Internal Audit

The shortcomings of the regulatory aspects of the civil service have been publicized in the Auditor General’s Report on an annual basis.  In 2007 the Financial Management and Audit Act was updated, requiring all State Owned Entities (SOE) and government departments to convert their accounting practices from cash basis to accrual basis.  The challenges with this conversion were anticipated and it was stipulated for all of these entities to have an Internal Audit Function.  To date many departments do not have an internal audit function and those who do have are not operating as any Internal Audit function should.  This could be as a result of a number of factors, namely:

• The individual not having the desired competency level to perform the role of Internal Auditor.
• Management compromising the objectivity and independence of the Internal Audit function.
• The proper structure not being in place to govern and regulate the internal audit process.
• A general misunderstanding of the role of Internal Audit.

Ideal reporting Structure

For an internal audit function to fulfill its mandate, independence is of paramount importance.  It makes absolutely no sense reporting to the head of the organization you are auditing.  In the case of statutory boards, the Internal Auditor should report to the Board of Management with respect to audit findings and any areas of concern.  The Internal Auditor should report to the head of the organization on an administrative level (vacation requests, attendance, etc.).

There are many instances throughout the Civil Service of internal audit objectives being adjusted by the CEOs, General Managers, Administrative Managers and other heads of departments to fulfill their own mandates and compromising the independence of the function.  This is far from ideal and defeats the entire purpose of Internal Audit.  In respect to government departments who do have an internal audit function, the mandate is not clear and results in the Internal Auditors not functioning at the required level or not functioning at all.

Recommendations:

The office of the Auditor General should be expanded to have an Internal Audit department, whose mandate is to regulate, monitor, facilitate training and any other needs the general Internal Audit body within governments needs to function. 

The Internal Audit function within government needs to be standardized to enhance its efficiency and effectiveness.  This is a resource which should not be allowed to be exploited.

Submitted by Keisha Griffith