scholarly journals The Effects of Interaction between Internal Auditor and Audit Committee on Fraud Detection in Malaysia

2018 ◽  
Vol 7 (4.38) ◽  
pp. 1338
Author(s):  
Sunita Lylia Hamdan ◽  
Nahariah Jaffar ◽  
Ruzanna Ab Razak
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Specific Interaction ◽  
Fraud Detection ◽  
Internal Audit ◽  
Internal Auditing ◽  
Internal Auditor ◽  
Internal Auditors ◽  
External Auditors

This study aims to examine the effect of interaction between internal auditor and audit committee on fraud detection in Malaysia.  Specific interaction is firstly; audit committee approving the appointment of chief audit executive, the evaluation of chief audit executive, the dismissal of chief audit executive, the internal audit budget and the internal audit plan or program.  Secondly, audit committee’s involvement in reviewing internal auditor’s work specifically; providing input for the internal audit plan, reviewing the results of internal auditing related to financial reporting, reviewing the results of internal auditing related to internal control, reviewing the results of internal auditing related to compliance with laws and regulation, reviewing the internal audit involvement in management responses to internal audit suggestions, reviewing the difficulties or scope restrictions encountered by internal auditors and reviewing the coordination between internal auditors and external auditors.  Survey questionnaires were mailed to internal auditors attached to 782 companies listed on Bursa Malaysia’s main market. The results of this study suggest that involvement of audit committee in approving chief audit executives’ matters is insignificant on internal auditors’ contribution to fraud detection.  However, audit committee’s involvement in reviewing internal auditors’ work significantly influence the internal auditors’ contribution in fraud detection.       

scholarly journals Corporate Governance on the Performance of Internal Auditors in Thailand Public Limited Company

2018 ◽  
Vol 6 (2) ◽  
pp. 118
Author(s):  
Sutana Narkchai ◽  
Faudziah Hanim Binti Fadzil ◽  
Sompon Thungwha
Keyword(s):  
Corporate Governance ◽  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Auditing ◽  
Internal Auditor ◽  
Internal Auditors ◽  
Sarbanes Oxley ◽  
Accounting Scandals ◽  
The Relationship

<em>The issue of performance of internal auditors is important since Thailand was also affected by the accounting scandals. The expanded scope in the definition of internal auditing and new regulatory requirements such as the Sarbanes-Oxley Act 2002 has increased the demands on internal auditing. This study was conducted to examine the relationship between the corporate governance on the performance of internal auditors in Thailand public limited companies. In this study, corporate governance relates to the board of directors size and audit committee size to the performance of the internal auditor. To achieve this objective, two hypotheses were developed based on previous studies and the agency theory. Survey questionnaires were sent to the Chief Audit Executives (CAEs) to determine the effectiveness on their performance based on the professional standards issued by the IPPF (2017) indicators. A total of 520 questionnaires were distributed, but only 146 were usable. Multiple regressions were used to test the relationship between the variables. The result showed that there is insignificant relationship between board of director’s size and internal auditors’ performance. This study however found that audit committee size has a positive relationship on the performance of internal auditors. Therefore, audit committee need to increase higher responsibility with regard to corporate governance by overseeing financial reporting and internal control matters.</em>

The Role of Accounting Mechanisms for Corporate Governance in Reducing Creative Accounting Practices in Telecommunications Sector Companies in Riyadh City: An Empirical Study: دور الآليات المحاسبية لحوكمة الشركات في الحد من ممارسات المحاسبة الإبداعية في شركات قطاع الاتصالات بمدينة الرياض: دراسة ميدانية

2020 ◽  
Vol 4 (15) ◽  
Author(s):  
Lamis Jameel Banasser, Maha Faisal Alsayegh
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Internal Auditors ◽  
External Auditors ◽  
Riyadh City ◽  
Creative Accounting ◽  
Telecommunications Sector

The study aimed to identify the role of accounting mechanisms for corporate governance in reducing creative accounting practices in telecommunications sector companies in Riyadh city. A descriptive analytical approach was followed to conduct the field study. Sample of the study consisted of members of the audit committee, internal auditors, accountants from the surveyed telecommunications’ sector companies, and the external auditors in the audit offices that specialized on auditing the examined sample of companies. Questionnaire was used as a data collection method. Results showed that activating the role of accounting mechanisms for corporate governance can greatly contribute in limiting creative accounting practices. As they are controlling mechanisms that capable of protecting companies, shareholders and stakeholders from any manipulation or misleading information in the financial statements. Further, internal audit plays a major role in limiting creative accounting practices by examining and evaluating the effectiveness of the internal control system. Furthermore, the independence and competence of the external auditor and his commitment to the rules of conduct and ethics of the profession contribute greatly in limiting creative accounting practices in the examined companies. The study recommended the necessity of holding specialized training courses for members of audit committees, internal auditors and external auditors on methods of detecting creative accounting practices to combat and reduce them.

scholarly journals Criteria for evaluating the effectiveness of the internal audit of an economic entity

2021 ◽  
Vol 7 (3B) ◽  
pp. 504-510
Author(s):  
Yulia Nikolaevna Kovalenko ◽  
Svetlana Nikolaevna Kovalenko ◽  
Natalia Alekseevna Prodanova ◽  
Marina Mikhailovna Krekova ◽  
Vadim Anatolevich Mironchuk ◽  
...  
Keyword(s):  
Audit Committee ◽  
Internal Audit ◽  
Control Measures ◽  
Executive Management ◽  
Internal Auditor ◽  
Internal Auditors ◽  
External Auditors ◽  
Audit System ◽  
Economic Entity ◽  
The Board Of Directors

The article raises issues related to the need and possibility of evaluating the effectiveness of the internal audit system. The directions of internal auditors 'audits are formed, the procedure of actions of various structural divisions within the framework of effective corporate governance is described, the key factors of the effectiveness of internal auditors' work are given, their essence is revealed. The necessity of creating an internal audit committee is justified, and the provisions of the internal audit committee are prescribed, according to its supervisory role in the activities of an economic entity. The role of the internal auditor and its interaction with external auditors who carry out control measures are described, arguments are given about internal cooperation between the board of directors, the internal audit committee and the executive management of an economic entity in relation to the control system.

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.

scholarly journals Job satisfaction of the internal auditor – A field study on the internal auditors in the Kingdom of Saudi Arabia –: الرضا الوظيفي للمراجع الداخلي – دراسة ميدانية على المراجعين الداخليين في المملكة العربية السعودية –

2021 ◽  
Vol 5 (3) ◽  
Author(s):  
Gihan Taha Khalil
Keyword(s):  
Job Satisfaction ◽  
Saudi Arabia ◽  
Audit Committee ◽  
Internal Audit ◽  
Primary Source ◽  
Internal Auditing ◽  
Kingdom Of Saudi Arabia ◽  
Internal Auditor ◽  
Internal Auditors ◽  
The Relationship

The present study aimed to identify the extent of job satisfaction for the internal auditor in the Kingdom of Saudi Arabia where the relationship of the internal auditor with the organization is a complex relationship where on the one hand they must have a sense of independence and objectivity in the performance of their responsibilities and on the other hand their work depends on those who review their work. The population of study are members of the Saudi Association of Internal Auditors. The researcher used the electronic questionnaire as a tool to collect data that was distributed to and the researcher has reached 330 questionnaires. The results of this study contribute to understanding the factors affecting job satisfaction of the internal auditor in the Kingdom of Saudi Arabia in order to find ways to improve and development career and retain professional competencies. The study concluded that the professional and organizational conflict decreased, the study found 55.1% indicating that the internal audit report was submitted to the audit committee, and the objectives of the internal audit agreed with the goals of the organization, as the sample items agreed that salaries are the primary source for obtaining income, and 57.6% asserted that they do not match the volume of work that Assigned by the internal auditor. The study recommended that professional organizations and associations should provide greater support to the profession of internal auditing and the utility of the role of the internal auditor more in line with the internal auditing standards issued by the American Institute of Internal Auditors and providing objective criteria for evaluating the performance of the internal auditor and reformulating the salary structure in proportion to the effort made and developing incentive methods, as well as strengthening, developing and improving the relationship with the internal auditor through appreciation and continuous cooperation and notifying them that they belong to the organization and not working in it only.

scholarly journals Using triangulation to view internal audit’s governance functioning

2016 ◽  
Vol 13 (4) ◽  
pp. 287-296
Author(s):  
Christo Ackermann
Keyword(s):  
South Africa ◽  
Risk Management ◽  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Audit Committees ◽  
Wide Audience ◽  
External Auditors ◽  
Reporting Practices

Internal audit departments of organisations are regarded as an integral component of the combined assurance model alongside the audit committee, management and the external auditors. The primary users of the work of internal audit are the audit committee, senior management, other levels of management and to some extent, the external auditors. This wide audience served by internal audit reinforces the importance of IAFs’ work, which deals with important aspects facing the entity. Internal audit is therefore able to reduce the lack of information availability for the audit committee on matters concerning risk management, internal control and governance. However, a study conducted on audit committee effectiveness, it was found that 40% of audit committees in national government departments in South Africa are not fully effective and are failing to contribute towards improving internal control, risk management, governance and financial reporting practices. Audit committees’ effectiveness in contributing to risk management, internal control and governance was measured at 63%, 76% and 62% respectively, in a comprehensive study on audit committees in the South African public sector. This indicates that their oversight in these areas, especially risk management and governance, is not yet effective. These findings are concerning given that audit committees have a legal mandate to assist government departments in these areas. Internal audit functions are key in assisting audit committees in their governance oversight responsibility. The present study reports on the extent to which internal audit in the eight metropolitan municipalities in South Africa assists audit committees in their governance oversight responsibility, focusing on the scope of work of internal audit with reference to its governance mandate. A data transformation triangulation design was followed to describe internal audit’s functioning

The Development of Internal Auditing as a Profession in the U.S. During the Twentieth Century

2017 ◽  
Vol 44 (2) ◽  
pp. 47-67 ◽  
Author(s):  
Susan Parker ◽  
Lynn A. Johnson
Keyword(s):  
Professional Identity ◽  
Internal Control ◽  
Self Regulation ◽  
Internal Audit ◽  
Professional Community ◽  
Internal Auditing ◽  
Internal Auditor ◽  
Business World ◽  
Internal Auditors ◽  
The Impact

ABSTRACT This paper traces the development of internal auditing from the standpoint of its professional identity. The question of how internal auditors have historically seen themselves bears on how they function as integral parts of internal control systems, and may help researchers formulate future empirical studies of internal auditing. Over the years, the self-perception of the internal audit profession's function has varied greatly. Internal auditing has lived, to some extent, in the shadow of the public accounting profession, while struggling to achieve public recognition, status in the business world, and a defined role separate from that of an internal monitor, subsidiary to the external auditor. While there have been many changes in terms of the formation of a professional community, belief in the importance of the work, and the growth of a system of self-regulation, the demands of various constituents and the desires of internal auditors for professional status have led to a persistent struggle to define the appropriate functions and organizational placement of internal audit. This struggle continues up to the present time. Several things stand in the way of a complete professional identity for internal auditing. Internal auditing cannot lay claim to a clearly defined role that is uniquely its own. The internal audit function (IAF) does not own a skill set or knowledge base that is not shared by the external auditors. The impact on the ability to distinguish the internal auditor from the external consultant is detrimental to the profession. Neither has the internal auditor been able to attain complete autonomy. While the IAF now reports to the Board of Directors or its audit committee more frequently than in the past, its continuing strong connection with management hinders its ability to be truly self-determining. On the other hand, the contributions that internal auditors make to their organizations are very real, and the lack of an externally mandated role allows them to be utility players. For management, the availability of a utility player who can provide internal consulting or assistance that saves overall compliance costs is valuable, as is the ability for boards to rely on an IAF with a deep knowledge of the organization.

The Impact of Internal Audit Function Quality and Contribution on Audit Delay

2014 ◽  
Vol 34 (1) ◽  
pp. 25-58 ◽  
Author(s):  
Mina Pizzini ◽  
Shu Lin ◽  
Douglas E. Ziegenfuss
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
House Of Representatives ◽  
Internal Audit ◽  
Financial Statement ◽  
Internal Auditors ◽  
External Auditors ◽  
Sarbanes Oxley ◽  
The Impact ◽  
Relevant Work

SUMMARY The number of days required to complete financial statement audits (i.e., audit delay) increased significantly with the implementation of Section 404 of the Sarbanes-Oxley Act (SOX, U.S. House of Representatives 2002). As firms' in-house experts on internal control, Internal Audit Functions (IAFs) can substantially affect financial reporting processes and, thus, audit delay. Internal auditors can help management maintain strong internal controls and assist external auditors with financial statement audits. Accordingly, we investigate whether IAF quality and the IAF's contribution to financial statement audits affect audit delay in a sample of 292 firm-year observations drawn from the pre-SOX 404 period. Using survey data from the Institute of Internal Auditors (IIA), we develop a comprehensive proxy for IAF quality; we measure different aspects of IAF quality (e.g., competence, objectivity, fieldwork rigor); and we measure the nature of the IAF's contribution to financial statement audits (independently performed work and direct assistance). Results indicate audit delay is decreasing in IAF quality, and this decrease is driven by IAF competence and fieldwork quality. Delay is four days shorter when IAFs contribute to external audits by independently performing relevant work. High-quality IAFs contribute to financial statement audits by independently performing relevant work, while low-quality IAFs provide direct assistance.

Audit report timeliness

2018 ◽  
Vol 13 (1) ◽  
pp. 60-74 ◽  
Author(s):  
Ahmed Atef Oussii ◽  
Neila Boulila Taktak
Keyword(s):  
Financial Reporting ◽  
Emerging Market ◽  
Internal Audit ◽  
Listed Companies ◽  
Policy Implications ◽  
Internal Auditing ◽  
Content Type ◽  
Internal Auditors ◽  
External Auditors ◽  
Audit Reports

Purpose The purpose of this paper is to examine whether coordination between external auditors and the internal audit function affect the timeliness of audit reports as proxied by audit delay. Design/methodology/approach This study uses a survey of chief internal auditors from Tunisian listed companies to analyze the extent of coordination between IAFs and external auditors. Data spanning a four year period (2011-2014) was collected for 53 listed companies. Further, regression analysis was used to test the hypothesis. Findings Results indicate that greater coordination between internal and external auditors results in timelier financial reporting. Practical implications Overall, the study makes several important contributions. Findings provide important insights that an IAF acts as a valuable resource to external auditors. The results should be of interest to managers, external auditors and the Tunisian Financial Market Council. Originality/value This paper is one of few studies which have examined the association between internal-external audit coordination and timeliness of audit reports in an emerging market. The study makes a meaningful contribution to the corporate governance literature by investigating the influence of internal audit assistance on the delivery of timely audited financial information to the capital market. Results also have policy implications for Tunisian regulators with respect to the promotion of internal auditing best practices.

scholarly journals External and internal auditors’ perceptions on compliance with internal audit standards and practices: Spirit versus letters?

2021 ◽  
Vol 18 (3) ◽  
pp. 31-45
Author(s):  
Mohamed Hegazy ◽  
Marwa Farghaly
Keyword(s):  
Financial Reporting ◽  
Emerging Market ◽  
Internal Audit ◽  
International Standards ◽  
Internal Auditing ◽  
Internal Auditors ◽  
Listed Firms ◽  
External Auditors ◽  
Body Of Knowledge ◽  
The Status

This paper investigates differences between the external auditors’ (EA) and the internal auditors’ (IA) perceptions of the degree of usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by internal audit departments. The research uses survey-based questionnaires sent to IAs and EAs of the listed firms registered in an emerging market and included interviews with individuals involved in the internal auditing function (IAF) and EAs. The survey analyzes issues relating to IAF compliance with IIA standards summarized in the Common Body of Knowledge Database (CBOK). Social identity and stakeholders’ theories are used to explain the development of the research hypotheses in relation to IAF. The research indicates that the rates of conformance for the selected individual standards vary significantly among respondents. The findings provide evidence that there are low levels of interactions between IAs and EAs in emerging markets. This study is considered among the first that surveys the status of the use of the professional IIA standards in listed firms in an emerging economy. It also investigates the importance of ensuring that the “spirit” of the IIA standards is adhered to rather than the mere compliance with their “letters”. The paper emphasizes the gap still existing in practice between IAs and EAs in relation to their interactions, communication, and cooperation to enhance the quality of the IAF activities and related financial reporting. The research study relied on a sample of companies to investigate the level of compliance with IIAs standards and selected a limited number of the IIA standards for usage and compliance assessments.

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