Digital transformation and internal audit quality and efficiency: dual pathways through human capital and financial channels

The study aims to demonstrate the extent to which the challenges of artificial intelligence technologies affect the quality of internal audit and their impact on the performance of financial institutions. With the growth of applications of artificial intelligence in financial operations, institutions have begun to increasingly rely on automation, intelligent data analysis, and machine learning in carrying out their daily tasks. While these technologies are expected to enhance efficiency and speed, they pose major challenges for internal audit units, including understanding complex systems, difficulty tracking algorithms, The possibility of technical biases or inaccurate automated decisions. The problem of the study is to identify the challenges posed by artificial intelligence technologies to the quality of internal audit, which may directly or indirectly affect the effectiveness and sustainability of the performance of financial institutions, and the extent of the readiness of internal audit units to deal with the smart systems adopted within these institutions and their impact on performance, in (Iraqi Trade Bank, Al-Nahrain Islamic Bank) the study sample, The research was based on a basic hypothesis, that the challenges of artificial intelligence affect the quality of internal audit, which is reflected in the performance of financial institutions. The research reached a number of conclusions, the most important of which are: Artificial intelligence technologies contribute to improving the quality and efficiency of internal audit by adapting to smart systems and understanding complex systems, which is reflected positively on the performance of financial institutions The research recommended the need to train auditors on the use of artificial intelligence tools and encourage institutions to replace manual systems with computerized systems to improve oversight performance and enhance cooperation between information technology and internal audit teams to ensure effective integration that ensures the quality of internal audit, which is reflected in improved performance.

Numerous audit findings identified by the BPK, rather than the inspectorate—tasked with serving as an internal auditor and an early warning system—indicate that the quality of government internal audits remains inadequate. This observation suggests that the internal audit processes within government institutions have yet to achieve an optimal standard. The principal aim of this study is to analyze the influence of internal supervision, audit probity, public accountability, and auditor competence on the quality of government internal audits. Additionally, the study examines the role of rewards as a moderating variable within the context of the BPK RI North Sumatra Representative. The study utilized a saturated sampling technique to select 48 participants, and data collection was conducted via questionnaires. Statistical analysis was performed using the MRA (Multiple Linear Regression Analysis) method with SPSS version 25. The findings from partial statistical tests reveal that neither internal supervision nor audit probity significantly impacts the quality of government internal audits. Conversely, public accountability and auditor competence demonstrate a positive and significant relationship with internal audit quality. When analyzed collectively, internal supervision, audit probity, public accountability, and auditor competence collectively contribute positively to the quality of internal audits. However, rewards do not serve as a moderating factor for the relationships between internal supervision, audit probity, public accountability, and audit quality. In conclusion, this study provides critical insights into the determinants of government internal audit quality. The results underscore the vital role of public accountability and auditor competence in enhancing the effectiveness of internal audits. Nonetheless, greater efforts are required to strengthen internal supervision and audit probity to achieve overall improvements in audit quality.

Audit quality is divided into internal audit quality and external audit quality, and the independence of the former has always been weaker than that of the latter. By selecting the two variables of internal audit outsourcing and executive power, combined with the method of empirical research, we compared the above two variables with audit quality. We will study the relationship between them and explore measures to strengthen audit independence from two perspectives, ultimately achieving the effect of improving audit quality. Based on the collation of domestic and foreign literature on factors affecting audit quality, this paper studies the relationship between internal audit outsourcing, executive power and audit quality, defines the concepts respectively, and determines the theoretical basis required for the research. From three Starting from the relationship between variables, a total of three hypotheses were put forward. An investigation was conducted using A-share listed companies in the Shanghai Securities Market from 2014 to 2018 as a research sample. Based on previous research, appropriate methods were selected to quantify the three variables and establish a model. Through empirical analysis, all three hypotheses have been verified. The first conclusion is that executive power is negatively related to corporate internal audit quality, that is, the greater the executive power, the lower the audit quality. The second conclusion is that internal audit outsourcing is positively related to audit quality, that is, the more reasonable the allocation of internal audit outsourcing services, the higher the audit quality. The third conclusion is that internal audit outsourcing will inhibit the negative relationship between executive power and audit quality.

Objectives: The purpose of this article is to discuss the regulations governing and the functioning principles for internal audits in financial institutions and private sector entities in Poland.Additionally, this study presents selected results of empirical research with regard to the effectiveness of internal audits in organisations. Research Design & Methods:To determine the research problems related to the functioning of the internal audit systems in financial institutions and private sector entities the author analysed specialist literature and reviewed earlier studies addressing this question.On the basis of the analysis of such literature and applicable legislation the author prepared an anonymous questionnaire and distributed it among internal auditors from a number of organisations.Findings: This paper discusses the legal basis and functioning principles for internal audits in financial institutions and private sector entities.The analysis related to internal audit functioning in financial and private sector presented in this paper made it possible to argue that the greatest development over the last several years took place in banks and insurance companies.On the basis of a survey carried out in financial institutions and private sector entities in Poland, the author set out to assess internal audit efficiency in organisations.Summarising the analysis of the internal audits in these entities, it should be argued that internal audit is highly diversified in specific types of entities.This results from the fact that individual entities operate in various legal and organisational environments and they differ in terms of their objective activity.Implications / Recommendations: This study has shown that the perception of the auditor's role and auditing efficiency varies significantly in comparable institutions.These audits are indeed necessary and demonstrate the efficiency of internal audits in the financial and private sectors.These conclusions should be considered as an inspiration for more advanced studies.

Purpose: The era of globalization and free markets forces universities to organize themselves by introducing internal quality assurance to guarantee the quality of education and services. In addition to internal quality assurance, universities as labor producers also require quality assurance from certification bodies outside the university. Several previous studies examined the influence of internal and external quality audits on work productivity and employee performance. In this study, the effect was seen to be different from before, namely knowing the effect of internal and external quality audits on the sustainability of the Surabaya Merchant Marine Polytechnic. The purpose of this study was to determine whether internal and external quality audits affect the sustainability of the Surabaya Merchant Marine Polytechnic.
 Design/methodology/approach: This study uses quantitative research with a population and the sample is a work unit at the Surabaya Merchant Marine Polytechnic which is involved with internal and external quality audits. The data collection method in this study was to use questionnaires using multiple linear regression analysis. Tests in this study used SPSS statistics version 26.
 Findings: The conclusion of this study is that there is a significant influence between internal and external quality audits on the sustainability of the Surabaya Merchant Marine Polytechnic either partially or simultaneously. The variable that has the dominant influence on this study is the internal quality audit.
 Paper type: Research Paper.

Journal of Accounting Advances, (2020) 12(1): DOI: 10.22099/JAA.2021.34214.1892 Journal of Accounting Advances (JAA)Journal homepage: www.jaa.shirazu.ac.ir/?lang=en A Model for Identification of Audit CriteriaFrom perspective of professional expertsSaeed Mohseninia1, Jafar Babajani2*, Mohammadtaghi Taghavifard3 PhD Student of Accounting, School of Graduate Studies, Allameh Tabataba'i University, Tehran, Iran, Samoh1362@yahoo.comFull Prof of Accounting Department, Faculty of Management & Accounting, Allameh Tabataba'i University, Tehran, Iran, jafar.babajani@gmail.comAssistant Prof of Industrial Management Department, Faculty of Management & Accounting, Allameh Tabataba'i University, Tehran, Iran, dr.taghavifard@gmail.com ARTICLE INFABSTRACT Received: 2019-10-09Accepted: 2021-04-04 Internal audit is considered as one of pillars of corporate governance in banks, corporations and organizations. The importance of internal audit in organizations across world is undeniable. In current research, by using Delphi research methodology and a survey of 156 professional experts in internal auditing, was tried to identify internal audit quality criteria, in order to design a suitable model. For this end, based on literature review and research background, 29 were identified which were classified in four sections including: a. Competence of internal auditors with eleven criteria; b. Independence of internal audit with eight criteria; c. Criteria related to performance of internal audit work with seven criteria; and d. Other with three criteria. Data were analyzed by utilizing R software with a confirmatory factor analysis model. The results of study indicate that 19 have been adopted, which provides a model for identification of internal audit quality from perspective of professional experts. * Corresponding author:Jafar BabajaniFull Prof of Accounting Department, Faculty of Management & Accounting, Allameh Tabataba'i University, Tehran, Iran, Email: jafar.babajani@gmail.com 1- IntroductionInternal audit has a critical role in managing and conducting organization's operations. Organizations with an efficient and effective internal audit can more accurately evaluate risks of businesses, processes and commercial systems. The internal audit is so important that, according to corporate governance model of American of Auditors, is listed as one of four cornerstones of corporate governance, along with audit executive manager and independent auditor. In this regard, some researchers, such as Abbott and Carlos, point out that in order to achieve desired results in a company, mere existence of an internal audit unit is enough, but quality of internal audit that plays a critical role (Johl et al., 2013). Therefore, there is a widespread issue in field of internal audit called Internal Audit Quality and various studies and researches have been conducted in this regard. 2- Research Questions The aim of study is to identify of internal audit quality from perspective of professional experts (individuals with experience in internal audit profession). Therefore, following questions are proposed:Which are approved by professional experts to measure internal audit quality?What is priority (rank) of internal audit quality from perspective of professional experts? 3- MethodsIn current research, by using Delphi research methodology and a survey of 156 professional experts, was tried to identify internal audit quality approved by those experts, in order to design a suitable model for Iran environment. To this end, based on literature review and research background, 29 were identified which were classified in four sections including: a. Competence of internal auditors with eleven criteria; b. Independence of internal audit with eight criteria; c. Criteria related to performance of internal audit work with seven criteria; and d. Other with three criteria. Data were analyzed by utilizing R software with a confirmatory factor analysis model. 4- ResultsThe results of study indicate that 19 have been adopted as described below, which provides a model for Identification of Audit Criteria from view of professional experts. a. Competence of internal auditors: 1. Having professional experience in independent auditing, 2. Having educational programs, 3. Having higher education, 4, 5 & 6. familiar with company's IT and communication skills. b. Independence of internal audit department: 7. Direct presentation of internal audit report to audit 8. Approval of annual budget of internal audit by audit 9. Approval of internal audit risk-based program by audit 10. Appointment and dismissal of internal audit manager by audit c. Criteria related to performance of internal audit work: 11. Having a charter of internal audit 12. Having a risk-based 13. Implementing internal audit activities according to a risk-based 14. Utilizing a variety of hardware and software (IT), 15. The highest percentage of internal audit recommendations that have been implemented, 16. The existence of an appropriate mechanism to follow up findings and recommendations of audit, 17. Evaluation of performance of internal audit by audit and d. Other criteria: 18. Size of internal audit and 19. Age of internal audit department. 5- ConclusionThe results of data analysis indicate that all seven related to performance of internal audit work were accepted. In this regard, three of having a risk-based program, implementing internal audit activities according to a risk-based program, and Performance evaluation of internal audit by audit committee have highest rank among 19 internal audit quality that show importance of these and their fundamental role in providing quality services of internal audit.In category of competence, six of eleven including Being familiar with IT, communication skills and company's industry, having higher education, professional experience in independent auditing and educational programs by internal auditors, which were presented in order of importance, were accepted as for assessing quality of internal audit. Meanwhile, five proposed of this class including having experience in internal audit and financial services, Being a member of AICPA, Iranian official experts and Auditor Institute was accepted. This means that from perspective of professional experts, these cannot be suitable for evaluation of internal audit quality.It should be noted that two criteria, including Being familiar with IT and communication skills, with a factor of more than 0.6, are in first half of ranking table of internal audit quality criteria, which indicates importance of above criteria.In category of independence, four of eight including approval of internal audit risk-based program by audit committee, appointment and dismissal of internal audit manager by audit committee, approval of annual budget of internal audit by audit committee and direct presentation of report of internal audit to audit committee, which were presented in order of importance, were accepted as for evaluating internal audit quality. Hence, four proposed criteria, including the less outsourced activity of internal audit to entire internal audit activity, the engagement of internal audit staff, only in internal audit work, not providing assurance services by internal auditor who has already been responsible for it and the absence of restrictions on access of internal audit to documents, personnel, assets and resources was accepted. This means that, from perspective of professional experts, these cannot be suitable for evaluating internal audit quality.In relation to other criteria category, results of research indicate acceptance of two of three criteria, including the age of internal audit department and the size of internal audit department as for assessing quality of internal audit, but criterion of the amount of investment in internal audit department was accepted.

this research aimed to identify the impact of digital transformation on the quality of internal auditing in Egyptian banks. This objective was divided into a set of sub-objectives, and the survey list was relied upon to collect data from the study sample. The survey was distributed to employees in the internal audit departments of banks, and the study sample consisted of 144 individuals.Using a set of appropriate statistical methods, the study reached the following results: Digital transformation plays an important role in commercial banks. Digital transformation affects the tools and methods used in internal auditing. Digital transformation affects the procedures of the internal audit process in banks. Digital transformation enhances the quality of internal auditing.Based on the challenges and obstacles identified during the implementation of digital transformation in organizations, especially in Egyptian banks, the study proposes the following recommendations: - Developing the technological infrastructure in banks by providing the necessary financial resources to equip them with computers and advanced Internet networks that are commensurate with the size of their customer base and the services they provide. - Diversifying banking applications and educating citizens on how to use them, which facilitates access to banking services and benefit from them. - Facilitating access to technology and Internet networks for all citizens to facilitate the use of banking applications and thus reduce transaction costs.Keywords:Digital Transformation, Internal Auditing, Egyptian Banks.

The purpose of the article is to examine and synthesise methodological approaches to assessing the quality and efficiency of internal audit in the contemporary context of corporate governance development, and to specify the possibilities of their application for building a comprehensive system for evaluating the performance of the internal audit function. The paper develops an approach in which internal audit quality is treated as an integral outcome of a balanced relationship between economy, efficiency and effectiveness. It proposes the use of the “economy + efficiency + effectiveness” model as a methodological framework for evaluating the internal audit function, ensuring an integrated combination of its resource, process and impact dimensions. Three groups of internal audit evaluation indicators are identified (process indicators, impact indicators and capability indicators), and the appropriateness of their use within an integrated assessment system is substantiated. The correspondence of these indicator groups to the logic of the 3E model (“economy + efficiency + effectiveness”) is demonstrated, enabling a systematic differentiation of the resource, process and impact dimensions of the internal audit function. It is argued that traditional process-oriented approaches to internal audit evaluation, focused on plan completion and compliance with timelines and procedures, provide a necessary level of functional controllability, yet are insufficient to confirm value creation and real impact on internal control and risk management systems. It is shown that internal audit effectiveness should be captured through indicators of implementation and timeliness of recommendations, reduced recurrence of findings, strengthened control procedures and a decrease in residual risk, whereas efficiency is reflected in productivity and the organisation of the audit process. Capability indicators of the internal audit function (staffing adequacy, professional competences, the availability of methodology, technological tools and a quality assurance programme) are demonstrated to be cross-dimensional in nature and to serve as prerequisites for the sustainable achievement of economy, efficiency and effectiveness. The article substantiates that, as a result, internal audit evaluation acquires the role of a managerial instrument that supports the professional maturity of the function and enhances organisational resilience in the context of increasing risk-environment complexity. Prospects for further research include developing sets of indicators tailored to specific enterprises, including those of different economic activities and sizes.

This study aimed to examine the impact of the efficiency and effectiveness of internal audit in improving financial performance on banks operating in Yemen. To achieve this objective, a questionnaire was used to collect data from the population, where 216 questionnaires were distributed to a sample of board members, audit committees, internal audit and financial management of banks. After colecting the data, the statistical multiple regression analysis was used to test the hypotheses of the study. The study findings revealed a high positive impact of the effectiveness and efficiency of internal audit on improving financial performance in banks. The findings also showed that the impact of effectiveness of internal audit was higher than that of its efficiency. Based on these results, it was recommended to pay attention to the effectiveness of internal audit, including its dimensions: (purpose, authority and responsibility) and (independence and objectivity). Attention should also be paid to the efficiency of internal auditing, including its dimensions: (professional diligince and skills) and (quality improvement program). It was also recommended to implement the recommendations of the bank internal auditors who should be independent and directly affiliated to the senior management and the audit committee.
 Keywords: banks operating in Yemen, improving financial performance, effectiveness and efficiency of internal audit.

The paper reports the major results of a study of performance measurement of internal auditing in various organizations operating in Poland in 2013 and prospects for development. The research implies that many internal audit departments formally do not measure performance, while others do measure, but only informally. Many times satisfaction indicators of key internal audit stakeholders are not identified, the information on performance is not reported to anyone apart from the internal audit staff, and the information is not used for continues improvement. The most often used performance measures in practice are focused on measuring effectiveness of audit processes and impact of internal audit services on organizations' performance. In addition there are internal audit efficiency and output measured. Quality measures are less common. Stakeholders, scope and usage of performance measurement are related to various organizational characteristics. Many respondents have declared that in future will start and formalize performance measurement and based on it they will improve internal audit performance. In future performance measurement will be more focused on internal audit quality and value added.

Although thought leaders assume audit technology will enhance internal audit quality, research has provided limited evidence. This study surveys 285 chief audit executives (CAEs) in 2020 and compares their responses with those of 447 CAEs in 2023 to explore changes of internal audit quality from using software and data analytics over time. From 2020 to 2023, internal audit functions (IAFs) showed a steady shift toward more sophisticated and digitalized data analytics, with increased integration and reduced reliance on paper-based and spreadsheet tools, although full optimization remains limited. The findings also show that the use of audit management software (data analysis software) is positively associated with improvements in internal audit efficiency (effectiveness) across both time points. Notably, internal auditing’s data analytics maturity is associated with increased measures of internal audit quality, a trend that strengthens in the 2023 data. These findings provide evidence that software and data analytics are beneficial. Data Availability: The data that support the findings of this study are available from the authors upon reasonable request. JEL Classifications: M40; M42; G34; G32; M4; G3.

Quality of Internal Audit is an activity which is very important and is a requirement in the implementation of ISO 9001:2000 standard, which aims to monitor the quality of the verifying the suitability and effectiveness of the implementation of the system of quality compared to the reference standards and policies that have been determined. Quality of Internal Audit is an assessment process and system to see whether the processes and systems in line with documented procedures and to see the effectiveness of the procedure. By doing this assessment, the company will know the condition or situation at this time. In the end, the results of this audit will be used as a tool / material improvement in the action / prevention of at improvement. Therefore, international standards emphasize the importance of audits as a means of monitoring and verification. ISO 9001:2000 is an international standard for quality management system. ISO 9001:2000 define the requirements and recommendations for the design and evaluation of a quality management system, which has the goal to ensure that an organization will provide products that comply with the requirements specified. The ISO 9001:2000 is only quality management standard and is not a standard product. But expected that the product resulting from international quality management system will has a suitable quality this. Implementation of Internal Audit Quality in the PT. Murni Cahaya Pratama program showed that the Internal Audit Quality is in accordance with plans and procedures. Results of Internal Audit Quality use as the improvement efforts for both systems, processes and products. The quality management system ISO 9001:2000 which is applied in PT. Murni Cahaya Pratama quite effective and efficient. However, there are several things that indicate the occurrence of inefisiensi and inefektivitas, this can be viewed from the inconsistency or the findings found at time internal audit been held of it occurs because human error and the lack of knowledge and understanding of the importance of documentation, especially new employees . Advice from the author on the results of the Internal Quality Audit was done in PT. Murni Cahaya Pratama is, for 2009 ISO 9001:2000 and Internal Quality Auditor training should been held immediately, so that all employees understand the importance of procedures and can implemented in their daily activities. Also to improve auditor's ability. Set procedures for the return of goods from the customer (return), so that when the Technical Service bring the returned goods it can be treated accordance with the procedures applicable. Consistent in their assessment of suppliers and maintain records of these assessments. Keywords: Internal Audit Quality, Quality Management System ISO 9001:2000

In the backdrop of several recent accounting crises, internal auditing has emerged as a major force in supporting effective controls and risk management. Therefore, internal auditing of the supply chain management performance is one of the strongest and quickest ways to reduce operational costs and provide the company competitive advantages in the global market in times of economic crisis. The purpose of this study was to examine the role of internal audit in improving supply chain management in shipping companies, the questionnaire was used to suit the nature of this study. Also, the survey included 167 participants of these companies. The results indicated a statistically significant relationship between the internal audit (independence and objectivity of internal audit, efficiency of internal audit and internal audit quality) and supply chain management in shipping companies.

This paper investigates the interplay between digital transformation, emotional intelligence (EI), and internal auditing quality within Saudi public institutions, with a focus on the mediating role of EI and the moderating role of organizational culture. The advent of digital transformation has significantly influenced internal auditing practices, necessitating an adaptation to new technologies and methodologies. Emotional intelligence is identified as a crucial factor in enabling audit teams to effectively manage the challenges and opportunities presented by digital transformation, enhancing communication, decision-making, and adaptability. Organizational culture further influences this relationship by providing a supportive environment that facilitates the adoption of digital innovations and the development of EI among audit personnel. The findings suggest that a synergistic approach, incorporating digital transformation initiatives with the development of EI and fostering a conducive organizational culture, can significantly enhance the quality and effectiveness of internal auditing in Saudi public institutions. This study contributes to the understanding of how digital transformation, EI, and organizational culture interact to improve internal auditing practices, offering valuable insights for policymakers and practitioners aiming to optimize internal audit functions in the face of ongoing digital advancements.

PurposeThe purpose of this study is to understand how internal auditors perceive the internal audit quality and to highlight the different profiles of internal auditors based on their perception of internal audit quality determinants.Design/methodology/approachThe authors’ methodological approach is based on the submission of a self-administered questionnaire. The final sample consists of 104 internal auditors. The first stage of the study is in the lead of a certified public accountants (CPA), which highlights seven factors of the internal audit quality. The second step is a confirmatory factor analysis (CFA) that allowed the authors to validate the model proposed by the CPA. Finally, the authors carry out a typological analysis of the auditors according to their way of perceiving the factors extracted by the CPA.FindingsThe authors’ model, validated by the CFA, shows that the knowledge of the internal auditor, the independence of reporting, compliance with professional standards of internal audit, the relationship with the external auditor, the personal relationship of the internal auditor, the access to information and the field of intervention of the internal auditor have a positive association with the internal audit quality but with a different degree of significance. For example, the field of intervention of the internal auditor and the access to information explain better the internal audit quality. However, the knowledge of the internal auditor and the relationship with the external auditor are not significant to explain the internal audit quality. From the hierarchical cluster analysis, four groups of internal auditors emerged: the autonomous, the perfectionists, the rigorous ones and the objectives.Originality/valueIn offering these findings, the paper contributes to the existing internal audit literature by introducing evidence from an emerging country, namely, Tunisia, of the internal audit quality model. In addition, the authors proposed a new measure to the internal audit quality model which is the use of the work of the internal auditor by the external auditor. This study is also interesting to managers and professional internal audit organizations in recognizing the characteristics of the quality of the internal audit and advance reflections on the effectiveness of internal audit practices. The authors’ study proposes a typology of certified internal auditors through their perceptions of the quality of the internal audit while taking into account the specificities of the Tunisian audit market. This provides insights to managers and audit committees on the measures necessary to ensure the relevance of the internal audit work within their companies.