Accounting Models / Business Model for topic 11

The main focus of this topic is Internal Auditing and its benefits along with associated financial and operational costs of an organization. Internal auditing is 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.

(Source: The Institute of Internal Auditors)

The objectives of the internal audit can be summarized as follows:

To verify the correctness, accuracy and authenticity of the financial accounting and statistical records presented to the management.
To confirm that the liabilities have been incurred by the organization in respect of its valid and legitimate activities.
To comment on the effectiveness of the internal control system and the internal check system in force and to suggest ways and means to improve these systems.
To facilitate the early detection and prevention of frauds.
To examine the protection afforded to organisation’s assets and use of them for business purpose.
To identify the authorities responsible for purchasing assets and other items as well as disposal of assets.
To ensure that the standard accounting practices which have to be followed by the organization are strictly followed.
To undertake special investigation for the management.
To assist management in achieving the most efficient administration of the operation by establishing procedures by complying with organisation’s operating policies
(Source: Account Learning)

Internal auditors work with management to systematically review systems and operations of the organisation. These reviews (audits) are aimed at identifying how well risks are managed including whether the right processes are in place, and whether agreed procedures are being adhered to. Audits can also identify areas where efficiencies or innovations might be made. Internal audits are organised under an ongoing program of review and advisory activity this is based on the strategic needs of an organisation. Many large organizations have a system of internal audit within the organization as an integral part of internal control. Internal auditing is a staff function rather than a line function and the internal auditor does not exercise direct authority over other persons in the organization.

An important aspect that student should consider under this topic is that he/she must have better understanding of basic concept of internal auditing , its objectives, major advantages and limitations. Student must have better understanding of overall operations of selected organisation and he/she must understand assigned tasks to internal auditor under various operations of the organisation. Moreover, student should have better understating of various financial and operations costs of the organisation as he/she needs to critically assess that under what types of issues identified by “Internal Auditor” in specific period of time ultimately help management of the organisation to control its costs. Along with cost aspect (quantitative) , students also need to assess benefits of internal audit activity in qualitative terms. Student also need to assess very critically that how overall internal audit activity help management of the selected organisation to meet its strategic objectives. In short, along with better understanding of overall internal audit activities students must have good knowledge of various operations of the organisation that directly or indirectly affect by internal audit activities.

Key features / requirements:

Need to identify all costs (both direct and indirect) of the company that impact due to either internal audit itself or through internal audit activities.
Comment on how impact on all relevant costs due to internal audit activities.
Comment on internal audit finding that impacted on overall various costs of the company. It includes how implementation of different recommendations impact on various costs of the company.
Identify that how implementation of internal auditor recommendation impact on growth of the company.
If applicable then student also need to analysis whether outsourcing of IA activities is beneficial or not as compare to in-house internal audit activities. To answer this objectively , student need to provide some facts and figures.
More focus would be on cost benefit analysis of internal audit activities rather then approach of Internal auditors or its various identified issues.

Key Success Factors:

Proper application of all selected aims and objectives (that decided in inception of RAP) in appropriate sections of RAP.
Proper answering of all research questions (that decided in inception of RAP) in appropriate sections of RAP.
Usage of proper research methodology to achieve good result against all selected aims and objectives (that decided in inception of RAP).
Maintain proper sequence of all discussion in logical manner by keeping all requirements of the topic.
Logically conclude all performed work at the end of Research Report by keeping in consideration of all requirements of the topic.

Major benefits for choosing this topic:

Student will practically apply his/her bookish knowledge into real life.
Various techniques learned under this topic will substantially help student in his/her professional life
Major possible limitations faced by student under this topic:
Students may not entertain well by the management of selected organisation in provision of required information due to various issues (e.g. confidentiality aspects, non availability of authorized person to disseminate information to student for research work, etc.)
Student may not find good stuff from internet or other sources (due to weak research approach) to bring ideas for improvement in the project.
Student may be confused due to variation in actual information (verbal or documented) provided from primary sources with the result that he/she actually derive from his/her research work as per requirement of the topic.

Suitable organisation under this topic:

The most suitable organisation under this topic is that for which student have access to management of the company and moreover management of the company is willingly provide all required information to student as required under the topic. Selection of most appropriate organisation is very essential as student must have better understanding of overall operations of the organisation and moreover he/she also have enough knowledge of the sector in which his/her selected organisation actually operates. Based on better knowledge of the organisation and respective sector , student will be able to interlink various aspect of overall operations of the selected organisation with all requirements of the topic that ultimately help him/her in getting good grades.

In short student need to assess following aspects in selection of organisation for RAP.

Student’s own interest related to overall business of the organisation;
Accessibility of information from primary sources (extremely important in topic 11);
Accessibility of information from secondary sources;
Knowledge of overall operations of the organisation (extremely important in topic 11);
Knowledge of overall associated sector of the organisation;
Availability of time from concerned officials of selected organisation (extremely important in topic 11);
Basic idea of requirements of selected topic and their applications on proposed organisation in inception of RAP.

Suggested approach for this topic:

Under this topic, student must plan properly from inception so that he/she can complete all tasks effectively in proper manners. First of all, student must gain excellent understanding of major requirements of this topic and he/she need to critically assess all aspects of requirement by defining detailed strategy. Student need to assess that what process that he/she actually follow to meet all requirements that only possible through detailed planning in inception of RAP.

Student need to prepare overall content of RAP under topic 11 that describes logical sequence of all tasks that need to adhere by the student. This content will also help student to keep on right track from inception and at the same time student can also assess time factor against planned vs. actual tasks through considering his allocated time for complete preparation of RAP.

After finalization of overall content of RAP under topic 11, student need to start working logically from gathering of information as per requirement of topic. Student need to assess all gathered information very critically through consultation from mentor. Mentor feedback on key areas of RAP is very essential so student should share his/her thoughts with project mentor regularly to get efficient guidance in time accordingly.

In short, there is no 100% suggested approach for topic 11 as keeping broader level approach (described above) , detailed approach under topic 11 varies due to student’s perception that he conceived from requirements of the topic along with available information of selected organisation. Whatever, the approach you will follow , keep getting guidance from project mentor at every step so that you can meet all requirements of topic and get good grades.

Availability of Information:

Student have to complete his/her RAP based on provision of information directly from management of the organisation (i.e. primary sources of information) along with vast information available through different mediums (internet, newspaper, books, etc.) under secondary sources of information. Availability of information from primary sources under topic number 11 is very essential as this topic cannot complete at all without getting specific information of the selected organisation. Student need to ensure that he has access of vast information from management of the selected organisation and there is no confidentiality concerns by them as well.

In short, student need to assess very critically before opting this topic for RAP as all requirements of this topic only meet if student have enough information about selected organisation. If there is any doubt on provision of required information during perpetration of RAP then student should not select this topic for RAP as it impact on overall evaluation of information and overall grades of RAP.