{"id":1603,"date":"2023-09-19T02:51:59","date_gmt":"2023-09-19T02:51:59","guid":{"rendered":"https:\/\/mudabicara.com\/en\/?p=1603"},"modified":"2023-09-19T02:51:59","modified_gmt":"2023-09-19T02:51:59","slug":"what-is-a-deficiency-definition-types-and-relationship-with-audit-findings","status":"publish","type":"post","link":"https:\/\/mudabicara.com\/en\/what-is-a-deficiency-definition-types-and-relationship-with-audit-findings\/","title":{"rendered":"What is a Deficiency? Definition, Types and Relationship with Audit Findings"},"content":{"rendered":"

Business companies in the current era of\u00a0 <\/span><\/span>the Internet of Things\u00a0<\/span><\/span><\/i> seem to be very strict. <\/span>In fact, it is so strict that various unhealthy company operating practices often emerge because management is forced to make profits that are difficult to achieve.<\/span><\/span><\/p>\n

When management cannot achieve the targets set at the General Meeting of Shareholders (GMS), company management can be replaced at any time. <\/span>Conflicts of interest between management in charge of running the company and shareholders who own the company are often the cause of problems within the company.<\/span><\/span><\/p>\n

For example, management may submit a report that the company’s achievements and performance are very good to shareholders in order to secure its position. <\/span>Although, for example, the facts on the ground are actually the opposite.<\/span><\/span><\/p>\n

Apart from that, the basic human nature of never feeling satisfied can also be a problem. <\/span>This can also lead to various frauds in company management, such as embezzlement, mark ups, fraud, and so on.<\/span><\/span><\/p>\n

Therefore, a company must carry out a management audit to detect various errors, fraud or inaccuracies in company management or known as deficiencies. <\/span>So, in this article we will discuss the meaning of deficiencies, their types, and their relationship to audit findings. <\/span>Listen to the end, OK?<\/span><\/span><\/p>\n

<\/span>Understanding Deficiency<\/span><\/span><\/b><\/h2>\n

Basically, deficiencies are shortcomings, usually found in company management. <\/span>The company carries out a management audit to correct these deficiencies which will improve management performance.<\/span><\/span><\/p>\n

Therefore, deficiencies can also be considered as one of the points of concern of management audits. <\/span>A comprehensive management audit will be able to find and correct the causes of deficiencies so that the auditor can achieve audit objectives. <\/span>As explained by Hery SEMSI. <\/span>CRP. <\/span>RSA. <\/span>CFRM. <\/span>CIISA in his book\u00a0 <\/span><\/span>Accounting and Auditing Terms.\u00a0<\/span><\/span><\/b>In this book you can find various important terms or concepts regarding the basics of accounting as well as general knowledge in the field of auditing.<\/span><\/span><\/p>\n

Auditors can identify deficiencies by looking at standard performance measurements that show weaknesses in organizational units or individuals. <\/span>In addition, Cooper and Backer (1993) say that deficiencies can also occur due to an organization’s unpreparedness to face changes that occur in the business environment. <\/span>For example, human resources are less prepared to face changes in consumer shopping habits from offline to online.<\/span><\/span><\/p>\n

On the other hand, Tagiman (1997) says deficiencies can also be related to assets. <\/span>This means that the auditor needs to review the various methods or tools used to protect these assets and, if necessary, verify the existence of assets owned by the company.<\/span><\/span><\/p>\n

Apart from that, auditors must also see how company assets are protected from various types of losses such as theft or illegal activities with appropriate and appropriate inspection procedures.<\/span><\/span><\/p>\n

In short, audits are carried out to improve management systems, such as preventing losses, avoiding incorrect payments, improving operational efficiency, or others. <\/span>In the process, auditors are required to find practices that occur in order to determine which organizational unit or individual is the cause of the deficiency.<\/span><\/span><\/p>\n

Even so, Herbert (1979) reminded that auditors also need to provide recognition for work results that produce good effects if they exist. <\/span>So the results of the management audit will be objective and clear.<\/span><\/span><\/p>\n

Read Also :\u00a0<\/strong><\/span>What is Debit and Credit in Accounting and Banking? Definition and Differences<\/a><\/strong><\/span><\/pre>\n
<\/span>Types of Deficiencies<\/span><\/span><\/b><\/h2>\n
Deficiencies in an organization can be divided into two, namely deficiencies in the system and deficiencies in operations. <\/span>For more details, see the brief explanation below:<\/span><\/span><\/p>\n
<\/span>1. Deficiencies in the system<\/span><\/span><\/b><\/h3>\n
As mentioned previously, deficiency is the same as deficiency. <\/span>This means that deficiencies in the system can be interpreted briefly as deficiencies in a company’s system. <\/span>Several things in the company system that can experience deficiencies include:<\/span><\/span><\/p>\n
<\/span>a. <\/span>Internal control system<\/span><\/span><\/b><\/h4>\n
In general, internal control can be interpreted as part of each system that is used as a guideline and operational implementation procedure for an organization. <\/span>Meanwhile, the internal control system is a collection of internal controls that are interconnected, integrated and mutually support each other.<\/span><\/span><\/p>\n
In a corporate environment, internal control is a process established by the board of directors and management as a whole with the aim of providing confidence that the company will achieve its goals.<\/span><\/span><\/p>\n
This goal is divided into three categories, namely the effectiveness and efficiency of company operations; <\/span>compliance with applicable procedures and regulations; <\/span>and reliable financial reporting.<\/span><\/span><\/p>\n
So, a company’s internal control is said to be effective if these three categories of company goals can be achieved under the conditions:<\/span><\/span><\/p>\n
    \n
  1. Directors and management gain an understanding of the direction of achieving company goals which includes achieving goals or targets, performance, level of profitability, and also security of company resources (assets).<\/span><\/span><\/li>\n
  2. The regulations and procedures that have been established by the company are strictly adhered to and complied with as they should.<\/span><\/span><\/li>\n
  3. The published financial reports are reliable and trustworthy and include interim and segment reports.<\/span><\/span><\/li>\n<\/ol>\n
    This means that if any one condition is not achieved, it can be said that the company’s internal control system is deficient. <\/span>For example:<\/span><\/span><\/p>\n