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Objective Branch Selection with Multi Criteria Decision Making in Internal Audit Planning

Year 2023, , 381 - 400, 30.06.2023
https://doi.org/10.47097/piar.1268740

Abstract

In recent years, expectations from internal audit have changed with globalization, diversification of risks, technological innovations and developments, international standards and legal regulations. Within the framework of both legal regulations and international internal audit standards, it has emerged that internal audit activities should integrate a risk-based perspective into internal audit processes rather than the traditional perspective. While this situation affects all internal audit units operating in different sectors, it has affected the internal audit units of banks, which are mandatory units for banks in Turkey, relatively more. The first stage of the risk-based perspective in internal audit is the planning of the areas to be audited through the risk assessments carried out objectively by the internal audit units. However, there are some difficulties as there is no method for objective risk assessment in practice. For this purpose, in this study, an application has been proposed on how a bank's internal audit unit can objectively prioritize the branches that should be audited, based on an imaginary example. In the proposed application, criteria for the branches to be prioritized in the annual internal audit plan were defined and scored, their weights were calculated with the standard deviation method, and the prioritization rankings for the branches were carried out using the ARAS method.

References

  • Alizadeh, N. (2011). The criteria of implementing and employing the effectiveness of internal auditing. Australian Journal of Basic and Applied Sciences, 5(12), 955-962.
  • e Costa, C. A. B., Carnero, M. C. & Oliveira, M. D. (2012). A multi-criteria model for auditing a predictive maintenance programme. European Journal of Operational Research, 217(2), 381-393.
  • Bradbury, M. E. & Rouse, P. (2002). An application of data envelopment analysis to the evaluation of audit risk. Abacus 38(2), 263–279.
  • Banking Regulation and Supervision Agency (BRSA) (2014). Bankaların iç sistemleri ve içsel sermaye yeterliliği değerlendirme süreci hakkında yönetmelik. URL: https://www.mevzuat.gov.tr/File/GeneratePdf?mevzuatNo=19864&mevzuatTur=KurumVeKurulusYonetmeligi&mevzuatTertip=5. (Accessed: 01.03.2023).
  • Banking Regulation and Supervision Agency (BRSA) (2015). 5411 sayılı bankacılık kanunu URL: https://www.mevzuat.gov.tr/mevzuatmetin/1.5.5411.pdf. (Accessed: 10.03.2023).
  • Celayir, D. (2021). İç denetim ve risk değerlendirme. İstanbul: Hiperyayın.
  • Chen, H. C. & Yang, C. H. (2019). Applying a multiple criteria decision-making approach to establishing green marketing audit criteria. Journal of Cleaner Production, 210, 256–265.
  • Dadelo, S., Z. Turskis, E. K. Zavadskas & R. Dadeliene (2012). Multiple criteria assessment of elite security personal on the basis of ARAS and expert methods. Economic Computation and Economic Cybernetics Studies and Research, 46(4), 65-88.
  • Filho, G., Martins, V. W., Rampasso, I., Quelhas, O., Souza Pinto, J., Silva, D., Osiro, L. & Anholon, R. (2021). Critical analysis of internal audit processes carried out by Brazilian companies. TQM Journal, 34(6), 2016-2029.
  • Gökoğlan, K. (2022). İç denetim etkinliğinin belirleyicileri üzerine bir araştırma. Ordu Üniversitesi Sosyal Bilimler Enstitüsü Sosyal Bilimler Araştırmaları Dergisi, 12(2), 949-966.
  • Institute of Internal Auditors (IIA) (2016). Uluslararası mesleki uygulama çerçevesi - Uygulama rehberleri. Türkiye İç Denetim Enstitüsü.
  • Institute of Internal Auditors (IIA) (2019). Mesleki uygulama çerçevesi. Türkiye İç Denetim Enstitüsü Derneği Yayınları.
  • Kai, R., Yusheng, K., Ntarmah, A. H. & Ti, C. (2022). Constructing internal audit quality evaluation index: Evidence from listed companies in Jiangsu province, China. Heliyon, 8(9), 1-15.
  • Karabasevic, D., Paunkovic, J. & Stanujkic, D. (2016). Ranking of companies according to the indicators of corporate social responsibility based on SWARA and ARAS methods. Serbian Journal of Management, 11(1), 43-53.
  • Karakaya, G. (2021). Investigation of the duty of public internal auditors with AHP method in Turkey. In: Aksoy, T. & Hacioglu, U. (eds). Auditing Ecosystem and Strategic Accounting in the Digital Era. Contributions to Finance and Accounting. Springer, Cham.
  • Krüger, H. A. & Hattingh, J. M. (2006). A combined AHP-GP model to allocate internal auditing time to projects. Orion, 22(1), 59-76.
  • Menekse, A. & Camgoz-Akdag, H. (2022). Internal audit planning using spherical fuzzy ELECTRE. Applied Soft Computing, 114, 1-19.
  • Mizrahi, S. & Ness-Weisman, I. (2007). Evaluating the effectiveness of auditing in local municipalities using analytic hierarchy process (AHP): A general model and the Israeli example. International Journal of Auditing, 11(3), 187-210.
  • Modirkia, P., Makrani, K. F. & Fazeli, N. (2023). Investigating and ranking of factors affecting the quality of internal audit performance. Accounting Knowledge & Management Auditing, 12(47), 259-274.
  • Ös, E. (2010). Denetim evreninin belirlenmesinde alternatif bir yöntem: Analitik hiyerarşi prosesi. Denetişim, (4), 8-16.
  • Petridis, K., Drogalas, G. & Zografidou, E. (2019). Internal auditor selection using a TOPSIS/ non-linear programming model. Annals of Operational Research., 216, 513-539.
  • Prasad, R. (2019). Selection of internal safety auditors in an Indian construction organization based on the SWARA and ARAS methods. Journal of Occupational Health and Epidemiology, 8(3), 134–140.
  • Ridley, J. (2008). Cutting edge internal auditing. England: JohnWiley & Sons.
  • Sarıkale, H. & Kandemir, T. (2022). Bankalarda uzaktan ve yerinde şube denetimlerinin AHP yöntemiyle değerlendirilmesi. Karamanoğlu Mehmetbey Üniversitesi Sosyal ve Ekonomik Araştırmalar Dergisi, 24(42), 125-143.
  • Seol, I. & Sarkis, J. (2005), A multi‐attribute model for internal auditor selection. Managerial Auditing Journal, 20(8), 876-892. 
  • Shimada, Y., Nakashima, K. & Nose, T. (2007). A study on information systems auditing processes using AHP: An approach to audit engineering. Journal of Japan Industrial Management Association, 57(6), 511-519.
  • Shinde, A. (2017). Selecting enterprise applications for performance audit using analytical hierarchy process (AHP). Computer Measurement Group Journal, 3, 1-6.
  • Shiue, W., Liu, J. Y. & Li, Z. Y. (2021). Strategic multiple criteria group decision-making model for continuous auditing system. Journal of Multi-Criteria Decision Analysis, 28(5-6), 269-282.
  • Sueyoshi, T., Shang, J. & Chiang, W. C. (2009). A decision support framework for internal audit prioritization in a rental car company: A combined use between DEA and AHP. European Journal of Operational Research, 199(1), 219-231.
  • Türkiye Bankalar Birliği (TBB) (2000). Bankalarda iç denetim ve bankacılık gözetim otoritesinin iç ve dış denetçiler ile ilişkisi. İstanbul: TBB Kütüphanesi.
  • Turskis, Z. & Zavadskas, E.K. (2010). A new fuzzy additive ratio assessment method (ARAS-F) case study: The analysis of fuzzy multiple criteria in order to select the logistic centers location. Transport, 25(4), 423-432.
  • Wang, X., Zhao, T. & Chang, C. T. (2021). An integrated FAHP-MCGP approach to project selection and resource allocation in risk-based internal audit planning: A case study, Computers & Industrial Engineering, 152, 1-17.
  • Zardari, N. H., Ahmed, K., Shirazi, S. M. & Yusop, Z. B. (2015). Weighting methods and their effects on multi-criteria decision making model outcomes in water. Springer.
  • Zhao, B. & Li, N. (2013). Internal audit outsourcing content decision-making based on AHP. Journal of Audit & Economics, 1(1), 35-38.

İç Denetim Planlamasında Çok Kriterli Karar Verme ile Objektif Şube Seçimi

Year 2023, , 381 - 400, 30.06.2023
https://doi.org/10.47097/piar.1268740

Abstract

Son yıllarda küreselleşme, risklerin çeşitlenmesi, teknolojik yenilikler ve gelişmeler, uluslararası standartlar ve yasal düzenlemeler ile birlikte iç denetimden beklentiler de farklılaşmıştır. Gerek yasal düzenlemeler gerekse uluslararası iç denetim standartları çerçevesinde iç denetim faaliyetlerinin geleneksel bakış açısından ziyade risk odaklı bakış açısını iç denetim süreçlerine entegre etmeleri gerekliliği ortaya çıkmıştır. Bu durum farklı sektörlerde faaliyet gösteren tüm iç denetim birimlerinin tamamını etkilemekle birlikte ülkemizde bankalar açısından oluşturulması zorunlu birimler olan banka iç denetim birimlerini görece daha fazla etkilemiştir. İç denetimde risk bazlı bakış açısının birinci aşaması iç denetim birimlerince objektif olarak gerçekleştirilen risk değerlendirmeleri ile denetlenecek alanların planlanmasıdır. Ancak, uygulamada risk değerlendirmesine yönelik objektif bir yöntem bulunmadığından bazı zorluklar yaşanmaktadır. Bu amaçla, bu çalışmada hayali olarak oluşturulan bir örnek üzerinden bir bankanın iç denetim biriminin denetlemesi gereken şubeleri objektif olarak nasıl önceliklendireceğine ilişkin bir uygulama önerisinde bulunulmuştur. Önerilen uygulamada yıllık iç denetim planında önceliklendirilecek şubelere yönelik kriterler tanımlanmış ve notlandırılmış, ağırlıkları standart sapma yöntemiyle hesaplanmış ve şubelere yönelik önceliklendirme sıralamaları ARAS yöntemiyle gerçekleştirilmiştir.

References

  • Alizadeh, N. (2011). The criteria of implementing and employing the effectiveness of internal auditing. Australian Journal of Basic and Applied Sciences, 5(12), 955-962.
  • e Costa, C. A. B., Carnero, M. C. & Oliveira, M. D. (2012). A multi-criteria model for auditing a predictive maintenance programme. European Journal of Operational Research, 217(2), 381-393.
  • Bradbury, M. E. & Rouse, P. (2002). An application of data envelopment analysis to the evaluation of audit risk. Abacus 38(2), 263–279.
  • Banking Regulation and Supervision Agency (BRSA) (2014). Bankaların iç sistemleri ve içsel sermaye yeterliliği değerlendirme süreci hakkında yönetmelik. URL: https://www.mevzuat.gov.tr/File/GeneratePdf?mevzuatNo=19864&mevzuatTur=KurumVeKurulusYonetmeligi&mevzuatTertip=5. (Accessed: 01.03.2023).
  • Banking Regulation and Supervision Agency (BRSA) (2015). 5411 sayılı bankacılık kanunu URL: https://www.mevzuat.gov.tr/mevzuatmetin/1.5.5411.pdf. (Accessed: 10.03.2023).
  • Celayir, D. (2021). İç denetim ve risk değerlendirme. İstanbul: Hiperyayın.
  • Chen, H. C. & Yang, C. H. (2019). Applying a multiple criteria decision-making approach to establishing green marketing audit criteria. Journal of Cleaner Production, 210, 256–265.
  • Dadelo, S., Z. Turskis, E. K. Zavadskas & R. Dadeliene (2012). Multiple criteria assessment of elite security personal on the basis of ARAS and expert methods. Economic Computation and Economic Cybernetics Studies and Research, 46(4), 65-88.
  • Filho, G., Martins, V. W., Rampasso, I., Quelhas, O., Souza Pinto, J., Silva, D., Osiro, L. & Anholon, R. (2021). Critical analysis of internal audit processes carried out by Brazilian companies. TQM Journal, 34(6), 2016-2029.
  • Gökoğlan, K. (2022). İç denetim etkinliğinin belirleyicileri üzerine bir araştırma. Ordu Üniversitesi Sosyal Bilimler Enstitüsü Sosyal Bilimler Araştırmaları Dergisi, 12(2), 949-966.
  • Institute of Internal Auditors (IIA) (2016). Uluslararası mesleki uygulama çerçevesi - Uygulama rehberleri. Türkiye İç Denetim Enstitüsü.
  • Institute of Internal Auditors (IIA) (2019). Mesleki uygulama çerçevesi. Türkiye İç Denetim Enstitüsü Derneği Yayınları.
  • Kai, R., Yusheng, K., Ntarmah, A. H. & Ti, C. (2022). Constructing internal audit quality evaluation index: Evidence from listed companies in Jiangsu province, China. Heliyon, 8(9), 1-15.
  • Karabasevic, D., Paunkovic, J. & Stanujkic, D. (2016). Ranking of companies according to the indicators of corporate social responsibility based on SWARA and ARAS methods. Serbian Journal of Management, 11(1), 43-53.
  • Karakaya, G. (2021). Investigation of the duty of public internal auditors with AHP method in Turkey. In: Aksoy, T. & Hacioglu, U. (eds). Auditing Ecosystem and Strategic Accounting in the Digital Era. Contributions to Finance and Accounting. Springer, Cham.
  • Krüger, H. A. & Hattingh, J. M. (2006). A combined AHP-GP model to allocate internal auditing time to projects. Orion, 22(1), 59-76.
  • Menekse, A. & Camgoz-Akdag, H. (2022). Internal audit planning using spherical fuzzy ELECTRE. Applied Soft Computing, 114, 1-19.
  • Mizrahi, S. & Ness-Weisman, I. (2007). Evaluating the effectiveness of auditing in local municipalities using analytic hierarchy process (AHP): A general model and the Israeli example. International Journal of Auditing, 11(3), 187-210.
  • Modirkia, P., Makrani, K. F. & Fazeli, N. (2023). Investigating and ranking of factors affecting the quality of internal audit performance. Accounting Knowledge & Management Auditing, 12(47), 259-274.
  • Ös, E. (2010). Denetim evreninin belirlenmesinde alternatif bir yöntem: Analitik hiyerarşi prosesi. Denetişim, (4), 8-16.
  • Petridis, K., Drogalas, G. & Zografidou, E. (2019). Internal auditor selection using a TOPSIS/ non-linear programming model. Annals of Operational Research., 216, 513-539.
  • Prasad, R. (2019). Selection of internal safety auditors in an Indian construction organization based on the SWARA and ARAS methods. Journal of Occupational Health and Epidemiology, 8(3), 134–140.
  • Ridley, J. (2008). Cutting edge internal auditing. England: JohnWiley & Sons.
  • Sarıkale, H. & Kandemir, T. (2022). Bankalarda uzaktan ve yerinde şube denetimlerinin AHP yöntemiyle değerlendirilmesi. Karamanoğlu Mehmetbey Üniversitesi Sosyal ve Ekonomik Araştırmalar Dergisi, 24(42), 125-143.
  • Seol, I. & Sarkis, J. (2005), A multi‐attribute model for internal auditor selection. Managerial Auditing Journal, 20(8), 876-892. 
  • Shimada, Y., Nakashima, K. & Nose, T. (2007). A study on information systems auditing processes using AHP: An approach to audit engineering. Journal of Japan Industrial Management Association, 57(6), 511-519.
  • Shinde, A. (2017). Selecting enterprise applications for performance audit using analytical hierarchy process (AHP). Computer Measurement Group Journal, 3, 1-6.
  • Shiue, W., Liu, J. Y. & Li, Z. Y. (2021). Strategic multiple criteria group decision-making model for continuous auditing system. Journal of Multi-Criteria Decision Analysis, 28(5-6), 269-282.
  • Sueyoshi, T., Shang, J. & Chiang, W. C. (2009). A decision support framework for internal audit prioritization in a rental car company: A combined use between DEA and AHP. European Journal of Operational Research, 199(1), 219-231.
  • Türkiye Bankalar Birliği (TBB) (2000). Bankalarda iç denetim ve bankacılık gözetim otoritesinin iç ve dış denetçiler ile ilişkisi. İstanbul: TBB Kütüphanesi.
  • Turskis, Z. & Zavadskas, E.K. (2010). A new fuzzy additive ratio assessment method (ARAS-F) case study: The analysis of fuzzy multiple criteria in order to select the logistic centers location. Transport, 25(4), 423-432.
  • Wang, X., Zhao, T. & Chang, C. T. (2021). An integrated FAHP-MCGP approach to project selection and resource allocation in risk-based internal audit planning: A case study, Computers & Industrial Engineering, 152, 1-17.
  • Zardari, N. H., Ahmed, K., Shirazi, S. M. & Yusop, Z. B. (2015). Weighting methods and their effects on multi-criteria decision making model outcomes in water. Springer.
  • Zhao, B. & Li, N. (2013). Internal audit outsourcing content decision-making based on AHP. Journal of Audit & Economics, 1(1), 35-38.
There are 34 citations in total.

Details

Primary Language English
Subjects Business Administration
Journal Section Research Articles
Authors

Kaan Ramazan Çakalı 0000-0003-4186-2291

Gürol Baloğlu 0000-0003-1093-2664

Publication Date June 30, 2023
Published in Issue Year 2023

Cite

APA Çakalı, K. R., & Baloğlu, G. (2023). Objective Branch Selection with Multi Criteria Decision Making in Internal Audit Planning. Pamukkale Üniversitesi İşletme Araştırmaları Dergisi, 10(2), 381-400. https://doi.org/10.47097/piar.1268740

Pamukkale Üniversitesi İşletme Araştırmaları Dergisinde yayınlanmış makalelerin telif hakları Creative Commons Atıf-Gayriticari 4.0 Uluslararası Lisansı (CC BY-NC-ND 4.0) kapsamındadır.

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