scholarly journals An Analysis of Internal Audit Investment Among Top Malaysian Listed Companies

2019 ◽  
Author(s):  
Mohamad Naimi Mohamad Nor ◽  
Suhaimi Ishak
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Economies Of Scale ◽  
Internal Audit ◽  
Listed Companies ◽  
Future Research ◽  
External Audit ◽  
Internal Audit Function ◽  
Code Of Corporate Governance

The importance of internal audit function in improving the company’s internal control risk management and corporate governance has been emphasized in the Malaysian Code of Corporate Governance (MCCG) and Bursa Malaysia Listing Requirements. Based on the Listing Requirements, Malaysian listed companies are required to establish the internal audit function, which is independent and this function must be supervised by the audit committee. Although the importance of internal audit function has been highlighted in various code of corporate governance, little is known about the investment made by the company in internal audit activity. This study capitalizes the publicly available data on internal audit cost and the type of internal function provider in Malaysia setting. The primary purpose of this study is to describe internal audit practices, especially on the internal audit budget in Malaysia for the year 2017 for top 300 companies. Based on the descriptive analysis, it is found that the internal audit fee is relatively lower than the cost of external audit and most of the companies’ internal audit function was carried out by in house teams. Also, the benefit from economies of scale is less pronounced in internal audit as compared to external audit services. Some further analyses were also conducted, and the article is ended recommendations for future research to be undertaken in investigating the internal importance audit in Malaysia.

scholarly journals The role of effective audit committee in strengthening the financial reporting: Evidence from Jordanian listed companies

2012 ◽  
Vol 9 (3) ◽  
pp. 59-68 ◽  
Author(s):  
Mo’taz Amin Al-Sa’eed ◽  
Soud M. Al-Mahamid
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Listed Companies ◽  
International Standards ◽  
Future Research ◽  
External Audit ◽  
Cross Sectional ◽  
Study Results

This study aims to understand the features of an effective audit committee and its role in strengthening financial reporting. A questionnaire based survey was circulated to public listed companies on the Amman Stock Exchange (Banking, insurance, and financial institutions). The study was aimed at internal audit managers and finance managers. Out of 156 questionnaires, we received 110 back which represents a 71% response rate. The study results show that the research respondents have a good level of education and experience. In addition, there is a relationship between internal controls, international standards on auditing, institute of internal audit; Jordan securities commission requirements, external audit, understanding of audit committee functions, and financial reporting. Furthermore, the internal control, international standard on auditing and institute of internal audit, Jordan securities commission requirements, External audit, understanding of audit committee functions can explain a significant amount of the variability in financial reporting. Finally, the research results also show that age and gender make a difference for our respondents when they evaluate financial reporting. The study like other cross sectional studies is not free of limitations. Managerial implications and new avenues of future research are supplied. Future research also can borrow the research model and apply a longitudinal study to solve the cross sectional study problems.

scholarly journals The concept and the appearance of internal audit committees

2018 ◽  
Vol 27 (2018) ◽  
pp. 111-114
Author(s):  
Cristian Dragan
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Internal Audit ◽  
Audit Committees ◽  
External Audit ◽  
General Management ◽  
Proper Functioning

The Audit Committee is a concept of Corporate Governance, whose main concerns are focused on organizing and ensuring the proper functioning of internal control, internal audit, and its relationship with external audit. Audit committees have emerged from the need to send recommendations to the general management or board, to understand them and provide needed assistance for their implementation. For these reasons, the boards of directors thoroughly oversee the qualifications of committee members, their autonomy towards managers, the information they receive from auditors, and what they report.

Factors influencing the implementation of risk-based auditing

2017 ◽  
Vol 25 (3) ◽  
pp. 361-375 ◽  
Author(s):  
Nor Hafizah Zainal Abidin
Keyword(s):  
Risk Management ◽  
Financial Reporting ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Reporting Quality ◽  
Listed Companies ◽  
Risk Environment ◽  
Content Type ◽  
Internal Audit Function

Purpose The purpose of this paper is to examine, from the agency perspective, the influence of internal audit and audit committee attributes, as well as risk management and internal control systems, on the implementation of risk-based auditing among public-listed companies in Malaysia. Design/methodology/approach A questionnaire survey was distributed to the in-house internal audit function in approximately 620 public-listed companies. Consequently, data from 117 heads of the internal audit function was collected and analyzed. Findings The findings indicate that “audit committee review and concern” and “risk management system” are significantly and positively related to the implementation of risk-based auditing. Most importantly, the results indicate the importance of audit committee inputs and concerns in reviewing internal audit activities. Empirically, the findings also suggest that a more formalized risk environment would foster the existence of a strong risk-aware culture and hence provides a strong foundation for internal audit to implement risk-based auditing. However, internal audit experience, size of internal audit function, audit committee qualifications, and internal control system are not found to be significant predictors of the presence of risk-based auditing. Research limitations/implications This study examined only risk-based auditing practices in the in-house internal audit function of public-listed companies; hence, the findings cannot be generalized to all Malaysian-listed companies that outsource or co-source their internal audit activities. Social implications An effective internal monitoring mechanism and better quality of internal audit work will minimize potential risks that prevent the achievement of company objectives, reduce propensity to falsify financial information, and improve financial reporting quality. Originality/value This study contributes evidence concerning the relationship between internal monitoring mechanisms and the implementation of risk-based auditing among in-house internal audit activity.

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 A versenyképesség és a társaságok belső ellenőrzése (Competitiveness and corporate internal audit)

2012 ◽  
pp. 19-33
Author(s):  
Mária Bordáné Rabóczki
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Supervisory Board ◽  
Internal Audit ◽  
Senior Management ◽  
Internal Auditors ◽  
Mutual Dependency ◽  
Internal Audit Function ◽  
External Auditor ◽  
The Impact

A cikk a belső ellenőrzésnek a hatékony társaságirányításhoz való hozzájárulását és ennek a versenyképességre gyakorolt hatását vizsgálja. A belső ellenőrzés és a társaságirányítás kölcsönös összefüggésben áll egymással. Nemcsak a belső ellenőrzés hat a társaságirányításra, hanem a releváns társaságirányítási struktúrák, emberi kapcsolatok és magatartásformák jelentős hatást gyakorolnak a belső ellenőrzés színvonalára és hatékonyságára. A cikk ezért különös figyelmet szentel a belső ellenőröknek az igazgatósággal, az auditbizottsággal/felügyelőbizottsággal, a menedzsmenttel és a könyvvizsgálóval való kapcsolatainak vizsgálatára. Rávilágít a belső ellenőrzés legfőbb funkciójára, amely objektív bizonyosságot nyújt az igazgatóság és a felső vezetők számára a kockázatok azonosítására, kezelésére és elfogadható szintre történő csökkentésére szolgáló kontrollfolyamatok megfelelőségéről és hatékonyságáról. A bemutatott belső ellenőrzési modell azt a szemléletet közvetíti, hogy a belső ellenőrzés által nyújtott objektív bizonyosság megszerzése nemcsak a jogszabályoknak vagy az ajánlásoknak való megfelelés, hanem a társaságok versenyképessége szempontjából is kiemelkedő jelentőségű. _________ The purpose of this paper is to consider the contribution of internal audit to the sound corporate governance and the impact of that on the competitiveness of the companies. There is a mutual dependency between internal audit and corporate governance. Not only the internal audit has impact on the corporate governance but the relevant governance structures, relationships and behaviour influence the level and effectiveness of the internal audit. Therefore the present paper is highly concerned with the internal auditors` relationships with the board, audit committee/supervisory board, senior management and the external auditor. It highlights the internal audit function, that provides objective assurance to the board and senior management about the adequacy and effectiveness of the processes by which risks are identified, managed, controlled and mitigated to acceptable levels. The internal audit model demonstrated represents an approach, according to that getting objective assurance provided by internal audit is important not only to be in line with laws and recommendations but to facilitate the corporate competitiveness.

Audit Committee Characteristics and Earnings Quality

2020 ◽  
pp. 23-49
Author(s):  
Fatima Albedal ◽  
Allam Mohammed Hamdan ◽  
Qasim Zureigat
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Earnings Quality ◽  
Listed Companies ◽  
Independent Variables ◽  
Pooled Data ◽  
Data Regression ◽  
Code Of Corporate Governance ◽  
The Relationship

This chapter investigates the relationship between the audit committee and earnings quality of listed companies in Bahrain Bourse and to examine whether those companies comply with the obligatory code of corporate governance. The sample of this study includes 40 companies listed in Bahrain Bourse for the period 2013-2017. The model of the study tested the relationship between the independent variables of audit committee characteristics and the dependent variable of earnings quality using pooled data regression. The findings of the study showed that the Bahraini listed companies comply and follow the code of corporate governance and some audit committee characteristics have an impact on earnings quality.

scholarly journals Factors affecting the voluntary use of internal audit: evidence from the UK

2018 ◽  
Vol 33 (3) ◽  
pp. 288-317 ◽  
Author(s):  
Hazem Ramadan Ismael ◽  
Clare Roberts
Keyword(s):  
Corporate Governance ◽  
Agency Theory ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Theoretical Framework ◽  
Policy Implications ◽  
Content Type ◽  
Factors Affecting ◽  
The Uk

Purpose This study aims to identify the factors that lead non-financial companies listed in the UK to use an internal audit function (IAF) as a monitoring mechanism. Although the use of an IAF in the UK is voluntary, no prior research has examined the drivers for using one. Design/methodology/approach Financial and non-financial data were collected from the annual reports of 332 UK non-financial companies listed on the London Stock Exchange (LSE) Main Market. Univariate tests and multivariate logistic regression tests were used to test the research hypotheses. A theoretical framework based on both agency theory and transaction cost economics (TCE) theory was used to explain the economic factors affecting the use of an IAF. Findings The study provides evidence that firm size, level of internal risks, agency problem between owners and managers and existence of an effective audit committee are associated with the existence of an IAF. Thus, the need to have strong internal control and risk management systems and to reduce both internal and external agency costs drives companies to have an IAF. These results suggest the importance of IAF as an internal corporate governance tool and the effectiveness of UK governance regulations in monitoring the effectiveness of internal control systems. Practical implications Given the importance of the IAF’s corporate governance role, the study provides some policy implications. Regulators should pay more attention to the issue of maintaining an IAF, especially by large companies, the relationship between the IAF and other governance parties, especially the audit committee, and the disclosure of more relevant information about the IAF’s characteristics and practices. Originality/value This is the first study to examine the factors affecting the existence of the IAF within the UK’s distinctive regulatory approach of “comply or disclose reasons”. Furthermore, it provides a theoretical framework that explains how both the agency theory and TCE theory can interpret the adoption of internal audit.

scholarly journals Does Internal Audit Function Quality Deter Management Misconduct?

2014 ◽  
Vol 90 (2) ◽  
pp. 495-527 ◽  
Author(s):  
Matthew S. Ege
Keyword(s):  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Audit Committees ◽  
Regulatory Requirements ◽  
Difference In Differences ◽  
External Auditors ◽  
Internal Audit Function ◽  
Auditor Quality ◽  
External Auditor

ABSTRACT Standard-setters believe high-quality internal audit functions (IAFs) serve as a key resource to audit committees for monitoring senior management. However, regulators do not enforce IAF quality or require disclosures relating to IAF quality, which is in stark contrast to regulatory requirements placed on boards, audit committees, and external auditors. Using proprietary data, I find that a composite measure of IAF quality is negatively associated with the likelihood of management misconduct even after controlling for board, audit committee, and external auditor quality. This result is robust to a variety of other specifications, including controlling for internal control quality and separate estimation during the pre- and post-SOX time periods. A difference-in-differences analysis indicates that misconduct firms have low IAF quality and competence during misconduct years and improve IAF quality and competence in the post-misconduct years. These findings suggest that regulators, audit committees, and other stakeholders should consider ways to improve IAF quality.

scholarly journals Corporate governance characteristics of firms reporting internal control deficiencies

2011 ◽  
Vol 8 (2) ◽  
pp. 363-390
Author(s):  
Kathleen Rupley
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
High Growth ◽  
Audit Committees ◽  
Market Reactions ◽  
Sarbanes Oxley ◽  
Internal Control Deficiencies ◽  
Nominating Committees

From a sample of firms reporting internal control deficiencies (ICD), I compare corporate governance structures to industry, exchange, and size – matched firms. I examine market reactions to reports of ICDs in 8-K filings. Additionally, I examine shifts in corporate governance characteristics since the Sarbanes-Oxley Act of 2002 (SOX). Results indicate that weaker boards, larger audit committees, less independent nominating committees, and high growth companies are associated with ICDs. Market reaction is negative to ICD disclosures when they are associated with controls over revenue. Firms have made changes post-SOX including reduced non-audit services, more frequent audit committee meetings, formation of nominating and governance committees, creation of internal audit functions, and implementation of corporate governance policies.

scholarly journals Financial crisis and corporate governance: The role of internal audit in the Greek context

2019 ◽  
Vol 15 (2) ◽  
pp. 45-55
Author(s):  
Andreas Koutoupis ◽  
Michail Pazarskis ◽  
Grigorios Lazos ◽  
Ioannis Ploumpis
Keyword(s):  
Corporate Governance ◽  
Financial Crisis ◽  
Audit Committee ◽  
Stock Exchange ◽  
Internal Audit ◽  
Listed Companies ◽  
Athens Stock Exchange ◽  
Total Turnover ◽  
The Relationship

In this paper, our purpose is to examine the relationship between the role of Internal Audit (IA), Corporate Governance (CG) and the Audit Committee (AC) in the recent financial crisis in Greece and to investigate the contribution of IA to CG structures as well as its possible, the IA’s role during the financial crisis in Greece. Moreover, little research has been conducted based on the relationship between corporate governance and internal audit during the financial crisis in case of Greece. For this reason, we conducted a survey, using questionnaires, which were sent to the listed companies of the Athens Stock Market. Out of a total of 192 listed companies on the Athens Stock Exchange, the relevant questionnaires were sent to 100 companies. Those companies were selected firstly based on their total turnover and secondly due to the availability of information from company websites such as employees’ numbers and Internal Audit Department Structures. Our conclusion was that Internal Audit adds value to the organization and it can also help the senior management towards the accomplishment of the organizational goals.

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