Internal auditors’ perceptions of the function’s ability to investigate fraud

2019 ◽  
Vol 20 (2) ◽  
pp. 134-153 ◽  
Author(s):  
Sourour Hazami-Ammar
Keyword(s):  
Internal Audit ◽  
Future Research ◽  
Financial Fraud ◽  
Internal Auditing ◽  
Content Type ◽  
Organizational Variables ◽  
Internal Auditors ◽  
Fraud Risk ◽  
Internal Audit Function ◽  
Practical Implications

Purpose The purpose of this paper is to examine the relation between internal audit function (IAF) characteristics and organizational variables and IAF’s self-investigation about fraud and irregularities (SIFI) in the French context. Design/methodology/approach This paper uses the responses of 96 chief audit executives (CAEs) to a global survey of the internal auditing profession carried out by the Institute of Internal Auditors Research Foundation (IIARF) in 2010. A logistic regression model is used to determine factors influencing IAF’s SIFI. Findings The authors’ findings reveal that IAF’s SIFI is positively correlated to independence and objectivity, the number of activities performed by the function, adoption of a systematic approach to evaluate the effectiveness of risk management and the size of the company. Research limitations/implications This study examines the factors associated only to IAF’s investigation rather than assessment of the risk of fraud. It remains for future research to analyze determinants those related to internal auditors’ approaches when they evaluate the risk of fraud. Practical implications The findings have implications for CAEs who wish to improve the IAF’s ability to investigate fraud. Originality/value Even if the IIA has stipulated since 2009 that internal auditors must have knowledge to evaluate the risk of fraud, no disclosure requirement exists, in France, for IAF or its charter. The areas of research related to internal audit behavior in relation to fraud concern fraud risk investigation of financial fraud and management/employee misconduct.

Understanding the internal audit function in a digitalised business environment

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Nathanaël Betti ◽  
Gerrit Sarens
Keyword(s):  
Data Analytics ◽  
New Technologies ◽  
Internal Audit ◽  
Business Environment ◽  
Future Research ◽  
The European Union ◽  
Content Type ◽  
Internal Auditors ◽  
Internal Audit Function ◽  
The Impact

Purpose This paper aims to gain an in-depth understanding of how the internal audit function evolves in an increasingly digitalised business environment. Design/methodology/approach This paper is based on 29 semi-structured interviews with members of management committees and internal auditors based in Belgium. Findings The analysis reveals that a digitalised business environment affects the internal audit function in three respects. First, it impacts its scope. The agility of the internal audit planning and the required digital knowledge are expected to increase and information technology (IT) risks gain importance, especially cybersecurity threats. Second, the demand for consulting activities performed by internal auditors is higher and third, digitalisation modifies the working practices of internal auditors in their day-to-day tasks. New technologies such as data analytics tools are being implemented progressively in internal audit departments and digital skills are considered a critical asset. Research limitations/implications This research was conducted in the European Union and gathers opinions of members of management committees and internal auditors. Future research could focus on other internal auditing stakeholders in other legal contexts. Practical implications The internal audit function needs to integrate IT and data analytics skills. In addition, the internal audit function should develop consulting activities to help organisations deal with the digitalisation of the business environment. Originality/value The impact of digitalisation on the internal audit function and its effect on internal audit practices is an underexplored area.

Internal Auditing in India and China: Some Empirical Evidence and Issues for Research

2018 ◽  
Vol 34 (4) ◽  
pp. 511-523 ◽  
Author(s):  
R. Narayanaswamy ◽  
K. Raghunandan ◽  
Dasaratha V. Rama
Keyword(s):  
Empirical Evidence ◽  
Emerging Economies ◽  
Internal Audit ◽  
The United States ◽  
Future Research ◽  
Internal Auditing ◽  
Internal Auditors ◽  
Internal Audit Function ◽  
India And China

Internal auditing is an important element in the corporate governance framework. Yet, research related to internal auditing, particularly in emerging economies like India and China, is sparse. We use data from responses provided by chief audit executives to provide empirical evidence about the extent of support for internal auditing and the determinants of such support in India and China, and compare the data with those from the United States. We find that such support is negatively related to pressure on internal auditors to suppress or alter their findings. We also provide descriptive evidence about the work and staffing of the internal audit function. We discuss the role of internal auditing in India and identify some possible avenues for future research.

Does the chief audit executive gender matter to internal audit effectiveness? Evidence from Tunisia

2019 ◽  
Vol 10 (4) ◽  
pp. 424-439
Author(s):  
Ahmed Atef Oussii ◽  
Mohamed Faker Klibi
Keyword(s):  
Quality Assurance ◽  
Internal Audit ◽  
Internal Auditing ◽  
Content Type ◽  
Internal Auditors ◽  
Positive Effects ◽  
Internal Audit Function ◽  
Management Positions ◽  
African Perspective ◽  
Executive Gender

Purpose The purpose of this paper is to investigate whether chief audit executive (CAE) gender has a significant impact on the internal audit function (IAF) effectiveness as proxied by the extent to which the internal audit function uses quality assurance techniques. Design/methodology/approach This study uses a multivariate regression model to analyze the association between CAE gender and the use of quality assurance techniques in fieldwork as a proxy for IAF effectiveness. Data were collected using a survey of 74 internal auditors from Tunisian listed companies. Findings The results indicate that IAFs run by a female CAE are more likely to incorporate quality assurance techniques into fieldwork than IAFs run by male CAEs. Therefore, internal audit departments managed by women tend to be more effective. Practical implications Findings highlight to regulators and reform advocates the importance of having women on the CAE position will improve internal audit practices’ quality. Thus, the gender difference in internal auditing should be more strongly emphasized in different cultural and economic contexts. Originality/value This study provides new insights which add to the existing gender literature by introducing a North African perspective and simultaneously providing new insights that highlight the importance of having women on top management positions in internal auditing and the positive effects which come with it.

Attributes of the internal audit function and effectiveness of internal audit services: evidence from local government authorities in Tanzania

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Athuman Kalokola Mahyoro ◽  
Pendo Shukrani Kasoga
Keyword(s):  
Local Government ◽  
Audit Quality ◽  
Internal Audit ◽  
Principal Component ◽  
Positive Influence ◽  
Audit Committees ◽  
Future Research ◽  
Content Type ◽  
Internal Auditors ◽  
Internal Audit Function

Purpose The purpose of this study is to examine how the level of attributes of the internal audit function relates to the effectiveness of internal audit services in local government authorities (LGAs) in Tanzania. Design/methodology/approach Data have been collected through a survey whereby 510 respondents from LGAs in Tanzania through their Heads of Internal Audit Functions, Internal Auditors and Chairpersons of Audit Committees respond to the questionnaire. The data were subjected to principal component analysis and exploratory factor analysis to reduce the set of items and to provide continuous scores for use in multiple regression analyses. Findings The findings reveal that audit quality; organization setting and auditee attributes have a significant positive influence on the effectiveness of internal audit services in LGAs in Tanzania. Research limitations/implications The study covered only LGAs in Tanzania. Future research in this field should address the gaps identified in the study. Practical implications This paper highlights areas that need management attention on the improvement of the effectiveness of internal audit units. Originality/value This paper contributes to the literature of both internal auditing and management studies by linking the level of attributes of internal audit function which are audit quality, organization setting, auditee attributes and effectiveness of internal audit services in Tanzania.

How the internal audit function is evolving

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Keyword(s):  
Design Methodology ◽  
Reading Time ◽  
Internal Audit ◽  
Content Type ◽  
Internal Auditors ◽  
Business Environments ◽  
Internal Audit Function ◽  
Digital Skills ◽  
Pertinent Information ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Digitalization brings both new opportunities and threats to the business environments. Such developments demand that internal auditors acquire digital skills and enhance consulting capabilities so the function can help companies effectively manage emerging risks. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

New guidance on internal audit – an analysis and appraisal of recent developments

2014 ◽  
Vol 29 (2) ◽  
pp. 196-218 ◽  
Author(s):  
Andrew D. Chambers
Keyword(s):  
Design Methodology ◽  
Internal Audit ◽  
Public Consultation ◽  
Internal Auditing ◽  
Content Type ◽  
Internal Auditors ◽  
Recent Developments ◽  
High Degree ◽  
Practical Implications ◽  
Partial Vacuum

Purpose – The purpose of this paper is to analyse and comment on recent enhanced pronouncements on internal auditing. Design/methodology/approach – The paper uses content analysis of five 2012-2013 sources of guidance, set out in the tables of this paper and summarised within the text, together with conceptual interpretations. Findings – Recent pronouncements respond, with considerable consensus, to stakeholder and public concerns and fill a partial vacuum left by The Institute of Internal Auditors' Standards. Principally this is about successfully enhancing the scope of internal audit and internal audit's independence from management. Research limitations/implications – While the paper is conceptual rather than empirical, it builds on the processes followed by the parties who developed the examples of enhanced guidance reviewed in this paper. Those processes included careful development by leaders in the field, public consultation of preliminary proposals, and final amended guidance based on feedback received. Practical implications – There are implications for staffing of internal audit functions and the seniority and calibre of chief audit executives. Originality/value – There has been no other attempt to map these developments. It has been done with a view to identifying possible ways forward for internal auditing, especially those which have a high degree of support and which are still to be incorporated into generally accepted internal auditing.

scholarly journals Responsibility of internal auditors in the management of fraud risks

Revizor ◽  
2021 ◽  
Vol 24 (93) ◽  
pp. 79-94
Author(s):  
Mile Stanišić
Keyword(s):  
Risk Management ◽  
Code Of Ethics ◽  
Internal Audit ◽  
Internal Auditing ◽  
Internal Auditors ◽  
Fraud Risk ◽  
Internal Audit Function ◽  
Auditing Standards ◽  
Management Controls ◽  
Fraud Risk Management

When fraud occurs in the organization, many wonder - where was the internal audit. The aim of this work is to determine what are the responsibilities of internal audit in the management of fraud risks and what regulations define them. Internal Auditing Standards and the Code of Ethics for Internal Auditors are places where the responsibility of internal auditors for managing fraud risks is established, and the Internal Audit Charter is a document that authorizes internal auditors. The internal audit function plays an important role in the overall monitoring of fraud risk management programs. This is primarily evident from the independent assurance that the internal audit function provides to the Board and management that existing fraud risk management controls are adequately planned and efective.

New perspective on the black box of internal auditing and organisational change

2016 ◽  
Vol 31 (8/9) ◽  
pp. 804-820 ◽  
Author(s):  
Aviv Kidron ◽  
Yuval Ofek ◽  
Herztel Cohen
Keyword(s):  
Public Sector ◽  
Quantitative Methods ◽  
Internal Audit ◽  
Organisational Change ◽  
Internal Auditing ◽  
Content Type ◽  
Internal Auditors ◽  
The Public ◽  
Innovative Model ◽  
Audit Information

Purpose The shift from the traditional audit towards performance audit implies that internal auditors in the public sector function as change agents who underpin the fundamental change process. This paper aims to propose a model that identifies the determinants of organisational change in the public sector that result from internal auditing and the way internal auditors facilitate it. Design/methodology/approach The conceptual discussion of this paper is based on a review of relevant literature, both practical and academic. Findings This paper develops an innovative model that describes the factors leading to auditees’ change readiness after undergoing internal audit processes. The independent variable is audit information quality and the dependent variable, organisational change. Auditees’ perceptions is the mediator variable, and accessibility to audit information is the moderator variable. Practical implications The proposed model suggests the advantages that can be gained by audit-related services, which in turn will add value to the organisation. The relationships between the variables inform practitioners on how to support effective audits as a means of increasing performance and influencing organisational change. Originality/value As the paper offers an innovative model, it may open up new research areas in internal auditing that can be studied by using both qualitative and quantitative methods.

E-business internal audit: the elephant is still in the room!

2014 ◽  
Vol 15 (1) ◽  
pp. 43-63 ◽  
Author(s):  
Amr Kotb ◽  
Alan Sangster ◽  
David Henderson
Keyword(s):  
Resistance To Change ◽  
Internal Audit ◽  
Business Environment ◽  
Content Type ◽  
Internal Auditors ◽  
Internal Audit Function ◽  
The Usa ◽  
The Uk ◽  
It Audit ◽  
The Impact

Purpose – The purpose of this paper is to explore the impact of technological change on the internal audit practices and skills requirements for internal auditors in an e-business environment. Design/methodology/approach – Generalist internal auditors and specialist information technology (IT) internal auditors were surveyed online in ten countries, including the USA and the UK which, together, provided the majority of responses. Findings – The results suggest a need for advanced IT-audit techniques in conducting the internal audit function, thereby increasing IT audit skill demands on generalist internal auditors. However, the results show a low confidence among internal auditors about their IT training and a continuing reliance upon IT audit specialists, rather than their own training/retraining. Research limitations/implications – The responses obtained in this study provide insight into both the status quo of the internal audit function, and to the changes that are needed to prepare generalist internal auditors for work in an e-business environment and, while the scale of the study limits the extent to which the findings may be generalized, they are consistent with the literature concerning the changing business environment and with the literature on resistance to change, suggesting that the issues revealed should be of concern. Practical implications – The results reported in this paper are useful to internal auditing educators and regulators in their consideration of the skills needed by generalist internal auditors in e-business environment. Originality/value – This study sheds light on a significantly growing area which remains relatively unexplored in the auditing-related literature, e-business audit. The study provides empirical evidence on challenges facing internal auditors in an e-business environment, thereby serving as a wake-up call, to both internal auditors and the professional bodies representing them, to defend their jurisdictional space against rival professional groups.

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.

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