Internal Auditing Concepts for Small and Medium Enterprises

Internal Auditing Concepts for Small and Medium EnterprisesINTRODUCTION1.0 vehemenceeInternal canvased accounting is an independent appraisal function induceed within an agreement to examine and evaluate its activities as a service to the organization. It helps an organization implement its objectives by bringing a systematic, disciplined approach to evaluate and break the effectiveness of run a risk commission, control, and organisation processes (IIA, 2007). It delivers greater value to an organization by championing right(a) formation, supporting enterprise risk anxiety roll surface, consolidating compliance processes, and potentially coordinating various other embodied monitoring functions (Rick Todd, 2008).Corporate institution is a set of processes, controls, and structures generally performed within the organization by, or on behalf of, stakeholders (including the board or other body directly appointed by stakeholders, to ensure that their interests are protecte d and their goals are achieved (Norman, 2007). Over the past years, at that place has been a loud call for good governance of organizations (Zeleke, 2007). In the fire of somatic scandals, widespread unethical behavior, and illegal activity in nigh of the most respected organizations, somatic governance has become grand in both public and private organizations (Tumuheki, 2007). These accounting scandals and legislation postgraduatelight the censorious lineament the internal audit function plays in corporate governance (Deborah et al, 2008). It is whence not surprising that the Institute of Internal Auditors (IIA) puts a spate of effort in guiding its members to become corporate governance specialists, adequate to(p) to assist both prudence and the board (Jan, 2005).Uganda, like other variety economies, now increasingly recognizes that corporate governance is an essential tool for successfulness and stinting growth. (Tumuheki, 2007). For Small and Medium Enterprises, es pecially those with a serious craving to grow and perhaps someday get stock exchange listings of their own, they should visit adopting key elements of corporate governance as this result help them overhear access to information and resources for growth. The presence of proper accounting and bookkeeping practices increases confidence in SMEs and makes them less risky to invest or finance. According to itty-bitty Teck (2003), there has been a recent growing call for the application of corporate governance to SMEs. They argue that, corporate governance has similar benefits to SMEs as to listed companies and therefore similar guidelines that apply to listed companies should in addition be applicable to SMEs.2.0 Statement of the businessSmall and Medium Enterprises (SMEs) are critical for Uganda because of their role in economic growth and poverty reduction. A dynamic and vibrant SME sector will provide sustainable growth, generate jobs and therefore reduce poverty levels .As co mpanies globally face issues relating to transparency, accountability and timely disclosure of material information, the concept of corporate governance and business ethics in SMEs has gained significant importance (Shahnawaz, 2003). In Uganda, SMEs which form 90% of the private sector, lack organised in-house procedures to manage and supervise internal controls, risk management, business performance and cash flows. This has caused a high collapse rate, with 40 % failing within one year and 80 % within five years (Kasule, 2008) despite the high formation rate. This has prompted me to control at the family among internal audit increase and corporate governance in the small and medium scale enterprises in Uganda.3.0 purpose of the educationThe purpose of the speculate seeks to evaluate the consanguinitys mingled with internal audit proficiency and internal controls internal controls and corporate governance internal audit proficiency and risk management internal controls and risk management and risk management and corporate governance in Ugandas SMEs.4.0 Objectives of the StudyThe specific objectives of the study are stated belowi To implant the relationship between internal audit proficiency and internal controls in SMEs ii To establish the relationship between internal control systems and corporate governance in SMEs iii To establish the relationship between internal audit proficiency and risk management in SMEs iv To establish the relationship between internal controls and risk management in SMEs v To establish the relationship between risk management and corporate governance in SMEs.5.0 query Questionsi) What are the causes of lack of internal audit proficiency in Ugandas SMEs? ii) What role can internal audit proficiency play to promote good corporate governance in Ugandas SMEs?6.0 Scope of the StudyThe study will focus on internal audit proficiency, internal controls, risk management and corporate governance practices in Ugandas SMEs. It will be conducted within capital of Uganda District since Kampala area has the largest number of SMEs in Uganda. The SMEs will be studied under the following categories trade and commerce, service and manufacturing.7.0 Significance of the StudyThe study will benefit the SME sector since it will highlight areas of emphasis that they should take advantage of. Scholars and academicians may be inspired to carry pop out further studies based on these findings. The study is expected to boost the writings gap on internal audit and corporate governance in the SME sector. Policy makers and other stakeholders will benefit from the findings of this research since they will be able to draw conclusions based on the findings.8.0 Conceptual FrameworkThe abstract frame work draws upon the works of Faudziah et al, (2005), Laura Michael, (2002) and Tushabomwe (2006) with adjustments made to fit SMEs in Uganda. It explores the relationship between two variables internal audit proficiency and corporate governance in Ugandas SMEs.According to Gerrit Ignace (2006), internal controls more specifically and risk management have been considered fundamental elements of organizational governance and that, it is the job of internal auditors to help organisations accomplish their objectives by bringing systematic and disciplined approaches to evaluate and mend the effectiveness of risk management, control and governance processes.Internal auditors have an important role in the corporate governance process (Jan, 2007) and therefore requirement to be out in front, leading organisations with regards to the internal control systems and also focusing on strategic business objectives. They also need to establish themselves as vital cogs in their organizations, rather than as observers who watch from the outskirt and wait for events to impact them (Sawyer Vinten, 1996). Therefore their experience and skill in carrying out audit work is of great importance since constructive advice to the Boa rd and management adds value to organizations. The following conceptual frame work will be used to guide the study.