearing
in the books of accounts, and ascertaining the authenticity of the
financial statements. It is also concerned with the examination of
accounting data to determine the extent of an audit examination is too
made on the basis of evidential document such as invoice, money
receipts and other records by the authorized representative of the
client.
Internal auditing is an independent, objective assurance and
consulting activity designed to add value improve an organization’s
operations. It helps an organization accomplish its objectives by
bringing a systematic, disciplined approach to evaluate and improve
the effectiveness of risk management, control and governance
processes. Internal auditing is a catalyst for improving an
organization's effectiveness and efficiency by providing insight and
recommendations based on analysis and assessment of data and
business processes. With commitment to integrity and accountability,
internal auditing provides value to governing bodies and senior
management as an objective source of independent advice.
Professionals called internal auditors are employed by organizations
to perform the internal auditing activity.
Internal Audit is not a discipline of Accountancy, External Audit is
related to Accountancy, but Internal Audit is an entirely separate
discipline more closely related to Enterprise Risk Management.
Internal Audit does, of course, cover financial risk amongst its
portfolio, but this is one very minor element of the role. Significant
misunderstandings in this area have resulted in many organizations
recruiting accountants with external audit experience to staff a
internal audit function; this is usually detrimental to the quality and
completeness of assurance provided to the Non- Executive Directors
/Board, and may, in part, have contributed to corporate failures are
key operational risks that were not directly related to financial
statements remained unidentified and/or managed by the Executive
Management.
When IIA and ACCA signed the Global Memorandum of
Understanding, IIA President David A Richards said, “The IIA and
ACCA are both long-standing, highly respected professional
associations ,each with members from all around the world. Although
we represent two distinctly different professions, our codes of ethics
and perspectives on enhanced professionalism ongoing education, and
quantifiable research mirror one another.”
The scope of internal auditing within an organization is broad and
may involve topics such as the efficacy of operations, the reliability of
financial reporting, deterring and investigating fraud, safeguarding
assets, and compliance with laws and regulations.
Traditionally, internal auditing involved measuring compliance with
the entity's policies and procedures. However, internal auditors are not
responsible for the execution of company activities, they advise
management and the Board of Directors (or similar oversight body)
regarding how to better execute the it responsibilities. As a result of
their broad scope of involvement, internal auditors may have a variety
of higher educational and professional backgrounds Developments in
internal auditing have moved away from “compliance” which is a
function of management control, towards Risk Based Internal
Auditing (RBIA) which results in monitoring and evaluation of the
risk based control framework to manage enterprise risk The modern
approach seeks to ensure that key risks are identified, a risk appetite is
defined. and controls are instigated in a fit for purpose way to manage
risk according to The risk appetite of the organization.
Publicly-traded corporations typically have an internal auditing
department, led by a Chief Audit Executive CAE who generally
reports to the Audit Committee of the Board of Directors with
administrative reporting to the Chief Executive Officer.
The internal auditor audits the accounts and other relevant records
daily, regularly or on periodical basis to accomplish the following
requirements :-
Internal audit may be conducted to ascertain whether all rules
regulations, policies, procedures and principles have been followed by
the company or not.
Name: IMPROSYS
Address: Jai Ganesh Vision Complex ,A- 29 Akurdi pune.
Business Status: - Active
Owner: Mr. Laxmikant Kathare
Total No of Employees: 50-60

Project Consultancy

 We ensure you success in projects that are yet to be conceived.

 We ensure your developers never face any technical hiccups.
 We ensure your developers are always abreast with the latest
technology.
 We ensure all your new hires ready to work on live projects
without any ramp up time.

We at Improsys believe that your business is to develop software

and deliver it on time. How simple; yet how difficult –

If these are your problems too, then rest assured! We will take care of
them. Our innovative team equipped with cutting edge technology
trains new hires and make them ready for work from day one. We will
not only help your experienced developers get trained on the latest
technology but also make them experts by continuously supporting
year after year.
 Our Expertise
 Identifying Customer Specific Requirement
 Project Planning Budgeting and Time Lining
 Conducting Project specific Training
 Identifying Software Architectural Patterns
 Developing Framework
 Designing and Optimizing Databases
 Defining and auditing coding standards
 Building and executing comprehensive test plans
 Providing Debugging and Optimization services
 Conducting Support Training
 Conducting Customer Training
 Increase Customer satisfaction.
 Increase utilization of machines
 Improve performance of employees.
 Improve level of quality standards in all functional areas.

Since 2006, Improsys is a solution provider for integrated business,

technology & process problems on a global delivery platform.
Improsys is a business improvement solutions organization in Pune,
India with focus in the area of systems design, systems development
& systems implementation. Improsys helps organizations to design
systems which connect to the company's vision, goals and objectives.
At Improsys, the emphasis is on putting systems in practice rather
than submitting consulting reports. The Improsys User Experience
team aims to create designs that are useful, fast, simple, engaging,
innovative, universal, profitable, beautiful, trustworthy, and
personable. Improsys is a leading software development company in
India providing Software Development Services & solutions with
services such as Web Development, .Net Development, PHP
Development, Softwares for Large, Medium & small Businesses,
Multimedia and Design Solutions, ERP Implementation, CRM
Solutions etc. Improsys specializes in providing web and software
development services including solution integration and IT
Consulting to small, medium and large sized businesses across the
globe.
  VISION-

To Become a Complete Software Company with the Quality

performances and to develop success path for every industry's growth
and progress.

 MISSION-

To consistently create value for our stakeholders, by providing

improvement solutions in systems which enable our customers to
achieve excellence and sustainable competitive edge. Improsys is
service provider for integrated business, technology & process
problems on a global delivery platform.

 INDIVIDUALS

We think about individuals and the part of work in their lives We

regard individuals as people believing them, supporting them
empowering them to accomplish their points in work and in life
We enable individuals to build up their professions through
arranging, work instructing and preparing
We perceive everybody's commitment to our prosperity our staff,
Our customers, and our competitors. we support and accomplishment.

Improsys also offers Corporate Training as per the need of

Industry. –

Since our services are human resource oriented, we need to work with
a proper plan to get the best. There are prescribed set of procedures
that we follow right from training people to delivering the services
and their further evaluation and improvements. Training and
development of the employees is well taken care of to enhance
employee skills.
Some features which attracts students and companies are :

- State-of-the-art facility for student to attend lectures practical

sessions.
- Professionally designed training programs for fresher’s.
- Innovate teaching methodology for specialization, certification,
foundations, academics and soft skills.
- Qualified and Trained staff for teaching and practical sessions
- Proper assistance for Job Interviews and placement drives.
- Staffing solutions for both permanent and contractual jobs.
- Innovative ideas, strict quality control and effective customer
service.

Qualiy Policy

At Improsys , we have a multi-functional team of marketing, design,

product line/program. customer contact and other key product/service
personnel examine customer and business needs. development of
software solution within the set timelines.
THEORETICAL PERSPECTIVE
According to the “Standards for the Professional Practice of internal
Auditing.” which was issued by The Institute of Internal Auditor, the
definition of internal auditing is :“Internal auditing an independent
evaluation function in an organization; it examines and evaluates
organization activities, and provides services to the organization. It is
kind of management control, and works through measuring and
evaluating the effectiveness of other controls.” In other words internal
auditing “control” internal control. The objectives of internal auditing
are- (1) appropriate control (2) the reliability of information system
(3) assets protection (4) efficient use resources (McAvoy 1977).
Thus, an internal control system cannot function well without internal
auditing. The general definition of an audit is an evaluation of a
person, organization, system, process, enterprise, project or product
The term most commonly refers to audits in accounting internal
auditing and government auditing. by similar concepts also exist in
project management, quality management, water management and
energy conservation. Auditing is defined as a systematic and
independent examination of data, statements records, operations and
performance (financial or otherwise) of an enterprise for a stated
purpose. In any auditing the auditor perceives and recognizes the
propositions before him for examination, collects evidence, evaluates
the same and on this basis formulates his judgment which is
communicated through his audit report.
The types of audit are:-

EXTERNAL AUDIT:- independent of the organization.

INTERNAL AUDIT:- an organization auditing its own systems. self

assessment.
HISTORY OF INTERNAL AUDIT:-

The Internal Auditing profession evolved steadily with the progress of

management science after World War II. It is conceptually similar
many ways to financial auditing by public accounting firms quality
assurance and banking compliance activities. While some of the audit
technique underlying internal auditing is derived from management
consulting and public accounting professions, the theory of internal
auditing was conceived primarily by Lawrence Sawyer (1911-2002),
often referred to as “the father of modern internal auditing”. and the
current philosophy theory and practice of modern internal auditing
defined by the International Professional Practice Framework (IPPF)
of the Institute of Internal Auditors owes much to Sawyer's vision.
With the implementation in the United States of the Sarbanes-Oxley
Act of 2002,the profession's exposure and value was enhanced as an
internal auditor possessed the skills required to help companies meet
the requirements of the law. However, the focus by internal audit
department of publicly traded companies on SOX related financial
policy and procedures derailed progress made by the profession in the
late 20th century toward Larry Sawyer's vision for internal audit
Beginning in about 2010, the IIA once again began advocating for the
broader role internal auditing should play in the corporate arena, in
keeping with the IPPE's philosophy.

MISSION OF INTERNAL AUDIT:-

The internal audit supports effective and efficient discharging of the

guiding and monitoring duties of the organization’s management by
producing assurance services for its internal customers relating to
governance, control and risk management processes. The internal
audit brings added value and promotes achievement of the set goals
by giving improvement recommendations, producing objective and
independent information and by training supervisors and employees
in understanding and application of monitoring processes and self-
assessment of business and other activities within the organization.
The internal audit sets its own objectives and performs its duties so
that the values of the organization are included in them and that these
values also guide the work of the auditors The internal audit function
as partners of the other organizational parts and work as experts in
different teams (especially development teams) if they do not
endanger their independence.
PURPOSE OF INTERNAL AUDIT:-

The internal audit is one of the management's control tools who

through its operations assist the entire organization by examining and
evaluating the adequacy and efficiency of internal control risk
management, quality of operations and governance processes. The
internal audit furnishes the organization with analyses appraisals,
recommendations, counsel and information The purpose is to
ascertain that the internal control system, by taking into account also
the information produced by the external auditors functions so that the
management can be reasonably sure that the set objectives and goals
will be achieved, the operations are effective, reporting is reliable and
safeguarding of assets and compliance with the laws and regulations
is done.

OBJECTIVES OF INTERNAL AUDIT:-

 To determine the reliability and integrity of information; (i.e.

evaluating the internal control systems and the integrity of
financial and operating information produced by those systems.)
 To determine whether compliance exists with policies,
procedures, laws and regulations.
 To establish that there in a proper authority for every acquisition
retirement and disposal of assets.
 To confirm that liabilities have been incurred only for legitimate
activities of the organization.
 To appraise the economy and efficiency of resource utilization
(i.e physical, monetary and non importantly staff).
 To review operations or programs for consistency with
established management goals and objectives.
 To assist members of the organization in the effective and
successful performance of their responsibilities by providing
them with analyses, appraisals recommendations and other
pertinent information concerning the activities being reviewed.
  To analyze and improve the system of internal check, in
particular to see that it is :-
 Working
 sound, and
 economical.

 To facilitate the prevention and detection of frauds

 To review the operation of the overall internal control system

and to bring material departures and non-compliances to the
notice of the appropriate level of management to locate
unnecessary and weak control system effective and economical.

PRINCIPLES OF ESTABLISHING INTERNAL AUDIT

The basic principles of establishing internal audit in a business

concern are:-

1 Independence :- The internal audit department should have an

independent status in the organization. The internal auditor must have
sufficiently high status in the organization. He may be required to
report directly to the board of directors.

2. Objectives :- The objectives of the internal audit function should

be made very clear and unambiguous. The objective should be
properly communicated so that internal audit is not viewed as “over
the shoulder check” by other departments.

3.Clarity In Scope:- The scope of internal audit department must be

specified in a comprehensive manner. The department must at all
times have authority to investigate from the financial angle, every
phase of organizational activity under any circumstance.

4. Definition of Duties: -The internal audit department's duty is to

review operations as part of the internal control system should not be
involved in performance of executive actions.
5. Internal Audit Department:- The size and qualification of staff of
the internal audit department should be commensurate with the size of
the business. The cost of internal audit department should not exceed
the benefits expected to be derived from it.

6. Reporting :- The programme of internal audit should be time-

bound. There should be provisions for periodic reporting on various
operational and other aspects.

7. Follow up and review:- There should be sufficient scope for the

follow-up action on the various points raised in internal audit report
Top management should take active part in ensuring compliance with
action points raised in the report.

8. Relationship with Statutory Auditor:- The copy of the internal

audit report should be made available to the statutory auditor, who
can deal with the same in the manner as he deems fit.

DIFFERENT ROLES OF INTERNAL AUDIT:-

1.Role in internal Control:- Internal auditing activity is primarily

directed at improving internal control, Internal control broadly
defined as a process, effected by an entity’s board of directors,
management and other personnel designed to provide reasonable
assurance regarding the achievement of objectives in the following
internal control categories :-

 Effectiveness and efficiency of operations.

 Reliability of financial reporting.
 Compliance with laws and regulations.

Management is responsible for internal .control Managers establish

and processes to help the organization achieve specific objectives in
each of these categories Internal auditors perform audits to evaluate
whether the policies and processes are designed and operating
effectively and provide recommendations for improvement.
2. Role in Risk Management:-Internal auditing professional
standards require the function to monitor and evaluate the
effectiveness of the organization's risk management processes. Risk
management relates to how an organization sets objectives, then
identifies, analyzes, and responds to those risks that could potentially
impact is ability to realize objectives. Risks fall under strategic,
operational financial reporting, and legal/regulatory categories
Management perform risk assessment activities as part of the ordinary
course of business in each of these categories.

3.Examples include:- strategic planning, marketing planning, capital

planning budgeting. hedging, incentive pay out structure, and
credit/lending practices. Internal auditors may evaluate each of these
activities, or focus on the processes used by management to report
and monitor the risks identified. For example, internal auditors can
advise management regarding the reporting of forward looking
operating measures to the Board, to help identify emerging risks In
larger organizations, major strategic initiatives are implemented to
achieve objectives and drive changes As a member of senior
management, the Chief Audit Executive CAE) may participate in
status updates on the major initiatives.
This places the CAE in the position to report on many of the major
risks the organization faces to the Audit Committee, or ensure
management's reporting is effective for that purpose Internal auditors
may help companies establish and maintain Enterprise Risk
Management processes.

4.Role in Corporate Governance:- Internal auditing activity as it

relates to corporate governance is really informal ,accomplished
primarily through participation in meetings and discussions with
members of the Board of Directors.
Corporate governance is a combination of processes and
organizational structures implemented by the Board of Directors to
inform direct manage and monitor the organization's resource,
strategies and policies towards the achievement of the
organizations objectives.
CATEGORIES OF INTERNAL AUDIT:-

1) System Based Audit:-

It refers to an in-depth evaluation of the Internal control system with

the objective to assess to extent to which the controls are functioning
effectively It is designed to assess the accuracy and completeness of
financial statements the legality and regularity of underlying
transactions and the economy, efficiency and effectiveness of
operations A systems based audit should be followed-up through
substantive testing of a number of transactions account balances, to to
determine whether the financial statements of the audited are accurate
and complete the underlying transactions legal and regulated and/or
the criteria for economy, efficiency and effectiveness have been
achieved.

b) Performance Audit or Operational Audit:-

It assesses whether the activity programme or body has been managed

economically and/or efficiently and/or effectively. A particular
performance audit will not necessarily seek to reach conclusions
about all three aspects above it should be clear from the audit
objectives, which need to be examined When carrying out audit of
economy. or efficiency, however the auditor does need to make a
general consideration of the effectiveness of the audited entity
it may be better that entity does the right thing badly rather than in
the wrong thing well.

c) Financial and Accounting Audit:-

It evaluate the accuracy of the accounting and related procedures and

practices. It assesses the accuracy and completeness of the financial
statements of the activity, programed or body being audited and/or
evaluates whether the transactions underlying the financial statements
are legal and regula However, according to the definition of internal
auditing informal auditors are mainly evaluating the system of
internal control. Therefore internal auditors primary interest not the
accounting as such but rather the control which ensures de quality of
accounting information and financial reporting
d) Compliance Audit:-

It evaluates the how well the organization conform and adherences

with relevant policies plans, procedures, laws regulations and
contracts wall audits include the compliance element, because the
auditor uses the laws, policies and regulations as a yardstick to
measure the performance of the organization Therefore these
guidelines do not contain separate section for compliance audit
but the aspect is included in all audit instructions later in these
guidelines.

The relationships between internal auditors and board of

directors
Board of directors represents all stockholders to monitor management.
However, most of the directors either are very busy or participate in
daily operation of the company; therefore, they are not able to control
management properly. As a result, nowadays, a lot of American
companies set up an audit committee to help board of directors to
supervise management. The main responsibility of audit committee
monitoring financial reporting procedures, internal control system,
and internal auditing and external auditing (Cook 1993).Most of the
audit committee members are outside directors, which can assure the
objectivity of their supervision management (Menon and Williams
1994) Internal auditing department is an important information source
for audit committee;The Treadway Commission suggested that audit
committee members and internal auditor should meet with each other
The direct communication between them shows the independent
position of internal auditors in an organization, allows internal auditor
to express their fair, impartial judgment and suggestions and increases
the possibility of the suggestions being adopted Venture and Lot
1990).
In Taiwan, there are no audit committee in a company today;
however, controller is a very similar position. According to
Commercial Code of Taiwan, “A controller is elected from
stockholders”, “A controller cannot be director, manager or other
employee in the same company”, and “ A controller can investigate
company's operating and financial situation at any time In addition.
“The Critical Point of Establishing Internal Control Systems for
Listed and Public Firms regulated that internal auditing department
must hand in the auditing report to controller to review. Finally, board
of directors must have the right to select and fire internal auditors, and
to establish all kinds of guidelines for internal auditors
(Morris 1978).
The factors that influence the effectiveness of internal auditing there
are a lot of factors that influence the effectiveness of internal auditing.
This study divides them into environment and inside internal auditing
factors, which are as follows.

Environment factors:

Firstly, management attitude management's support is probably the

most important factor in company environment (Stocks, Albrecht,
Howe, and Schueler 1988). The effectiveness of internal auditing
department mostly depend on management involvement and
requirement.
Secondly, the attitude of board of directors No 7 of The Statements of
Internal Auditing Standards regulates that the head of internal
auditing should communicate directly with board of directors
regularly, and they should meet with each other without management
on the scene at least once a year, enhance the independence of internal
auditing. Third organization structure: if management provides
internal auditing department with an independent position inside an
organization, it would have a positive influence on control
environment Pushkin 1990).
The degree of autonomy and independence depends on the level
internal auditor reports to and internal auditing department should
report both to audit committee and management in 4 order to assure
its autonomy and independence Schroeder 1977). In addition, internal
auditors and the audited activities should be Independent of each
other, and internal auditors should report directly to high management
(DeMarco 1980). Fourth, career planning: promotion opportunity is
an important factor to attract excellent internal auditors (Schneider
1970) An efficient internal auditing department should be regarded as
a good place to develop employees’ careers, because internal auditors
can understand the whole operation in a company (Stock, Albrecht,
Howe and Schueler 1988).
The factors inside an internal auditing department

Firstly, the human resources policy of internal auditing department It

is related to whether or not the limited internal auditors are used
efficiently and includes the following.

(1) Education and training: the education and training internal

auditors received is an important indicator of efficient internal
auditors function (Stocks, Albrecht Howe and Schuler 1988) A good
education and training should meet the department's needs or
objectives, so that internal auditing department as a well balance
(Schneider 1970).

(2) People combination: people inside internal auditing department

should have well balance and include an appropriate proportion of
senior and inexperienced internal auditors. Thus, they can learn from
each other and then the whole team can complete any different
assigned mission (Schneider 1970) In internal auditing. In Internal
auditing department, besides financial and accounting background
auditors, more persons of different skills are needed to execute
operating auditing and provide consulting services (Vondra and
Schueler 1993).

(3) Job description: internal auditing department should define its

responsible areas and the necessary autonomy to reach its objectives,
so that internal auditors can work according to the manual and
enhance the probability of success (McAvoy 1977). Internal auditing
regulations should include the objectives, authority, and report
responsibility of internal auditing (Pushkin 1990).

(4) Performance evaluation: the performance evaluation of internal

auditors includes two parts one is to evaluate internal auditors
performance after completing overy auditing activity, and to review
their salary raise and promotion opportunity once a year at least the
other is to evaluate the effectiveness for every internal auditing
activity (Schroeder 1977) The performance of internal auditors can be
evaluated by the head of audited department or by external auditors
(De Lomba 1974).
Secondly, auditing planning Auditing planning is to set up auditing
objectives and strategies. It can coordinate internal auditing objectives
and company goals and then help internal auditing department to
reach maximum efficiency (McAvoy 1977). In designing an annual
plan, internal auditing department can review all of the activities in a
company in addition, they must pay more attention to "risk" and audit
risky areas more frequently (Schroeder 1977).
Third, professionalism Internal auditing is a very complicated
professional field which needs a wide range of knowledge,
experience, insight, and maturity, in order to execute its auditing well
Therefore, professional license, integrity independence objectivity
knowledge, and experience are all very important (DeMarco 1980)
Communication ability is also very important Internal auditors should
regard communication as the tool to manage the relationship with
their customers, in order to create mutual reliability and furthermore,
to reach organizational goals (Stein and Holcombe 1994) In a
decentralized organization. internal auditors must have quick and
correct access to the information system of their organization, so they
need two special skills understanding the computerized database of
their company, and being a good communicator and motivator (Haley
and Mckeon Jr. 1990).
Fourth, approach to auditing Internal auditors can use behavioral
science concepts, that is power and situational leadership to enhance
the possibility of audited departments adopting their suggestions
internal auditors power is their professional knowledge and situational
leadership is to give suggestions.

according to the maturity of audited department that is use “telling” a

low maturity, use “selling”, "participatingand “delegating” 6 at mid-
low, mid-high and high maturity, respectively (McKanna 1987) A
timely, efficient report process is very important to make internal
auditors reach the highest effectiveness (Schroeder 1977) The way to
report should make internal auditors communicate effectively with
their customers including high-rank management audit committee,
operating supervisors, and external auditors (Vondra and Schueler
1993). After audit activities end internal auditors should discuss audit
findings with audited departments, and then write audit reports
according to the discussion The audit report should include audited
departments opinions positive audited findings, suggestions, and audit
department responses (Morris 1978).
The measurement of internal auditor’s performance

Internal auditors provide different services to the customers inside and

outside an organization, thus the customers usually put different
emphasis on evaluating their performance This is discussed as follows
the performance measurement by inside organization of internal
auditors.
Because working papers and audit report cannot completely reflect
the characteristics, behavior and attitude internal auditors have while
they are working, a questionnaire survey is necessary The
questionnaire issued from the head of internal auditing department to
the head of audited departments should include the professionalism of
internal auditing department, the time period of completing an
auditing project, the extent to which audit results meet the demand
of audited department, and the degree to which the head of audit
department accept audit results Seats 1991).
 OBJECTIVES OF STUDY

Objectives of the study:-

1.To study the basic concept & procedures of Internal Audit.

2.To understand the relevance & scope of internal Audit within the
organization.

3 To study the functions & role of Internal Audit Department of SSP

Technology.

4 To check whether the existing internal control system is adequate

and effective and according to the size of the organization.

5 To ensure that all the assets of organization are properly

safeguarded, if not be reports the management about the drawback
with suggestions.

6 To highlight the weak areas of the organization and give suggestion

to strengthen them
 SCOPE OF THE STUDY

The study in restricted to only one organization . An attempt

has been made to study Every aspect of internal audit within
the different departments of the organization The period under
the study was limited to one Accounting Year i.e 2018-2019
 RESEARCH METHODOLOGY
WHAT IS RESEARCH METHODOLOGY AND PROCEDURE
OF WORK ?

The study is based on survey method. The primary data is collected

by person interviews through structured questionnaire to know the
views comments and confidence regarding the performance of
Internal Audit functions in IMPROSYS . For the purpose of the study
executives of different departments were selected and interviewed.
The secondary data in collected from the books, magazines journals,
websites and including IMPROSYS Internal Audit Department office.
Research Design:-Descriptive and Exploratory Type of research.
Sampling Plan:- The sample was selected on the basis of
convenience sampling
Sample Size:- 50
Data Sources:- Both Primary and Secondary data
Schedule Design
A well-structured schedule comprising of close ended & multiple
choice. Sincere efforts were made to make the schedule simple and
precise. Care is being taken to prepare the schedule according to the
structure and format The schedule is set according to the objective of
the study.
Sample area :-
The questionnaire was distributed in 04 major departments of
IMPROSYS.

Method of data collection:

Primary data were collected by face to face interview with the help of
a well structured questionnaire and secondary data were collected
from books magazines/journals, and websites.

Analysis Technique:
The data collected from the respondents were analyzed using standard
statistical methods and techniques. Pie charts and Bar diagrams are
used to reach at the conclusion Findings were made on the basis of
analysis Recommendations were made on the basis of findings drawn
from various data collected.
Sample Questions: 15
 DATA ANALYSIS AND INTERPRETATION

Q1. Taking into consideration the objectives/structure and

responsibilities of the internal Audit functions, to what extent do you
feel that internal Audit meets expectations in Improsys?

Option No of Respondent Percentage of

Respondent
Yes 38 76%
No 8 16%
May Be 4 8%
Total 50 100%

38% Yes
50%
No
May be

8% Total
4%

Percentage of Respondents
INTERPRETATION
The above table and graph shows the responses towards –How
Internal Audit meets expectations, the 76% respondents said that IA
Meet Expectations Only 16% said that IA Does Not Meet
Expectations The rest of 8% did not comment they were neutral.
Thus, the internal audit meets the expectations of the organization.
Q2. To what extent do you believe that the work of internal Audit improves
the overall internal control of the organization IMPROSYS?

Option No of Respondent Percentage of

Respondent
Strongly Agree 18 36%
Agree 21 42%
Disagree 2 4%
Strongly Disagree 0 0
Neutral 9 18%
Total 50 100%

18%
Strongly Agree

50% Agree
21%
Disagree
Strongly Disagree
4% Neutral
9%
Total

Percentage of Respondents

INTERPRETATION
The above table and graphs shows that responses towards –How
Internal Audit improves the overall internal control of the
organization 36% respondent strongly agree, 42% respondent agree,
4% respondent disagree, 0% respondent were strongly disagreeing,
and 18% respondent were neutral. Thus overall it can be interpreted
that internal audit improves the overall internal control of the
organization.
Q3. Do you believe that the work of Internal Audit helps in
identifying and improving the overall risk of the organization
(IMPROSYS) ?

Option No of Respondent Percentage of

Respondent
Strongly Agree 10 20%
Agree 12 24%
Disagree 8 16%
Strongly Disagree 16 32%
Neutral 4 8%
Total 50 100%

12%
10% Agree
50% 8% Strongly Agree
Disagree
Strongly Disagree
16%
Neutral
4%
Total

Percentage of Respondents

INTERPRETATION
The above table and graphs shows responses to the question Internal
Audit helps in identifying and improving the overall risk of the
organization. 20% respondents were strongly Agree, 24% respondents
Agreed with the above statement. 16% respondents were Disagree,
and 32% respondents were Strongly Disagree, 8% respondents
remain neutral. Thus, Internal Audit does not help in identifying &
improving the overall risk of the organization.
Q4. Do you feel that Audit report issued by Internal Audit department
help the department to improve the work of department?

Option No of Respondent Percentage of

Respondent
Strongly Agree 10 20%
Agree 20 40%
Disagree 8 16%
Strongly Disagree 9 18%
Neutral 4 6%
Total 50 100%

10%
Strongly Agree
20%
50% Agree
Disagree
8%
Strongly Disagree
9% Neutral
3%
Total

Percentage of Respondents

INTERPRETATION
The above table and graphs shows the percentage of respondents.
Only 20% respondent strongly agreed, 40% respondent agreed, 16%
respondent disagreed, 18% respondent strongly disagreed, & the
statement 6% respondents remain s neutral. Thus, the respondents
were agreed that Audit Report issued by internal audit department
helps the department to improve the work of the department.
Q5. How do you rate the quality of Internal Audit report issued by
Internal Audit Department?

Option No. of Respondent Percentage of

Respondent
Excellent 10 20%
Good 10 20%
Average 20 40%
Poor 6 12%
No comment 4 8%
Total 50 100%

10%
10%
Excellent
50% Good
20% Average
Poor
6% No Comment
4%
Total

Quality Of IA Report

INTERPRETATION
The above table and graph the Quality Of Internal Audit Report. 20%
respondents were strongly agreed, 20% respondents were agreed,
40% respondents were disagreed, 4% respondents were strongly
disagreed, 16% remain neutral. Thus, aggregate 40% respondents
were agreed that Internal audit report issued by internal audit
department.
Q6. Do you think that Internal Audit have the right reporting structure?

Option No. of Respondent Percentage of

Respondent
Excellent 13 26%
Good 18 36%
Average 5 10%
Poor 6 12%
No comment 8 16%
Total 50 100%

8%

20% Excellent
50% Good
Average
9%
Poor
5%
No Comment
8%
Total

Percentage of Respondent

INTERPRETATION
The above table and graph shows the percentage of respondent. 26%
responses were excellent, 36% were good, 10% were average, 12%
were poor, 16% were neutral. Hence, from this interpretation it can be
concluded that aggregate responses were good regarding internal
audit has the right reporting structure.
Q7.Do appreciate that audit work was efficiently performed as per
the schedule?

Option No. of Respondent Percentage of

Respondent
Excellent 8 16%
Good 20 40%
Average 9 18%
Poor 5 10%
No comment 8 16%
Total 50 100%

8%

20% Excellent
50% Good
Average
9%
Poor
5%
No Comment
8%
Total

Percentage of Respondent

INTERPRETATION
The table and graph shows the percentage of respondents. Only 16%
respondents were excellently agreeing, 40% responses were good,
18% responses were average, & 10% responses were strongly poor,
& 16% respondent remains neutral. Thus, it can be interpreted that
audit work efficiently performed as per the schedule.
Q8. Do the Auditors motivate you to improve on your performance with
their suggestions?

X No of Respondent Percentage of
Respondent
Strongly Agree 10 20%
Agree 16 32%
Disagree 11 22%
Strongly Disagree 5 10%
Neutral 8 16%
Total 50 100%

10%
16% Strongly Agree
50% Agree

11% Disagree
Strongly Disagree
5%
8% Neutral
Total

Percentage of Respondent

INTERPRETATION
The above table and graph shows whether the Auditors motivate to
improve the performance. Only 20% respondent strongly agrees that
Auditors motivate them in improving their performance. Nearly 32%
respondent agrees, 22% respondent disagree, 10% respondent were
strongly disagreeing & 16% remains neutral with the statement. So
the 52% employees agree that the internal auditors motivate to
improve the performance.
Q9. How will you judge Improsys present Internal Audit activities
towards improving the performance of the organization?

Option No. of Respondent Percentage of

Respondent
Excellent 10 20%
Good 11 22%
Average 18 36%
Poor 8 16%
No comment 3 6%
Total 50 100%

10%
11%
Excellent
50% Good
18% Average
Poor

8% Neutral
3%
Total

Percentage of Respondents

INTERPREATATION
The above table and graph shows the percentage of responses on the
relevance of internal audit activities towards improving the
performance. Only 20% of respondent response as Good, 22% said
Average, 36% response comment as Poor and Rest 16% did not
comment. Thus , it can be interpreted that Internal audit activities help
in improving the performance of the organization.
Q10. Have you ever requested specific services of the Internal Audit
function in Improsys?

Option No of Respondent Percentage of

Respondent
Yes 26 52%
No 24 48%
Total 50 100%

26%

50%
Yes
No
24%
Total

Percentage of Respondent

INTERPRETATION
The above table and graphs shows the percentage of respondents of
the internal audit function. Nearly 52% respondents said No Only
48% respondent request specific service of Internal Audit function.
Thus, it can be interpreted that the employees have requested specific
services of the internal audit function.
 OBSERAVTION AND FINDINGS

Major findings based on primary data collected from the respondents

are stated as follows :

1. The above table and graph shows the response towards How
Internal Audit meets expectations, the 76 % respondents said that IA
Meet Expectations Only IA Does Not Meet Expectations The rest of
8% did not comment they were neutral Thus, the internal audit meets
the expectations of the organization.

2. The above table and graph shows the responses towards How Internal
Audit improves the overall internal control of the organization 36%
respondent strongly agree, 42% respondent agree, 4% respondent
disagree,0 % respondent were strongly disagreeing, and 18% respondent
were neutral. Thus overall can be interpreted that internal audit improves
the overall internal control of the organization.

3.The above table and graph shows responses to the question Internal
Audit helps in identifying and improving the overall risk of the
organization 20% respondents were Strongly Agree, 24% respondents
Agreed with the above statement 16% respondents were Disagree and
32% respondents were strongly Disagree, 8% respondents remain
neutral. Thus, Internal Audit does not help in identifying improving
the overall risk of the organization .

4.The above table and graph shows the percentage of respondents

Only 10% respondent strongly agreed, 20% respondent agreed,8%
respondent disagreed, 9% respondent strongly disagreed, & the
statement 3% respondents remain s neutral Thus, the respondents
were agreed that Audit Report issued by Internal audit department
helps the department to improve the work of the department
5 The above table and graph shows the quality of Internal Audit report
20% respondents were strongly agreed, 20% respondents were agreed, 40
respondents were disagreed, 49% respondents were strongly disagreed
16% remain neutral. Thus, aggregate 40% respondents were agreed that
Internal audit report issued by Internal Audit Department.
6.The above table and graph shows the percentage of respondents
26% responses were excellent 36% were good, 10 % were average
12% were poor, 16% were neutral Hence, from thiS interpretation it
can be concluded that aggregate responses were good regarding
Internal Audit has the right reporting structure.

7. The table and graph shows the percentage of respondents Only

16% respondents were excellent ly agreeing, 40% responses were
good, 18% responses were average, &10% responses were strongly
poor &16% respondent remains Thus, it can be interpreted that audit
work efficiently performed as per the schedule.

8. The above table and graph shows whether the Auditors motivate to
improve the performance Only 10% respondent strongly agrees that
Auditors motivate them in improving their performance Nearly 16%
respondent agrees, 11% respondent disagree 5% respondent were
strongly disagreeing, & 8% remains neutral with the statement So the
52% employees agree that the internal auditor motivate to improve
the performance.

9 .The above table and graph shows the percentage of responses on

the relevance of internal audit activities towards improving the
performance Only 28% of respondent response as Good 56% said
Average, 10% response comment as Poor and Rest 6% did not
comment Thus, it can be interpreted that Internal audit activities help
in improving the performance of the organization.

10.The above table and graph shows the percentage of respondents of

the internal audit function Nearly 52% respondents said No Only 48%
respondent request specific service of Internal Audit function Thus, it
can be interpreted that the employees have requested specific services
of the Internal Audit function.
 LIMITATIONS OF THE STUDY
Limitation

 The survey was limited to few departments in the organization.

 Unavailability of executives in their cabins as they were

engaged in field work at that time.

 Sampling error might have occurred because no sample in

perfect representation of a give population unless the sample
size equals the population.

 There is a possibility of occurrence of false judgment due to the

biased responses by some of the executives staff while giving
answers.

 Since the report is based on the primary data and personal

interview. Occurrence of personal biased cannot be ruled out.
 SUGGESTIONS AND RECOMMENDATIONS

SUGGESTIONS

1.The Internal Audit schedule program should be revised the

expectations of the respective department should be considered.

2 The internal auditor should discuss with the relative department

about their performance.

3. The Internal auditor should mention the weak & key areas for
concentration to the management of the company.

4. The internal auditors should check the implementation of the

suggestion given in the previous project report while commencing the
audit of the next period.

5. Regular meeting with the higher management should be

undertaken.

6. The employee should be made aware of the internal audit function

within the organization.
 CONCLUSION

A Project report on "Internal Audit Functions and its Performance

with IMPROSYS is the top for my study. It is a brief study of
understanding about the IA functions of the organization.
From the report it can be well identified that the organization has adopted
a well and distinguish Internal Audit functions. The department working
independently and reporting to the Audit Committee on a regular basis.
We have felt that the company has come forward to apply new skills and
techniques in order to improve the Functions of IA.
The project work is very beneficial for us and the guidance and
support receive from all during the course of my project was very
encouraging Finally, the internal auditor should review all procedures
with reference to their costs and benefits. One of the factors resulting
in inefficiency is that in many cases procedures become hindrance to
operations.
 REFERENCES
A)Journal
1) Cook, J. M., "The CEO and The Audit Committee Chief Executive
April 1993, pp.44-47.
2) DeMarco, V F, "Recruiting and Developing Internal Auditors". The
Internal Auditor. February 1980, pp.53 57.
3)Haley, D. C. and Mckeon Jr., "Docentralized Operational
Auditing-the Effective Use of the Internal Audit Function." The Mid-
Atlantic Journal of Business 26(2), Winter 1990, pp 81-89.
4) Schroeder R G "How to Audit Internal Auditing The Internal
Auditor August 1977 pp 21 25
5) Stocks, K. D Albrecht W S, Howe K R and Schueler, DR
"What Makes an Effective Internal Audit Department?" The Internal
Auditor April 1988, pp 45 49
6) Morris, N "How Does Your Audit Department Rate The Internal
Auditor October 1978, pp 69.77
B) Books
CR Kothari- Research Methodology (New Age International
Publishers)
2 Annual Report on
3 Audit Manual OIL
4 OIL magazines
C Internet:
www.wekipedia.com
www.oil-india.com
www.google.com
 QUESTIONNAIRE

1. Have you ever requested specific services of the Internal Audit function
in Improsys.?

a) Yes b) No

2. How do you judge present Internal Audit activities towards improving

the performance of the organization in Improsys?

a) Excellent b) Good c) Average d) Poor e) Very Poor

3.Taking into consideration the scope/objectives/structure and

responsibilities of the internal Audit function, to what extent do you
feel that Internal Audit meets expectations in Improsys?

a) Exceeds Expectations b) Meets Expectations c) Does not meet

4. How confident are you relying on the conclusions reached or

recommendations made by the Internal Audit function in Improsys?

a) Completely confident b) Somewhat Confident c) Not at all

5. To what extent do you believe that the work of internal Audit

improves the overall internal control of the organization (Imposys)

a) Greatly improve b) somewhat improves

c) Does not improves d) Not sure /don't know

6. Do you believe that the work of Internal Audit helps in indentifying
and improving the overall risk of the organization (Improsys) ?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

7. Do you appreciate that internal audit team is proactive (Improsys)?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

8. Do you feel that Audit report issued by Internal Audit department

help the department to improve the work of department?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

9. How do you rate the quality of internal Audit report issued by Internal
Audit Department?

a) Excellent b) Good c) Average d)Very poor

10. Does Internal Audit have the right reporting structure (Improsys)?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

11. Do you appreciate that audit work was efficiently performed

according to planning period in Improsys ?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

12. Do you consider that internal audit report was issued in a useful
time in Improsys?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

13. Do you appreciate that internal Audit department is maintaining

the appropriate auditing standards in Improsys?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

14. Do the Auditors motivate you to improve on your performance

and with their suggestions in Improsys?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree

15. Does IA function have appropriate status in Improsys?

a) Strongly agree b) Agree c) Neutral d) Disagree e)Strongly disagree