Drivers of stakeholders’ view of internal audit effectiveness

2018 ◽  
Vol 33 (1) ◽  
pp. 90-114 ◽  
Author(s):  
Lourens Erasmus ◽  
Philna Coetzee
Keyword(s):  
Audit Committee ◽  
Internal Audit ◽  
Principal Component ◽  
Senior Management ◽  
Audit Committees ◽  
Internal Auditing ◽  
Content Type ◽  
Key Stakeholders ◽  
Audit Effectiveness ◽  
Insight Into

Purpose The purpose of this study is to determine the differences in perception of the key stakeholders on the drivers of internal audit effectiveness, namely, senior management and the audit committee, in relation to identified measures. To be seen as an effective internal audit function, value needs to be added for both these stakeholders. It is thus important for internal auditing to obtain an understanding of what these stakeholders respectively perceive as the most prominent drivers of internal audit effectiveness. Design/methodology/approach Heads of internal audit functions (providing insight into the drivers), chairpersons of audit committees and senior management (providing insight into the measures) within the South African public sector responded to a survey. The data were subjected to an exploratory factor analysis and principal component analysis to reduce the set of items and to provide continuous scores for use in a multivariate multiple regression analyses. Findings Senior management and the audit committee differ in their level or order of prominence of the identified drivers that influence the identified measures of internal audit effectiveness. No statistical similarities in their level of views could be found. Originality/value To enhance the effectiveness of internal auditing, the internal audit functions should take cognisance of the difference in perceptions of its key stakeholders on the drivers of internal audit effectiveness, in relation to identified measures, to manage these relationships. No previous research could find that statistically compared views of senior management and the audit committee regarding the drivers of internal audit effectiveness.

Contribution of internal auditing to risk management

2016 ◽  
Vol 29 (4) ◽  
pp. 348-364 ◽  
Author(s):  
Philna Coetzee
Keyword(s):  
Risk Management ◽  
Public Sector ◽  
South African ◽  
Audit Committee ◽  
Internal Audit ◽  
Senior Management ◽  
Minor Effect ◽  
Internal Auditing ◽  
The South ◽  
Content Type

Purpose – There is a widening gap between the expectations of internal audit stakeholders and the value the function brings to the table, for example, in the management of the risks threatening an organisation. The purpose of this paper is to investigate the views of chief audit executives (CAEs), the chairs of audit committees and senior management on the contribution of the internal audit functions to risk management in the South African public sector. This contribution is considered in the context of existing risk management structures and the level of coordination between these structures and internal auditing. Design/methodology/approach – The views of heads of internal auditing, chairpersons of the audit committee and the Accounting Officer (similar to the CEO of private sector organisations) of national, provincial and local government organisations were obtained and statistically analysed. Findings – The results indicate that the CAEs have noticeably different views from the other two parties, and that the existence of risk management structures has a minor effect on how the contribution of internal auditing to risk management is perceived. Research limitations/implications – It was decided to not include the views of heads of risk management functions owing to the immaturity of risk management in this sector with in the South African public sector. Practical implications – The results of the study provide internal auditing with information on narrowing the possible gap between the perceptions of senior management and their own perceptions. Senior management could streamline the efforts of these two parties in mitigating the key risk of the organisation. The audit committee, as the independent overseer of internal auditing, will obtain information on whether internal auditing contributes to risk management, and if not, how to address these issues, taking into account the existence (or a lack thereof) of risk management structures. The legislator and regulator of public sector could be influenced to provide clearer guidance or rules in this regard in order to enhance the efficiency and effectiveness of risk management policies and practices. Originality/value – Limited studies have been conducted regarding the coordination of internal auditing and risk management in mitigating the key risks; especially within the public sector domain whether the existence of risk management structures would affect this coordination. Also the views of senior management, as the key stakeholder of internal auditing, on this matter have not yet been solicited.

Internal auditor characteristics, internal audit effectiveness, and moderating effect of senior management

2016 ◽  
Vol 32 (2) ◽  
pp. 160-176 ◽  
Author(s):  
Khaled Ali Endaya ◽  
Mustafa Mohd Hanefah
Keyword(s):  
Multiple Regression ◽  
Internal Audit ◽  
Moderating Effect ◽  
Senior Management ◽  
Management Support ◽  
Internal Auditing ◽  
Internal Auditor ◽  
Content Type ◽  
The Impact ◽  
Audit Effectiveness

Purpose The purpose of this paper is to investigate the direct relationship between internal auditor’s characteristics[1] and internal audit effectiveness[2], and the moderating effect of senior management[3] support. Design/methodology/approach Standard multiple regression and moderated multiple regression are applied, and the data were collected from 114 members of Libyan Association of Accountants and Auditors[4] by using personally administered questionnaire. Findings The findings reveal that internal auditor’s characteristics have a significant impact on internal audit effectiveness, and senior management support has a moderating effect. Practical implications The findings would encourage Libyan organizations to concentrate on the issue of internal audit effectiveness, and will strengthen the capacity of internal auditing in public organizations. Originality/value This paper contributes to the literature of both internal audit and management studies and represents the first effort to examine the impact of internal auditor’s characteristics on internal audit effectiveness with senior management support as a moderating variable.

The impact of audit committee characteristics on internal audit professionalization: empirical evidence from Greece

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Christina Vadasi ◽  
Michalis Bekiaris ◽  
Andreas G. Koutoupis
Keyword(s):  
Empirical Evidence ◽  
Audit Committee ◽  
Audit Quality ◽  
Research Question ◽  
Internal Audit ◽  
Audit Committees ◽  
Annual Reports ◽  
Substantial Impact ◽  
Content Type ◽  
The Impact

Purpose This paper aims to provide empirical evidence of the association between audit committee characteristics and internal audit quality through internal audit professionalization. Design/methodology/approach The investigation of the research question was based on 45 usable responses that were received from a survey of chief audit executives from firms listed on the Athens Stock Exchange and combined with publicly available information from annual reports. Findings The results indicate that audit committee characteristics (independence, diligence through frequent meetings and interaction with internal audit through valuation) influence internal audit professionalization. In addition, they demonstrate that internal audit professionalization is also influenced by CEO duality and firm’s external auditor. Practical implications The findings of this study have implications for audit committees wishing to improve their overall effectiveness, by identifying areas with substantial impact on internal audit quality. Moreover, regulators of corporate governance bodies can also benefit from the results to strengthen audit committee’s efficiency regarding internal audit function oversight. Originality/value The results add to the literature on the discussion of internal audit professionalization and complement the work of other researchers in the field of audit committee’s impact on internal audit quality/effectiveness. This study attempts to fill a gap in the literature on the effect of audit committee characteristics on internal audit professionalization, an element introduced from an institutional theory perspective.

Corporate governance and internal audit: an institutional theory perspective

2019 ◽  
Vol 20 (1) ◽  
pp. 175-190 ◽  
Author(s):  
Christina Vadasi ◽  
Michalis Bekiaris ◽  
Andreas Andrikopoulos
Keyword(s):  
Corporate Governance ◽  
Institutional Theory ◽  
Audit Committee ◽  
Internal Audit ◽  
Annual Reports ◽  
Substantial Impact ◽  
Content Type ◽  
Internal Auditors ◽  
The Impact ◽  
Audit Effectiveness

Purpose This paper aims to explore internal audit effectiveness through its contribution to corporate governance. Namely, the authors attempt to investigate the impact of internal audit professionalization on internal audit’s contribution to corporate governance. Design/methodology/approach Using a research framework informed by institutional theory, the authors predict that internal audit’s contribution to corporate governance is associated with factors related to internal audit professionalization. To investigate the arguments, the authors combine data from a survey of 49 listed companies in the Athens Stock Exchange with publicly available information from annual reports. Findings Empirical results indicate that internal audit professionalization affects internal audit effectiveness, as internal audit’s contribution to corporate governance is improved for organizations where internal audit function complies with internal auditing standards and internal auditors hold professional certifications. The findings also suggest that internal audit’s contribution to corporate governance is shaped by some company-specific characteristics, namely, CEO duality and audit committee quality. Practical implications The results have implications for internal auditors who wish to increase the efficiency of their work, corporate governance mechanisms such as the board of directors and the audit committee, which can use the findings of this study to better respond to their responsibilities concerning internal audit and regulators who can also benefit to strengthen areas with substantial impact on internal audit’s contribution to corporate governance. Originality/value This paper contributes to the academic discussion on the role of internal audit in corporate governance and complements the work of other researchers in the field of internal audit professionalization. This study tries to fill a gap in the literature on the effect of internal audit professionalization elements on internal audit’s contribution to corporate governance.

scholarly journals Internal audit risk management in metropolitan municipalities

2016 ◽  
Vol 6 (3) ◽  
pp. 36-44 ◽  
Author(s):  
Christo Ackermann ◽  
Ben Marx
Keyword(s):  
Risk Management ◽  
Audit Committee ◽  
Internal Audit ◽  
Senior Management ◽  
Audit Committees ◽  
Risk Governance ◽  
Specific Reference ◽  
Managing Risk ◽  
And Control ◽  
Metropolitan Municipalities

Internal audit functions (IAFs) of organisations are regarded as crucial components of the combined assurance model, alongside the audit committee, management and external auditors. The combined assurance model aims at having integrated and aligned assurance in organisations with the overall aim of maximising risk and governance oversight and control efficiencies. In this regard, internal audit plays a crucial role, insofar as it consists of experts in risk, governance and control consultancy who provide assurance to senior management and the audit committee. Audit committees are dependent on internal audit for information and their effectiveness revolves around a strong and well-resourced internal audit function which is able to aid audit committees to meet their oversight responsibilities. There is thus a growing demand for managing risk through the process of risk management and internal audit is in a perfect position to assist with the improvement of such processes. If internal auditors wish to continue being an important aspect of the combined assurance model, they need to address the critical area, amongst others, of risk management as part of their work. If not, it follows that the board, audit committees and other levels of management will remain uninformed on the status of these matters which, in turn, will negatively impact the ability of these stakeholders to discharge their responsibilities. This study therefore focuses on analysing the functioning of IAFs, with specific reference to their risk management mandate. The study followed a mixed method approach to describe internal audits risk management functioning in the big eight metropolitan municipalities in South Africa. The results show that internal audit provide a broad scope of risk management work which assist senior management in the discharge of their responsibilities. However, in the public eye, internal audits risk management functioning is scant.

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.

Influence of audit committees on internal audit conformance with internal audit standards

2015 ◽  
Vol 30 (6/7) ◽  
pp. 539-559 ◽  
Author(s):  
Abdulaziz Alzeban
Keyword(s):  
Audit Committee ◽  
Stock Exchange ◽  
Middle Eastern ◽  
Internal Audit ◽  
International Standards ◽  
Audit Committees ◽  
Content Type ◽  
Internal Auditors ◽  
The Impact ◽  
Audit Standards

Purpose – This study aims to provide empirical evidence of the association between audit committee characteristics and internal audit conformance with the International Standards for the Professional Practice of Internal Auditing (ISPPIA). Design/methodology/approach – Seventy-four usable responses were received from a survey of chief internal auditors (CIAs) from Saudi companies listed on the Saudi Stock Exchange. Findings – The results indicate that audit committee characteristics (the presence of independent members on the committee, members’ expertise in auditing and accounting and meeting with the CIA) influence internal audit conformance with the ISPPIA. Additionally, they demonstrate that such conformance is also influenced by CIA tenure. Practical implications – The findings of this study also have significant implications for audit committees wishing to improve their overall effectiveness, by identifying the impact of the committee’s characteristics on internal audit conformance with the ISPPIA. Originality/value – The results add to the literature on internal audit standards by introducing a Middle Eastern perspective and simultaneously providing insights for companies in their attempts to adhere to the international standards, hence, supporting efforts towards good corporate governance.

scholarly journals Interdependence between audit committee and internal audit

2012 ◽  
Vol 8 (2) ◽  
pp. 6-14
Author(s):  
Boris Tušek ◽  
Ivana Pokrovac
Keyword(s):  
Audit Committee ◽  
Internal Audit ◽  
The Other ◽  
Mutual Interaction ◽  
Audit Committees ◽  
Internal Auditing ◽  
Key Factors ◽  
Internal Audit Function ◽  
Source Of Information ◽  
Adequate Communication

Internal audit is an indispensable resource and a source of information for the audit committee. Audit committees have to meet a number of obligations and responsibilities which is not possible without adequate communication with the internal audit. Internal audit is often seen as an "eyes and ears" of the audit committee. On the other hand, one of the key factors for the successful internal auditing functioning in an organization is a support that audit committee provides to the internal audit function. Previous studies stress out the importance of mutual interaction which is extremely important for reciprocal strengthening. of each other’s functions. The purpose of this paper is to investigate the relevant theoretical features of the connection between internal and Audit Committee.

Audit Committee Composition, “Gray Directors,” and Interaction with Internal Auditing

2001 ◽  
Vol 15 (2) ◽  
pp. 105-118 ◽  
Author(s):  
K. Raghunandan ◽  
Dasaratha V. Rama ◽  
William J. Read
Keyword(s):  
Audit Committee ◽  
Empirical Support ◽  
Internal Audit ◽  
Audit Committees ◽  
Internal Auditing ◽  
Public Companies ◽  
Internal Auditor ◽  
Blue Ribbon ◽  
Internal Auditors ◽  
Governance Process

The functioning of corporate audit committees was criticized in recent years by the Treadway Commission, the Public Oversight Board, the Kirk Panel, and the SEC Chairman. In response, the NYSE and NASD sponsored the Blue Ribbon Committee (BRC) on Improving the Effectiveness of Corporate Audit Committees. The BRC Report includes recommendations aimed at strengthening director independence and qualifications, and highlights the role of internal auditors in assisting audit committees in the corporate governance process. Moreover, the first three recommendations of the BRC relate to audit committee composition: absence of inside or “gray” directors, and presence of a member with financial expertise. This study examines the association between audit committee composition and the committee's interaction with internal auditing. Our results, based on responses from chief internal auditors of 114 public companies, indicate that committees comprised solely of independent directors and with at least one member having an accounting or finance background are more likely to (1) have longer meetings with the chief internal auditor; (2) provide private access to the chief internal auditor; and (3) review internal audit proposals and results of internal auditing. These findings provide empirical support for the BRC's recommendations related to audit committee composition.

An examination of factors associated with investment in internal auditing technology

2020 ◽  
Vol 35 (7) ◽  
pp. 955-978
Author(s):  
Sarah Garven ◽  
Audrey Scarlata
Keyword(s):  
Audit Committee ◽  
Investment Decision ◽  
Internal Audit ◽  
Internal Auditing ◽  
Private Company ◽  
Internal Auditor ◽  
Content Type ◽  
Technology Investment ◽  
Audit Technology ◽  
Tools And Techniques

Purpose The purpose of this study is to explore whether various organizational, internal audit function and audit committee factors are associated with internal audit investment in audit technology. Design/methodology/approach The responses from 213 public and private company chief audit executives (CAEs) from seven Anglo-culture countries are analyzed from the Common Body of Knowledge (CBOK) 2015 Global Internal Auditor Practitioner Survey on specific questions addressing internal audit use of audit technology. Findings The results indicate that several of the studied factors are associated with investment in internal auditing technology, and taken together, suggest that CAE power may be the key driver in the technology investment decision. Furthermore, the data show that internal audit functions are not fully embracing the use of information technology (IT) tools and techniques, with average usage of ten of the eleven tools and techniques examined below moderate levels. Practical implications The results have implications for CAEs, boards and management when making resource allocation decisions. For example, the findings can be used in benchmarking an appropriate investment in internal audit technology, as well as identifying specific internal audit technology areas where further investment may be warranted. Additionally, insights provided by this study can facilitate a discussion about the value internal audit can add by increasing its investment in audit technology. Originality/value This study contributes to prior literature on internal auditing by filling a gap related to internal audit investment in audit technology, examining countries that are similar in culture rather than limiting the study to one country, and using several factors that have not been previously examined in prior internal audit investment-related literature. Additionally, the findings pointing to the important role CAE power appears to play in the internal audit technology investment decision provide several interesting new research avenues.

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