Internal audit education
and co-operative
education: a South
African perspective
Houdini Fourie
Senior Lecturer: Internal Auditing
Nelson Mandela Metropolitan University
1
Introduction
The education and preparation of quality internal auditors is a
challenge to all universities in South Africa. Employers who seek
to employ entry level internal auditors expect a certain preexisting standard of knowledge and skills from their freshmen
employees. When recruiting, employers all ask to interview the
"best students" in the class. Universities then select these
students primarily on their academic records which, because of
the accounting and auditing focus of the courses, are almost
exclusively based on these competencies. Apart from the
technical, accountancy-based skills that are taught at
universities, employers also seek certain character traits and
behavioural skills of their internal auditor candidates.
As early as 1989, in a survey of audit directors (Chief Audit
Executives), 91% of Chief Audit Executives (CAEs) regarded
communication skills, and 84% considered oral communication
skills as essential skills of any internal auditor.
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Internal audit skills requirements
were asked to select from, (and the percentage of respondents
placing these in their top five most important skills), includes the
following:
• Data collection and analysis (15.2%);
• Financial analysis (35.9%);
• Forensic skills/fraud awareness (43.2%);
• Identify types of controls (30.8%);
• Interviewing (37.7%);
• Negotiating skills (68.7%)
• ISO/quality knowledge (18.9%);
• Research skills (20.8%);
• Risk analysis (74.9%);
• Statistical sampling (6.5%);
• Total quality management (33.4%);
• Understanding the business (78.3%); and
• Use of information technology (28.3%).
During the survey, each CAE was requested to select five
technical skills for each staff level that he/she perceived as being
the most important. The staff levels were divided into CAE, Audit
manager, Audit senior/supervisor, and Audit staff.
The 2006 global Common Body of Knowledge (CBOK) survey
conducted by the Institute of Internal Auditors Research
Foundation (IIARF) revealed that CAEs perceive negotiating skills
(68.7%) and interviewing skills (37.7%) as two of the most
important skills that internal auditors on any levels should
possess in order to do their work. The list of skills that the CAEs
The five most important technical skills, according to the
perceptions of the CAEs, are illustrated in Figure 1 below. It is
interesting to note that according to the perceptions of the CAEs,
financial analysis skills (35.9%) are not amongst the five most
important technical skills that internal auditors should possess.
The CBOK survey also tested the perceptions of the CAEs in
regard to the most important behavioural skills that internal
auditors should possess. The list of behavioural skills that CAEs
were requested to select from (and again with percentages
supporting these), includes the following:
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Cofidentiality (68.7%);
Faclitating (34.3%);
Goernance and ethics sensitivity (54.8%);
Interpersonal skills (49%);
Leadership (75.1%);
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Objectivity (58.2%);
Relationship building (44.7%);
Staff management (34.8%);
Team building (32.9%);
Team player (15.2%);
Work well with all levels of management (58.3%); and
Based on the illustrations in figures 1 and 2 above, it can be
deduced that internal auditors on all levels are required to have
more than mere cognitive technical accounting based skills in
order to effectively fulfil their duties as internal auditors. This
deduction is supported by the comprehensive definition of
internal auditing issued by the IIA (Inc.) during 1999. The
definition of internal auditing is as follows:
"Internal auditing is an independent, objective assurance and
consulting activity designed to add value and improve an
organization's operations. It helps an organization accomplish its
objectives by bringing a systematic, disciplined approach to
evaluate and improve the effectiveness of risk management,
control and governance."
The fact that the internal auditor can render a consulting service,
improve the organisation's operations and improve the
effectiveness of risk management, control and governance,
indicates that an internal auditor needs the skills (technical and
behavioural) to enable him/her to effectively fulfil the internal
auditor responsibility. The five behavioural skills perceived by
the CAEs to be most important for internal auditors to possess,
and that could improve or ensure a person's ability to effectively
provide consulting services to a client, are (as indicated above):
leadership, confidentiality, [ability to] work well with all levels of
management, objectivity, and governance and ethics sensitivity.
Apart from the comprehensive definition explaining the
responsibilities of an internal auditor, the IIA has issued The
Standards for the Professional Practice of Internal Auditing
(Standards), to provide guidance in identifying acceptable
"behaviour" appropriate to internal auditors. The Standards are
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•
Working independently (18.9%).
Figure 2 below indicates the five most desirable behavioural
skills selected from the list provided as perceived by the by
CAEs.
divided into three sets of closely related standards. The three
sets are attribute standards, performance standards and
implementation standards.
The attribute standards (AS) provide guidance on the purpose,
authority and responsibility of the internal audit activity (IAA)
and the individual internal auditor. Specific attributes that are
included and emphasised in the attribute standards are:
• Independence and objectivity (AS 1100);
• Proficiency and due professional care (AS 1200); and
• Quality assurance and improvement program
(AS 1300).
The performance standards (PS) provide guidance in terms of
which internal auditors perform their internal audit
engagements. Overall, the performance standards (PS 2000)
refer to the effective management of the IAA. These standards
are further divided into:
• Nature of work (PS2100);
• Engagement planning (PS2200);
• Performing the engagement (PS2300);
• Communicating results (PS2400);
• Monitoring progress (PS2500); and
• Resolution of management's acceptance of risks
(PS2600).
The results from the CBOK 2006 survey revealed a high
percentage of respondents who indicated that they use the IIA
Standards. Figure 3 below illustrates the perceptions of all the
CBOK 2006 respondents (by staff level) on the use of the IIA
Standards by their internal audit activities (IAAs).
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Although the CBOK 2006 study revealed a high percentage
usage of the Standards, a substantially lower percentage of full
compliance was also revealed. This lower percentage of
compliance could be attributable to the internal auditors lacking
the required skills.
The content of the curricula of internal audit educational
programmes in South Africa is lacking in the area of teaching of
behavioural skills to aspirant internal auditors, the skills that the
internal audit profession assumes as standard. This shortcoming
in the curricula of internal audit educational programmes could
be one of the reasons why internal auditors do not generally
possess adequate behavioural skills.
3
Internal audit education in South Africa
In South Africa there are currently three universities teaching
internal auditing through programmes that are endorsed by the
IIA Inc. as Internal Audit Education Partners (IAEP). These
universities are University of Pretoria (UP), a centre of
excellence, the highest IAEP level; the University of South Africa
(UNISA), an IAEP Partner, the second level; and Tshwane
University of Technology (TUT), an entry level institution. The
IIA Inc. has requirements that a university must comply with in
order to be accorded IAEP status. None of these IAEP schools
applies a fully integrated co-operative education philosophy, but
some components of co-operative education (advisory
committees and internships) are being complied with by the
three IAEPs. One of the requirements of being an IAEP school is
that it has an advisory board (committee), a requirement which
the three South African IAEPs do comply with.
As mentioned above the IIA has specific programme
requirements in order for universities to be accorded IAEP
status. The core requirements, according to the IIA, are:
• Internal audit curriculum;
• Faculty support - an IAEP coordinator for the university
should be appointed;
• Departmental and College/University support - The
university is required to indicate, in writing, their support to
the IAEP and the university must prove that they
have
sufficient capacity to teach internal auditing;
• Accreditation/international reputation - The university is
required to indicate in the application whether they have
an appropriate accreditation or quality assurance
programme in place (Council on Higher Education in South
Africa);
• IIA Chapter/Affiliate support - The university is required to
obtain written confirmation from the local affiliate (IIA (SA))
that the internal audit programme or IAEP will be supported
by them;
• A university must have an advisory board;
• Students must be members of the local Chapter or affiliate.
In South Africa the arrangement is that one student from
each IAEP will serve as a co-opted member of the Pretoria
Region of the IIA (SA); and
• Students should have opportunities to take part in fulltime or part-time internship programmes.
The latter three requirements are elements of co-operative
education. Thus the three IAEPs in South Africa do comply with
a limited number of the elements of co-operative education.
Apart from the limited integration of co-operative education
into the internal auditing educational programmes taught at
universities in South Africa, universities teaching internal
auditing in South Africa do not teach adequate communication
Summer
skills to aspirant internal auditors. Communication skills are an
integral part of behavioural skills.
4
Co-operative education
Co-operative education includes the cooperation of three
parties. In the first instance, the student, secondly the employer
or host organisation, and thirdly the academic institution
providing the teaching of cognitive skills. The Co-operative
Education Association, Incorporated (CEA) adopted the
following definition for co-operative education:
"Co-operative education is a structured educational strategy
integrating classroom studies with learning through productive
work experiences in a field related to a student's academic or
career goals. It provides progressive experiences in integrating
theory and practice. Co-operative education is a partnership
among students, educational institutions and employers, with
specific responsibilities for each party."
Co-operative education, as defined above, is a well known
concept among universities (including former Technikons) in
South Africa. All Universities of Technology (UoT) currently have
co-operative education departments or directorates dedicated
to assist academic departments with co-operative education.
Comprehensive universities such as University of Johannesburg
(UJ), Nelson Mandela Metropolitan University (NMMU) and
UNISA, integrate their teaching and co-operative education
programmes. Some programmes (for example Engineering,
Medicine and Food technology) offered by traditional
universities including the University of Pretoria (UP), Wits
University, University of Kwazulu-Natal, US, et cetera, also have
work integrated learning (WIL) as part of their qualification
requirements.
The South African Society for Co-operative Education (SASCE),
a non-profit organisation, helps interested parties to integrate
academic learning and experiential learning. The official
mission of SASCE is as follows:
"The mission of SASCE is to foster the practice of co-operative
education and facilitate the participation therein of all
stakeholders in Southern Africa through promotional and
educational activities. SASCE will strive to fulfil its mission by:
• promoting co-operative education as an effective
educational philosophy;
• encouraging and promoting co-operative education
research, development and expertise;
• establishing (or encouraging the establishment of)
information resources on co-operative education, and
publicizing the availability of these resources;
• creating opportunities for dialogue between, and giving
direction to, practitioners of co-operative
education at
regional, national and international levels; and
• recognising excellence in the practice of co-operative
education by organisations as well as individuals."
SASCE highlights several advantages of co-operative education.
These advantages are published on the Website of SASCE as
follows:
"Advantages to participating employers
"Co-operative education students enhance professional
recruitment:
• Many employers regard Co-operative Education as a
significant component of their recruitment strategy as
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there is consistent evidence that participation in Cooperative Education leads to higher acceptance ratios
and a better recruitment yield;
Employers and students are provided with an opportunity
to determine, in a non-threatening situation,whether there
is a suitable "match" for permanent employment;
Co-operative Education provides special opportunities to
select, train and develop the educationally disadvantaged;
and
Experiential learning offers an ideal opportunity to assess
the potential of employees for further development and
advancement.
"Other key advantages to employers include:
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Labour cost savings as students generally receive lower
payment than academically qualified but inexperienced
new recruits;
Improved staff efficiency as students can be used to relieve
higher paid permanent staff of routine tasks, to handle peak
workloads and to carry out special projects;
The employment of students can increase the motivation of
permanent staff with whom they work; and
Co-operative Education strengthens the relationship
between employers and educational institutions.
Advantages include cross-pollination and improved careerorientated education as employers contribute to curriculum
design and educational staff gain access to work
experience.
"Advantages to professional bodies, trade unions,
vocational associations and institutes include:
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Participation in Co-operative Education affords
professional, vocational and trade bodies a direct input in
the strategies, curriculum design, planning and control of
individual programmes aimed at developing their future
members. Appropriateness, competence, recognition of
experiential learning and professionalism can thus be
ensured; and
Co-operative Education helps in career decisionmaking.
Students can test career expectations against the realities
of the workplace and make choices based on
job
experience in a chosen field, thereby reducing incorrect
career choices.
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placement;
By using the experiential learning as an extended
classroom/laboratory, institutions have access to the latest
and most sophisticated equipment;
Real job experience for students rather than c l a s s r o o m
simulations;
Constant input from the employer sector keeps curricula
up-to-date with the changes in industry;
Co-operative Education enhances the retention of
students; and
SASCE provides a forum for orientating educational,
business, labour and government institutions in a mutually
beneficial partnership."
Work integrated learning (WIL)
WIL programmes combine on-campus classroom-based
learning with off-campus authentic practical work experience.
WIL programmes are a fast growing area of interest globally.
Academics have different views as to desirable outcomes in
terms of competencies expected of aspirant internal auditors. A
challenge for multi-party WIL programmes is that educational
stakeholders or participants (e.g., staff working in tertiary
education provider institutions and employers) hold different
views as to desirable graduate outcomes. Theoretical classroombased instruction will not equip learners with the required skills,
and work-integrated learning could be an option in the
development of the behavioural competencies of graduates.
6
Conclusion
Internal audit education in South Africa provides aspirant or
entry level internal auditors with sufficient relevant technical
knowledge of the internal audit profession. The dearth in
behavioural skills that internal auditors possess is an indication
that more needs to be done to provide them with the nontechnical behavioural skills that are required in order for them
to do their work. According to the benefits of co-operative
education discussed in this article, it can be argued that the
integration of CE would enable tertiary institutions that teach
internal auditing as a formal educational programme, to more
fully equip aspirant internal auditors with the skills that are
required by the internal audit profession. Universities in South
Africa that teach internal auditing should consider revising the
curriculum to include or more fully integrate CE as part of their
formal internal audit educational programmes.
"Advantages to institutions (Universities,
Technikons (UoTs), Colleges) include:
•
More efficient use of facilities by alternating students
between the classroom and the experiential learning
RGA
Registered Government Auditor
The highest qualification in government auditing
Managed by the Southern African Institute of Government Auditors (SAIGA)
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