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The existence of corruption has been for ages in one form or another. Corruption is a term with many meanings involving both monetary and non-monetary benefit, but generally it entails misusing one's office for a private gain or unofficial end. It involves (William, 2003). The term corruption mean different thing to different people, nation and culture, that is, it is; context-based depending on the individual, ideology, culture or other context (Yadong, 2005). Morley (1998) also defines corruption as an illegitimate exchange of resources involving the use or abuse of public or collective responsibility for private ends
Yadong (2005) describes corruption as an illegitimate exchange of resources involving the use or abuse of office for private ends. Usually, work environment and culture could either foster or discourage corrupt practices depending on cultural perception of corruption. (Barth, and Schipper, 2008). For example, until recently, United Kingdom's anti-bribery act previous did not contain a "facilitating payments" exception (Bribery Act 2010).
According to Hjalmar and Weaver (1960), many managers work in an organisation carry out different roles and functions. This hierarchy of is referred to as Level of Management with different responsibility at each level within each position. However, each level of is vital to ensuring effective overall operation of the organisation.
This is defined as three level management hierarchies namely;
Administrative or Top Level of Management.
Executive or Middle Level of Management.
Supervisory or Lower Level of Management.
The board of directors and Chief Executive Officer (CEO)/General Manager (GM)/Managing Director (MD) generally constitutes the administrative/top management level with roles in enforcing and strengthening a company capability of dealing with financial scandals as they bear the final responsibility of the internal control the organizational system.
The Middle Level Management consists of the Departmental Heads (HOD) like Finance Managers and Purchase Managers, Branch Managers Branch or Unit Heads), and the Junior (Assistant Finance Managers, Assistant Purchase Managers). These levels of Managers are selected by the Top Level Management (Webb, 2010).
The lower level management are selected by middle level management and consists of the Foremen and the Supervisors. This level is also referred to as Operative/Supervisory level or First Line of Management (Webb, 2010).
Corruption exists at different level of management in an organisation. Though each level reinforces each other, the more hierarchical levels involved the more incidences and severity organizational corruption (Argandona, 2003). For the purpose of this study, focus would be on middle level managers. In the prevention of corruption, systemic change becomes eminent. As important as general system changes is also looking for ways of fighting corruption at different level within the system because organisational credibility may be at stake if exposed; thus the need for reasonable strategies, policies and plans to minimise risks ( Ackkerman, 2001).
System Auditing are important for correcting implementation of standards and create an ethical business environment that supports organisation's image preservation, improves employee morale, and reduces fraud.
For too long, organizations have not recognized the important role of an internal audit department. Ali and Owais (2013) reported that advanced countries have recently shown an increasing interest in the internal audit profession because of the exposure of large companies to scandals in the late nineties of the last century. Therefore, internal audit has become an integral component of organisations' corporate governance mechanisms to strengthen risk management systems and enhance financial reporting quality (Sucherand and Zelenka, 1996). Many other authors sees internal auditing as crucial resource in corporate governance providing services at different management levels and external auditors (DeZoort et al., 2002; Dillar et al., 2004).
Internal auditing is an independent activity, established by management, to examine and evaluate organisational risk, management processes and control systems and make recommendations for improvements
The establishment of Institute of Internal Auditors (IIA) corrected the notion about internal audit. IIA indicated that internal audit does not exist to judge the appropriateness of a company's objectives or strategies to objective achievement, but to add value in several key areas. For example, an internal auditor's knowledge of the operations of a business is vital in helping management identify risks, and control weaknesses. A more clarified role of internal audit is the new dimensions in enabling it function to combat corruption (IIA 1999).
Gramling and Hermanson, (2006) defined Internal Auditing as an independent, objective assurance and consulting activity designed to add value and 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.
This definition emphasis assisting management and at the same time objectively assuring all management levels in thinking proactively and top managers are putting in place anticorruption mechanisms. This is an era when more focus is being placed on good governance practices and sound risk management. It is clear that both the accounting and audit professions have an important role to play now and in the future in preventing, detecting and reporting on corruption.
This study proposes to examine the impact of how internal audit strategies structure helps to minimize the incidence of corruption practices among middle level managers.
One major impediment to economic development of any organisation is corruption which often could cause other organised crimes. Equally corruption could damage the integrity of organisation and subsequently development of various organisational system problems. It is not sufficient to develop a plan for fighting corruption without analysis of probability of corruption practices within different management levels and the impact of constituted department within the organisational framework of control system.
Middle level managers give recommendations or advice to the top level management and mainly executors of organisational policies and plans which are made by the top level management as well as intermediary between top and lower management. It is therefore pertinent that when corruption is prevalent in middle level managers, it poses a threat to not only the organisation but also to the larger society. Among the corruption practices within middle level managers that easily come to mind include; bribery or kickbacks, extortion, nepotism, fraud, and opportunism among others.
This issue is a large concern for the companies because value maximization and company wealth often depend on its members. Therefore, this study is vital to shedding light on the impact of internal auditing in controlling corruption among middle level managers in order to add value and achieve company's strategy.
The general objective of this study is to determine the impact of internal auditing in controlling corruption in middle level managers.
To assess the understanding of corruption among middle level managers and internal audit.
To discuss at least two UK and one international standards setting and regulations for internal audit use
To determine the effectiveness of internal audit toll in preventing corruption among middle level managers.
To understand the components of internal control in preventing corruption among middle level manager.
To identify the role of internal audit system in preventing corruption among middle level manager.
1.4 STATEMENT OF PROBLEM
It is pertinent that an organization is a basic unit of corruption practice. The middle level serves as intermediary to the top and low level managers thereby, giving them direct contacts to all categories of company staff. Yadong, (2005) reported that most corruption occurs in the low level managers. The middle level managers could easily be drag into the fraud if care is not taking or intentionally be compliance. A focus on controlling corruption among middle level managers warrants particular attention.
These behaviours in turn could cause great damage in the areas of strategic impediment, competitive disadvantage and organizational deficiency. To rectify or avoid these damages, organizations must establish a formidable infrastructure resistant to corrupt practices (Argandona, 2003). Internal audit has a unique role in influencing management of risks by ensuring proactive, preventive, detective and combative measures in fighting corruption
The main hypothesis of this study is that the existence of internal audit structure plays an important role in minimizing the incidence of fraudulent practises among middle level managers. The statements of hypothesis for this study include:
Hâ‚€: There is no evidence that suggests internal audit as an anti-corruption measure among middle level managers.
HÑ-: There is evidence that suggests internal audit as an anti-corruption measure among middle level managers.
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