I. Title
Internal Audit as an effective tool for proper budget execution and contribution to the continuous improvement and competitiveness of a state health entity.
II. Graduate Name
III. Place where the thesis will be developed.
LIMA PERU.
IV. Project description.
4.1. Bibliographic Background.
a) Campos Guevara Cesar Enrique
The author indicates that the State institutions suffer from a chronic illness, these being the budgetary limitations for the attention of their requirements, reason why most of the time this has to be prioritized, originating with this that it is not fully fulfilled with the mission entrusted in the State Constitution. According to the author, the National Budget System is the set of organs, norms, and procedures that guide the budget process of all entities and agencies of the Public Sector in its programming, formulation, approval, execution, and evaluation phases. It is governed by the principles of balance, universality, unity, specificity, exclusivity and annuity. The National Budget System is made up of the National Directorate of the Public Budget,dependent on the Vice Ministry of Finance and by the Executing Units through the offices or dependencies in which the processes related to the System are conducted, at the level of all the entities and agencies of the Public Sector that administer public funds, the same as the responsible for ensuring compliance with the rules and procedures issued by the governing body. The National Directorate of the Public Budget is the governing body of the National Budget System and dictates the norms and establishes the procedures related to its scope, within the framework of the provisions of this Law, Budgetary Directives and complementary provisions. The Public Sector Budget is the annual economic and financial programming instrument and is approved by the Congress of the Republic.Its execution begins on January 1 and ends on December 31 of each year. For the author, Public Sector Income is public funds, without exception, income of a tax, non-tax or financing nature that serves to finance all the expenses of the Public Sector Budget. They are disaggregated according to the corresponding income classifiers. Instead it indicates, the expenses of the State are grouped in Current Expenses, Capital Expenses and Debt Service, which are disaggregated according to the corresponding classifiers. Current expenses are the expenses destined to the maintenance or operation of the services that the State provides. Capital expenditure is the expenses destined to the increase of the production or to the immediate or future increase of the State Patrimony. Debt service,they are the expenses destined to the fulfillment of the obligations originated by the public debt, be it internal or external. Income Execution comprises the stages of estimation, determination and perception. The estimation consists of the calculation or projection of the income levels that are expected to be achieved for all concepts; the determination is the identification of the concept, opportunity and other elements related to the realization of the income; and the perception is the collection, raising or obtaining of public funds. Regarding the execution of the Expense, the author indicates that he understands the stages of commitment, accrual and payment; being the commitment the preventive affectation of the budget of the entity by acts or administrative dispositions;the accrued is the final execution of the budget allocation for the recognition of a payment obligation; and, the payment is the extinction of the obligation by canceling it. The author indicates that all public income and expenses must be contemplated in the institutional budgets approved according to law, the administration or management of public funds being prohibited, in any other form or modality. Any provision to the contrary is null and void. Then it highlights the officials of the entities of the Public Sector competent to commit expenses must observe, prior to the issuance of the administrative act or spending provision, that the entity has the corresponding budget allocation. Otherwise they become null and void.On the other hand, it highlights that the budget execution and its corresponding register of income and expenses closes on December 31 of each Fiscal Year. It also emphasizes that after December 31, the income received is considered part of the following Fiscal Year regardless of the date on which it had originated and settled. Likewise, no commitments can be assumed or expenses accrued from the Fiscal Year Budget that closes on that date. Payment of the accrued expense as of December 31 of each Fiscal Year may be made until March 31 of the following Fiscal Year as long as it is duly formalized and registered.The author indicates that the budget reconciliation includes the set of acts conducive to reconciling the budget records of income and expenses made as of December 31 of each Fiscal Year as well as the approval of the necessary provisions for the effect of the corresponding formalization, which may be carried out by the own administration or by the entity's internal audit, which becomes a very helpful entity for the proper management of institutional resources.
b) Fernández Ramírez, Domingo
In this work, the author describes how to implement an internal audit unit, which is facilitator of the optimal management of cooperative companies. According to the author, internal audit arises after external audit due to the need to maintain permanent and more effective control within the company and to make the function of the external auditor faster and more effective. Generally, the classic internal audit has been mainly dealing with the internal control system, that is, the set of measures, policies and procedures established in companies to protect the asset, minimize the possibilities of fraud, increase operational efficiency and optimize the quality of economic-financial information. It has focused on the administrative, accounting and financial fields.The author establishes that the need for internal audit becomes evident in an entity as it increases in volume, geographical extension and complexity and makes direct control of operations by management impossible. Previously, control was exercised directly by management through permanent contact with its middle managers, and even with the employees themselves. Today this peculiar way of exercising control is no longer possible today, and hence the emergence of the so-called internal audit. The main objective is to assist management in fulfilling its functions and responsibilities, providing objective analyzes, evaluations, recommendations and all kinds of pertinent comments on the operations examined.This objective is fulfilled through other more specific ones such as the following: a) Verify the reliability or degree of reasonableness of the accounting and non-accounting information generated at the different levels of the organization; b) Monitor the proper functioning of the internal control system (which implies its survey and evaluation), both the accounting and operational internal control system. For the author, internal control is a function that aims to safeguard and preserve the assets of the institution, avoid undue disbursement of funds and offer the assurance that obligations will not be incurred without authorization. Internal control is the system made up of a set of procedures (regulations and activities) that, interrelated with each other, aim to protect the assets of the institution.Among the objectives of internal control we have: a) Protect the assets of the institution avoiding losses due to fraud or negligence; b) Ensure the accuracy and veracity of accounting and non-countable data, which are used by management for decision-making; c) Promote production efficiency; d) Encourage monitoring of practices ordered by management; e) Promote and evaluate safety, quality and continuous improvement. Among the elements of a good internal control system are: a) An organization plan that provides an appropriate functional distribution of authority and responsibility; b) An authorization plan, accounting records and adequate procedures to provide good accounting control over assets and liabilities, income and expenses;c) Effective procedures with which to carry out the projected plan; d) A staff duly instructed on their rights and obligations, which must be in proportion to their responsibilities.
Next, the author reaffirms that Internal Audit is part of Internal Control, and has as one of its fundamental objectives the improvement and protection of such internal control. The main and most commonly used techniques for evaluating internal control are: a) Procedural memoranda; b) Flowcharts; c) Internal Control Questionnaires; d) Statistical techniques. To these must be added the management tools, among the main ones we have: Ishikawa diagram (also called “Fishbone”), Pareto diagram, scatter diagram, histogram and flow charts (the last three are already contained in the aforementioned), stratification, and the Internal Control Matrix among others. The author reinforces his work indicating that the advantages of internal audit are as follows:a) It provides essential assistance to management by evaluating the organization and administration systems relatively independently; b) It facilitates a global and objective evaluation of the company's problems, which are generally interpreted in a partial way by the affected departments; c) It makes available to management a deep knowledge of the operations of the institution, provided by the work of verification of accounting and financial data; d) It contributes effectively to avoid routine activities and bureaucratic inertia that generally take place in large institutions; e) It favors the protection of the institution's interests and assets against third parties. The internal audit engagement requirements are as follows:a) The reviews must be carried out by people with adequate technical knowledge and training as auditors; b) The auditor must maintain an independent mental attitude; c) Both in the examination and in the preparation of the report, due professional rigor must be maintained; d) The work must be properly planned, exercising due supervision by the most experienced auditor; e) Sufficient information must be obtained (through inspection, observation, investigation and confirmations) as the basis of the work. Lastly, the author points out that for a good performance of the company and in particular of the internal audit, the recipe is teamwork, because it is the best use of capabilities and experiences for a more effective evaluation of internal control,as well as the investigation of special cases require the implementation of teamwork including the Quality Circles in the area of internal audit, as a way to improve procedures, thereby achieving higher quality controls, proposals, analysis and reports, and lower costs.
c) Bendezú Iriarte Juan Héctor
The author in this thesis develops the performance audit process. It also refers to management audit programs, procedures, techniques, and practices. The author indicates that the performance audit is related to the effectiveness, efficiency and economy in the operations of an entity, as well as with the maximization of the cost / benefit ratio when achieving the desired benefits. It is an objective, systematic and professional examination of evidence, carried out in order to provide an independent evaluation of the performance (performance) of an entity, program or project, aimed at improving the effectiveness, efficiency and economy in the use of resources. to facilitate decision-making by those responsible for taking corrective actions and improve their accountability to the public.The management audit by its approach involves a systematic review of the activities of an entity in relation to the fulfillment of objectives and goals (effectiveness) and, with respect to the correct use of resources (efficiency and economy). Its general purpose is performance evaluation (performance); identification of opportunities for improvement; and, development of recommendations to promote improvements or other corrective actions. The author clarifies that the performance evaluation refers to the performance evaluation obtained by an entity. This evaluation involves comparing the route followed by the entity when conducting its activities with: a) the objectives, goals, policies and norms established by legislation or by the entity itself. The increase in the conditions of effectiveness, efficiency and economy,They are the categories under which improvements in operations can be classified. Opportunities for improvement can be identified through analysis of information, interviews with officials of the entity or outside it, observing the operations process, reviewing past and present internal reports, and exercising professional judgment based on the auditor's experience or on other sources. Development of recommendations to promote improvements or other corrective actions.10 The nature and scope of the recommendations developed in the performance audit process is variable. In some cases, recommendations can be made on specific issues; however, in other cases, after analyzing the cost / benefit of implementing recommendations on highly complex activities,It may be feasible to suggest that the entity itself carry out a more in-depth study of the specific area and adopt the improvements it deems appropriate, in the circumstances. The criteria referring to the integral nature of the audit, aimed at evaluating the economic / social benefits obtained in relation to the expenditure executed and its link with government policies, as well as the flexibility that allows prioritizing efforts in achieving the planned goals, they constitute postulates that guide the performance of the management audit. The objectives of the performance audit are: To determine the degree to which the results or benefits foreseen by the legal regulations are being achieved, by the entity itself, the program or project, as the case may be; Establish whether the entity acquires,protects and uses its resources efficiently and economically; Determine if the entity, program or project has complied with the applicable laws and regulations on efficiency and economy; Establish whether the management controls implemented in the entity or project are effective and ensure the efficient development of activities and operations.
Herrera Celis, Dionicio
According to the author, Income Execution comprises the stages of estimation, determination and perception. The estimation consists of the calculation or projection of the income levels that are expected to be achieved for all concepts; the determination is the identification of the concept, opportunity and other elements related to the realization of the income; and, the perception is the collection, raising or obtaining of public funds. On the other hand, the execution of the Expense includes the stages of commitment, accrual and payment. The commitment is the preventive involvement of the entity's budget by administrative acts or provisions; the accrued is the final execution of the budget allocation for the recognition of a payment obligation; and, the payment is the extinction of the obligation by canceling it.The author complements that all public income and expenses must be contemplated in the approved institutional budgets, being prohibited the administration or management of public funds, in any other form or modality. Any provision to the contrary is null and void. The author points out that the officials of the Public Sector entities competent to commit expenses must observe, prior to the issuance of the administrative act or expenditure provision, that the entity has the corresponding budget allocation. Otherwise they become null and void. Then it is indicated that the budget execution and its corresponding register of income and expenses closes on December 31 of each Fiscal Year; after December 31,the income received is considered part of the following Fiscal Year regardless of the date on which it was originated and settled; likewise, no commitments can be assumed or expenses accrued from the Fiscal Year Budget that closes on that date;, the payment of the accrued expense as of December 31 of each Fiscal Year can be made until March 31 of the following Fiscal Year as long as it is duly formalized and registered.the payment of the accrued expense as of December 31 of each Fiscal Year may be made until March 31 of the following Fiscal Year provided it is duly formalized and registered.the payment of the accrued expense as of December 31 of each Fiscal Year may be made until March 31 of the following Fiscal Year provided it is duly formalized and registered.
Hernández Celis, Domingo (2005)
According to the author, the budget is an action plan aimed at meeting a planned goal, expressed in values and financial terms that must be met in a certain time and under certain conditions, this concept is applied to each responsibility center of the organization. The functions of budgets are given by being: a) The main function of budgets is related to the financial control of the organization; b) Budgetary control is the process of discovering what is being done, comparing the results with their corresponding budgeted data to verify achievements or remedy differences; c) Budgets can play both preventive and corrective roles within the organization. According to this work,Budgets are important because they are useful in most organizations such as: Utilitarians (business companies), non-utilitarians (government agencies), large (multinationals, conglomerates) and small companies; Budgets are important because they help minimize risk in the organization's operations; Through budgets, the company's operations plan is kept within reasonable limits; they serve as a mechanism for reviewing company policies and strategies and directing them towards what is truly sought; make it easier for members of the organization; quantify in financial terms the various components of your total action plan;budget items serve as guides during the execution of personnel programs in a given period of time, and serve as a standard of comparison once plans and programs have been completed; the procedures induce consulting specialists to think about the total needs of companies, and to plan so that the various components and alternatives can be assigned the necessary importance; Budgets serve as means of communication between units at a certain level and vertically between executives from one level to another. The budgets, according to this work are the following: Plan comprehensively and systematically all the activities that the company must develop in a given period; control and measure the quantitative, qualitative results and,set responsibilities in the different dependencies of the company to achieve the goals established; coordinate the different cost centers to ensure the running of the company in an integral way. The purposes of the budgets are given by allowing: Plan the results of the organization in money and volumes; control the management of income and expenses of the company; coordinate and relate the activities of the organization; achieve the results of periodic operations. For the author, budgets can be classified from different points of view, namely: 1) According to flexibility, 2) According to the period of time they cover, 3) According to the field of applicability of the company, 4) According to the sector in the which are used. On the other hand, it details that according to flexibility they can be rigid, static,fixed or assigned because they are prepared for a single activity level and do not allow necessary adjustments due to the variation that occurs in reality. They leave aside the environment of the company (economic, political, cultural, etc.). Budgets of this type were previously used in the public sector. They can also be flexible or variable, when they are elaborated for different levels of activity and can be adapted to the changing circumstances of the environment. They are widely accepted in the field of modern budgeting. They are adaptive dynamics, but complicated and expensive. Another classification is given according to the period of time, and may be short-term, if they are carried out to cover the organization's planning in the one-year cycle of operations; This system is adapted to countries with inflationary economies. Long term,if they correspond to the development plans that are generally adopted by states and large companies. Another classification is according to the field of application in the company; They may be operational or economic, if they take into account the detailed planning of the activities that will be carried out in the period following the one in which they are carried out, and their content is summarized in a Statement of Profits and Losses. Among these budgets we can highlight: Sales Budgets: They are generally prepared by months, geographic areas and products; Production Budgets: They are commonly expressed in physical units. The information necessary to prepare this budget includes types and capacities of machines, economic quantities to produce and availability of materials; Shopping budget,that foresees the purchases of raw materials and / or merchandise that will be made during a certain period. They are generally made in units and costs. Production-Cost Budget: Sometimes this information is included in the production budget. By comparing the cost of production with the selling price, it shows whether the profit margins are adequate. Cash flow budget: It is essential in any company. It must be prepared after all other estimates have been completed. The flow budget shows the anticipated receipts and expenses, the amount of working capital. Master Budget: This budget includes the main activities of the company. It brings together and coordinates all the activities of the other budgets and can be conceived as the "budget budget".Then the author mentions financial budgets in this context and then indicates that they include the items and / or items that affect the balance sheet. There are two types: 1) Cash or Treasury and 2) Capital or capitalized expenditures. The Treasury Budget takes into account the predicted estimates of funds available in cash, banks and easy to carry out values; It can also be called cash flow or cash flow budgeting because it is used to forecast the monetary resources that the organization needs to develop its operations; it is formulated for short periods monthly or quarterly. He1) Cash or Treasury and 2) Capital or capitalized expenditures. The Treasury Budget takes into account the predicted estimates of funds available in cash, banks and easy to carry out values; It can also be called cash flow or cash flow budgeting because it is used to forecast the monetary resources that the organization needs to develop its operations; it is formulated for short periods monthly or quarterly. He1) Cash or Treasury and 2) Capital or capitalized expenditures. The Treasury Budget takes into account the predicted estimates of funds available in cash, banks and easy to carry out values; It can also be called cash flow or cash flow budgeting because it is used to forecast the monetary resources that the organization needs to develop its operations; it is formulated for short periods monthly or quarterly. He
Capital expenditures budget is the one that basically controls all investments in fixed assets. It allows evaluating the different investment alternatives and the amount of financial resources required to carry them out. The author adds that depending on the sector of the economy in which they are used, the budgets can be from the public and private sectors. The Public Sector Budgets are those that involve the plans, policies, programs, projects, strategies and objectives of the State. They are the most effective means of controlling public spending and they contemplate the different alternatives for allocating resources for expenses and investments. Private Sector Budgets are those used by private companies, also known as business budgets;they seek to plan all the activities of a company.
4.2. Problem Statement.
The Home of the Mother Society, a decentralized body of the Metropolitan Lima Charitable Society, was founded on December 21, 1926. Then on May 8, 1938, "The Home of the Mother" was created, at the service of comprehensive care. the Mother and the child.
The Home of the Mother is a Clinic - Hospital that provides specialized care to the mother and child. To date, it has expanded and diversified its specialties, trying at all times to be at the forefront of scientific and technological advances to provide a better quality of service to the community.
It is also named Clinica Hospital Rosalía De Lavalle De Morales Macedo in honor of its founder.
This hospital performs outstanding social work and does it with self-financing.
The work carried out at the Clinic - Hospital «Hogar de la Madre is mainly aimed at preserving the health and well-being of the mother and the child, since their fertilization.
The Hospital de la Madre Hospital Clinic does not receive income nor is it financed through the Public Treasury, its resources depend exclusively on the sale of its service to the private sector.
Due to the current situation facing companies in our country, to the constant changes to adapt in this increasingly competitive and globalized world, a company that was initially private (a company without profit), but which was donated to the Metropolitan Lima Charitable Society and is currently governed by government regulations, although it works exclusively with its own resources.
The mere fact of not receiving financial resources from the State and submitting to its regulations is already a problem for the institution.
Although for the purposes of this work, the main problem lies in the fact of having to apply the leafy formalities and procedures that the State Budget Law implies in the budget execution phase.
The entity has a private spirit but has to comply with the bureaucratic public formalities; which often means that the processing of the periodical authorizations is not complied with, formulation of the budget execution reports, presentation of the accounts, absolution of the observations, due to various problems within the institution, such as changes of authorities, change of personnel, rotation of personnel, resignation of personnel, lack of preparation of personnel; This means that far from advancing in the provision of better health services in the framework of continuous improvement and competitiveness, each time the entity lags behind and is devastated by strong competition from private entities, all of which affects the development of the institution,which has always had a reputation as a Clinic in the maternal and child specialty.
The entity does not have a Policy Manual, Budgetary Procedures Manual, Accounting Procedures Manual, Administrative Procedures Manual and other documents that guide budget execution in the best conditions and especially that is complied with by managers, officials and personnel in general..
Regarding the budget execution itself, it has been determined that the delay in the approval of the PIA (approved with the SBLM Board Agreement), in 2006, was approved in June 2006, the procedures, modifications, extension by supplementary credits are after this date, also from January to June 2006, expenses were executed for the normal operation of the Clinic, without PIA approval. There are unscheduled expenses that are made without considering the established procedures, such is the case of AFP lawsuits (for payments not made in the years 1993 to 2003); payments of social benefits of workers and non-personal Services personnel; medical malpractice payments that is not common but in 2006 there was a case that forced payment to INDECOPI,to avoid a fine that was 10 UIT.
Another problem is the lack of receipt of the documentation within the relevant deadlines, which constitutes a lack of opportunity and leads to breach of responsibilities. For example, in 2007, the budget was approved within its date, but the documentation was received by the Hogar de la Madre in April-2007; therefore, between January and April, budgetary executions were carried out for the operation of the company without complying with the formalities and the respective controls.
The lack of application of elementary principles of internal control, such as the lack of rotation of Treasury and Logistics personnel, generates distrust in the management of the entity's funds and assets; If we add to this the lack of academic training, training and training of those responsible, it contributes to inappropriate management. In Treasury, the non-deposit of income captured within twenty-four hours, leads to high-risk problems, such as being assaulted, misuse or carrying out embargo mechanisms by suppliers, workers or other agents. Such is the case raised in 2007 that the entity had an embargo in the amount of S /.700,000.00, by the Doctors of the Institution, who had been demanding an increase given by the government in 2001.
In general, it has been determined that the following budgetary procedures are not fully complied with:
v The ordering requirements of the areas are not carried out in a timely manner or with the corresponding supporting documents.
v The Logistics Area, (in charge of ensuring that the Contracting and Procurement Law is complied with) does not verify that the documents are approved, the corresponding signatures and the document that supports the transaction.
v The Budget Area does not comply with the commitment procedure in the established manner and terms.
v The Economy Unit - Accounting Area does not apply the so-called Prior Control consisting of verifying the documentation of the transactions. The Treasury Area does not issue checks in a timely manner and sometimes does so without complying with the formalities of the case, referring the documentation to the Economy Unit for the approval and signatures. Taking as a consequence of multiple errors, to assume responsibilities of the directors and officials, who for these and other reasons have a very short stay in the entity.
v The signing of checks by the Management and the Director of Administration and Finance, due to the lack of prior and concurrent control, leads to the commission of errors that then lead to the commission of faults and even possible crimes.
v On the basis of successive errors, the Cash Section pays obligations that do not meet the elementary formal aspects of transactions within the framework of government regulations.
Another relevant aspect within the problem is that the entity does not have the competent agencies for efficient and effective compliance with the established processes and procedures. For example, the control of budget execution is carried out in the Accounting Area, which is not the correct thing to do because it should be done in a budget unit that the entity does not have.
Likewise, the entity does not have an Institutional Control Office - OCI (dependent on the Office of the Comptroller General of the Republic), which directly supervises the directly collected resources applied by the entity. The control is carried out from the Public Charity of Lima, where neither the quantity nor the quality of the personnel exists that provides the guidelines for carrying out an adequate budget execution and that does not cause problems for the entity.
As a consequence of the budgetary problem, the following drawbacks have been identified:
· Delay of budget approval and remission.
· Documentation without budget commitment
· Payments of documents without budgetary impact, such is the case of the purchase of medicines, food and other supplies.
· The budget execution phase is not fully complied with according to Law, which leads to administrative, civil and in some criminal cases responsibilities.
Faced with the problems described, it is recommended that the authorities carry out the implementation of an internal audit unit, so that it is the instrument that permanently evaluates the entity's internal control system and provides the most appropriate recommendations for adequate budget execution. that contributes to the strengthening of institutional control, the improvement of the entity's activities and competitiveness.
4.2.1. Problem formulation.
How can internal auditing facilitate proper budget execution and thus contribute to the continuous improvement and competitiveness of the Hogar de la Madre Clinic?
4.2.2. Systematization of the Problem.
In what way can internal audit standards help to ensure that budget execution is properly fulfilled and contributes to meeting the objectives of the Hogar de la Madre Clinic?
How to couple the internal audit process and the budget execution procedures so that it is carried out properly and contributes to the effectiveness of the institutional management of the Hogar de la Madre Clinic?
How can the added value generated by internal auditing contribute to the effectiveness of budget execution and therefore to the improvement and competitiveness of the Hogar de la Madre Clinic?
4.3 Theoretical Framework
Bacón (2007) and Editorial Océano (2005), agree that the need for internal auditing is evident in a company as it increases in volume, geographical extension and complexity and makes it impossible for direct control of operations by the direction. Previously, control was exercised directly by the company's management through permanent contact with its middle managers, and even with the company's employees. In modern large companies this peculiar way of exercising control is no longer possible today, and hence the emergence of the so-called internal audit.
Interpreting Arens & Loebbecke (2005), internal auditing is one that is carried out by the employees and officers of an entity, in order to provide corporate governance with a protectionist and constructive service, from which it follows that the The main difference with respect to external auditing lies precisely in the financial dependence on the management of the Internal Auditor. It should be noted that due to the frequency and number of reviews that are carried out, many companies are forced to use employees who do not have adequate preparation for the practice of auditing. These situations typical of internal auditing,are inconsistent with the standards regarding the auditor's professional personality regarding "mental independence" and "training and professional ability"
Interpreting the IAI of Spain (1997), the new concept tends to consider internal auditing as a technical assistance service to the authorities and workers, the center of the institution, even though without neglecting its primary responsibility to review operations and evaluate the operation of internal control. Auditing as well as advising must be, therefore, according to this modality, the true objective of internal auditing in the new framework of competitiveness and globalization, all based on the components of the COSO Report. In the new framework, the purpose of the internal audit is to provide a constructive assistance service to the administration,with the purpose of improving the conduct of operations and obtaining a greater economic benefit for the entity or a more effective fulfillment of its institutional objectives
According to the Institute of Internal Auditors of Peru (2001), internal auditing is an independent and objective activity of assurance and consultation, designed to add value and improve the operations of an organization. It helps an organization meet its objectives by providing a systematic and disciplined approach to assess and improve risk management, control and governance processes.
According to Kell & Boynton (2005), There are several points of view to determine the internal audit process. A first point of view indicates that the process is made up of planning, execution and audit reports. A second point of view says that the process comprises the pre-audit, the audit itself and the post-audit. A third, more modern point establishes that the process encompasses planning, evaluation, results, monitoring, and advice on feedback activities. The point is that in all cases internal auditing becomes a professional activity of the highest level that influences the proper budgetary, financial and other execution.
Interpreting the CGR (1998), the concept of government internal audit can be constructed, such as the objective, systematic and professional examination of budgetary, financial and / or administrative operations, carried out in entities subject to the National Control System, elaborating the corresponding report. Said examination must be carried out in accordance with the Government Auditing Standards and specialized provisions issued by the Comptroller General and applying the established procedures, techniques and methods. Its objectives are:
v Evaluate the correct use of public resources, verifying compliance with legal and regulatory provisions.
v Determine the reasonableness of the budgetary, financial, economic and patrimonial information.
v Determine the degree to which the planned objectives have been achieved and the results obtained in relation to the assigned resources and compliance with the approved plans and programs of the entity examined.
v Recommend measures to promote improvements in public management.
v Strengthen the internal control system of the audited entity.
Analyzing Argandoña (2008), the budget is an element of planning and control expressed in economic and financial terms within the framework of a strategic plan, capable of being an instrument or tool that promotes integration in the different areas that the public sector has participation. as a contribution to the set of initiatives within each responsibility center and the responsibility expressed in terms of programs established for compliance in terms of a clearly defined structure for this process.
Interpreting Johnson & Scholes (1999), a budget is the forecast of expenses and income for a certain period, usually one year. It enables companies, governments, private organizations and families to set priorities and assess the achievement of their goals. To achieve these ends, it may be necessary to run a deficit (that expenses exceed income) or, conversely, it may be possible to save, in which case the budget will present a surplus (income exceeds expenses). In the field of commerce, it is also a document or report that details the cost that a service will have if carried out. The one who makes the budget must stick to it and cannot collect it if the client accepts the service. The budget can be charged or not if it is not accepted.
According to Koontz & O`Donnell (1990), the budgeting process tends to reflect in a quantitative way, through budgets, the objectives set by the company in the short term, by establishing the appropriate programs, without losing the perspective of the long term, since it will determine the plans that will allow the achievement of the ultimate goal to which the management of the company is oriented. Budgets serve as a means of communicating the plans of the entire organization, providing the basis for evaluating the performance of the different segments, or areas of activity of the company and management. The process culminates with budgetary control, through which the result of the actions undertaken is evaluated, allowing, in turn,establish an adjustment process that makes it possible to set new goals. An effective budgeting process depends on many factors; however, there are two that may be considered “essential requirements”. Thus, on the one hand, it is necessary for the company to have a clear and coherent organizational structure configured, through which the entire process of assigning and delimiting responsibilities will be structured. A budget program will be more effective as long as responsibilities can be properly assigned, for which, necessarily, it will have to have a perfectly defined organizational structure. The other requirement is determined by the repercussion that the behavior of the human potential involved in it has on the budget process; this is,the role of motivational and behavioral factors in the planning and budgeting process. The budget, in addition to representing a fundamental instrument for optimizing short-term management, constitutes an effective tool for staff participation in determining objectives and in formalizing commitments in order to set responsibilities for their execution. This participation serves as motivation to the individuals who exert a personal influence, conferring a decision-making power in their respective areas of responsibility.It constitutes an effective tool for staff participation in determining objectives, and in formalizing commitments in order to set responsibilities for their execution. This participation serves as motivation to the individuals who exert a personal influence, conferring a decision-making power in their respective areas of responsibility.It constitutes an effective tool for staff participation in determining objectives, and in formalizing commitments in order to set responsibilities for their execution. This participation serves as motivation to the individuals who exert a personal influence, conferring a decision-making power in their respective areas of responsibility.
According to Budget Law 28411, the Budget constitutes the State's management instrument that allows entities to achieve their objectives and goals contained in their Institutional Operational Plan (POI). Likewise, it is the quantified, joint and systematic expression of the expenses to be attended during the fiscal year, by each of the Entities that are part of the Public Sector and reflects the income that finances said expenses. The Budget includes:
v The expenses that, at most, the Entities may incur during the fiscal year, based on the approved budgetary credits and the income that finances said obligations.
v The objectives and goals to be achieved in the fiscal year by each of the Entities with the budgetary credits that the respective budget approves.
Legal basis of the Home of the Mother Clinic:
The Legal Base of The Clinic »Home of the Mother, is as follows:
a) Political Constitution of Peru.
b) Legislative Decree No. 356, which regulates the organization, functions, tasks and resources of Public Charitable Societies and Social Participation Boards.
c) Law 27793 "Organization and Functions Law of the Ministry of Women and Social Development" MIMDES. The Metropolitan Lima Charitable Society (SBLM) is under the purview of the National Institute for Family Welfare (INABIF).
d) Law No. 26918 "Law for the National Creation of the National System for the Population at Risk" promulgated on January 9, 1998 and published in the "El Peruano" newspaper on January 23, 1998; of which the Metropolitan Lima Charitable Society is a part.
e) Law No. 28927 “Public Sector Budget Law for Fiscal Year 2007.
f) Directive No. 013-2006-EF / 76.01 for the Programming and Formulation of the Budget of the Specifications of the National Government for Fiscal Year 2007, Approved by Directorial Resolution No. 030-2006-EF / 76.01.
g) Legislative Decree No. 830 Law of the National Institute of Family Welfare and Legislative Decree No. 866, Organization and Functions Law, of the Ministry for the Promotion of Women and Human Development. Approved with Supreme Decree No. 012-98- PROMUDEH;
h) Regulatory Norms of Public Charities and Social Participation Boards that approve Supreme Decree No. 008-98 / PROMUDEH, being approved with Presidential Resolution No. 037-98-P / SBLM;
i) General Hospital Regulations; Code of Ethics and Deontology of the Medical College of Peru;
j) Health Code Decree Law 17505;
k) Medical Work Law DS No. 005-90.
Regulation of organization and functions of the Clinic "Home of the mother" - Approved on June 8, 2000:
It is a normative instrument of institutional management in which the content, competence, mission, objectives, functions, organic structure and relationships of the Hogar de la Madre Clínica are specified. This Patrimony was donated to the Public Charity Society of Metropolitan Lima by the Association "Home of the Mother" as stated in the Donation Testimony registered in folio No. 6146, Kardex 1357, Minute 1109 of Nov. 15, 1976 at the Office of Public Records
Economics Unit - Accounting Area:
The functions of the economy office are:
a) Formulate, propose and execute the approved budget and manage the funds
b) Develop an adequate accounting system that allows to provide an exact knowledge of the expenses and the economic-financial and patrimonial situation of the Clinic-Hospital
c) Organize, coordinate and direct the dissemination of provisions, regulations and directives on financial and budgetary administration to assign the application and compliance of accounting procedures.
They depend hierarchically on the Directorate of Administration. It is also responsible for the areas of: Accounting, Treasury, Billing and Asset Control.
4.4 Justification and Importance of work.
4.4.1. Methodological justification
This work is justified in that it is an application of the generally accepted scientific process. In this regard, in the first place the corresponding problem has been identified and on this basis the solution has been proposed through the hypotheses. The purposes of the work represented by the objectives are presented below. The work will end when after development the hypotheses are tested, the conclusions and recommendations are established on the basis of the theoretical planning and the respective field work.
4.4.2. Theoretical justification
The internal audit is the examination or verification of the transactions, accounts, information, or budgetary statements, corresponding to a period, evaluating the conformity or compliance with the legal provisions in force in the institutional Internal Control system; therefore it is the facilitating tool for an adequate budget execution; and also of the continuous improvement and competitiveness of the Clinic Hogar de la Madre.
Internal audit is specified in a series of processes, procedures and techniques, through which management is given first-hand assurance regarding budget execution and other institutional aspects.
The internal audit is the eyes of the institutional management, projected on all its dependencies and organizations, to capture and permanently inform it, of its situation and of the possible problems that may exist.
The objective of the Internal Audit is to assist the members of the organization in the effective discharge of their responsibilities. Internal Audit provides analysis, evaluations, recommendations, advice and information on institutional budget execution and other aspects.
The objectives of an Internal Audit are: to maintain an effective Internal Control in the budgetary executions, to achieve a good operation of the organization, its operating systems and the adequate use of its resources, to ensure compliance with the policies, rules and instructions of the management, constantly improve the management of the company, keep the management informed of any exceptions detected, proposing the corresponding actions to correct them, ensure compliance by the various organs and centers of the entity with their recommendations and suggestions, promote changes that they are necessary, training their employees to adapt the new systems, suppressing fraud and irregularities and safeguarding the institution's assets.
4.4.3. Practical justification
This work will be a contribution to a state health entity so that it has the facilitating tool for an adequate budget execution, continuous improvement and institutional competitiveness. The authorities will surely take the information into account because its practical application will allow the institutional budget to be executed in the best way.
4.4.4. Importance.
The importance of this work is given by the use of a tool such as internal audit in determining the existing problem and then in the recommendations it provides for the efficiency, economy, effectiveness, continuous improvement and competitiveness of the Hogar de la Clínica. Mother.
It is also important because it allows to capture the knowledge and experiences of the professional practice of the audit.
5. Objectives
5.1 General Objective.
Establish the way in which the internal audit facilitates an adequate budget execution and thus contributes to the continuous improvement and competitiveness of the Hogar de la Madre Clinic.
5.2 Specific Objectives.
1. Determine how internal auditing standards can help budget execution to be adequately carried out and contribute to meeting the objectives of the Hogar de la Madre Clinic.
2. Identify how to couple the internal audit process and budget execution procedures so that it is carried out properly and contributes to the effectiveness of the institutional management of the Hogar de la Madre Clinic.
3. Point out how the added value generated by the internal audit contributes to the effectiveness of the budget execution and therefore to the improvement and competitiveness of the Hogar de la Madre Clinic.
6. Hypothesis
6.1 General Hypothesis:
Whether internal audit effectively examines budget execution; Then, it will contribute to the continuous improvement and competitiveness of the Hogar de la Madre Clinic.
6.2. Specific Hypotheses:
1. If the application of internal auditing standards facilitate the obtaining of conclusions and recommendations; Then, they can help to achieve an adequate budget execution and contribute to the Hogar de la Madre Clinic achieving its goals, objectives, mission and institutional vision.
2. If the internal audit process is linked to budget execution; Then, it will contribute to this stage of the budget process being carried out properly and contributing to the effectiveness of the institutional management of the Hogar de la Madre Clinic.
3. If the added value generated by internal audit manages to influence budget execution; then, an adequate concretion of this budgetary phase will be achieved and therefore the continuous improvement and competitiveness of the Hogar de la Madre Clinic.
6.2. Research variables and indicators
Independent variable
X = Internal Audit as an effective tool
Indicators
X1 = Standards.
X2 = Process
X3 = Added value
Dependent variable
Y = Budget execution and contribution to continuous improvement and competitiveness.
Indicators
Y1 = Standards
Y2 = Procedures
Y3 = Effectiveness
Intervening Variable:
Z = Mother's Home Clinic
Indicators
Z1 = Institutional Organization
Z2 = Institutional Management
Z3 = Institutional control.
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