Abstract
The study aimed at examining the impact of Internal Audit Function independence on Transparency & Accountability. The study adopted independence as the independent variable and transparency & accountability as the dependent variable, measured by management perception, organization policy, auditees’ cooperation and risk exposure of the organization. Survey data was collected from local authorities in Zimbabwe using semi structured questionnaires. Correlation and regression analysis were used to test the hypothesis that the existence of an independent internal audit function in an organization is positively associated with transparency and accountability. Study findings revealed that the existence of an independent internal audit function in an organization is positively associated with transparency and accountability. The findings concur with results from previous studies which concluded that an independent internal audit function plays a monitoring role, therefore contributing towards promoting good corporate governance practices, supporting the applicability of the Agency Theory and the Theory of Inspired Confidence in internal audit research Keywords: Internal Audit Function, Independence, Transparency & Accountability DOI : 10.7176/RJFA/10-5-06 Publication date :March 31 st 2019
Highlights
Literature on public sector internal audit remains scant (Hutchinson & Zain, 2009; Al-Matari, et al, 2014; Roussy & Brivot, 2016), regardless of recent improved attention towards the sector (Neu, et al, 2013; Vinnari & Skaebaek, 2014; Everett & Tremblay, 2014; Roussy, 2015) and the profession (Shabnan, et al, 2014; Regoliosi & D'eri, 2014; Coetzee & Lubbe, 2014; Trotman & Trotman, 2015; Pizzini, et al, 2015)
Since this state of affairs was being blamed on poor corporate governance practices, this study explores how the poor corporate governance practices could possibly be a result of questionable quality attributes of our internal audit functions within public sector organizations, whose role among others should be to help organizations improve in governance processes
The study findings reveal that there is a statistically significant relationship between independence of internal audit function and transparency and accountability
Summary
Literature on public sector internal audit remains scant (Hutchinson & Zain, 2009; Al-Matari, et al, 2014; Roussy & Brivot, 2016), regardless of recent improved attention towards the sector (Neu, et al, 2013; Vinnari & Skaebaek, 2014; Everett & Tremblay, 2014; Roussy, 2015) and the profession (Shabnan, et al, 2014; Regoliosi & D'eri, 2014; Coetzee & Lubbe, 2014; Trotman & Trotman, 2015; Pizzini, et al, 2015). Some scholars argue on the ambiguity of expecting internal auditors to be independent of a management team they serve (Stewart & Subramaniam, 2010; Al-Shabail & Turki, 2017) This current study will contribute to existing literature by trying to empirically establish the impact of internal audit function independence on enhancing transparency and accountability of the local government sub-sector in the context of Zimbabwe, a developing nation. Internal auditors make use of their understanding of social relationships and societal expectations to align their objectives to those of the organization This notion is supported by findings from a survey by Holt &DeZoort (2009), which confirmed that external stakeholders’ confidence in company financial statements is determined by their perceived quality of the firm’s internal audit function (Holt & DeZoort, 2009).In the context of what stakeholders expect from a modern internal audit function and the prevailing corporate governance environment in the Zimbabwean public sector, the quality of public sector internal audit functions deserves to be brought to scrutiny.
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