Internal Audit in government sector . A case study : Ministry of Education in Saudi Arabia Essay Example

Internal Audit in Public Sector

Internal Audit in the Public Sector — A case Study: Ministry of Education in Saudi Arabia


Internal auditing has been adopted rather differently by both the public and private sectors of world economies. However, it is important to understand what internal auditing refers to, and the term can be defined as an activity that is independent, objective and consultative that is designed to improve an entity’s operations, as well as adding value to such operations. The role of an internal audit is to evaluate and make improvements of risk control, management and governance processes. The private sector has lived to these roles of internal auditing, but the public sector has made it an administrative procedure that mostly involves checking accuracy, verification and control of transactions findings of which were reported to various kinds of management.

However, the case is changing in the Saudi public sector as the government is emphasizing high levels of transparency. The internal auditing function is regulated by the General Auditing Bureau in the kingdom of Saudi Arabia. They ensure that the government ministries and agencies comply with particular standards that are internationally accepted with regard to internal auditing. Internal auditing in the public sector is now focused on efficiency of management processes and services to the public, in addition to ensuring that finances, allocated to ministries and agencies are used for the right purpose and appropriately (Jacqueline 2004, p. 128-135). Therefore, this paper would cover requirements for internal auditing, in addition to explore the importance, of internal auditing in the public sector in Saudi Arabia.

Legal Framework Governing Internal Auditing

It is important for there to be legislation governing the internal auditing function in the public sector as the legislations clearly set out internal auditing requirements and suitable governance arrangements that support internal auditing effectively. The General Auditing Bureau (GAB) being tasked with the role of financial oversight recommended for the establishment of an internal auditing function in every organization that is under their scope. In general,, the role of the GAB was that of external audit for the kingdom’s public sector, and, therefore, proposed an internal audit function to be set up in every state ministry and agency. This was made law in 2004 through Resolution no.235 that mandates every organization in the public sector to establish an internal audit function (Summary Report of GAB 2008).

The push for the resolution, was the growth in size of government institutions such as the Ministry of Education, which has grown in terms of financial allocations to the ministry, as well as transactions being more complex by the day. The legislation for the establishment of internal audit functions was meant to aid the GAB in monitoring the efficiency and effectiveness of internal control systems in such ministries. Finally, in 2007 after intensive lobbying and drafting by different ministries with regards to internal audit, resolution number 129 was issued that brought regulation of the internal audit function (Summary Report of GAB 2010).

Importance of Internal Auditing to the Ministry of Education

Asides from reducing errors in financial transactions for organizations, internal auditing is very essential in various activities in the public sector. Internal auditing ensures that the public sector leaves up to its role of providing essential services to the citizenry of that country. Therefore, this section would cover the importance of internal auditing to the Ministry of Education in Saudi Arabia and the public sector at large (Alzeban & Gwilliam 2012).

For the public sector, internal auditing acts as a cornerstone for good governance as it is responsible for providing an objective and unbiased assessment of the management of public resources. Internal auditing ensures that funds allocated by the government to the ministry of education are used to achieve the intended purpose (Deloitte Middle East 2011). Internal auditors ensure that values and ethics set up by such ministries have been upheld by the employees and organizations. Government institutions such as the ministry of Education are assisted through the internal audit function among others to improve performance, achieve integrity and accountability, as well as instilling confidence among stakeholders and citizens.

Internal auditing in the public sector plays an important role in the governance responsibilities tasked to the state agencies of foresight, insight and oversight (Deloitte Middle East 2011). The responsibility of oversight envisages the ability of a government entity do what they were created or established to serve. The internal audit function ensures that such organizations are able to detect and also deter corruption in the public sector. This has played a critical role in the Ministry of Education as levels of corruption have been on a decline. The responsibility of insight is also aided by internal auditing through the provision of a totally independent assessment of state policies, operations, programs and results. Internal auditing also assists in the role of foresight as it identifies trending and emerging issues affecting state agencies (Alzeban & Sawan 2013, 443-454).

The primary role of internal auditing for checking accuracy and errors of financial transactions, in the public sector, also serves as an internal assurance instrument in financial controls in the public sector. Internal auditing also acts as a tool for checking and evaluating executive activities before any external evaluation is conducted by external auditors, in such case, which is the GAB.

The internal audit function also serves as an essential part of the public sector expenditure management system. This enables an internal auditor to ensure that the public budget provisions are stack to by ensuring public spending and disbursements are made in compliance with procedures set out by the budget. The internal auditor is tasked with the role of carrying out a timely reconciliation of systems, and accounts in the public sector for accounting and managing financial and physical assets that the public sector hold as trustees for citizens. This ensures that there is transparency and fairness by ensuring that the public procurement process provides value for money.

Finally, internal auditing forms an integral part of financial management in the public service as it serves as an instrument for performance improvement and management (Alzeban & Sawan 2013, p. 443). Internal auditors perform performance audits in state agencies such as the Ministry of Education as they monitor efficiency and effectiveness of state expenditure plans. In practical situations, performance audits focus on the assessment of whether state agencies are doing things in the right ways, in addition to them being smart.

Factors affecting the Effectiveness of Internal Auditing Function in the Public Sector

To start with, internal auditing function is faced with the challenge of independence in carrying out its work in the public sector (Skoczylas & Nowak 2012, p. 8-25). Although there is legislation regulating the internal audit function in both the public and private sectors, in practice, the adoption of this function in the public sector has been difficult. Issues relating to internal audit function being given a sufficient budget to their authority, for them to carry out audit on virtually anything that impacts their professional opinion on risk management governance and control processes. In the public sector, there is no proper procedure of appointing managers to manage operations of the internal audit function for organizations as internal squabbles within the management of state agencies (Ahmad, Othman & Jusoff 2009, p.53-62).

Another factor is the level of communication between the internal audit team and management in the government agencies. It is difficult for internal auditors to proactively communicate with management as they are usually not involved in the decision making process. This prevents them from having an up-to-date in understanding of the going-on in the organization, which in turn hampers dialogue with management with regards to changes.

Finally, internal auditors are considered outsiders in the public sector as they are tasked with checking the day-to-day operations, and; therefore, it is critical that the internal audit function gets a proper understanding of certain issues affecting the organization. This would guarantee them support from both employees and the organization as a whole.

List of References

Ahmad, H., Othman, R., & Jusoff, K 2009, The Effectiveness of Internal audit in Malasian Publc sector, Journal of Modern Accounting Auditing, vol. 5, no.9, p.53-62.

Alzeban, A., & Sawan, N 2013, The role of internal audit function in the public sector context in Saudi Arabia, African Journal of Business Management, vol.7, no.6, p.443-454.

Alzeban, A., & Gwilliam, D 2012, Perceptions Of Managers And Internal Auditors As To Factors Affecting The Effectiveness Of Internal Audit In The Public Sector Context. Viewed from

Deloitte Middle East 2011, Internal Audit in the Public Sector: The quiet revolution. Viewed from

Jacqueline, AB 2004, A critical evaluation of academic internal audit, Quality Assurance in Education: An International perspective, vol.12, no.3, p.128-135.

Skoczylas, A., & Nowak, W 2012, The Era of Internal Audit in the Public Finance Sector in Poland, Journal of US-China Public Administration, vol.9, no.1, p.8-25.

Summary Report of GAB 2008, Okaz Newspaper, Viewed from

Summary Report of GAB 2010, Alriyadh Newspaper, viewed from