Abstract
In South Africa, the financial sector contributes approximately 10.5% to the country’s gross domestic product (GDP). Although the 2007-2009 global financial crisis did not directly impact the domestic market, it threatened the profitability of the financial sector and triggered changes that affected the role of the internal audit function. In particular, stakeholders’ expectations from the function have significantly increased. Against this background, the study seeks to identify the key success factors of performing internal audit reviews of capital markets business areas within the big four South African banks. For this purpose, in-depth interviews with experienced internal auditors, risk managers and traders were carried out. The study suggests several implications and recommendations for the risk management, internal audit and audit committee functions that can also be adopted by interested parties from non-financial institutions. Keywords: internal audit, value creation, skills, stakeholders, capital markets. JEL Classification: G31, M42
Highlights
In 2007-2009, capital markets worldwide were engulfed by a crisis which had significant economic consequences (Corden, 2008; McKibbin & Stoeckel, 2009; Taylor, 2009)
Fourie et al (2013) reported that the Internal Audit Competency Framework (IACF), Certified Internal Auditor (CIA) certification program, South African Group Internal Audit (GIA) learnership program and the International Professional Practices Framework (IPPF) all have different views about what skills and competencies are required by an internal audit professional
From a risk management perspective, despite that 80% of internal auditors indicated that following business news gave them a sense of the issues in capital markets, value creation required a more thorough and proactive approach to information rather than relying on the business assurance providers
Summary
In 2007-2009, capital markets worldwide were engulfed by a crisis which had significant economic consequences (Corden, 2008; McKibbin & Stoeckel, 2009; Taylor, 2009). The present study attempts to analyze the views of capital markets traders, desk heads, and risk managers from the big four South African banks in order to determine the key success factors of a performing capital markets internal audit function. It provides recommendations on what key attributes internal audit should be measured against. It is followed by the methodology and the presentation and discussion of the results
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