Perceptions on the value added by South African internal audit functions

Abstract

This article explored the perceptions on value added by internal audit functions (IAFs) of South African companies. Six attributes of value added by IAFs (including in-house, outsourced and co-sourced activities) were investigated: organizational status, staffing and work environment, the extent to which IAFs’ recommendations are implemented, risk assessments, internal audit services and performance measures. Data was gathered via questionnaires from the chief executive officers (CEOs) or the chief operating officers (COOs) or the chief financial officers (CFOs), audit committee chairpersons (CACs) as well as the chief audit executives (CAEs) of 30 large South African companies. The findings revealed that IAFs are perceived to add value. With reference to the attributes investigated, it was found that IAFs report to the CACs, recommendations of IAFs are implemented, IAFs are well managed and not exploited by other functions within the organization and IAFs add value with regard to risk. Given the evolution of internal audit in recent years and the different attributes used in the literature to measure value-adding IAFs, further research could be conducted to identify generally accepted value-added attributes for IAFs, including those in the public sector. Key words: Internal audit, internal audit quality, quality internal audit function, internal audit attributes, internal audit value added.