Two heads are better than one: the power of auditor collaboration amid complexity

Research on the internal audit function is relevant for improving the quality of governance in organizations. The internal auditor is an important element of government management in the context of realizing good governance by providing quality and effective audit results. The aim of this study is to examine the factors influencing (determinants) the effectiveness of the internal audit function in Indonesian local government organizations. The research samples were 137 respondents. This study used primary data in the form of a questionnaire. The hypothesis testing technique used Partial Least Squares-Structural Equation Modelling (PLS-SEM) analysis. The results of statistical tests showed that independence, competence, and management support could increase the effectiveness of the internal audit function. However, this cooperative relationship does not moderate the influence of competence and management support on the effectiveness of internal audit. The practical implication of this study is that in order to increase the effectiveness of internal audit, internal auditors must uphold an attitude of independence, objectivity and freedom from conflicts of interest in carrying out their professional responsibilities. The practical value of this study also shows that to increase the effectiveness of public sector internal audit, internal and external auditors must increase cooperation to improve the effectiveness of internal audit, especially in discussion activities between internal and external auditors, communication between internal and external auditors, and activities to share working papers between internal and external auditors.

PurposeThe purpose of this paper is to investigate the moderating effect of task complexity on external auditors’ cooperation (EAC), top management empowerment and internal auditors’ independence, which affect internal auditors’ effectiveness in the Jordanian public sector.Design/methodology/approachThis paper utilised 117 usable questionnaires from financial managers and internal audit (IA) managers of the Jordanian public sector institutions. The collected data were analysed using partial least squares-structural equation modelling (PLS-SEM).FindingsThe results reveal that EAC, top management empowerment, and internal auditors’ independence are the factors which positively and significantly affect the internal auditors’ effectiveness, as supported by the resource-based theory, with incomplete support for the task complexity’s role as a moderator.Practical implicationsThe findings are important for the decision-makers and regulators in introducing new legislation and regulation for the IA profession in the Jordanian public sector.Social implicationsIt is shown that the factors affecting the internal auditors’ effectiveness can definitely enhance their ability to achieve the role of IA in protecting public funds and limiting financial and administrative corrupt practices, particularly in the public sector.Originality/valueTo the best knowledge of the authors, this study is one of the first studies that addresses task complexity as an interaction effect on the factors affecting internal auditors’ effectiveness in the public sector.

The significance of internal auditing and its quality cannot be overstated, making it essential to investigate the factors influencing this quality. This study, employing a cross-sectional analysis, aims to assess how the characteristics of external auditors affect the perceived quality of internal audits in Iranian and Iraqi banks. In 2024, data regarding the attributes of external auditors and the perceived quality of internal audits were collected through a questionnaire distributed to external auditors from various banks in Iran and Iraq. The data analysis was conducted using Partial Least Squares Structural Equation Modeling (PLS-SEM). The study reveals a positive relationship between external auditors’ competence and independence and the perceived quality of internal audits, while it shows a negative impact of external audit methodologies on this perceived quality. These findings highlight the importance of external auditors’ independence as a key determinant of perceived internal audit quality.

There is minimal level of use of Computer-Assisted Audit Tools and Techniques (CAATTs) in developing nations regardless of its importance to audit productivity and cost reduction, and this holds particularly true in the public sector entities’ internal audit departments. Accordingly, this article aims to explore how technological factors, such as relative advantage, complexity, compatibility, observability, and trialability, contribute to the use of CAATTs in Jordan’s public sector internal audit during the COVID-19 pandemic and the impact of the pandemic on the profession’s outcome. The study also seeks to evaluate how the use of these tools affects the effectiveness of internal auditing, with the IT knowledge of the auditors serving as a moderating variable. This study used 91 usable responses from the internal audit managers of Jordanian public sector institutions. The study used the Diffusion of Innovation (DOI) theory to develop the proposed research model. Using Partial Least Squares Structural Equation Modeling (PLS-SEM), the study result indicated that technological factors, with the exception of complexity, had a positive and significant effect on CAATTs use in the public sector internal audit departments. Based on the findings, using CAATTs has a positive and significant effect on internal audit effectiveness and IT knowledge has a positive moderating effect on the relationship between CAATTs usage and internal audit effectiveness. Owing to the public sector significance to the economy of Jordan, the findings have implications for the internal audit profession, regulators, and decision-makers in proposing new legislation and regulations when it comes to internal audit. Further, through the lens of the social implications, this study proposed that CAATTs usage in public sector institutions can positively improve their capability to reach the role of internal audit in protective public funds and limiting corrupt practices in the public sector. The paper contributes to theory by providing insight into the effect of factors on the use of CAATTs in the public sector of Jordan. This study, to the best of the author’s knowledge, is the first study that has tackled the moderating role of auditors’ IT knowledge on the CAATTs use–internal audit effectiveness relationship in the public sector context.

PurposeThis paper aims to examine the association between the working relationship between internal and external auditors and the moral courage of internal auditors to report management fraud in the Tunisian setting.Design/methodology/approachData are gathered from 163 internal auditors working in Tunisian companies and a partial least squares–structural equation model (PLS-SEM) is used to test the hypothesis regarding the effect of the cooperation between internal and external auditors on internal auditors’ moral courage.FindingsThe results of this study provide strong empirical support for the positive impact of the working relationship between internal and external auditors on internal auditors’ moral courage to report management fraud and unethical behaviors.Practical implicationsThe reported results increase the awareness of Tunisian regulators to enact regulations that strengthen the collaboration between internal and external auditors to promote internal auditors’ moral courage and then limit fraud and improve organizational performance in the Tunisian setting.Originality/valueThis paper fills one of the major research gaps in internal audit and moral courage research streams by revealing that the courageous behavior of internal auditors can be fostered by specific means efficacy such as the working relationship between internal and external auditors.

The existing ample literature studied the factors for adopting computer-assisted audit techniques (CAATs) by internal and external auditors, frequently ignoring their impact on the quality of audits and companies’ efficiency. This study delivers new evidence on the kinds of CAATs utilized by internal auditors, examines their adoption impact on corporate sustainability, and studies the moderating impact of company characteristics. This study used data from internal auditors in Ethiopia gathered using a survey, and the study hypotheses were tested using the partial least squares-structural equation modeling (PLS-SEM) technique. The study found a moderate utilization of CAATs by internal auditors in executing their activities. The result also revealed a highly positive impact of internal auditors’ CAAT utilization on fraud discovery in the acquisition process. The study found that the intensity of this relationship is impacted by the companies’ characteristics of management commitment. However, the size and type of the company are not impacting it. This study finding complements prior studies and helps practitioners make decisions that can improve CAAT utilization in internal audit functions for a high level of companies’ sustainability.

SUMMARY The Public Company Accounting Oversight Board's (PCAOB) Auditing Standard No. 5 (AS5) encourages external auditors to rely on internal auditors to increase the efficiency of lower-risk internal control evaluations (PCAOB 2007). We use post-SOX experimental data to compare the levels and effects of employer (client) identification on the control evaluations of internal (external) auditors. First, we find that internal auditors perceive a greater level of identification with the evaluated firm than do external auditors. We also find some evidence that, ceteris paribus, internal auditors are less lenient than external auditors when evaluating internal control deficiencies (i.e., tend to support management's preferred position to a lesser extent). Further, while we support Bamber and Iyer's (2007) results by finding that higher levels of external auditor client identification are associated with more lenient control evaluations, we demonstrate an opposite effect for internal auditors—higher levels of internal auditor employer identification are associated with less lenient control evaluations. Our results are important because we are the first to capture the relative levels of identification between internal and external auditors, as well as the first to compare directly internal and external auditor leniency, both of which are important in light of AS5. That is, we provide initial evidence that external auditors' increased reliance on internal auditors' work, while increasing audit efficiency, also could improve audit quality by resulting in less lenient internal control evaluations, due, at least in part, to the effects of employer and client identification. Data Availability: Contact the first author.

This study examined how job satisfaction affected the link between internal audit effectiveness and human capital dimensions in the context of Jordanian commercial banks. In this paper, from the distributed questionnaire copies distributed to internal auditors working in the commercial banks of Jordan, 102 copies were deemed useable. Data obtained was exposed to Partial Least Squares-Structural Equation Modeling (PLS-SEM). Based on the results, education, expertise, and training had a direct, positive, and significant influence on the effectiveness of internal audit, while job satisfaction had an incomplete role as a moderator, as underpinned by the Social Exchange theory. The study enumerates the implications for practice and academics, with the study contributions serving as guidelines for bank managers and literature research. On this basis, the study implications are categorized into two major types, theoretical and practical implications. Accordingly, the first contribution to theory is that social exchange theory adoption to examine the human capital dimensions (education, expertise, and training) and their relationship with internal audit effectiveness. Also, practically, the study findings indicate the strategic importance of internal audit, reminding executives and banks directors to enhance internal audit staff expertise and meet their satisfaction to promote the effectiveness of the internal audit.

This study aims to examine the influence of audit expertise and task complexity on audit judgment by incorporating the Big Five personality traits as moderating variables. The research is motivated by the low quality of audit judgment in the public sector, as reflected in recurring audit findings, including those at the Ministry of Public Works and Housing (PUPR). We collected data using a quantitative causal approach through a questionnaire survey involving 164 auditors at the Inspectorate General of the Ministry of PUPR. The analysis technique applied was Partial Least Squares-Structural Equation Modeling (PLS-SEM) using SmartPLS. The results indicate that both audit expertise and task complexity have a significant positive effect on audit judgment. The personality traits of conscientiousness, extraversion, and openness to experience strengthen these relationships, while neuroticism weakens them. Meanwhile, agreeableness moderates only the relationship between audit expertise and audit judgment, but not the relationship between task complexity and audit judgment. This study contributes to the broader understanding of the auditor’s personality role in improving audit judgment quality, particularly among internal auditors in the public sector, an area that has received limited research attention.

The objective of this study was to evaluate good hygiene practices in food trucks, and to verify if there is a difference between the evaluation made by internal auditors and by that of an external auditor. The transversal study was conducted in 95 food trucks in the city of Curitiba, Brazil. A checklist for good hygiene practices was applied during the work routine by internal auditors (owner or manager of each food truck) who evaluated their own food trucks and by an external auditor (who did not work directly with the food trucks) who assessed all the food trucks under study. There was significant difference (p < .01) in the assessment of good hygiene practices between the external and internal auditors. The external auditor was more critical in rating the specific good hygiene practices than the internal auditors (p < .01), indicating their impartial assessment of the routine activities and of the good hygienic practices in the food trucks. This study revealed the importance of internal and external auditors in the evaluation of sanitary risks in food trucks and demonstrated that external auditors are less prone to bias. We concluded that external audits are an effective tool for improving food safety in street food.

This study aims to explain the influence of auditor competence, data trusworthinesst, and technology anxiety on audit judgment performance, with fraud risk assessment as an intervening variable. This study was conducted on internal auditors in Indonesian higher education institutions. This study uses Behavioral Decision Theory (BDT) and Technology-to-Performance Chain (TPC) model to explore how behavioral and technological factors interact to shape the cognitive process in assessing fraud risk and producing high-quality audit judgments. This study uses a questionnaire-based survey approach administered to internal auditors across Indonesian higher education institutions, resulting in 158 respondents. The proposed hypotheses were tested using Partial Least Squares Structural Equation Modeling (PLS-SEM) to assess the relationships between constructs. The findings indicate that auditor competence and data trust have a positive influence on audit judgment performance, both directly and indirectly through an effective incident risk assessment process. This indicates the importance of professional skills and reliable digital audit data in supporting appropriate audit decisions. In contrast, technology anxiety does not influence fraud risk assessment, indicating that internal auditors have largely adapted to the use of digital audit systems. This study contributes to the audit literature by integrating the BDT and TPC models in the context of higher education internal audit and provides practical insights for governance and policymakers in strengthening internal audit performance in the digital transformation process.

This study aims to analyze the influence of Transformational Leadership and Motivation on Audit Quality, with Organizational Culture as a moderating variable, within the Regional Inspectorate throughout Lampung Province. The research background is driven by the scarcity of studies on audit quality that utilize organizational culture as a moderator, especially in public sector internal audits, and the observed variations in financial statement opinion achievements and the Internal Audit Capability Model (IA-CM) at the Lampung Regional Inspectorate. This research employs a quantitative design using a survey approach via G-form questionnaires. The research sample consisted of 140 auditors selected through purposive sampling from a population of 447 active auditors. Data was analyzed using the Partial Least Squares Structural Equation Modelling (PLS-SEM) method with SmartPLS software, applying a second-order approach through the Embedded Two-Stage Approach method. The results show that Transformational Leadership has a significant and positive effect on Audit Quality. Motivation was also found to have a significant and positive effect on Audit Quality. Furthermore, Organizational Culture was proven to significantly and positively moderate the influence of Transformational Leadership on Audit Quality, as well as significantly and positively moderate the influence of Motivation on Audit Quality among auditors at the Regional Inspectorate throughout Lampung Province. The implications of these findings highlight the importance for Regional Inspectorate leaders to clarify and reinforce shared goals, adopt an individualized approach in interacting with auditors, and integrate continuous career development. Additionally, leaders must actively enforce an organizational culture that upholds objectivity, independence, and meritocracy to enhance audit quality. This study contributes to a deeper understanding of the determinants of audit quality in the internal public sector and provides practical recommendations for Regional Inspectorates in their efforts to improve audit performance. For future research, it is suggested to explore other variables not examined in this study to explain audit quality with organizational culture as a moderator, particularly in the context of internal public audit.

Purpose – The purpose of this paper is to investigate differences in the degree of usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by the Egyptian listed companies’ internal audit departments. This paper shows the differences among the external and the internal auditors’ perceptions concerning the level of use and compliance with these standards. Design/methodology/approach – Survey based on questionnaires sent to the internal auditors and the external auditors of the Egyptian listed firms registered in the Egyptian Institute of Directors indicator of corporate governance in 2010. This survey was conducted in March 2014 about various topics relating to internal auditing which were summarized in the Common Body of Knowledge 2006 database in relation to compliance with the IIA standards that are important to enhance its role in corporate governance. Findings – The research shows significant levels of variation in the responses concerning usage and compliance with Professional Practices standards of the internal and external auditors. Standards 1100 “Independence and objectivity” and 2100 “Nature of work” show variations in relation to compliance among survey respondents while Standards 1300, “Quality Assurance and Improvement Program” respondents indicated high levels of non-compliance. The findings provide evidence that there are no minimal qualifications level required to appoint the internal auditors and low levels of interactions between the internal auditors and the external auditors. Originality/value – According to the best of authors’ knowledge, this study is among the first that surveyed the status of the use of the IIA Standards in the Egyptian listed firms characterized by having good corporate governance practices from the perspectives of the internal and external auditors of the same companies. This study also investigated the importance of ensuring that the “spirit” of the IIA standards is adhered to rather than the mere compliance with their “letters”. Limitations – The research study relied on a sample of companies for investigating the level of compliance with IIAs standards as well as selected some of the IIA standards for usage and compliance assessments.

Partial Least Squares Structural Equation Modeling (PLS-SEM) in second language and education research: Guidelines using an applied example

The purpose of this study is to determine the factors that affect the internal control of zakat organizations. The variables of this study are organizational culture, strategic planning, external audit, internal audit and internal control. The study data were collected through 326 questionnaires obtained from employees and leaders from five zakat organizations in Indonesia. The approach of this research is Tawhidi String Relation (TSR). Data analysis in this research using method Structural Equation Model-Partial Least Square (SEM-PLS).The results of the study found that:(1). Organizational culture, strategic planning, external audit, and internal audit have positive and significant effect on internal controls; (2). Strategic planning, internal audit and internal control have positive and significant effect on organizational culture, while external audit has no significant effect on organizational culture; (3). Organizational culture, external audit, internal audit and internal control have positive and significant effect on strategic planning; (4). Organizational culture, strategic planning, internal audit and internal control have positive and significant effect on external audit; and (5). Organizational culture, strategic planning, external audit, and internal control have positive and significant effect on internal audit.