An evaluation of the internal audit function at a major government agency : a case study

Abstract

Purpose: The purpose of this study is to evaluate the present state of the internal audit function at a major government agency. Steps as to how this function could be improved will also be included. Given that such agencies have always absorbed a substantial amount of public funds and there is the interest of the public, this entails having a sound internal audit function. Evaluating such an important function is something that should be studied. Design: The objectives of this study were achieved through in-depth interviews with the Head of Internal Audit, the co-source internal audit service providers and auditee management at the government agency. Findings: Findings reveal that the internal audit function within this government agency has been laid on solid grounds. The factors that impinge on the effective operation of this function appear to be in place. This function appears to have clear objectives and is independent from the rest of the other departments. Internal audit personnel are competent and appear to plan the work that needs to be performed in order to provide optimal services to the agency. The internal audit unit effectively communicates with the audit committee and auditee management. Reporting made and follow-up on all findings has added value to the rest of the agency. However, the current structure of such function and the resources required to operate this function need to be considered given that the agreement with the co-source internal audit service providers will soon expire. Conclusions: Overall this study shows clearly that thought the internal audit function at the government agency has not been in operation for so long, it appears that this function has a good standing as it has managed to accomplish many of the critical factors that influence the success of this function. However, its continued success hinges on a study that needs to be considered with regards to the future structure and prospects of such function as otherwise such an important function within this agency will end up without adequate resources. If this study is not undertaken this will shed doubts as to whether this function will be able to maintain its current momentum. Implications: It is sincerely hoped that this study will encourage further improvements within the internal audit function at the government agency. Furthermore, it is hoped that there will be an increasing awareness in the importance that an effective internal audit function plays in the development and sustainability of an internal control system, particularly in this agency, where the exposure to the public opinion and the desire for credibility is crucial.