scholarly journals Audit committee effectiveness, internal audit function and sustainability reporting practices

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zainabu Tumwebaze ◽  
Juma Bananuka ◽  
Twaha Kigongo Kaawaase ◽  
Caroline Tirisa Bonareri ◽  
Fred Mutesasira
Keyword(s):  
Natural Environment ◽  
Financial Services ◽  
Audit Committee ◽  
Internal Audit ◽  
Sustainability Reporting ◽  
Small Sample ◽  
Content Type ◽  
Reporting Practices ◽  
Internal Audit Function ◽  
Financial Services Firms

PurposeThe purpose of this study is to examine the association between audit committee effectiveness (ACE), internal audit function (IAF) and sustainability reporting practices.Design/methodology/approachUsing a cross-sectional and correlational design, useable questionnaires were received from 48 financial services firms in Uganda. The data were analyzed using Statistical Package for Social Sciences.Findingsresults indicate that ACE and IAF are positively and significantly associated with sustainability reporting practices. ACE and IAF are more significantly associated with economic and social indicators than environmental sustainability indicators.Research limitations/implicationsIn terms of practice, it is no longer a matter of having internal auditors and audit committees in place but rather those who are mindful of the welfare of society and the natural environment. The effectiveness of the board audit committee and a functioning internal audit can be assessed in terms of their recommendations and decisions regarding improvements in the welfare of society and the natural environment in addition to the traditionally known performance benchmarks.Practical implicationsThe study focuses on only financial services firms in Uganda, and this is a small sample. Future studies may focus on larger samples to enable comparison of the results.Originality/valueThis study provides insights on the initial understanding of the association between ACE, IAF and sustainability reporting practices using evidence from a developing African country – Uganda.

Factors associated with security/cybersecurity audit by internal audit function

2018 ◽  
Vol 33 (4) ◽  
pp. 377-409 ◽  
Author(s):  
Md. Shariful Islam ◽  
Nusrat Farah ◽  
Thomas F. Stafford
Keyword(s):  
Audit Committee ◽  
Internal Audit ◽  
Mixed Effect ◽  
Content Type ◽  
Internal Auditors ◽  
Factors Associated ◽  
Security Breaches ◽  
Internal Audit Function ◽  
Enterprise Risk

Purpose The purpose of the study is to explore the factors associated with the extent of security/cybersecurity audit by the internal audit function (IAF) of the firm. Specifically, the authors focused on whether IAF/CAE (certified audit executive [CAE]) characteristics, board involvement related to governance, role of the audit committee (or equivalent) and the chief risk officer (CRO) and IAF tasked with enterprise risk management (ERM) are associated with the extent to which the firm engages in security/cybersecurity audit. Design/methodology/approach For analysis, the paper uses responses of 970 CAEs as compiled in the Common Body of Knowledge database (CBOK, 2015) developed by the Institute of Internal Auditors Research Foundation (IIARF). Findings The results of the study suggest that the extent of security/cybersecurity audit by IAF is significantly and positively associated with IAF competence related to governance, risk and control. Board support regarding governance is also significant and positive. However, the Audit Committee (AC) or equivalent and the CRO role are not significant across the regions studied. Comprehensive risk assessment done by IAF and IAF quality have a significant and positive effect on security/cybersecurity audit. Unexpectedly, CAEs with security certification and IAFs tasked with ERM do not have a significant effect on security/cybersecurity audit; however, other certifications such as CISA or CPA have a marginal or mixed effect on the extent of security/cybersecurity audit. Originality/value This study is the first to describe IAF involvement in security/cybersecurity audit. It provides insights into the specific IAF/CAE characteristics and corporate governance characteristics that can lead IAF to contribute significantly to security/cybersecurity audit. The findings add to the results of prior studies on the IAF involvement in different IT-related aspects such as IT audit and XBRL implementation and on the role of the board and the audit committee (or its equivalent) in ERM and the detection and correction of security breaches.

Internal audit function, audit committee effectiveness and accountability in the Ugandan statutory corporations

2018 ◽  
Vol 16 (1) ◽  
pp. 138-157 ◽  
Author(s):  
Juma Bananuka ◽  
Stephen Korutaro Nkundabanyanga ◽  
Irene Nalukenge ◽  
Twaha Kaawaase
Keyword(s):  
Audit Committee ◽  
Sampling Error ◽  
Internal Audit ◽  
Hierarchical Regression ◽  
Cross Sectional ◽  
Content Type ◽  
Internal Auditors ◽  
Internal Audit Function ◽  
Correlational Data ◽  
Finance Officers

Purpose The purpose of this study is to investigate the contribution of internal audit function and audit committee effectiveness on accountability in statutory corporations (SCs). Design/methodology/approach This study is cross sectional and correlational. Data have been collected through a questionnaire survey of 52 SCs in Uganda through their Chief Internal Auditors and Chief Finance Officers. Data have been analysed using Statistical Package for Social Sciences. Findings The internal audit function significantly contributes to accountability of SCs in Uganda and audit committee effectiveness is not where effective internal audit is present in such organisations. However, audit committee effectiveness significantly contributes to accountability when an internal audit function is not present. Research limitations/implications The use of hierarchical regression is prone to problems associated with sampling error. However, the likelihood of these problems is mitigated by the interface with data. Originality/value Whereas hitherto both internal audit function and audit committee effectiveness had been viewed as explanations of accountability, this study only confirms the internal audit function as a significant predictor of SCs’ accountability relative to audit committee effectiveness.

scholarly journals Audit committee – internal audit interaction and moral courage

2016 ◽  
Vol 31 (4/5) ◽  
pp. 403-433 ◽  
Author(s):  
Imen Khelil ◽  
Khaled Hussainey ◽  
Hedi Noubbigh
Keyword(s):  
Audit Committee ◽  
Critical Role ◽  
Internal Audit ◽  
Moral Courage ◽  
Content Type ◽  
Second Stage ◽  
Internal Audit Function ◽  
Mixed Approach ◽  
Positive Effect

Purpose This paper aims to offer empirical evidence about the effect of the interaction between the audit committee and the internal audit function (IAF) on the moral courage of the chief audit executive (CAE). Design/methodology/approach A mixed approach was followed. In the first stage, questionnaires were sent to CAEs of 60 listed, financial and non-financial Tunisian companies. To enhance the depth of the analysis, in the second stage, semi-directed interviews with 22 CAEs from listed financial and non-financial Tunisian companies were performed. Findings This paper found that the existence of private access to the audit committee has a positive effect on the moral courage of the CAE. The number of meetings between the audit committee and the CAE, the examination of internal audit programmes and results together with the contribution of the audit committee to the appointment and dismissal of the CAE do not show a significant link with the moral courage of the CAE. It also found an insignificant relationship between the audit committee’s examination of interaction between management and the IAF and the moral courage of the CAE. Originality/value To the best of the authors' knowledge, this paper fills one of the major research gaps in the auditing literature by demonstrating the critical role of audit committee–internal audit interaction in promoting the CAE’s moral courage to behave ethically.

scholarly journals China’s financial sector sustainability and “green finance” disclosures

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Shidi Dong ◽  
Lei Xu ◽  
Ron McIver
Keyword(s):  
Small Sample Size ◽  
Sustainability Reporting ◽  
Financial Sector ◽  
Small Sample ◽  
Green Economy ◽  
Quality Of Reporting ◽  
Content Type ◽  
Reporting Practices ◽  
Financial Firms ◽  
Green Finance

Purpose This paper aims to provide a longitudinal analysis of influences on China’s financial sector’s sustainability reporting practices, examines “green finance” disclosures and undertakes subsector comparisons. The state’s impact on the quantity and quality of reporting practices is analyzed. Design/methodology/approach Content analysis is used to examine the volumes, frequency and content of sustainability disclosures by China’s financial institutions. Survival analysis is used to identify factors significant in firms’ initiation of these disclosures. In total, 308 firm-year observations on disclosures are examined for 2007–2016. Findings China’s financial sector’s sustainability reporting pieces of evidence an “emerging stage” (2007–2009), “developing stage” (2010) and “greening stage” (2011–2016). The roles of institutional theory and regulatory pressure in explaining Chinese financial firms’ reporting behaviours are supported. Research limitations/implications This study has several limitations. Firstly, given data restrictions, use of a relatively small sample size. Secondly, it examines different categories of disclosures made by financial firms, not more detailed content. Thirdly, is the potential overlap in disclosure themes under the classification scheme. Practical implications China’s financial sector’s adoption of sustainability reporting has been institutionalized, mainly in its banking subsector, consistent with general regulatory pressures. Social implications “Greening the finance system” is examined in China’s context, as the country transforms from a resource and pollution-intensive to a green economy. Originality/value The financial sector is normally excluded from in-depth qualitative research. This study examines China’s financial sector’s responses to recent governmental pressures on green finance disclosures.

Institutional investor preferences

2019 ◽  
Vol 42 (5) ◽  
pp. 641-659 ◽  
Author(s):  
Hamdan Amer Al-Jaifi ◽  
Ahmed Hussien Al-Rassas ◽  
Adel Al-Qadasi
Keyword(s):  
Institutional Investors ◽  
Audit Committee ◽  
Internal Audit ◽  
Institutional Ownership ◽  
Governance Mechanisms ◽  
Internal Governance ◽  
Content Type ◽  
Internal Audit Function ◽  
Internal Governance Mechanisms ◽  
Emerging Country

Purpose This study aims to examine the institutional investors’ preferences for internal governance mechanisms (internal audit function and audit committee effectiveness) in an emerging country like Malaysia. Design/methodology/approach A sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012 is used. The two-stage least squares using instrumental variables (IV-2SLS) analysis is used to examine the relationships. To corroborate the findings of this study, a regression based on a one-year lag of the independent variables is used. Furthermore, ordinary least square regression and Generalized Method of Moments using instrumental variables (IV-GMM) are used. Findings Positive associations are found between the internal audit function and audit committee effectiveness and the institutional ownership. Research limitations/implications These findings imply that institutional investors gravitate to firms that have high investment in internal audit function and effective audit committee. These findings are consistent with the conjecture that institutional investors try to minimize monitoring and exit costs and meet their fiduciary responsibility by investing in better internal audit firms. Practical implications This study offers insights to policymakers interested in enhancing internal governance mechanisms to attract institutional investors. Originality/value Limited empirical studies have examined the relation between internal governance mechanisms (internal audit function and audit committee effectiveness) and institutional ownership. This study adds to the existing literature on the importance of internal governance mechanisms by documenting an association between internal audit function and audit committee effectiveness and institutional ownership in an emerging country like Malaysia.

scholarly journals Social contagion and the institutionalisation of GRI-based sustainability reporting practices

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ameeta Jain ◽  
Muhammad Azizul Islam ◽  
Monica Keneley ◽  
Monika Kansal
Keyword(s):  
Financial Services ◽  
Sustainability Reporting ◽  
Social Contagion ◽  
Global Reporting Initiative ◽  
Content Type ◽  
Services Sector ◽  
Reporting Practices ◽  
Financial Services Sector ◽  
Adoption And Diffusion ◽  
And Diffusion

Purpose This study aims to investigate the adoption and diffusion of Global Reporting Initiative (GRI)-based sustainability reporting practices within the global financial services sector. Design/methodology/approach The approach draws on the sociological construct of social contagion theory (SCT) to explain the drivers of diffusion of GRI-based sustainability reporting. Based on a longitudinal study of GRI adoption over a period from 2000 to 2016, thematic content analysis of sustainability reports and media articles was used to refine information gathered that related to nature and spread of GRI-based sustainability practices within the global financial services sector. Findings This study finds that the early adopters of GRI-based sustainability reporting and the accompanying media attention influenced the institutional diffusion of GRI-based reporting in the financial services sector. This growth was isomorphic as companies copied best practice models to reduce uncertainty and maintain legitimacy. Originality/value This paper focuses on the institutional diffusion of sustainability reporting practices within the global financial sector. It explores the notion of social contagion as an institutional dynamic to understand the drivers for the adoption and diffusion of GRI-based sustainability reporting across national borders. In doing so, the study contributes to the accounting literature on diffusion of innovations in reporting practice, but also, more generally, to the field of diffusion of new ideas in organisations using the unique approach of SCT.

Audit committee, internal audit function and earnings management: evidence from Jordan

2019 ◽  
Vol 27 (1) ◽  
pp. 72-90 ◽  
Author(s):  
Ebraheem Saleem Salem Alzoubi
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Committee ◽  
Internal Audit ◽  
Reporting Quality ◽  
Discretionary Accruals ◽  
Least Squares Regression ◽  
Content Type ◽  
Internal Audit Function ◽  
The Impact

PurposeThis study aims to examine the influence of audit committee existence and internal audit function on the earnings management of companies.Design/methodology/approachThis paper uses generalised least squares regression to investigate the influence of audit committee existence, internal audit function and the interaction of these two mechanisms on earnings management for a sample of 86 industrial companies listed on the Amman Stock Exchange over a four-year period from 2007 to 2010. The paper uses the extent of discretionary accruals as the proxy for earnings management.FindingsThis paper finds that audit committee existence and the internal audit function reduce the level of earnings management. The number of meetings between the audit committee and internal audit function also reduces discretionary accruals. Overall, this study finds that audit committee existence and internal audit function decrease earnings management and improve the financial reporting quality.Originality/valueThe main contribution of this study is that it investigates the combined effects of audit committee existence and internal auditors on earnings management. Furthermore, this study is the initial paper to examine the impact of audit committee and internal audit on earnings management in Jordan.

Evidence on the relation between audit committee financial expertise and internal audit function effectiveness

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ahmed Atef Oussii ◽  
Neila Boulila
Keyword(s):  
Financial Reporting ◽  
Work Experience ◽  
Audit Committee ◽  
Committee Member ◽  
Internal Audit ◽  
Reporting Quality ◽  
Certified Public Accountant ◽  
Content Type ◽  
Internal Audit Function ◽  
Financial Expertise

PurposeThe purpose of this paper aims to investigate whether the source of audit committee accounting expertise influences the internal audit function (IAF) effectiveness in the Tunisian setting.Design/methodology/approachIn the analysis, the authors conduct a survey of chief internal auditors from Tunisian listed companies. Then, a multivariate regression analysis is performed in order to analyze the relationship between audit committee financial expertise and IAF effectiveness.FindingsThe findings of the present study show that audit committee accounting financial expertise is most likely to be positively associated with the implementation of internal audit report recommendations. The authors also find that only financial expertise gained from accounting education and experience (e.g. an audit committee member with experience as a certified public accountant, auditor, chief financial officer or chief accounting officer) is associated with a stronger implementation of IAF recommendations, but not financial expertise gained from work experience in finance positions.Practical implicationsThese results may have implications for regulatory bodies. They can provide a better understanding of the role of the audit committee expertise in monitoring internal audit processes. The major contribution of this study is that the audit committee's oversight role is strengthened if the committee members have accounting and auditing expertise.Originality/valueThe study extends prior literature by providing evidence that the source of audit committee accounting financial expertise enhances internal audit effectiveness beyond the outcomes it has on financial reporting quality. The study also contributes to the ongoing debate in the corporate governance literature concerning the definition of the financial expertise of audit committee members.

Internal audit organisational status, competencies, activities and fraud management in the financial services sector

2017 ◽  
Vol 32 (9) ◽  
pp. 924-944 ◽  
Author(s):  
Frank Kabuye ◽  
Stephen Korutaro Nkundabanyanga ◽  
Julius Opiso ◽  
Zulaika Nakabuye
Keyword(s):  
Financial Services ◽  
Policy Development ◽  
Internal Audit ◽  
Firm Level ◽  
Cross Sectional ◽  
Content Type ◽  
Internal Auditors ◽  
Services Sector ◽  
Financial Services Sector ◽  
Financial Services Firms

Purpose The purpose of this paper is to study the relationship between internal audit organisational status, competencies, activities and fraud management. As a corollary, this paper examines the contribution made by the internal audit organisational status, the internal audit competence and the internal audit activities on fraud management in financial services firms. Design/methodology/approach This study is cross-sectional and correlational, and it uses firm-level data that were collected by means of a questionnaire survey from a sample of 54 financial services firms in Kampala – Uganda. Findings Results suggest that the internal audit organisational status and the internal audit competence are significant predictors of fraud management. Contrary to previous thinking, internal audit activities do not significantly predict fraud management. Therefore, once internal auditors have appropriate status and are competent in an organisation, they are likely to perform activities that enhance fraud management. Research limitations/implications This study focuses on financial services firms in Uganda, and it is possible that these results are only applicable to the financial services sector. More research is therefore needed to further understand the contribution of the internal audit constructs on fraud management in other sectors such as the public sector. Practical implications The results are important for internal audit policy development, for example, in terms of prescribing the competences and reporting lines for the internal auditors to enhance fraud management in the financial services sector. Originality/value As far as the authors are aware, no research has hitherto been undertaken that investigates the individual contribution of internal audit organisation status, competence and its activities as internal audit constructs on fraud management.

Corporate governance, SSB strength and the use of internal audit function by Islamic banks

2020 ◽  
Vol 11 (1) ◽  
pp. 152-167
Author(s):  
Saed Ahmed Sulub ◽  
Zalailah Salleh ◽  
Hafiza Aishah Hashim
Keyword(s):  
Corporate Governance ◽  
Board Of Directors ◽  
Audit Committee ◽  
Global Financial Crisis ◽  
Supervisory Board ◽  
Internal Audit ◽  
Annual Reports ◽  
Islamic Banks ◽  
Content Type ◽  
Internal Audit Function

Purpose This paper aims to identify the effects of some corporate governance (CG) mechanisms and Shariah Supervisory Board (SSB) strength on the voluntary use of internal audit function (IAF) by Islamic banks in Sudan. Design/methodology/approach Based on Agency and Stakeholder Theories, this paper hypothesizes that IAF is likely used by Islamic banks with strong CG and Shariah governance systems. To test these hypotheses, we examine the annual reports of 14 Sudanese banks for a period of five years following the global financial crisis in 2008, using logistic regression analysis. Findings This paper found that IAF is likely used by Islamic banks with higher CG disclosure (CGD) and strong SSB. While the findings showed that the audit committee and IAF are likely used as substitutes, this paper also indicated that there is a negative association between levels of Unrestricted Investment Account Holders’ (UIAH) ownership and the use of IAF. However, the evidence of this study did not find any impact for the board of directors’ strength on the use of IAF. Research limitations/implications There may be better measures for some variables in the study model. Additionally, the restriction of the study sample to Sudanese banks may limit the generalization of the results. Therefore, future studies may refine the model and expand the sample to Islamic banks in other countries. Practical implications This paper highlights the importance of IAF for Shariah governance in Islamic banks. Moreover, the insignificant association between the use of IAF and the strength of board of directors has important implications for the board’s effectiveness in Islamic banks. Originality/value This is the first study to investigate the factors associated with the use of IAF by Islamic banks.

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