Accounting of Money Transfers in the International Banking System

This thesis examines the accounting of money transfers within the international banking system, using Jordanian commercial banks as a case study. The research explores the impact of the financial accounting system on the accounting practices of these banks, and how they respond to accounting reforms and disclosure requirements. It investigates the role of the financial accounting system in improving the accounting of bank transfers and ensuring compliance with international accounting standards (IFRS). The study covers the period from 2010 to 2018, focusing on the processes, standards, and challenges related to international money transfers, and their implications for the banking sector. The research also considers the importance of bank transfers for customers and the role of technology in facilitating these transactions.

Accounting of money transfer in the international banking system and
a Jordanian banking example
By: Mahmoud ahmad musa al-ababneh
Master’s degree in MBA business administration / Istanbul Aydin
University
Istanbul - turkey
Adviser:
Assist. Prof. Dr. Hulya boydas hazar

ABSTRACT
Banks and especially commercial banks are facing a formidable array of risks that
can be due to global competition, complex financial instruments, mergers,
downsizing, which all create a riskier operating environment for organizations,
specifically banks. This is a study of money transfers in the international banking
system that I conducted in my MBA business administration program, I hope I can
identify how is the money transfer happens in the international banking system?
this study took place in Jordan as an example and in the world in general , the
sample of this study is the banking force in Jordan and there transactions with the
banks all over the world , In this thesis I will clarify the methods I used to get the
answers I was aiming to get out of this study .

I dedicate this thesis for my mother may her soul rest in peace, my
father may god bless him, my brothers and sister and my future wife
Ranad alzoubi.

ACKNOWLEDGMENTS
This project would not have been possible without the support of many people.
Many thanks to my adviser, Hulya hazar, who read my numerous revisions and
helped, make some sense of the confusion. Also thanks to my father Ahmad
Ababneh, my friend Mohammad bataineh, who offered guidance and support.
Thanks to the Istanbul Aydin University for awarding me and providing me with
the means to complete this project. Finally, thanks to my future wife Ranad alzoubi
for all the love and support.

TABLE OF CONTENTS
Table of Contents :
Chapter one:
Introduction :.........................................................................................................................................2
Problem of Research :............................................................................................................................2
Search hypotheses:................................................................................................................................3
Reasons to choose a topic :....................................................................................................................3
- The Importance Of Studying :....................................................................................................3
Objectives of the study :.........................................................................................................................4
The limits of the study:...........................................................................................................................4
Timeline : The study time limits from 2010 to 2018..........................................................................4
Research Methodology :........................................................................................................................5
Table of Contents :.................................................................................................................................6
Chapter one : international money transfers.........................................................................................9
Topic one : what is international money transfers.............................................................................9
Topic two : example about international money transfers................................................................9
Topic three : the process of international money transfers...............................................................9
Chapter two : The Accounting of international money transfers...........................................................9
Topic one : IFRS..................................................................................................................................9
Topic two : recording..........................................................................................................................9
Chapter three : examples of othe countries...........................................................................................9
Chapter four : Jordanian international banks........................................................................................9

Chapter one:
Introduction
Historically, accounting has evolved as a logical consequence of meeting the needs
and requirements of economic and social development and progress in the world of
finance and business, and with increasing the functions and duties of accounting, it
has been one of the most important elements of upgrading it and ensuring its
continuity as a social science is its ability to respond to these requirements.
In addition, the banking system has witnessed a rapid development in the range of
services it offers in terms of its variety, mix of products and the technology it uses.
Therefore, these challenges have forced the accounting to provide answers to many
of the current banking problems, their evolution from traditional systems to
modern systems and follow-up of creative trends in international banking
especially in the Jordanian international banks.
Transfer money plays a pivotal role in helping an organization achieve its
objectives. There has been a growing recognition of the strong connection between
effective risk management and transfer money, which has supported by the
International Standards for the Professional Practice of Transfer money, which
provided a solid basis for accounting system in the banking system. With regard to
broad direction, these standards have stated that the primary objective of
accounting system is to assess and develop the efficiency of transfer money and
processes within the banking.

Accounting Transfer money depends on the International Standards. Its primary
role regarding of transfer money is to provide objective assurance to the abroad
regarding the effectiveness of the remittances. In fact, research has shown that
international standards have a high importance in transferring money in proportion
to the accounting system in local and international banks in a way that does not
contradict the interests of organizations that wish to transfer money.
Problem of Research :
Since the adoption of the Kingdom of Jordan on the accounting and financial
system at the beginning of 2010, the system has sought to include all institutions
regardless of the nature of their activities. However, the banking sector and its
distinctive activities make it unique in a special way that separates it from other
sectors. Despite this difference, the accounting and financial system to the banking
sector to apply the same basic rules and principles used in other entities, so we will
study in this thesis:
-How does the application of the accounting system effect on the accounting
practices of the Jordanian international commercial banks?
-What will happen if Jordanian commercial banks respond to accounting reform?
- How is the commercial banks committed to accounting disclosure in their
financial statements for bank transfers according to the financial accounting
system?
-What is the role of the financial accounting system in improving the reality of the
accounting of bank transfers to Jordanian international banks?

Bank transfers provide a great benefit to bank customers, which lead to the transfer
of financial rights without resorting to the transfer of money sense, and is
characterized by other methods of payment is inexpensive and quick
implementation and easy to use by banks, in addition to the safety of the result of
Advanced control procedures the banks, which led to the desire of many people on
this type of contracts and confidence in the efficiency of this service provided by
the bank; which called on banks to allocate branches for conversion, and emerged
companies specializing in the conduct of remittances.
In addition, its great importance as it coincides with Jordan's compliance with the
International Accounting Standards (IPSAS) through the financial accounting
system, so that we address the financial accounting system at the level of banks
and financial institutions, making it a scientific material that benefits students and
researchers and contributes to raising their understanding of accounting in the
banking sector.
Search hypotheses:
Through the sub-questions, the following hypotheses were developed:
-The international banks of Jordan are obliged to disclose the accounting in their
financial statements to a great extent in accordance with the accounting system.
-Commercial banks respond adequately to accounting reform by applying the
financial accounting system.
-The role of the financial accounting system is to facilitate financial and
accounting transfers to improve the accounting system in Jordan to comply with
international accounting standards.

Reasons to choose a topic :
- The personal desire of the researcher to expand and deepen the topics of
financial accounting
- Attention to the theme of the compatibility with the researcher's specialty
- Entry into the market economy requires reconsideration of the banking
system as a whole, on the one hand, and the accounting of international
remittances on the other hand
- The Importance Of Studying :
- Bank transfers provide a great benefit to bank customers, which lead to the
transfer of financial rights without resorting to the transfer of money sense,
and is characterized by other methods of payment is inexpensive and quick
implementation and easy to use by banks, in addition to the safety of the
result of advanced control procedures The banks, which led to the desire of
many people on this type of contracts and confidence in the efficiency of
this service provided by the bank; which called on banks to allocate
branches for conversion, and emerged companies specializing in the
conduct of remittances.
- In addition, it is of great importance as it coincides with Jordan's
compliance with the International Accounting Standards (IPSAS) through
the financial accounting system, so that we address the financial accounting
system at the level of banks and financial institutions, making it a scientific

material that benefits students and researchers and contributes to raising
their understanding of accounting in the banking sector.
Objectives of the study :
- Acquiring new information regarding banking accounting from the point of
view of the financial accounting system
- Know the extent of qualification of international banks to work in
accordance with international accounting standards
- Provide a clear and simple picture of the outputs of the financial accounting
system for remittances in international banks.
- The limits of the study:
- Timeline : The study time limits from 2010 to 2018
- the research paper is projected to take about ( 32 weeks ) of preparation
below i shall elaborate the duration of every phase :
- collecting material : 5 weeks
- purview study : 2 weeks
- preparing introduction : 2 weeks
- sample selection and talk with community : 2 weeks
- write the thesis : 12 weeks

- data collection : 2 weeks
- data entry and analysis : 2 weeks
- analysis result : 2 weeks
- recommendation : 1 week
- review : 2 weeks
- Spatial boundaries: The study will be limited to Jordanian commercial
banks.
- Temporal Boundaries: The study will take place during the second
semester of 2019/2020.
This study is also limited by the fact that its results cannot be generalized to other
sectors for that matter. In addition, the results of this study will determine the
generality of the instrument validity and stability, as well as the accuracy of the
response of the subjects and their objectivity to the study instrument.
- Research Methodology :
- In order to address the problem of the subject of the study and analyze its
dimensions and try to test the validity of the hypotheses submitted was
based on the curriculum
- In some of the parts related to the theoretical and conceptual framework
with regard to the accounting of bank remittances.
- In order to become acquainted with all aspects of the subject, we followed
the descriptive and analytical approach supported by models and tables to

simplify and understand the subject and answer the questions and prove
the hypotheses
- The study will focus on the money transfer process
- Conceptual and operational :
- Accounting:
- Electronic Banks:
- Remittances:
- EFT:
- IFRS:
- Swift:

Chapter two:
Introduction to transfer money or remittances
Bank transfer are one of the most seasoned and most generally utilized strategies
for installment in global business. Particular sorts of bank transfer were utilized as
of now in the antiquated times. The bank transfer we know today, for example
quickly executed "wiring" of assets from one record to another by methods for
media transmission, has been utilized at the discount level since the mid-1900s
after the presentation of the electric transmit. This sort of bank transfer is called
transmitted transfer or on the other hand wire transfer. On the other hand, it
might be additionally called a link transfer. It is a game plan whereby one bank, on
demand of payer having his/her record in this bank, transfer reserves
immediately from the payer record to another record in the same or distinctive
bank. The genuine exchange is finished by the bank, and neither the sender nor
the beneficiary of the cash sees or contacts the real assets. On account of global
bank transfer, the payer is generally the merchant and the payee is the exporter.
Bank transfers is a noob treatment establishment after appearance of banking
system and it is the most important process of operational banking and widely
spread in the world , the commercial banking system provides this service to
meet the customers’ needs and facilitates their purposes .
A money Bank transfer: is an outgoing order from the bank (transferor)
depending on the clients request to another branch in the same bank or other
banks, regardless wither the branch or bank is inside the country or outside ( the
transferring bank) request to pay an amount of money to an another person
called ( beneficiary ) .
This operation is defined as the outgoing and incoming money transfers, the first
transaction is the outgoing transfer and it means the remittances that is issued by

the bank at the request of a specific person to another bank or the a branch of
the same bank itself, to pay a specific amount of money to a specific person
(beneficiary) . And the incoming remittances means the order that is taken by
bank from another bank or branch in the same bank to pay a specific amount of
money to a specific person.
Banking transfer involve some key players
- The transfer applicant: is the person or entity which desire to transfer or pay
specific amount of money to specific person or entity (beneficiary), the transferor
may request transfer specific amount of money from his account that already has
money in or he can pay in cash.
- The beneficiary: is the person or entity that will receive the amount of money
and probably the beneficiary is the same person who ask for transfer or
independent third party. The beneficiary may be a resident in the same country
and receive the amount of money in the local currency or another currency.
- The commanding bank: the bank who receive the transfer request and take the
amount of money that is required to be transferred from the client who request
the transfer, then sends the amount directly to the beneficiary or through other
correspondent bank.
- The paying bank: if the account of the both sides of the transfer is in the same
bank, the transfer of the money is done by the same bank, In this case, the bank is
the commanding bank is the paying bank. On the other hand, if the both sides’
accounts is in deferent banks accounts, the paying bank deliver the transferred
amount to the beneficiary at the request of the commanding bank.
- Covering bank: It is the payment settlement between the issuing bank (the
recipient of the transfer) and the executing bank (paying transfer). The covered
bank may be the same as the paying bank.

The remittances divided into two types:
1- Internal remittances: is the process of transferring an amount of money
from a bank or a branch to another in the same country at the request of
the client, in this case the client must deposit the amount of money he
desire to transfer from the bank or have an account in the bank to cover or
deduct the amount of money to move forward in the transfer process to
receive it by the beneficiary. The bank will take a commission or fees for
this service and the bank send a notice to the client by e-mail, fax,
phone...etc. That the client owns.
2- External remittances: is the process of transferring the amount of money
from one country to another (internationally).
It is also required from the client to deposit the amount of money he desire
to transferee or from the account that the client already has in the bank to
cover the transfer, the bank will take a commission or fees for this service.
The service includes more than one transaction, in addition to the wage
agency, which includes the exchange process.
As pervious, we conclude that the bank transfers is important for the
effective economic role that is played by making it easier for the parties to
transfer money and cover their international and local debts in a sufficient,
fast and safe way based on how low expensed it is, based on the new
technology of following and tracing system that the banks own, the bank
transfers is so important that is why banks have opened a specified transfer
branches in the country.

The definition of international money transfer (IMT)
International money transfer (IMT)
It’s basically an electronic transfer of funds in the same country or with of
broad country between the same bank branches or with different banks in
this situation the client gives an order to the bank to transfer money to the
beneficiary through the bank from a current existed account or by giving
cash money to the commanding bank, The bank transfers the money to
their branch or beneficiary bank in other places all over the world or in the
country.
In the case of transferring money to other banks, the two banks need to
have an established relationship and contract in order to facilitate the
transfer.
There are FOUR common ways to transfer money internationally they are:
(SWIFT), (FEDWIRE), (CHIPA), AND (EFT) transfers.
I will try to give a brief definition to the four common ways of transferring
money internationally, because this will help forward in this thesis.
1- SWIFT:
It is a correlation system between the banks, It is a centralized international
system for the implementation of electronic money transfer between
international banks electronically by adopting international standards and
through a specific code given for each bank called SWIFT CO .
2- FEDWIRE:
A system is run by the Federal Reserve wire network Known as the Federal
Reserve Bank (FED).

3- CHIPA:
It is a shorten for (Cleaning Inter Bank Payment System) Which is the
system of payment between banks in the Clearing House, where the
headquarters of this system in the city of New York, the US and consists of
twelve banks, Which is the system of payment between banks in the
Clearing House, where the headquarters of this system in the city of New
York, the US and consists of twelve banks.
4- EFT:
Electronic Funds Transfer (EFT) is an arrangement of exchanging cash
starting with one ledger straightforwardly then onto the next with no paper
cash evolving hands. A standout amongst the most generally utilized EFT
programs is Direct Deposit, in which finance is saved straight into a
representative's financial balance, despite the fact that EFT alludes to any
exchange of assets started through an electronic terminal, including
MasterCard, ATM, Fed wire and purpose of-offer (POS) exchanges. It is
utilized for both acknowledge exchanges, for example, finance installments,
and for charge exchanges, for example, contract installments.
The SWIFT and EFT transfer are most using around the world so we will
explain both of them widely.
Swift
It is a correlation system between the banks, It is a centralized international
system for the implementation of electronic money transfer between
international banks electronically by adopting international standards and
through a specific code given for each bank called SWIFT CO .swift
represents the Society for Worldwide Interbank Financial
Telecommunications. It is an informing system that money related
organizations use to safely transmit data and directions through an
institutionalized arrangement of codes. Swift allocates each budgetary
association an exceptional code that has either 8 characters or 11

characters. The code is reciprocally called the bank identifier code (BIC),
SWIFT code, SWIFT ID.
The SWIFT framework pre-dates endeavors to institutionalize worldwide
managing money transferring from the bank account through IBAN. It remains the
technique by which most of worldwide store transfer is made. One of the primary
purposes behind this is on the grounds that the SWIFT informing framework
enables banks to share a lot of monetary information. This information
incorporates the status of the record, charge and credit sums and subtleties
identified with the cash exchange. Banks regularly utilize the bank identifier code
(BIC) rather than the SWIFT code. Nevertheless, the two are effectively tradable;
both contain a blend of letters and numbers and are for the most part somewhere
in the range of 8 and 11 characters long.
Having the capacity to get to both of these identifiers is fundamental to
guaranteeing a fast and effective universal transfer. The identifier required by the
bank relies upon the bank being utilized, the beneficiary's bank and the nations in
which the transfer is started and got. Nevertheless, without either, the odds of
the transfer being finished effectively reduce extensively.
The differences between an IBAN and a SWIFT code
An international bank account number (IBAN) is a standard numbering
framework, created to distinguish bank account from around the globe. Banks in
Europe initially built up the framework to rearrange transactions including bank
account from different nations.
An IBAN did not supplant an account number; rather, this is an extra number,
with additional data, which helps in distinguishing proof for abroad installments.
The IBAN number comprises of a two-letter nation code, trailed by two check
digits, and up to thirty alphanumeric characters. These alphanumeric characters
are known as the basic bank account number (BBAN). It is up to the saving money
relationship of every nation to figure out which BBAN they will choose as the
standard for that nation's bank account. Right now, just European banks utilize

the IBAN despite the fact that the training is getting to be famous in different
nations.
In the register of nations, presently utilizing the IBAN framework, a few
precedents are as per the following:
1- Jordan: JOXXARAB0000000XXXXXXXXXXXX
2- Turkey: TRXXXXXXXXXXXXXXXXXXXXXXXXX
3- Kuwait: KWXXNBKXXXXXXXXXXXXXXXXXXX
After we define the IBAN and SWIFT code definitions, we conclude the main
differences as below
The primary distinction between an International Bank Account Number (IBAN)
and a Society for Worldwide Interbank Financial Telecommunication (SWIFT) code
lies in what they distinguish. A SWIFT code is utilized to recognize a particular
bank amid a universal transaction, though IBAN is utilized to distinguish an
individual account associated with the global transaction. Both assume a basic job
in the smooth running of the worldwide money related market.
Preceding the presentation of these ID techniques, there were no universally
perceived, institutionalized strategies for recognizing bank account. The data that
one nation used to distinguish the bank and individual account was not really
perceived by the accepting nation. Absence of standard practice implied there
was no real way to guarantee the data entered was right. Thus, installments could
hypothetically be made to the wrong individuals or associations. Additionally,
installments could be deferred while the distinguishing subtleties were affirmed.
Missed, deferred and mixed up installments made extra costs both sending and
accepting banks.

Rapid of execution framework
The SWIFT offers unquestionably the speediest method for worldwide supports
transfer. The messages are regularly sent from the candidate bank around the
same time as the application accommodation, to have a certification, in any case,
the application for remote supports settlement ought to be gotten by the bank,
regardless of whether on the web or in paper structure, until around 2 – 3 pm.
In the event that the application is submitted after that time, it is prepared on a
"best endeavors" premise, or on the accompanying business day. It must be had
as a primary concern, in any case, that the message sent by the candidate is only a
demand to credit recipient account and there is no assurance of when the
recipient account will be credited.
Therefore, the vast majority of the postpones that happen typically identify with
the day on which the recipient's account is credited by the getting bank and thus
are free on the sending bank.
Transfer that are bound to nations generally inside a similar time zone is normally
transmitted with an esteem date inside two days. Further goals can't sensibly be
required to process installments so rapidly because of time contrast and thus
other working twenty four hours.
Besides, on account of moves made in EUR or USD, it is likewise conceivable to
apply for two sorts of transfer need: critical (esteem date inside one day) and
express (esteem date in the equivalent day).
All together for the transfer to be finished rapidly, the accepting bank ought to
have an account at the head office of the sending bank. This implies the two
banks ought to be reporters of one another. When in doubt, significant banks
have direct account at the head workplaces of different banks and in this manner,
an inter-bank transfer can be made straightforwardly.
Nonetheless, if the getting bank does not have such a record, the wire exchange
must experience a mediator organization that can interface the sending and the
accepting banks.
It is here and there important to call upon a few go-between to transfer the
money to the last getting bank. This may take longer furthermore; every mediator

will regularly request a commission.
Extra SWIFT prerequisite is that every global transfer must be coordinated
through a bank set up in the nation, which is the backer of the cash being subject
of the transfer. Therefore, the task may take longer, contingent upon the money.
Security
SWIFT is a standout among-st the most secure global installment instruments.
Since neither the payer nor the recipient really has any physical contact with the
assets, the risk of imitation, extortion, or some other sort of illicit movement
making monetary mischief the gatherings of the transaction is essentially wiped
out. Furthermore, since the assets might be just transferred starting with one
account then onto the next, it is constantly conceivable to follow the recipient
through its bank. The correspondence organize and the workstations utilized by
SWIFT individuals are equipped with most recent security programming and thus
give an abnormal state of assurance of the gatherings' touchy information.
Attributable to this SWIFT system is portrayed by exceptionally perfect execution
and has the up time of 99.9%.
Effortlessness
SWIFT is a simple to utilize instrument. Elective methods for installment, for
example, narrative credits or narrative accumulations require both the payer and
the payee to plan noteworthy measures of papers, which is a very tedious and
oppressive activity. If there should be an occurrence of SWIFT, the deskwork is
totally wiped out for the recipient and diminished to a base for the candidate. The
payer needs to just present an application to his bank, regardless of whether in
paper structure or internet, showing important information, for example, the
recipient, recipient bank, sum and money of the exchange, need, and cost
alternative. The entire task may take as meager as 5-10 minutes. The recipient
just trusts that his record will be credited.

Accounting has been known since its emergence as the sole and sure source of
information that contributes mainly to the rationalization of the decisions of its
users. This position has been enhanced by the peculiarities and characteristics of
its development that have been associated with the development of peoples and
communities in a way that satisfies their information needs in terms of their
diversity and diversity Over time, the need for the services of accountants, who at
first thought that the accumulated experience was sufficient to meet the
requirements of the profession, increased with their efforts to control the
practice as accepted and accepted among the accounting communities. Which are
often influenced by the judgments and personal assessments of those who
prepare them to meet the needs of users, especially after the increase of their
keenness to obtain information with characteristics that can only be provided if
they are based on a scientific basis and theoretical structure that provides the
logical justification for And hence the inability of principles and rules to address
these requirements has a material impact on accounting research.
The shift of attention from the solution of the practical problems of accounting to
the search for its theoretical components reflects the seriousness of the need to
develop a general framework that provides a theoretical reference to assess the
safety, interpretation and prediction of the practices. , And many attempts have
been made, especially in the United States of America, where many bodies have
taken the task of defining a theoretical framework for accounting. Perhaps the
most important of these bodies is the authority and importance of the Financial
Accounting Standards Board, which was tasked with issuing standards of
accounting, General acceptance of the principles
To the international level, which led to the emergence of international
accounting, which is reflected in achieving a degree of compatibility between the
accounting practices of different countries, through the development of a set of
principles and standard accounting standards to be applicable in different
countries of the world.
Thus, the idea of international accounting standards came to light after the
establishment of the International Accounting Standards Committee (IASC) in

1973. The Commission began its activity with a limited entity in terms of
composition or objective, or in terms of authority to enforce the standards it
issues. Subsequent years, thanks to the relationships it established with various
international bodies and organizations, it was able to prove its presence in the
world arena as a first source of standards, especially after restructuring it
Accounting was not established as a separate branch of knowledge, but rather
arose from the actions taken in order to quantify economic events and overcome
the problem of forgetfulness that is associated with human nature. For many
centuries it has been sufficient for the accountant to practice his profession It has
principles and customary rules, adopted by the profession and settled by practice,
where environment conditions played an active role in the formation of these
principles and rules, and to keep some of them and abandon others.
On this basis, accounting at that time was unable to reach the goal it sought and
complete the role it had found. However, the rapid developments witnessed in
the last century showed the lack of a technical perspective of accounting in
achieving its goal and completing its role. On the theoretical basis and logical
justification for the use of accepted and accepted principles, and reflected these
efforts in an attempt to establish a stable structure of accounting theory and the
strengthening of scientific assets through
However, despite all these efforts, there is still no accounting theory
characterized by stability and inclusiveness, where many theories have emerged,
different according to the perceptions of the theoreticians and their
environments, and in the continuous quest to establish the theoretical structure
desired, The interest in the search for accounting theory has shifted to the search
for its standards. It is built on the basis of a conceptual framework and thus stems
from a logical relationship between them and the objectives, concepts and
principles of accounting.
Other beneficiaries of the information contained in the financial reports, as the
company seeks to attract contemporary new funds on a continuous basis from
multiple sources, and may be in the form of new contributions to capital or in the
form of loans.
It is natural that donors need the financial information to enable them to make
decisions related to investment or lending to these companies, and the expected

return on their investments, and there are other beneficiaries who have interests
in the company, such as suppliers, customers and employees, as well as
government agencies and banks.
To protect the rights of the Company's stakeholders, it is necessary to have
accounting standards that specify the methods to be followed to measure the
processes, events and circumstances that affect the Company's financial position
For the purpose of making a profit, and to deliver such appropriate and reliable
information to its beneficiaries.
That the accounting standards determine the proper basis and methods for
measuring, presenting and disclosing the elements of financial reports and the
impact of operations, events and circumstances on their financial position and
results of their operations. One of the most important elements of financial
reporting is the quality of the accounting information in which the IFRS is applied.
International Financial Reporting Standards (IFRS) are defined as standards,
models, principles or general guidance that guide practice in accounting, auditing
or auditing (IASB, 2012). In the past few years, the international standard setting
process has achieved remarkable success in achieving recognition And greater use
of IFRS (Humaidan, 2010), as they facilitate international operations and pricing,
as well as decisions on resource allocation,
(International Accounting Standards Board, 2012). On the other hand, the quality
of profits reflects the ability of current profits to provide a true picture of the
company's future and its ability to continue in the future, as it is an important
element in the financial statements and used in Rationalization of decision
making, and that the most important factors influencing the quality of profits are
the accounting standards which in turn prevent the management of the company
from manipulating accounting policies or making estimates that give the
management the option to affect the financial results, which manages profits.
(Hamdan, Mushta, Awad, 2012)
Reasons for the emergence of IFRSs

Interest in international financial reporting standards has begun in the last three
decades for many reasons including Saleh (2008 :)
1. Multiply commercial transactions between international business companies.
2. Multiplication of investments between different countries during the preceding
periods and their possible multiplication in subsequent periods, as globalization
and the demand for capital expected to grow in the major capital markets need to
be consistent with local accounting principles and international accounting
standards.
3 - the emergence of international accounting organizations, which requires the
involvement in different global markets and the existence of a unified accounting
language.
4. Protection of funds invested in foreign financial markets.
5 - the emergence of multinational companies, and the emergence of the largest
international financial markets, where multinational companies grew significantly
over the past years, so the need for unified accounting principles to measure and
assess the situation and performance.
6 The language difference among the peoples of the world led to the need to use
standardized synonyms for key accounting terminology to be used in the financial
statements.

Objectives of International Financial Reporting Standards
Among the most important objectives and motivations for the development of
IFRSs are the International Accounting Standards Board (2012) and Saleh (2008),
which can be summarized as follows:
1. Develop a single set of globally accepted, high-quality, understandable and
clearly defined financial reporting standards.
2. High-quality, transparent and comparable information to assist investors,
participants in international capital markets and other users of financial
information in economic decision-making.
3 - an effective way to reduce the gap between accounting methods and practices
applied in the accounting profession and provide companies the effort and cost to
prepare two sets of financial statements, one local and the other in accordance
with international standards.
4. Facilitates the procedures for listing foreign companies in the international
financial markets, which will significantly reduce the accounting measurement
differences that appear in the financial statements of these companies.
5. Harmonization of accounting standards at an international level will greatly
facilitate the work of the IRS in the countries in which they are located.
6. Improving management decisions in multinational companies. Unified data are
easy to understand for decision makers and decision makers and do not require
different interpretations depending on their sources of preparation.
7 - useful for developing countries that lack the existence of accounting standards
of their own, where it is difficult for those countries to develop their accounting
standards because of the limited physical and technical potential
International Financial Reporting Standards

In the past few years, the development of international accounting standards has
made a number of successes in achieving greater recognition and use of IFRS. In
2002, the European Union passed legislation requiring companies listed in Europe
to apply IFRS in their consolidated financial statements. The legislation became
effective in 2005 and is applied to more than 7,000 companies in 28 countries.
The adoption of IFRS in Europe means replacing national accounting standards
and requirements as a basis for preparing and presenting the collective financial
statements of listed companies in Europe. Many countries outside Europe are
also moving towards adoption of IFRS. In 2005 these standards have become
mandatory in many countries in South-East Asia, Central Asia, Latin America,
South Africa, the Middle East and the Caribbean. "4 In addition, National
standards that reflect IFRS, such as Australia and Hong Kong, and more than 70
countries have requested their listed companies to apply the International
Financial Reporting Standards in their preparation and presentation of the
financial statements in 2005. Jordan is one of the first Arab countries The most
recent exceptions to IFRSs are the United States, Japan and Canada, in accordance
with the standards of the size of their capital markets. Companies in these
countries are still required to follow local accounting standards.
Attempts to set standards at the international level began at the beginning of this
century. The first accounting conference was held in 1904 in St. Louis, USA under
the auspices of the Association of Chartered Accountants. The focus of the
conference was on the possibility of harmonizing accounting laws between
countries.
The third International Accounting Conference was held in New York where it
presented three major papers: continuous consumption, consumption and re-
evaluation, commercial or natural year. These conferences are held every five
years. These conferences, which were the result of increasing pressure from users
of the financial statements, resulted in shareholders, investors, creditors, trade
unions and federations
Standard No. 1 Presentation of Financial Statements:
Financial statements are among the most important sources of information on
which investors, lenders, financial analysts and other interested parties depend
on the company's decision making process. Most companies publish financial

statements through the annual, semi-annual or quarterly report. Additional
financial information may not be required by international accounting and
financial reporting standards ".
Scope of IFRS 10: The requirements of IAS 1 will apply to all "general purpose
financial statements", which are prepared and presented in accordance with
International Financial Reporting Standards. General purpose financial statements
are intended to meet the needs of users who are not in a position to request
reports tailored to their information needs. IAS 1 does not apply to interim
condensed financial statements prepared in accordance with IAS 34. IAS 30
"Disclosures in Financial Statements of Banks and Related Financial Institutions"
includes additional requirements for banks and similar financial institutions.
Objective of the Standard:
The objective of this Standard is to demonstrate the basis of presentation of the
financial statements for general purposes to ensure comparability with the
Company's financial statements for prior periods and the financial statements of
other companies. To achieve this objective, this Standard sets out the overall
considerations of the presentation of financial statements and guidance on their
structure and minimum requirements for the content of the financial statements.
Standard No. (2) Share-Based Payment:
This standard applies in cases where the company buys or receives goods and
services for payment on the basis of equity. Such goods may include: inventory,
property, plant and equipment, intangible assets and other non-financial assets.
Objective of the Standard:
• The objective of this Standard is to determine how the Company prepares
reports when it deals with share-based payments. In particular, this standard
requires that the company disclose in its profit, loss or financial position the
effects of transactions based on share-based payments, including transaction-
related expenses in which employees confer an option to subscribe to shares.
This standard requires the recognition of certain charges for goods or services
received by the company. The accounting records are either an obligation or an

increase in the Company's equity, depending on whether the transaction will be
settled in cash or through equity securities if the payment for the goods and
services is eligible to be recognized as an asset, the expense is recognized in the
statement of comprehensive income only once The asset is sold or depreciated.
Scope of the Standard:
The Company shall apply this Standard when all share-based payments are
recognized, including:
- Equity-based transactions in the form of equity instruments in which the
Company receives goods or services in exchange for the issuance of equity
instruments in the Company, including shares or share options.
- Share-based transactions denominated in cash, in which the Company obtains
goods or services by way of endurance against the supplier of such goods or
services for amounts calculated on the basis of the price (value) of the company's
shares or other equity.
- The transactions under which the Company purchases goods or services. The
terms of the contract provide for either the company or the supplier of such
goods or services the right to choose the settlement of the transaction by the
company either in cash or other assets or by issuing equity instruments in the
company.
Standard No. (3) Business Combinations:
Business combination or consolidation is the aggregation of separate companies
or business activities into a single entity for the financial statements. All
consolidation results in the acquisition of a single company, the acquirer, of
control over one or more of the acquired company, and if the company obtains
control over one or more companies When the company acquires a group of
assets or net assets that are not a business, it allocates the cost of this group of
identifiable individual assets and liabilities in the group based on their fair values.
T Date of acquisition. "12. A business combination may result in the relationship
of a parent company to a subsidiary and the acquirer is the parent company and
the acquiree is the subsidiary.

Objective of the Standard:
"The objective of this Standard is to determine the financial reports prepared by
the Company in carrying out the business combination and specifically determine
the necessity of accounting for all mergers using the acquisition method. The
acquirer recognizes the assets of the acquiree and its present and potential
liabilities that can be determined at fair value on Acquisitions also recognize
goodwill and are subsequently selected for impairment rather than amortization.
Scope of the Standard:
• The Company applies this Standard when accounting for business combinations
and does not apply this Standard to:
a. Business combinations whereby companies are grouped together to form a
joint venture.
B. Business merger involving a company or companies under joint control.
T. A business merger that includes two or more investment funds.
D. Business combinations whereby separate companies are merged to form a
company prepared for financial statements under a contract only without any
share of ownership.
Standard No. (4) Insurance Contracts:
IFRS 4 is the first IASB standard that deals with insurance contracts in terms of the
accounting treatment of insurance contract reporting and disclosures relating to
the determination and interpretation of amounts relating to insurance contracts.
"14 The proposals in the standard are very simple compared With the
comprehensive review of insurance accounting as envisaged by the Board This
standard was introduced to allow insurance companies to comply with the
adoption of international standards in Europe and elsewhere in 2005, and the
standard was designed to make limited improvements to accounting practices
and understand the aspects of Which includes the definition of a new insurance
contract, which will lead to the redefinition of many insurance policies as
investment contracts and subject to IAS 39, under which the insurance contract is
the contract under which an individual (The Insurer) shall agree to indemnify the

policyholder for a certain uncertain future occurrence (the insured event)
adversely affecting the holder of the document.
Objective of the Standard:
The objective of this Standard is to determine the financial reporting method for
insurance contracts by any company issuing such contracts. This standard
requires, in particular, the following 18:
a. A limited range of amendments to the accounting systems of insurance
companies in relation to insurance contracts.
B. Disclosure discloses and clarifies the amounts appearing in the insurance
company's financial statements arising from insurance contracts to assist users of
the financial statements in understanding, assessing, timing and uncertainties in
future cash flows from insurance contracts.
• Scope of the Standard
The Company shall apply this Standard to:
a. Insurance contracts (including reinsurance contracts) issued by them and
reinsurance contracts held by them.
B. Financial instruments that are issued and which have an optional form of
participation. This standard requires the disclosure of financial instruments,
including financial instruments containing such forms.
This standard does not address other aspects of an insurance company's
accounting treatment, such as the accounting treatment of financial assets held
by the insurance company and the obligations that it issues.
Standard No. (5): Non-current assets held for sale and discontinued operations:
As the non-current assets held for sale and the results of non-recurring operations
are non-recurring and have different characteristics from the Company's
operating activities, the separate presentation of the items in the financial
statements will enable the users of the financial statements to better assess and
assess the financial position, results of operations and future cash flows "17.
Discontinued operations under IAS 5 are those parts of a company that, under a
single plan, are:

a. Acting in its entirety, such as selling it in a single, detailed transaction or
transferring the ownership of the separate part to the shareholders of the
company. It is a separate main line of work or geographic area of operation that is
separate and operationally distinguishable and for reporting purposes ".
B . Such as the sale of the assets of the segment at a reduced price, the
settlement of its liabilities individually or its cancellation by renunciation.
Objective of the Standard:
The objective of this Standard is to determine the accounting for assets held for
sale and to account for the presentation and disclosure of discontinued
operations. The measurement provisions in this Standard do not apply to
deferred tax assets, assets arising from employee benefits, financial assets falling
within the scope of IAS 39 and non-current assets that are accounted for under
the fair value model in IAS 40 and contractual rights Under insurance contracts as
defined in IFRS 4.
Scope of the Standard:
The classification and presentation requirements set out in this Standard apply to
all recognized non-current assets and all asset classes of the Company to be
disposed of. The measurement requirements in this Standard apply to all
recognized non-current assets except for assets to be measured Therefore, the
Standard and assets classified as non-current in accordance with IFRS 1,
Presentation of Financial Statements are not reclassified as current assets until
the conditions for classification as assets held for sale in accordance with this
Standard are met for assets that are normally considered Which are not traded
and are acquired for resale, may not be classified as current assets unless they
meet the conditions required for classification as assets held for sale in
accordance with this standard.
Standard No. 6: Exploration and Evaluation of Mineral Resources:
Natural resources: oil fields, natural gas, phosphate mines, gold, coal, forests and
others. The most important feature of which is the need for large financial
investments, and requires a relatively long period of time from the start of work
to the start of extraction of sources. "19 This standard addresses the preparation

of financial reports for the exploration or evaluation of mineral resources
including minerals, oil, natural gas and similar non-renewable sources.
Objective of the Standard:
The objective of this Standard is to provide some initial guidance on the
accounting of these activities until the IASB performs a more comprehensive audit
of the accounting of extractive industries. More specifically, this international
standard aims to:
- Determination of expenditures to be included and excludes exploration and
evaluation assets.
- The assets of exploration and valuation are exempted from part of the hierarchy
in IAS 8 for the criteria that a company should use to formulate an accounting
policy if no IFRS applies specifically to a particular item.
- This standard requires the company that recognizes exploration and valuation
assets to assess these assets in respect of impairment in accordance with this
Standard and to measure impairment in accordance with IAS 8 Impairment of
Assets.
- This standard requires the availability of disclosures that identify and clarify the
amounts of financial statements that arise from the assessment and exploration
of mineral resources, including: the company's accounting policies for exploration
and valuation expenses, and the amounts of assets, liabilities, income, expenses
and operating and investment cash flows arising from the exploration and
evaluation of mineral resources.
a. "This standard does not include any requirements as to how to recognize the
costs of exploration and exploration of natural resources as an asset, but rather to
leave the Company to establish the accounting policy that is appropriate and in
the absence of a specific standard or interpretations on the subject, the Company
shall adopt an accounting policy that provides appropriate and reliable
information"
There are two generally accepted ways of oil and gas exploration companies
using accounting treatment for research costs: 22:
1. Successful Efforts Method (Sc) Successful Effort Method

2. Total Cost Method (Fc)
The method of successful efforts drawn up by US Accounting Standard 19 applies
to all exploration companies in the United States of America only for the costs of
prospecting for wells and successful mines.
a. The costs of ownership include the right to prospecting.
B. Exploration costs include costs for drilling wells or prospecting for natural
resources.
T . Development costs are the costs after exploration of natural resources (oil,
for example) but before production begins.
Unsuccessful wells or mines, whether empty or economically inefficient, are
treated by the standard as an indicative expense and the total cost method
entraps the costs of drilling for unsuccessful or successful wells or mines.
Objective of Standard 23:
The objective of this Standard is to identify financial reports for exploration and
evaluation of mineral resources. This standard specifically requires:
a. Specific improvements to current accounting applications with respect to
exploration and evaluation expenditures.
B. Companies that recognize exploration and evaluation assets shall be subject to
impairment tests in accordance with this Standard and any impairment in value in
accordance with IAS 36 Impairment of Assets.
C. "Disclosures that specify and explain the values in the Company's financial
statements arising from the exploration and evaluation of mineral resources and
to assist users of the financial statements in understanding the amounts, timing
and extent of confirmation of cash flows from any recognized exploration or
valuation assets".
Scope of the Standard:
The Company shall apply this Standard to exploration and evaluation expenses
incurred. This standard does not specify other aspects of accounting by the
company engaged in the exploration or evaluation of mining resources, nor does

the company apply this standard to expenses incurred prior to prospecting and
evaluation of mining resources such as expenses incurred before the company
obtains the legal rights to prospect in a specific area, Clearly demonstrate the
technical feasibility and commercial capacity to extract mining resources.
Standard No. (7): Financial Instruments: Disclosures
As a result of the increasing role of securities and trading in the stock market and
their impact is clear as well as the owner of the growing role and its associated
risks associated with them. An internationally accepted accounting standard was
required to clarify the mechanism governing the operations of financial
instruments. This is the IFRS 7 on disclosure in financial instruments. "This
Standard focuses on disclosing the element of importance (substance in the form)
of the amount of financial instruments on the statement of financial position and
income statement".
Objective of the Standard:
This standard aims to improve the understanding of the users of the financial
statements about the importance of the financial instruments for the financial
position, performance and cash flows of the financial instruments. This standard
includes the requirements for presentation of financial instruments, identifies the
information to be disclosed and applies the disclosure requirements on the
classification of financial instruments between financial assets, Equity, as well as
classification of related interest, dividends and losses 26.
Scope of the Standard:
IFRS 7 applies to financial instruments: a financial instrument is a contract that
gives rise to a financial asset of a company and a financial or other equity
instrument of another company. The term financial instruments includes equity
instruments, financial assets and financial liabilities , All three of which have
definitions that help companies identify which items should be accounted for as
financial instruments or instruments.
Standard No. 8: Reporting on Sectors:
The importance of international accounting standards and the accuracy and
transparency they provide when applied by companies, these standards provide a

great service to the beneficiaries of the work of these companies, which makes it
easier for investors to understand the financial statements and determine their
direction in investment. "This information also reflects the risks and rewards
associated with the company's operations by presenting the financial position and
performance by sector".
Objective of the Standard:
"This standard aims at determining the basis for reporting on financial
information by sector whether it is a geographical sector or a business sector to
reach the following:" 28:
- Improve the understanding of users of accounting information for the
company's previous performance.
- Improve the ability of users of accounting information to assess the risks and
returns of the company.
- Improve the ability to understand and understand all about the company as a
whole.
Scope of the Standard:
* This Standard applies to the entire set of financial statements issued in
accordance with International Accounting Standards. The complete set of
financial statements includes the financial position, statement of comprehensive
income, statement of changes in owners' equity, statement of cash flows and
explanatory notes.
* This Standard applies to a restricted company its equity instruments or
instruments for its public trading debt as well as to companies that are in the
process of recording debt instruments in the financial markets.

Introduction
The audit profession represents the critical work of the accountant, the auditor's
work begins when the accountant's work is completed, the auditor follows several
procedures: a set of steps that the auditor determines in advance in the form of
an audit program, the auditing profession is committed to applying generally
accepted international standards at the local and international levels. These
standards are issued by competent professional bodies and organizations Is
recognized internationally to ensure that the main objective of the audit is to
obtain an opinion on the financial statements by issuing a report at the end of the
audit.
the existence of professional standards for the audit profession use by the auditor
during each stage of The stages of conducting an audit do not exclude the
possibility that the financial statements will not be included On any case of fraud
or The errors are produced due to the Reasons for the auditor or accountant
during Doing their work within the institution, and This is what leads The auditor
may issue an inappropriate opinion about materially misstated financial
statements .
The criterion for the study and evaluation of the internal control system is one of
the most important professional standards for external auditing. Recently,
attention has been paid to the system of internal control and the expansion of its
concept, which has increased the need to study and evaluate it well. Perhaps one
of the main reasons that led to attention to the internal control system the
emergence of many types of enterprises and the multiplicity of operations and
financial events within the institution and the continued need for information as
well as the need to protect the assets of the company .

The main reason for the increased interest in the study and evaluation of the
internal control system is the shift in the method of auditing from the
comprehensive audit to the test audit. The latter relies on the use of statistical
sampling by selecting the appropriate vocabulary size for conducting the audit.
Total vocabulary, the checker justifies success The use of this technique greatly
affects the effectiveness of the internal control system and the results of its
evaluation .
The objective of the auditor is to examine and evaluate the internal control
system of the institution, to choose the size of the sample, to use certain
evidence, and other procedures of the audit process to verify the correctness of
the accounting information and to issue an opinion on the financial statements of
the institution. Contained in the financial statements? Especially that credibility
Or lack of credibility of this information is related to the nature of the auditor's
opinion, which plays a significant role in the quality and results of the audit
conducted by the institution .
Therefore, in the opinion of the auditor on the financial statements, we speak of a
new term in the field of auditing, which is the risk of auditing, which is intended to
the possibility of the auditor expressing an incorrect opinion in the financial
statements, because of his failure to detect errors in those lists, the auditor's
statement of a sound opinion in the financial statements contains significant and
significant distortions .
The risk of internal control is among the key components of audit risk, which
results from the ineffective internal control system adopted by the institution.
Although the auditor has relied on the evaluation results of the internal control
system, the problem of trust in accounting information remains, the internal
control system needs to be improved and more effective .
In order to improve the internal control system, the auditor should, according to
the modern version of the auditing standards, identify and evaluate the risk of
internal control at certain levels by relying on the study and evaluation of the
internal control system, especially for the listed institutions. Internal control risk
levels for each The external auditor may propose improvements to the audit
objective of the internal control system, and therefore the external auditor has a

significant role to play in evaluating the internal control system Assess the risk of
internal control and propose improvements .
Commodity purchase is one of the most important elements of the company's
financial statements , That it affects the outcome of the activity from the profits
or losses of any increase or deficiency that may result from the choice of a
particular method of evaluation of procurement, as well as the accuracy of
inventory quantities, which confirms the importance of disclosure by the auditor
at Issuing a report on the quantities owned by the Corporation either in its stores
or in the warehouses of others as well as the methods of assessment and
inventory .
In order to achieve the objective of auditing the procurement elements, the
auditor will obtain information on the adequacy of the internal control system of
the procurement cycle as a basis for determining the procedures, scope and
timing of its audit based on the evaluation results of this system in order to detect
all errors and deviations that may appear in the course elements Which pose risks
to the users of the financial statements, especially if the auditor has issued his
report without reservation on the procurement.
Study problem
Through the above we raise the following problem:
- What is the role of the external auditor in assessing the risk of control and
improving the internal control system for the cycle?
- How we can improve the purchasing audit cycle ?
- Procurement within the organization?
- What are the obstacles to make the audit more effective related to
procurement?
This main question is divided into the following sub-questions :
- What is the relationship between the risk of internal control and the
effectiveness of the internal control system of the procurement cycle?

- Can the internal control system give absolute assurance that there is no level of
internal control risk?
- can we judge that the internal control system of the procurement cycle is
ineffective as a result of the lack of professional experience of the external
auditor?
- How can the risk of internal control of the procurement cycle be reduced to the
acceptable level?
- What is the level of risk of internal control related to the size of the
improvements required for the internal control system of the procurement cycle?
Aim of study
- Identify the reality of the external audit profession and the extent of its
application to the economic institution .
- Extent of the external auditor's approval of the modern standards of the
external audit profession and the impact on providing honest information
to the project owners .
- Explain the importance of the internal control system in supporting the
profession of the external auditor and achieve good results .
- Identify the extent to which international standards of external auditing
have been achieved The extent to which they contribute to reducing the
incidence of fraud and errors and thus reduce the risk of auditing .
- Identify the good internal control system for the stock cycle and its impact
on the results of the audit process .
- Identify the external auditor's contribution to improving the internal
control system of the procurement cycle .

- Identify the role of the internal control system in influencing the risk of
internal control and other audit risks .
- Reduce internal control risk levels to an acceptable level .
- Achieve optimal audit performance by developing the auditor's skills as the
main element of the report's production under the surrounding risks .
- Work on the shortcomings to obtain a highly efficient report under the risk
of control .
Importance of the study
The external audit profession is one of the most interesting topics of the users of
the lists ,The financial institutions and the owners of the project, because these
lists provide them with the financial and accounting information they use in
making their administrative decision, and therefore the audit of the financial
statements of the institution is considered a mirror that reflects the validity of the
objectivity of its results at the end of the financial period .
The objective of the external audit was due to its effective and primary role to
serve the owners of the project and to ensure the protection of assets and the
optimal use of economic resources through physical and accounting protection
against the risks that may be exposed to the assets and property of the
establishment such as fraud and forgery and make mistakes.
The external audit standards are the general principles governing the audit of the
organization's accounts, using specific procedures to achieve the objectives to be
achieved from the audit. The development of the concepts of external auditing
and its standards, as well as the development of the concept of control system
and the emergence of what is known as risk Audit The increase in cases of fraud
and errors has led to a great interest in the external audit of the procurement
cycle and to highlight the role of the external auditor to identify the mistakes,
fraud and the assessment of the potential risks and not to evaluate them as the

strengths and weaknesses of the internal control system To the activities of the
procurement cycle and propose improvements to it .
The study also interested to let the researcher know the extent of the progress
achieved by the external audit profession In all its aspects and extent :
- The contribution of this development to putting an end to all excesses that
appear daily in the financial statements of the institution .
- The correlation between the credibility of the accounting information and the
effectiveness of the internal control system .
- To establish the relationship between external audit and internal audit of the
internal control system .
- Clarify the importance of relying on the internal control system by the auditor
when performing the audit .
- To highlight the evolution of the internal control system and the reasons that led
to this development .
- Identify the extent of the external auditor approval on the internal control
system to conduct the audit .
Auditing and reporting on the financial and accounting performance of the
institution is a key factor in the overall audit since the audit provides credibility in
the information that is reported or obtained.
This credibility is achieved by assessing the effectiveness of the internal control
system in order to plan the audit and collect evidence obtained from the auditors.
The auditor faces a lot of risk to collect data and information during the audit and
submit it on time to prepare the report according to the audit plan.

In this context, it is important to prepare this research so that it is a practical,
realistic study that examines the real risks faced by the auditor during the
preparation of the report, which should be highly efficient in achieving the
desired audit objectives in the public audit manual Strategic Audit.
Research hypothesis
Main hypothesis (H01) : there is no impact of internal control and external
auditing on the procurement cycle in the companies .
In view of the previous model , and to answer the questions of this future
study , the following hypothesis were developed :
- H01-1 : The risk level of internal control is directly related to the nature of
the internal control system of the procurement cycle .
- H01-2 : The internal control system cannot guarantee a zero risk of control,
due to certain restrictions outside the role of the external auditor .
-Right decisions
-No frauds
The internal control and
the external audit

- H01-3 : The external auditor's experience caused the risk of control to arise
despite the effectiveness of the internal control system of the procurement
cycle .
- H01-4 : Implementing the internal control system of the procurement cycle
by adhering to the external auditor's proposals reduces the risk of internal
control to an acceptable level .
- H01-5 : There is a direct correlation between the internal control risk level
and the volume of improvements required for the internal control system
of the procurement cycle at the level of each audit objective associated
with financial operations.
Conceptual and operational :
Purchasing : is the organized acquisition of goods and services on behalf of the
buying entity. Purchasing activities are needed to ensure that needed items are
obtained in a timely manner and at a reasonable cost. A purchasing department
is especially necessary in a manufacturing business, where large amounts of raw
materials and components must be obtained on a recurring basis.
Purchasing process
 Receive and verify purchase requisitions from around the company.
 Search for qualified suppliers that can fulfill the buyer's needs.
 Prepare and issue request for proposal (RFP) documents to qualified
suppliers.
 Evaluate supplier responses to RFPs, select a winner, and negotiate a
contract.

 Issue purchase orders to suppliers that authorize purchases, A master
purchase order may be issued when there are a number of deliveries
contemplated under a purchasing arrangement.
 Administer contracts that have a longer duration.
 Review open purchase orders to see if any should be closed.
Auditing : is the examination of an entity's accounting records, as well as the
physical inspection of its assets, If performed by a certified public accountant
(CPA), the CPA can express an opinion on the fairness of the entity's financial
statements .
Internal audit : is a dynamic profession involved in helping organizations
achieve their objectives, It is concerned with evaluating and improving the
effectiveness of risk management, control and governance processes in an
organization.

External auditor : performs an audit, in accordance with specific laws or rules,
of the financial statements of a company, government entity, other legal entity
or organization and is independent of the entity being audited, External
auditors normally address their reports to the shareholders of a corporation .
Limitations of the study :
The limitation for this study can be summarized into the following :
- Spatial boundaries : the study will be limited to Jordanian companies that
have a procurement department .
- Human boundaries : the study will be limited with the employees who
works at the procurement department as auditors .
- Temporal boundaries : the study will take place during the year of
2019/2020 .

Literature review :
Procurement management is one of the most important departments in
institution , and we can call it procurement process management, Hence it can
defined as a number of activities and processes that we do it for purchasing
process by the managers , In these days the production companies buying 70% of
their total sales , on the other hand the service companies are buying up to 40%
of their own sales and that make the procurement management more important
so it become need control , the procurement management has three main steps
the first is to plan for procurement then the continuously accurate follow up for
the purchasing process and finally perform procurement reports .
The procurement department in the institutions and organizations is the right arm
and it has many purposes we can arrange them below , first to ensure the
continuity of production operations by purchasing raw materials and all important
basic things otherwise the final product will delayed for the end users , to ensure
that we take the best offer and the lowest and cheapest price, the price shall
worth the value of product, looking for many suppliers to have several offers and
to ensure a lowest price and to have many suppliers standby if the previous
supplier face any problem or delayed, make with suppliers a good relationships,
cooperation and interconnection between all departments in institution because
each department has something related to the procurement department and
finally ensure that all purchasing operations are documented .
Procurement in the broad sense of this administrative activity, which exceeds the
limits of the procurement activity and simplified procedures, to include planning

and policy-making covering a wide range of complementary works associated
with this activity in terms of research and development that aims at appropriate
selection and sources of access, follow-up to ensure adequate delivery, Shipments
arriving to ensure that quantity and quality are matched with what is specified in
the purchase order, developing better means can increase the ability and
efficiency of procurement management to implement procurement policies and
coordination with other departments, and contact with senior management For
the purpose of facilitating operations and implementing programs relating to
procurement activity (GARY 1981) .
Elements of procurement process :
Procurement management includes many elements and the degree of importance
is different of that elements refers to each company .
1- Raw Materials : firstly you have to determine the needs to choose the right
material depends to your own standards and inform the supplier with all
information to avoid any misunderstanding.
2- Price: it almost the most important element for any purchase process
happened in several companies , but that’s not mean the lowest price is
best but we have to associate the price with good quality refers to
company standards .
3- Source or supplier : its evaluated for many thing like price, delivery ,
speed ,and the experience and the ability to catering the needs of the
company .
4- Quantity : the inventory ordered the quantity refers to the demand
forecasting and scheduling process, it can affect if there is an good offer
from one of the suppliers .
5- Time : it’s a main factor and it depends on the speed of the supplier to
provide the materials first Powell .

6- Quality : as previous the quality associated with price, for example there is
two products have the same results and the same all variables except that
the first one is more expensive but reach the solution faster, then the
decision refers to the company depends to their own chase and financial
policy to choose which product they have to purchase.
7- Transportation : to ensure that the ordered materials will delivered on
time, safe and not damaged and who must deliver it the seller or the
company itself .
8- Place of delivery : it always be the inventory of the company , to avoid high
expenses and waste time, the final destination must be correct.
9- Contracts : it should includes all the previous elements to catering all the
needs for the institution with lowest price, highest quality and maximum
speed .
Purchase functions :
The function of procurement management and its activities related to access to the
needs of materials, parts and equipment, etc., is one of the main factors influencing the
success of the organization and its ability to achieve its specific objectives (La Marsa and
the beauty of 2005).
The procurement function has become a vital part of the whole system of the
organization, and all the activities practiced by the regulator must be harmonized and
integrated in a single fabric, The administration has to fulfill its main task in exploiting
the organization's resources to achieve performance and profitability, (Idris, La Marsa
2005).
On the other hand, there must be a clear distinction between the concepts of the
procurement function and the buying department, since they may necessarily mean the
same, Purchasing as an activity function is common to all organizations while the

procurement section of another organization represents that organizational unit that
has the responsibility to promote each aspect Procurement The provision of
requirements to other units in the organization In any case, the effectiveness of the
procurement function when entrusted to a specialized central unit, which has a high
degree of expertise and practice to carry out the responsibilities involved (1991
DOBLER) .
This is seen as an important input in the performance of organizations, and that
the purchase line is a standard for measuring the performance of actual practices
of the purchasing business through comparing the plan with the level that was
implemented and the procurement depends on determining the current and
expected conditions of the internal and external variables affecting the work of
the organization (Tawfiq, 1999).
As a result of the increasing importance of purchasing management in the
modern era, and put it in the organizational structure with the rest of the
functional departments, and sometimes follow the senior management directly to
the impact on the performance of the Organization, the decisions of the purchase
management has a strategic dimension in terms of impact on the objectives and
strategies and plans of the long-term The management of procurement from this
concept is defined as "an administrative and operational decision-making system
related to procurement functions, followed up in order to achieve certain
objectives for procurement effectively and efficiently" (cf. and Chalabi 1997).
The responsibility of the procurement department to provide materials of the
appropriate quality, in the appropriate quantity, in a timely manner, at the right
price and from the appropriate source. Several studies have pointed to the failure
of some organizations to perform their work due to lack of interest in research on
the study of environment-friendly variables in the availability of appropriate
human resources .
And the lack of integration between the procurement department and the
integrated planning of the organization as a whole. Accordingly, in order for the
purchasing department to play its role and to interact with the other
departments, it must determine its goals related to the objectives of the
organization, which is to provide the required things in quantities, specifications
and quality according to the criteria agreed by the departments The organization
to contribute to the success and effectiveness of organizations, as well as the
need to carry out work in the management of procurement through the existence

of a number of departments and subdivisions on division of labor and tasks
among all employees from the purchase, planning, follow-up and research of
procurement, Trained, qualified and able to perform tasks efficiently and
effectively, which is a determining factor in the success of the procurement
process (Arfa Chalabi 1997).
Therefore, the role of procurement management shifts from simply providing
needs to organizations to participate in identifying those needs (Tawfiq, 1999).
stressed the importance of the procurement link to the organization's integrated
planning by focusing on study the circumstances of the purchasing environment
and the associated technological development expectations that may affect the
supply chains and the relationship with the suppliers related research, which may
also affect the importance of purchasing in the development of products and
selecting the appropriate suppliers through constant follow-up and identification
of existing suppliers and identify and evaluate the supply strategy so that the
organization can verify the adequacy of the conditions in the supply market,
supply planning and the importance of linking it to the total plan of the
organization, which requires the development of purchasing information systems
to interact with ongoing environmental and technological developments and
changes.
The availability of highly skilled human trained Perform procurement tasks
efficiently and effectively, Arfa and Chalabi (1997) dealt with the introduction of
the talk of procurement management, which focuses on the importance of
cooperation and integration Between procurement activity and other activities in
the organization to provide the necessary and required information for the design
and development Presenting existing products with the required quality and
introducing new products to compete locally and internationally through the shift
from purchasing to manufacturing to research and development.
Thus, three main stages of procurement should be focused
on:
1- The inquiry phase.
2- The testing phase.
3- The material acquisition and manufacturing phase.

In the inquiry stage, the purchasing department identifies the needs, desires and
price targets, and the availability and availability of materials for their alternatives
so as to provide the required information that serves the other executive
departments such as marketing and production to identify existing and new
products.
The Procurement Department participates in the testing phase to participate in
the design references and materials provided by the production and marketing
departments regarding the impact of supplier specifications and sources of
access, In the final stage, which is the acquisition and manufacture of materials,
the procurement department must identify the appropriate elements that
contribute to the impact on the success of the organization, such as working to
reduce the prices of suppliers, search for Mazi From potential suppliers and the
development of integrated data on current and potential suppliers base.
The trend toward specialization is the functional basis of the procurement system,
Therefore, individuals who work in the management of materials have a high
degree of culture and education, along with practical experience and good
knowledge of the commercial aspects. In practice, given the responsibilities and
tasks assigned to the purchasing staff, Graduates from the Colleges of Commerce
and Engineering are given a combination of business knowledge and technical
knowledge.
The experiences that the buyer has to know :
1. Comprehensive knowledge of the needs of the Organization.
2. Comprehensive knowledge of trends in prices in the markets.
3. Full knowledge of procurement policies and procedures.
4. Know the methods of testing and measurement of the required materials.
5. Familiarity with suppliers' operating programs and production methods.
6. Familiarity with the economic aspects of the country of the Organization.
Stages of purchasing process :
Purchase planning : The Procurement Department is responsible for the proper
and accurate planning of the various procurement activities to be implemented in
terms of the necessary policies and necessary procurement, the procedures

necessary for the practice of procurement work, the preparation of budget
estimates and time programs procurement.
Review specifications and characteristics of the materials to be purchased:
Procurement department officials and material review and procurement authority
authorities are an important policy area, as this should be clearly stated in the FAO
Policy Manual.
Supplier selection and contract award:
One of the basic tasks recognized by most organizations is to identify, select and
develop the base of suppliers who have the ability and willingness to deal with
the organization, satisfy their purchasing needs, follow up the sources of funding
and developments in their abilities, potentials and trends towards the
organizations that made the purchase.
The majority of organizations are developing policies that require their
procurement organs to spend significant time and effort in searching for potential
sources of supply, analyzing their capabilities and evaluating them in light of the
organization's needs and purchasing objectives.
Integration with other FAO departments:
It is important for the Procurement Department to have a deep understanding of
the key needs of the Organization's users so that these needs can be translated
into plans to secure timely, appropriate and quality access.
Responsibility for external communications:
In the light of the regulator's policy, most organizations formulate a number of
additional policies that give precise guidance in specific situations. Here the
procurator makes contact and paves the way for dialogue and participates in
meetings and discussions that may take place between FAO officials and suppliers
and affect the final performance of the procurement agreement.
Develop good relations with the supplier community:
The development of these relationships and ensuring continuity to the benefit
and satisfaction of the parties, and the availability of positive trends and

partnerships and cooperation with suppliers increases the desire of existing
suppliers and current prospects to enter In the organization's dealings, which is a
good customer for them, and the development of good relations with suppliers
contributes to overcome the problems of implementation of commitments.
Activities of the procurement departments :
First: Maintaining the basic documents represented as follows:
1- Purchase records .
2- Price records .
3- Supplier records .
4- Stock and usage records .
5- Specs files .
6- Catalogs .
Second: Conduct research, which includes:
1- Market study .
2- Study of materials .
3- Cost analysis .
4- Study the sources of procurement .
5- Check suppliers factories .
6- Development of alternatives to materials, sources and supply .
Third: Purchase includes:
1- Review purchase orders .
2- Obtaining and analyzing quotations .
3- Developing procurement and delivery programs .
4- Meet sales representatives .
5- Negotiation of contracts .
6- Issuing supply order .
7- Legal verification of the terms of the contract .
8- Follow-up of supply and receipts .
9- Review invoices .
10-Correspondence with suppliers and settlement procedures with them .

Manual Purchasing Management :
The manual Purchasing Manual contains written policies and procedures that
cover the internal activities of the procurement department, it defines the
relationship between procurement management and other departments in the
organization, and this procurement management manual is a policy-wide issue at
the organization level as a whole, Procurement activity on this basis, and then
undertake the process of formulating the procedures and methods to be followed
to implement that policy (Obeidat 1999).
Features of a Purchasing Department directory:
1- Support and strengthen the authority of the Department of Procurement
on the work carried out by.
2- The other departments of the Organization shall be provided with the
procurement function procedures and policies to be taken into
consideration when requesting the requirements .
3- help in training and upgrading the efficiency of procurement staff .
4- Help reduce procurement costs in a manner that ensures the delivery of
the procurement function efficiently and effectively.
Procurement procedures :
The procedure specifies in detail the actions to be performed in order to
accomplish a specific task in the light of the policies followed, The procedure
defines the method of completing the tasks or the work of the objects, The
procurement procedures seek two main purposes:

First : It represents the general framework and direction of actions needed to
accomplish the activities of the procurement department efficiently and
effectively .
Second : It represents the means or tool to operate information inputs from
outside the department to produce the information required for individuals in
other departments to perform their functions in a coordinated and timely
manner.
Purchase types :
1- Purchase with a view to selling :
Commercial establishments purchase goods for the purpose of resale, for the
purpose of profit. The success of this enterprise depends on its ability to sell the
items it has bought at a price that achieves a certain amount of profit to suit.
2- Purchase with a view to production:
The aim of this purchase is to convert the materials into finished goods for sale to
others at a profit price. The success of these establishments depends on their
ability to produce goods that can be sold at the right prices.
3- Purchase with a view to consumption:
Here are the items to be purchased by the various establishments for the purpose
of final consumption through which the production of multiple services, the
success depends on the ability of the enterprises to produce the services required
by individuals and other establishments at appropriate costs.
Centralized and decentralized procurement :
The centralization of the procurement : Is that all procurement management
disciplines are grouped in one place and are asked by one individual or one
department.

Decentralization of procurement : Means that other departments have the right
to intervene in the procurement process, choose sources of supply, direct contact
with suppliers, etc.
Procurement The centralized purchasing system is widely applied to many
advantages as a result of the specialization and high efficiency of the procurement
function, which helps to achieve many offers and thus achieve the best
performance.
The centralization of purchasing is the principle of specialization in administrative
work, which seeks to focus expertise in specific work that helps to increase the
efficiency of performance and increase profitability. Therefore, the modern
trends, most of the organizations, are centralized purchasing to take advantage of
this system.
Central advantages:
1- Avoid duplication of effort to purchase.
2- Obtain a quantity discount due to the collection of orders in one hand.
3- Saving in transport costs resulting from shipping large quantities and taking
advantage of the full load of means of transport.
4- To achieve effective control over the procurement work.
5- The possibility of providing specialists in the procurement works, especially
in developed countries and benefit from their expertise.
6- Sending less orders in larger quantities This reduces the number of times of
purchase and thus reduces the cost of purchase.
7- Achieving a lot of savings in transportation costs when consolidating
applications and delivery dates of materials .
8- Reduce the number of times to buy and get the items to be bought in
quantity, price and quality appropriate.
9- Simplifying the procedures and reducing the volume of written work while
reducing the number of records and files and focus in one place .
10- Concentrate the responsibility of purchasing in one place and one
administrator.
Central purchasing defects:

1- Slow in the procedure and implementation of the requests of branches,
which leads to create difficulties in terms of continuing work.
2- Reformed in industrial projects with multiple production units and spread
in many areas, as well as in multi-branch and geographically dispersed
commercial enterprises.
3- Difficulty faced by the Department of Procurement in the knowledge of all
the needs of different departments, where it is more likely that each
department can determine their needs accurately and determine the best
way to buy what it needs.
4- Centralization of procurement leads to the need for the availability of the
necessary competencies and expertise to assume the responsibility of the
procurement function, which is difficult to provide, especially in developing
countries.
Procurement Decentralization:
In some cases of large organizations with branches and operating in different
specialties and in different geographical areas, a centralized purchasing policy,
despite economic savings, will cause administrative and economic problems due
to the multidisciplinary required in the procurement department. This may cause
delays in the implementation of the various activities. Therefore, an adjustment
should be made to the procurement policy, in this case to suit the situation of the
multi-branch organization.
Advantages of decentralization:
1- Ensure that there is no interruption or breakdown of production programs
in the project to speed the response of production units in the
management of their needs.
2- Ensure the supply of requirements and supplies for each unit of production
according to the required specifications, This unit is more familiar with the
conditions of work and the nature of their needs.
3- The majority of the needs of the productive unit will be secured from the
local market and this will strengthen the bonds of friendship with the local
sources.

4- Ease of coordination with the users of the use of a procurement
department in the Department of Productivity Unit enables direct contact
between the procurement representatives and the users of the use, which
helps to accurately understand the needs.
5- Avoid repetition and duplication in the work of writing and record keeping
and this phenomenon is difficult to escape from in the case of centralization
due to the constant contact between the factory and the central
management of the purchase.
6- Assist in providing expertise and knowledge of the sub - departments in
the management of materials When the decentralized approach is
generated by individuals in the sub - departments and main expertise in the
purchase process. As for the shortcomings of decentralization, it is the
opposite of the advantages of centralization.
Centralization and decentralization of procurement:
This is the so-called decentralized procurement and centralization of control, the
percentage of industrial enterprises that have large-scale factories scattered in
geographical regions Decentralization of procurement is necessary and vital
regardless of product types (similar or different) but with the concentration of
control in the center the head office is represented in the general manager of the
procurement department. In this type of organization, the head office purchases
the equipments and the operating tasks in large quantities and distributes them
to the subsidiary units, He keeps this power for himself continuously, The head
office conducts the technical and economic studies and researches related to the
purchase, By combining centralized and decentralized procurement it achieves
both advantages and avoids their disadvantages at the same time.
Scientific assets of the purchase process:
From the general management perspective, the scientific assets of the
procurement process can be summarized as obligations Five or sometimes
expressed by the Organization's five rights, namely, access to the organization's
needs of raw materials, parts, equipment and other tasks :
• The right Quality .

• The right Quantity .
• The right Price .
• At the right Time .
• The right Supplier .
• Some add a sixth general objective, which is the right service .
Which is necessary to achieve the exploitation of materials and scientifically, the
purchasing authority is difficult to achieve these goals at the same time and with
the same level of efficiency, there may be a conflict between some of these goals
for one time and the same Level of implementation.
Introduction to auditing
The word auditing come from” Audire” and it’s a Latin word means listening, the
auditing derive its importance from the human needs to verify the validity of the
accounting data on which decisions are based, the audit has a relationship with
accounting department but it’s an independent specialization, the auditor job is
to collect evidence to make sure that all data is correct and if there is any
mistakes.
Before 5000 years ago the audit was found in Egypt, China and Mesopotamia ,
these empires felt the importance of verifying their financial wealth, especially
when the amount of grain that is within reach has been dealt with, as the saying
goes “The people who suffer from hunger are the people who are restless” , Thus
was the beginning of censorship by controlling the food supply that keeps these
civilizations in power, The resource audit of the Egyptians was important enough
that the actual observation of bringing the grain into grain silos was requested
and they demanded that the grain import receipts be certified, But the audit did
not develop into the profession currently known until the industrial revolution
occurs, The examiners began examining and documenting financial information at
that period, In order to do that, they checked the written records and compared
the entries entered with the documentary evidence and that is the general
auditing.

In the 19th century ,The railway sector supported the development of internal
audit, as the railway includes points of sale of cards and collect cash in a number
of sites spread in large areas, With multiple cash collection points, there were a
number of opportunities for theft and mismanagement, which in turn increased
the need to document correct receipt by point managers in the large geographic
range, External audit was not appropriate to deal with these concerns, so internal
audit became the means used to achieve a more appropriate method of
accounting, Since that time the audit has continued to evolve and grow as an
important part of the business culture to ensure that resources are properly
monitored and managed.
This article points, through a fundamentals introduction as to give illumination to
a superior comprehension of what interior review definition, targets, capacities
and phases of its improvement mean. It is likewise uncovered a concise history
about the rise and improvement of inner review and administrative structure, I
likewise plan to connecting hypothesis and practice by reference to archives
utilized both the proof considered and particularly those readied by the
inspectors regarding the execution review and its utilization in the review report.
The differences between the internal and external auditors :
External auditor Internal auditor
Independent contractor An employee at the same company
Independent of the administration and
the board of directors in reality and
thought
It is independent of audited events but
must be ready to respond to the needs
and wishes of all managers
The records of the financial statements
are reviewed periodically, often once a
year
Activities are constantly reviewed
is interested in preventing and
detecting fraud in general, but he is
directly concerned about the impact
on the financial statements
Directly concerned with the
prevention of fraud in any way within
any activity being reviewed
Focuses on the accuracy and
comprehension of historical events as
Focuses on future events by assessing
controls designed to ensure the

they are in the financial statements achievement of goals and objectives
Serves other parties that need reliable
financial information
Serves the needs of the company
The internal audit
It is an independent and objective activity that aims to provide assurance services
and various consulting activities to improve and add value to the operations in the
institution, It helps the institution achieve its objectives through a systematic
method of evaluating and improving the effectiveness of risk management,
control and governance.
Types of internal audit
- Financial internal audit : it’s the internal audit that ensure the commitment
following up all the transactions and activities ,that happened within the
institution, which related to financial transactions of sales and purchases,
this type aimed to ensure that the financial statements are typically
consitant with the assets and liabilities , which helps to identify the financial
errors then try to solve it .
- Managerial internal audit : it’s the internal audit that lean on the internal
managerial control concept with all individual operations done by
employees , whether computerized or paper-backed , this type of audit
lead to identify the administrative errors during and after the preparation
of reports, files, financial statements and other administrative documents .
The importance of internal audit
The importance of internal audit has increased with the expansion of the activities
that done at instituation, and their continues efforts to develop, evaluate, and
improve their productivity, also the services that provided by the internal audit
department functions represented in :
Protective services: ensure that there is a total protection for all assets, and
protect the plans and policies from deviation in application.
Evaluating services : measuring and evaluating the internal auditing system
affectivity .

Development services : make some development and improvement of systems
by Providing suggestions in the establishment.
Objectives of internal audit
The objective of the internal audit is to provide an accurate information, specially
the quality of the contents obtain, Supervisory summary correspond to the laws,
policies, and regulations of the institutions , use the internal audit summaries in
various financial, economic and other activities, provide accurate and correct
information about the establishment to protect the property, monitor all
component of the internal activities in the establishment and make sure that
there is no more fraud occurred .
1- Regular or compliance audit :
Its target which is to set up in the event that they met certain criteria
characterized by a capable specialist, these criteria are normally explicit elements
or divisions of exercises, for example:
- Consistence with the board choices or approaches.
- Consistence system manuals identifying with the direct of tasks.
- Consistence with contract terms.
- Legitimate consistence and other outer confinements (such expense review
can be considered a consistence review).
- Guaranteeing exhaustively, reality and exactness of data.
- Security resources.
- Guaranteeing an environment of good moral thing and so on.
2- Audit of effectiveness or performance:
In this kind of review criteria are not settled, they change each time contingent
upon the thinking of reviewers that see what are the best, compelling, solid and
convenient arrangements based on rising inward and outer patterned.
Successful review can be seen from two edges, the executives review and
operational review.

3- Monetary review depends in gathering review proof about the substance's
fiscal reports and utilize these examples to survey their consistence with
preset criteria. In Romanian enactment the articulation „financial review" is
utilized, in the 7th Directive of the European Community Council in 1984 is
utilized in a similar usual meaning the expression "lawful control"
(legitimate or statutory review).
The audit functions
Universal examining norms characterize the inward review movement evaluation
as an element sorted out as an administration to it.
Interior review capacities are among others:
- Examination.
- Assessment.
- Checking the sufficiency and adequacy of inward control.
Internal audit survey the element's exercises and administrations, essentially to
make strides them, It prompts strict strategies and methods built up by that
substance and it isn't constrained to monetary issues.
The internal audit is :
- A lasting audit of the element's financial action .
- A free evaluation action for the financial element's administration, by
inspecting the money related tasks, financial and different administrations
on all.
- An assessment of similarity appraisal undertakings and financial records,
reports, resources, capital and results.
- An authentication or accreditation of money related financial archives .
Internal audit is a component of the element's control structure, It ought not be
mistaken for the element's inward control structure, the two offices are isolated
and free, not being in the relationship of subordination.

Those in charge of doing internal auditing, coordination of work or duties, the
marking of inward review reports must be of internal inspecting.
Inward evaluators are lasting workers of the substance and are specifically
capable to the element's administration or the General Assembly of Shareholders.
Internal Auditor: prompt, help, suggest, however not choose, his commitment is
to give a way to enhance the control that every director has on his exercises and
those in coordination to accomplish objectives.
Code of Ethics
The Code of Ethics expresses the standards and desires administering the conduct
of people and associations in the direct of internal audit, it portrays the base
necessities for lead, and conduct desires instead of explicit exercises.
Introduction to the code of ethics
The motivation behind The Institute's Code of Ethics is to advance a moral culture
in the calling of internal audit.
Internal audit is a independent, target confirmation, objective and counseling
action intended to include esteem and enhance an association's tasks, it enables
an association to achieve its destinations by bringing a deliberate, taught way to
deal with assess and enhance the viability of hazard the board, control and
administration forms.
A code of morals is essential and fitting for the calling of internal inspecting,
established for what it's worth on the trust put in its target affirmation about
goovernance, risk management, and control.
The Institute's Code of Ethics stretches out past the Definition of Internal
Auditing to incorporate two fundamental segments:
- Principles that are applicable to the calling and routine with regards to
inner inspecting.

- Rules of Conduct that depict conduct standards expected of inside
reviewers. These standards are a guide to deciphering the Principles into
useful applications and are expected to manage the moral direct of inside
evaluators.
The internal auditors alludes to Institute individuals, beneficiaries of or possibility
for IIA proficient accreditations, and the individuals who perform interior review
benefits inside the Definition of Internal Auditing.
Principles of code ethics
Internal auditorrs are relied upon to apply and maintain the accompanying
standards:
Respectability : The respectability of internal auditors sets up trust and
subsequently gives the premise to dependence on their judgment.
Objectivity : internal auditors display the most abnormal amount of expert
objectivity in social occasion, assessing, and imparting data about the action or
procedure being analyzed, Inside evaluators make a reasonable appraisal of all
the significant conditions and are not unduly affected by their own advantages or
by others in shaping decisions.
Privacy : internal auditors regard the esteem and responsibility for they get and
don't reveal data without suitable specialist except if there is a lawful or expert
commitment to do as such.
Competency : internal auditors apply the learning, aptitudes, and experience
required in the execution of internal audit administrations.
The audit and how it affects the purchasing process
Amid the fundamental overview, the auditor should pick up an comprehension of
how acquiring happens inside an association, purchasing is a noteworthy use of
any business and basic to an organizations achievement.

Auditor aims in looking into procurement to:
1- Buying capacity is performed as per the board's arrangements and
methods.
2- Buying is performed in a compelling, effective, and practical way.
3- Buying capacity ensures the best advantages of the organization in getting
the most elevated quality item at the least cost .
4- Buying capacity guarantees ceaseless supply of required materials .
5- Methods are set up to approve that what has been requested is gotten
before money related repayment.
6- No undue impact by sellers to get request, or no bias appeared to sellers
except if justified through item quality and cost.
Understanding procurement Systems
The auditor ought to comprehend the buying framework and its relationship to
alternate parts of the obtainment framework.
Any computerized buying frameworks ought to be audited so as to distinguish
any potential new or novel control shortcoming that may have come about
because of the utilization of obsolete innovation.
To comprehend the obtaining framework, an Auditor should …
1- Survey the office arrangements and methodology including any
irreconcilable situation or ethical quality arrangements .
2- Demand an obtaining stroll through from a senior part in the acquiring
division.
3- Set up a PC framework flowchart and audit it with the information
preparing venture pioneer.

4- Distinguish the different kinds of acquiring exchanges and record the
stream of those exchanges all through the association.