Core and Legitimate Roles of Internal Audit Function and Enterprise Risk Management: Propositions for Future Research

2019 ◽  
Vol 10 (9) ◽  
pp. 891-901
Author(s):  
Suaad Jassem ◽  
Keyword(s):  
Risk Management ◽  
Internal Audit ◽  
Enterprise Risk Management ◽  
Internal Auditor ◽  
Internal Auditors ◽  
Corporate Scandals ◽  
The Core ◽  
Enterprise Risk ◽  
Core Components ◽  
The Impact

In the aftermath of global corporate scandals at the start of the new millennium government policy makers and international regulatory organizations launched several initiatives to anticipate and mitigate the impact of enterprise risk that can seriously damage economies of nations and bankrupt globally recognized companies. The typical roles of internal auditors have failed to prevent frauds and financial crimes from taking root in organizations. As a result, paradigms such as Enterprise Risk Management took centre-stage and became vital considerations and organizations such as the Institute of Internal Auditors along with other global platforms such as the Committee of Sponsoring Organizations of the Treadway Commission to address the issue of enterprise risk. However, despite all these measures new corporate scandals have emerged, inviting scope for further investigation on matters such as how defined internal audit functions relate to Enterprise Risk Management. This paper proposes a conceptual link between the core and legitimate roles of internal auditor function and enterprise risk management. The roles of internal auditor function are based on the Institute of Internal Auditors Position Paper (2009) and the core components of Enterprise Risk Management are identified based on the Committee of Sponsoring Organizations (2017) Enterprise Risk Management Integrated Framework. This study further proposes a set of propositions suggesting the possible association of the core and legitimate roles of internal auditors on the five core components of Enterprise Risk Management. The output of this study is expected to lay the foundation for further empirical studies to develop a finer-grained understanding of how internal auditor function roles relate to Enterprise Risk Management implementation.

scholarly journals Peran Internal Audit dalam Implementasi Enterprise Risk Management berupa Pelaporan Kerusakan Prosedur Risiko.

2020 ◽  
Vol 14 (2) ◽  
Author(s):  
Indarti Indarti
Keyword(s):  
Risk Management ◽  
Internal Audit ◽  
Enterprise Risk Management ◽  
Audit Committees ◽  
Corporate Risk Management ◽  
Internal Auditor ◽  
Internal Auditors ◽  
Enterprise Risk ◽  
Management Procedures ◽  
Corporate Risk

Implementation of Enterprise Risk Management (ERM) by Internal Audit in an orga-nization or company becomes important because Internal Audit is expected to help the organization achieve its objectives by approaching systematic and discipline to evaluate and improve the effectiveness of risk management, control, and governance process. As for which affects it is the involvement of internal auditors, the relation-ship of the audit committee with the internal auditor, and ERM.This study aims to analyze the involvement of Internal Audit in Enterprise Risk mana-gement implementation. Internal auditors should assist both management and audit committees in risk management responsibilities and supervisory roles by examining, evaluating, reporting and recommending improvements to the adequacy and effec-tiveness of risk management processes. An interesting issue is whether internal auditors involved in corporate risk management have a link to the willingness of internal auditors to report to the audit committee.The population in this study are the internal auditors and audit committees who working in companies manufacturing and financial services. The reason for determining the company is because the researcher wants to know how internal audit is involved in ERM implementation on that entity. The sample used in this research is internal auditor at private company and at Banking in this case internal auditor at local bank.The analytical method used is multiple regression analysis with SPSS version 23 pro-gram. The analysis technique used in this research is descriptive statistical analysis, classical assumption test, F-statistic hypothesis test to test influence together with 5% confidence level and use t-statistics to test partial regression coefficients. This re-search was conducted to analyze how much influence the role of Internal Audit in applying Enterprise Risk Management in the implementation of Audit.The result of this research is that the high level of internal auditor involvement in Enterprise Risk management implementation has no significant and significant im-pact on reporting of damage to risk management procedures. This indicates that the role of internal auditors in corporate risk management does not affect the reporting of damage to corporate risk management procedures. While the characteristics of strong relationships between internal auditors and audit committees positively and significantly influence the reporting of risk procedures, this indicates that internal audits that have strong internal audit-audit committee relationships strongly support internal auditors who have high involvement to report damage Greater risk procedures.

scholarly journals The Effectiveness of Enterprise Risk Management and Internal Audit Function on Quality of Financial Reporting in Universities

2017 ◽  
Vol 9 (4(J)) ◽  
pp. 230-241
Author(s):  
Wadesango N ◽  
Mhaka C.
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Reporting ◽  
Internal Audit ◽  
Enterprise Risk Management ◽  
State Universities ◽  
Internal Audit Function ◽  
Enterprise Risk ◽  
The Impact

This study examined the impact of enterprise risk management (ERM) and internal audit function (IAF) on the financial reporting quality (FRQ) of state universities in Zimbabwe. Utilizing a dataset of 250 respondents from across nine (9) state universities, the researchers examined the effectiveness of ERM and the IAF on the quality of financial reporting in state universities. The researchers employed the contingency theory and studied each university separately to report on items that are specific to each and then also establish a commonality in the definition of parameters to be used in setting up the benchmark against which future performance may be measured. The findings were that there is a strong and significant relationship between ERM and the FRQ and also that there is a positive relationship between the internal audit function and FRQ. Quality internal audit results improved corporate governance systems. The results also underscore the significance and need for central government to establish and monitor a system of good ERM processes that minimize corporate governance breaches and enhance integrity and independence in financial reporting in state universities.

scholarly journals The Effectiveness of Enterprise Risk Management and Internal Audit Function on Quality of Financial Reporting in Universities

2017 ◽  
Vol 9 (4) ◽  
pp. 230
Author(s):  
Wadesango N ◽  
Mhaka C.
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Financial Reporting ◽  
Internal Audit ◽  
Enterprise Risk Management ◽  
State Universities ◽  
Internal Audit Function ◽  
Enterprise Risk ◽  
The Impact

This study examined the impact of enterprise risk management (ERM) and internal audit function (IAF) on the financial reporting quality (FRQ) of state universities in Zimbabwe. Utilizing a dataset of 250 respondents from across nine (9) state universities, the researchers examined the effectiveness of ERM and the IAF on the quality of financial reporting in state universities. The researchers employed the contingency theory and studied each university separately to report on items that are specific to each and then also establish a commonality in the definition of parameters to be used in setting up the benchmark against which future performance may be measured. The findings were that there is a strong and significant relationship between ERM and the FRQ and also that there is a positive relationship between the internal audit function and FRQ. Quality internal audit results improved corporate governance systems. The results also underscore the significance and need for central government to establish and monitor a system of good ERM processes that minimize corporate governance breaches and enhance integrity and independence in financial reporting in state universities.

Adherence to the Internal Audit Core Principles and Threats to Internal Audit Function Effectiveness

2021 ◽  
Author(s):  
Christopher G Calvin
Keyword(s):  
Corporate Governance ◽  
Future Development ◽  
Internal Audit ◽  
Internal Auditors ◽  
The Core ◽  
Body Of Knowledge ◽  
Internal Audit Function ◽  
Lower Likelihood ◽  
Practitioner Survey ◽  
The Impact

I investigate the impact that adherence to the Institute of Internal Auditors' Core Principles has on the likelihood that an internal auditor's effectiveness is threatened through pressure to modify valid audit findings. I use responses from the Institute of Internal Auditors' 2015 Common Body of Knowledge Practitioner Survey to show that higher adherence to the Core Principles by both internal audit staff and CAEs is associated with a lower likelihood of being pressured to modify audit findings. I also explore which of the ten Core Principles are dominant in explaining these associations to inform the future development of the internal audit profession. Finally, I investigate the sources of pressure to modify audit findings and explore the effect the Core Principles have in mitigating pressure from each source. My findings are relevant to the Institute of Internal Auditors, internal audit practitioners, and academics interested in internal audit or corporate governance.

Enterprise risk management and sustainability of banks performance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Babajide Oyewo
Keyword(s):  
Risk Management ◽  
Banking Sector ◽  
Management Practice ◽  
Enterprise Risk Management ◽  
Annual Reports ◽  
Banking Reform ◽  
Content Type ◽  
Enterprise Risk ◽  
The Impact

PurposeThis study investigates firm attributes (namely level of capitalisation, scope of operation, organisational structure, organisational lifecycle, systemic importance and size) affecting the robustness of enterprise risk management (ERM) practice, the extent to which ERM affects the performance of banks and the impact of ERM on the long-term sustainability of banks in Nigeria. This was against the backdrop that the 2012 banking reform was a major regulatory intervention that mainstreamed ERM in the Nigerian banking sector.Design/methodology/approachThe study employed a mixed methodology of content, trend and quantitative analyses. Ex post facto research design was deployed to analyse performance differential of banks, with respect to the implementation of ERM, over a 10-year period (2008–2017). A disclosure checklist developed from the COSO ERM integrated framework was used to assess the robustness of ERM by content-analysing divulgence on risk management in published annual reports. The banking reform periods were dichotomised into pre- (2008–2012) and post- (2013–2017) reform periods. Jonckheere–Terpstra test, independent sample t-test and Mann–Whitney test were applied to analyse a total of 1,036 firm-year observations over the period 2008–2017.FindingsResult shows that bank attributes significantly affecting the robustness of risk management practice are level of capitalisation, scope of operation, systemic importance and size. Performance of banks improved slightly during the post-2012 banking reform period. This suggests that as banks consolidate on the gains of ERM, benefits of the regulatory policy on risk management may be realised in the long run. Result also shows that ERM enhances long-term performance, connoting that effective risk management could serve as a competitive strategy for surviving turbulence that typically characterises the banking sector.Practical implicationsThe emergence of level of capitalisation, scope of operation, systemic importance and size as determinants of ERM provides empirical evidence to support the practice of reviewing the capital requirements for banking business from time to time by regulatory authorities (i.e. recapitalisation policy) as a strategy for managing systemic risk. Top management of banks may consider instituting mechanisms that will ensure risk management is given prominence. A proactive approach must be taken to convert risks to opportunities by banks and other financial institutions, going forward, to cope with the vicissitudes of financial intermediation.Originality/valueThe originality of the study stems from the consideration that it provides some new insights into the impact of ERM on banks long-term sustainability in a developing country. The study also contributes to knowledge by exposing the factors determining the robustness of risk management practice. The study developed a checklist for assessing ERM practice from annual reports and other risk management disclosure documents. The paper also adds to the scarce literature on risk governance and risk management.

scholarly journals The impact of internal audit in the activation of risk management under the governance of banks

2019 ◽  
Vol 5 (4) ◽  
pp. 7
Author(s):  
Afsar Ali Alimoradi ◽  
Chya Kareem Ahmad
Keyword(s):  
Risk Management ◽  
Internal Audit ◽  
Secondary Data ◽  
Internal Auditing ◽  
Audit Risk ◽  
Internal Auditor ◽  
Risk Management Process ◽  
Statistical Program ◽  
Bank Governance ◽  
The Impact

The research aims to measure and evaluate the impact of internal audit on the efficiency of risk management under the principles of the bank governance in a sample of banks. Thus, internal audit is an important function of controlling financial and administrative performance. It has the impact of evaluating and measuring the efficiency of the use of available resources and strengthening the so-called governance as well as contributing to the assessment and management of risks, which enhances the opportunities of economic units and banks in the optimal use of resources.Internal Audit assists senior management and the board in the process of  theidentifying, assessing and responding to risks, by providing various assurance and advisory services during the implementation of the risk management process. In order to achieve the objectives of the study and test its hypotheses, the study was based on primary and secondary data and the questionnaire was designed and the researchers used the Statistical Program (SPSS) to analyze the data. It was concluded during the research that there is a clear impact of the internal audit profession on the risk management by improving its effectiveness and efficiency under the principles of bank governance shows through the internal audit has a prominent position in banks and because it is linked to the highest levels of management as an independent control and advisory tool. The researchers present a set  of recommendations, the most important of which is the need to provide adequate financial and human resources for internal auditing in banks. The study also recommended to strengthen the components of the independence of the internal auditor in order to be able to perform his duties to the fullest. Key words :  Internal Audit , Risk Management , Banking Governance, Internal Auditor.

scholarly journals IMPACT OF GOOD CORPORATE GOVERNANCE TOWARDS CORPORATE VALUE WITH ENTERPRISE RISK MANAGEMENT AS MODERATING VARIABLE (EMPIRICAL STUDY OF FINANCIAL COMPANIES LISTED IN IDX FOR THE PERIOD 2017-2019)

2021 ◽  
Vol 13 (1) ◽  
pp. 74-98
Author(s):  
Lydia Sibarani ◽  
Herlina Lusmeida
Keyword(s):  
Risk Management ◽  
Corporate Governance ◽  
Audit Committee ◽  
Enterprise Risk Management ◽  
Managerial Ownership ◽  
Corporate Value ◽  
Good Corporate Governance ◽  
Enterprise Risk ◽  
Multiple Regression Method ◽  
The Impact

Abstract- This research aims to observe and analyze the impact of Good Corporate Governance towards Corporate Value as well as analyzing whether Enterprise Risk Management is able to moderate its impact. Good Corporate Governance is proxied by the presence of Independent Commissioners, Audit Committee, as well as Managerial Ownership. The population of this research includes all financial companies that publish their annual report in Bursa Efek Indonesia (BEI) over the period of 2017-2019. Data were analyzed using the multiple regression method and the moderated regression analysis. The result of this research found that Independent Commissioners and Audit Committee gives positive and significant impact towards Corporate Value while Managerial Ownership gives negative and insignificant impact towards Corporate Value. Enterprise Risk Management is not able to moderate the impact of Independent Commissioner and Managerial Ownership towards Corporate Value but is able to moderate the impact of the Audit Committee towards Corporate Value. Keywords: Audit Committee; Corporate Value; Corporate Governance; Independent Commissioner; Managerial Ownership

scholarly journals UPRAVLJANJE RIZICIMA I INTERNA REVIZIJA

2021 ◽  
Vol 9 (1) ◽  
pp. 48-57
Author(s):  
Zorica Jović
Keyword(s):  
Risk Management ◽  
Internal Audit ◽  
Basic Element ◽  
Security Measures ◽  
Management Framework ◽  
Internal Auditors ◽  
Consulting Services ◽  
Risk Management Framework ◽  
Enterprise Risk ◽  
And Control

People undertake risk management activities to identify, assess, manage, and control all types of events or situations. This can range from a single project or narrowly defined types of risk, for example, market risk, to the threats and opportunities faced by the organization. Organizations are under pressure to identify all business risks they face - social, ethical, and environmental risks as well as financial and operational - and to explain that they are being managed at an acceptable level. Risk management is a basic element of corporate governance. Management is responsible for establishing and operating the risk management framework on behalf of the board. A company's risk management brings many benefits that result from its structured, consistent, and coordinated approach. The key role of internal auditors concerning enterprise risk management should be to assure the effectiveness of risk management to management. When an internal audit extends its activities beyond this key role, it should apply certain security measures, including treating engagements as consulting services and applying all relevant standards. In this way, an internal audit will protect its independence and the objectivity of its assurance services

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