Abstract
Internal auditing has been called upon to enhance its value proposition for organisations and one way of doing this is to demonstrate its effectiveness. By using the responses of participants from the BRICS countries on the 2010 global Common Body of Knowledge survey of the Institute of Internal Auditors in conjunction with the elements of the Internal Audit Capability Model this study examines the convergence towards internal audit effectiveness by the BRICS countries. The study uses a neo-institutional perspective to demonstrate how internal auditing in the BRICS countries has responded to coercive, normative and mimetic pressures to demonstrate effectiveness. The study shows that coercive pressures for internal auditing exist in all the BRICS countries, but owing to the voluntary internal audit structure in Russia, such pressure appears to be lower in that country. Using professionalism to demonstrate normative pressures, the emphasis on internal audit in the King III report of South Africa was evident. The results of this study seem to indicate that South Africa has responded more to mimetic pressures in relation to people management, professional practices and organisational relationships than other BRICS countries.
Highlights
Internal auditing (IA) has been called upon to enhance its value proposition for organisations
By analysing the questions included in the questionnaire used in the Common Body of Knowledge (CBOK) study, those applicable to government mandates, the legal environment and legitimated rules were used as indicators of coercive pressures, questions relating to professionalisation were used as indicators of normative pressures, and drivers of IA best practices were used to set a role model or benchmark for IA effectiveness
Since only 31.72% respondents from Russia believed that IA is mandated by the country’s laws/regulations, such coercive pressure appears to be at a lower level than for the other BRICS countries
Summary
Internal auditing (IA) has been called upon to enhance its value proposition for organisations. An effective internal audit function (IAF) as a corporate governance monitoring mechanism could be especially useful in developing countries as the literature shows the importance of corporate governance at firm level for these countries to access financing, lower the cost of capital and improve operational firm performance (Claessens & Yurtoglu, 2013; 2012; Peters, Miller & Kusyk, 2011). Previous studies have considered IA effectiveness in some developing countries. These include Ethiopia (Mihret & Woldeyohannis, 2008; Mihret & Yismaw, 2007); Israel (Cohen & Sayag, 2010); Libya (Abu-Azza, 2012), Malaysia (Fadzil, Haron & Jantan, 2005); Saudi Arabia (Al Twaijry, Brierley & Gwilliam, 2003); and Singapore (Yee, Sujan, James & Leung, 2008). IA effectiveness in the so-called “BRICS” countries (Brazil, Russia, India, China and South Africa) has not been studied
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