Independent audit risk analysis and preventive measuresAbstractPrevious studies have utilized a variety of approaches to determine appropriate criteria to evaluate the effectiveness of the internal audit function. For example, considered the degree of compliance with standards as one of the factors which affects internal audit performance. A 1988research report from the IIA-United Kingdom（IIA-UK ，1988）focused on theperceptions of both senior managementand external auditors of the value of the internal audit function. The study identified the difficulty ofmeasuring the value of services provided as a major obstacle to such anevaluation. Profitability, cost standards and the effectiveness of resource utilization were identified as measures of the value of services.In its recommendations it highlighted the need to ensure that audit workcomplies with SPPIA.In the US, Albrecht et al.(1988)studied the roles and benefits of the internal audit function and developed a framework for the purpose ofevaluating internal audit effectiveness. They found that there were four areas that the directors of internal audit departments could develop toenhance effectiveness: an appropriate corporate environment, top management support, high quality internal audit staff and high qualityinternal audit work. The authors stressed that management and auditors should recognize the internal audit function as a value-adding functionto the organization. In the UK, Ridley and D’Silva (1997) identified theimportance of complying with professional standards as the most important contributor to the internal audit function adding value.Key wordsAudit,Risk, Internal Control, Auditing Compliance with SPPIAA number of studies have focused on the SPPIA standard concerned with independence.Clark et al.(1981) found that the independence of the internal audit department and the level of authority to which internalaudit staff report were the two most important criteria influencing the objectivity of their work. Plumlee (1985) focused on potential threats to internal auditor objectivity, particularly whether participation inthe design of an internal control system influenced judgements as to thequality and effectiveness of that system. Plumlee found that such design involvement produced bias that could ultimately threaten objectivity.The relationship between the internal audit function and company management more generally is clearly an important factor in determininginternal auditor objectivity. Harrell et al. (1989) suggested that perceptions of the views and desires of management could influence theactivities and judgement of internal auditors. Also, they found thatinternal auditors who were membersof the IIA were less likely to succumb to such pressure.Ponemon (1991) examined the question of whether or notinternal auditors will report sensitive issues uncovered during the course of their work. He concluded that the three factors affectinginternal auditor objectivity were their social position in theorganization, their relationship with management and the existence of a communication channel to report wrongdoing.The independence of internal audit departmentsCommentators and standard setters identify independence as being a key attribute of the internal audit department. From the questionnaire responses 60 (77%) of the internal audit departments stated that therewas a written document defining the purpose, authority and responsibilityof the department. In nearly all instances where there was such a document the terms of reference of the internal audit department had been agreedby senior management (93%), the document identified the role of theinternal audit department in the organization, and its rights of access to individuals, records and assets (97%), and the document set out thescope of internal auditing (90%). Respondents were asked to assess the extent to which the relevant document was consistent with the specificrequirements of SPPIA. In those departments where such a document existed27 (45%) claimed full compliance with SPPIA, 23 (38%) considered their document to be partially consistent with SPPIA. In more than one-thirdof the departments surveyed either no such document existed ( n=18, 23%) or the respondent was not aware whether or not the document complied with SPPIA ( n=10, 13%).SPPIAsuggests that independence is enhanced whenthe organization ’s board of directors concurs with the appointment or removal of the director of the internal audit department, and that the director of the internalaudit department is responsible to an individual of suitable senioritywithin the organization. It is noticeable that in 47 companies (60%) their responsibilities with regard to appointment, removal and the receipt ofreports lay with non-senior management, normally a general manager. SPPIA recommendsthat the director of the internal audit de。