Effectiveness Of Internal Audit Function Research Articles

INTERNAL AUDITORS AS CHANGE AGENTS: WHAT A DIFFERENCE A YEAR MAKES!

It was evidenced in a multiple-case study that the pattern of interaction between Chief Audit Executives and Senior Management is a key determinant of Internal Audit effectiveness. There are notable differences among Internal Audit Functions. The effectiveness of Internal Audit is largely determined by “soft factors.” Therefore, where Senior Management, possibly pushed by the supervisory board or the owner himself, truly supports the Internal Audit Function and wants it to look at the right matters, its effectiveness will be fundamentally different from cases where the management and/or board is passive, and does not push the Internal Audit Function to become effective by unearthing matters they may not wish to be found. In the upper echelon of Management, interaction with the chief stakeholder/s typically happens frequently, in a timely manner, and the communication is geared toward problem-solving. The relationship is strongly based on shared goals, shared knowledge, and mutual respect. At the other end of this spectrum, interaction with the chief stakeholder/s happens in-frequently, is typically delayed, and the communication is rather geared toward finger-pointing. In this context, functional goals prevail, knowledge is preferably exclusive, and relations can be impaired by disrespect. This article provides conceptual and practical insights into features within the more immediate control of the Chief Audit Executives, helping or hindering Internal Audit effectiveness. Self-perception and external perception can differ greatly. Positioning and communication are instrumental when identifying successful Internal Audit Functions; these make a fundamental difference as to whether the Internal Audit Function is positioned as police, servant, consultant, doctor or change agent. Practical insights then demonstrate what a difference a year makes. Guided by the change agent, the more effective Internal Audit Function can prove also with hard data that there are fewer overdue findings, that reports are delivered more swiftly, and quantum leaps of productivity can be achieved.

Corporate Governance, Effectiveness of Internal Audit Function and Fraud in Islamic Banking in Indonesia

Corporate Governance, Effectiveness of Internal Audit Function and Fraud in Islamic Banking in Indonesia

Assessment of Factors Affecting Effectiveness of Internal Audit Function in Public Institutions in Tanzania; Case of Selected Public Sectors

Assessment of Factors Affecting Effectiveness of Internal Audit Function in Public Institutions in Tanzania; Case of Selected Public Sectors

Does Internal Audit Functions Effectiveness influence External Auditors’ Reliance on Internal Audit Work?

This study examines the influence of internal audit function effectiveness on the extent to which external auditors rely on internal audit function work. A sample of 100 senior external auditors of Tanzanian-listed companies was purposively selected to provide the data. A questionnaire was employed to collect the data which were then analysed using a Partial Least Square Structural Equation Modelling. The result shows that internal audit function effectiveness has a significant positive effect on the extent of external auditors’ reliance on internal audit function work. This suggests that external auditors adjust their audit efforts in response to the effectiveness of the internal audit function, consistent with the audit risk model. The result contributes a new dimension, the internal audit function effectiveness and reliance, to the audit risk model. The result has practical implications for clients and external auditors looking to obtain a cost-effective audit of financial statements, by recognising the impact of internal audit functions on external audits.

Legal regulations and internal audit function in ugandan public enterprises

Purpose: The purpose of this study is to investigate about legal regulations on internal audit function in Uganda public enterprises.
 Findings: we analysed the association between legal regulations and internal audit function in Ugandan public enterprises, in line with corruption, objectivity and use of technology. However, there is still insufficient literature to support this relationship because the study found that objectivity and corruption were insignificant predictors of legal relgulations and internal audit function, nevertheless, technology had a positive relationship between legal regulations and internal audit function.
 Method: quantitative research method was employed and data was analysed using a Multiple regression model, and it was obtained from a sample of 49 audit managers, audit seniors, audit staff,and CAEs of selected public sectors in Uganda. using the 5-point Likert scale( Ankur J. (2015),
 Recommendation: the study recommend that further study should focus on government anti- corruption interventions through ICT improvement in both public and private enterprises.
 Significance: This paper is significant to internal audit policy-makers in Uganda such as, the ministry of finance, planning and economic development (MoFPED), that will continue to ensure promotion of ethics and professional conduct among internal auditors. This will help achieve effective internal audit function.
 Originality: As far as the authors of this study are concerned, there is no other research that has been undertaken to investigate about ‘’ Legal regulations and internal audit function in Uganda public enterprises’’

Effectiveness of internal audit function in public sector organisations in Northern Region of Ghana

Effectiveness of internal audit function in public sector organisations in Northern Region of Ghana

Effectiveness of internal audit function in public sector organisations in Northern Region of Ghana

Effectiveness of internal audit function in public sector organisations in Northern Region of Ghana

The Role of Internal Audit Function on Performance of Public Higher Learning Institutions in Tanzania: A Case of the Institute of Accountancy Arusha

This study investigated on role of internal audit function on performance of public higher learning institutions in Tanzania using the descriptive correlational design. From 306 staff members, 103 were selected through the simple random sampling and 83 filled and returned the questionnaires. Data was analyzed through descriptive statistics and regression analysis. The organization was found to be doing well in risk management and control mechanism aspects as part of the internal auditing function. There are adequate human and material resources for internal audit function. The internal audit staffs are qualified and the management supports the internal audit initiatives with ICT facilities and adequate budget. While risk management, control mechanism and availability of resources significantly predicted the organizational performance, governance process did not. Availability of resources for internal auditing was the best predictor for the organizational performance. It is therefore recommended that the organization should maintain the existing risk management strategies and regular presentation of risk management reports as such aspects contribute to the organizational performance. Since risk management, control mechanism and availability of resources are significant predictors for the organizational performance, there is need to keep improving the control mechanism and provide required resources for effective internal audit function.

Fighting Corruption in the Public Sector by Implementation of Effective Internal Audit Function

This research is focused on fighting corruption through effective internal audit in the public sector of Maldives. Corruption is a global challenge faced around the world, detrimental for the public sector institutes to efficiently deliver their obligations and safeguard public resources. Mitigating corrupt practices require establishment of good governance, transparency and accountability at all levels in public sector institutes. Internal audit is a control mechanism to infuse ethical values, good governance, strengthen internal control system and risk management processes, a fundamental feature in the fight against corruption. However, effective IAF remains deficient in the country. This study uses exploratory method to gain in-depth insight to reach a deeper understanding on the challenges and reasons for lack of effective IAF, role of IAF to mitigate public sector corruption, adequacy of existing internal control system, risk management processes and governance mechanism to provide recommendations to strengthen IAF and enhance transparency and accountability in the public sector. The study indicates weaknesses in the governance structure, inadequacy of controls and poor risk management strategies resulting in significant corruption in the public sector. Limitations in the regulatory framework, insufficient competent internal auditors, political and bureaucratic constraints are denoted as primary challenges to implement IAF in the country. Strengthening the role of IAF in the public sector requires regulatory reform to provide internal auditors an environment to perform their responsibilities with integrity and independence, competence building of internal auditors and establishing a good governance framework promoting transparency and accountability. The study provides a significant contribution to existing literature on the role of IAF in mitigating public sector corruption and challenges to implement effective IAF in the country. Further, the outcome of the study can be applied as a guide for policy makers and internal audit practitioners to enhance the effectiveness of the function and strengthen the role of IAF in mitigating public sector corruption in the Maldives.

Adherence to the Internal Audit Core Principles and Threats to Internal Audit Function Effectiveness

SUMMARY I investigate the impact that adherence to the Institute of Internal Auditors' Core Principles has on the likelihood that an internal auditor's effectiveness is threatened through pressure to modify valid audit findings. I use responses from the Institute of Internal Auditors' 2015 Common Body of Knowledge Practitioner Survey to show that higher adherence to the Core Principles by both internal audit staff and CAEs is associated with a lower likelihood of being pressured to modify audit findings. I also explore which of the ten Core Principles are dominant in explaining these associations to inform the future development of the internal audit profession. Finally, I investigate the sources of pressure to modify audit findings and explore the effect the Core Principles have in mitigating pressure from each source. My findings are relevant to the Institute of Internal Auditors, internal audit practitioners, and academics interested in internal audit or corporate governance. Data Availability: Data were obtained from the CBOK 2015 Global Internal Audit Practitioner Survey (Altamonte Springs, FL, U.S.: The IIA Research Foundation). Visit www.theiia.org/CBOK for more information.1

Evidence on the relation between audit committee financial expertise and internal audit function effectiveness

PurposeThe purpose of this paper aims to investigate whether the source of audit committee accounting expertise influences the internal audit function (IAF) effectiveness in the Tunisian setting.Design/methodology/approachIn the analysis, the authors conduct a survey of chief internal auditors from Tunisian listed companies. Then, a multivariate regression analysis is performed in order to analyze the relationship between audit committee financial expertise and IAF effectiveness.FindingsThe findings of the present study show that audit committee accounting financial expertise is most likely to be positively associated with the implementation of internal audit report recommendations. The authors also find that only financial expertise gained from accounting education and experience (e.g. an audit committee member with experience as a certified public accountant, auditor, chief financial officer or chief accounting officer) is associated with a stronger implementation of IAF recommendations, but not financial expertise gained from work experience in finance positions.Practical implicationsThese results may have implications for regulatory bodies. They can provide a better understanding of the role of the audit committee expertise in monitoring internal audit processes. The major contribution of this study is that the audit committee's oversight role is strengthened if the committee members have accounting and auditing expertise.Originality/valueThe study extends prior literature by providing evidence that the source of audit committee accounting financial expertise enhances internal audit effectiveness beyond the outcomes it has on financial reporting quality. The study also contributes to the ongoing debate in the corporate governance literature concerning the definition of the financial expertise of audit committee members.

A Study on the Role and Effectiveness of Internal Audit in Public Enterprises: The Case of Nekemte City Administration

Internal audit plays significant role to achieve organizational objectives. Auditors need to be increasingly competent in many different areas in order to do a good job: risk and control analysis, financial analysis, computer technology, etc. An important factor in the professionalization of internal audit is to create a solid ethical climate. Without an ethical environment, laws will never be properly applied, and the legal framework will only be for show. Failure to address key strategic and operational risks as well as compliance risk in an annual audit programs undermines the effectiveness of the Internal Audit Functions. For effective work performance, internal auditors should have the support of top management and the board of directors. Generally, the effectiveness of internal audit function is influenced by human and capital resources available, the scope of internal audit function and the level of interaction with higher management. In most of public enterprise the objectives, authority, scope, and responsibilities of internal auditing are not spelled out due different factors. Internal auditing is handicapped by a critical shortage of appropriately trained and skilled manpower, inadequate organizational status, and a lack of professional independence. The inadequacies in further professional education and the lack of a coordinated comprehensive training program are critical obstacles to strengthening internal auditing. Purposively six public Enterprises were selected from the total sixteen public Enterprises found in Nekemte city administration. Both primary and secondary data were used for Internal Audit to be effective, internal auditors need appropriate competence to achieve their work effectively, and aspects such as education, training, experience and professional qualifications of the internal auditors influence Internal Audit effectiveness. Key words: Audit; Internal Audit; Audit effectiveness; Public enterprises DOI: 10.7176/PPAR/10-10-04 Publication date: October 31 st 2020

Can internal audit functions improve firm operational efficiency? Evidence from China

Purpose The purpose of this study is to examine the effects of internal audit function (IAF) quality on the operational efficiency of Chinese firms. Design/methodology/approach The authors use regression models with a sample of Chinese listed companies to test their research hypotheses. Findings The authors find that IAF quality is positively associated with firm operational efficiency. The result is unchanged after correcting for endogeneity via the instrumental variable method and using an alternative measure of firm operational efficiency. The authors show that IAF competence improves firm operational efficiency, but the relationship between IAF independence and firm operational efficiency is insignificant. Additionally, they find that IAF quality can only significantly improve firm operational efficiency in the presence of effective corporate governance at the firm level and strong institutions at the province level. Using path analysis, the authors find that an IAF can improve firm operational efficiency directly or indirectly by promoting firm internal control quality. Practical implications The findings of this study suggest the need for a balance between IAF competence and independence to achieve the goals of IAF. Additionally, the authors study suggests that the effectiveness of IAF is contingent on corporate governance and market-based institutions. Originality/value The study’s findings contribute to the burgeoning literature on the relationship between IAF and firm operational performance and deepen the authors’ understanding of the role of IAF in an emerging economy whose government plays a major role in promoting and enforcing internal audits. The study also empirically support the Internal Audit Governance Maturity Model proposed by the Institute of Internal Auditors.

Investigating the impact of antecedents of internal audit function effectiveness at a private university in Ghana

Investigating the impact of antecedents of internal audit function effectiveness at a private university in Ghana

Determinants of External Audit Effectiveness: The Case of Amhara National Regional State Bureaus

This paper aims to find out the Determinants of external audit effectiveness when performing its duties and responsibilities to examine the most significant Determinants among them with particular emphasis on Amhara National Regional State budgetary bureaus using mixed research approach. Primary data were collected using questionnaire and Interview by using descriptive statistics and multiple regression analysis methods. The main findings of the study were public sectors’ assets had been unable to provide reasonable assurance by auditing whether the general objectives of organizations are accomplished. These indicated that there is Weakness in the internal control of entities which includes effective systems of risk management, an effective internal audit function, internal control and an audit committee as part of the framework of control. To address the problems stated above the public bodies should give due attention to establish an audit committee, comprising nonexecutive members with the responsibility for independent review of the framework of control of the external audit process.

Audit Committee Attributes and Internal Audit Function Effectiveness. Evidence from Zimbabwe Local Authorities

The study aimed at establishing the impact of audit committee characteristics on internal audit function effectiveness in Zimbabwe local authorities. The study used audit committee characteristics as represented by its dimensions of competence, conduct of meetings and independence as the independent variable and internal audit function effectiveness, represented by its dimensions of independence, competence and objectivity as the dependent variable. The association between the independent and dependent variables was assessed considering the effects of the regulatory environment as the mediating variable there to. Survey data was obtained from audit committee chairpersons and chief audit executives in Zimbabwean local authorities using semi-structured questionnaires. Correlation and regression analysis were used to test whether there is a relationship between audit committee characteristics and internal audit function effectiveness. The study established that audit committee membership in Zimbabwe local authorities is not subject to qualifications, experience or expertise, as such, majority of audit committees in Zimbabwe local authorities lack the required competencies to effectively execute their mandates. Correlation and regression analysis results further established that the characteristics of independence and conduct of meetings are capable of predicting the effectiveness of internal audit functions within Zimbabwe local authorities. The study recommends the inclusion of “resource persons”, in form of independent professionals with financial expertise and experience within audit committees of local authorities, most preferably from the civil service, so as to fill the competency gap. The study also recommends the establishment of clearer guidelines on the operation of audit committees within Zimbabwe local authorities to help in ensuring the committees’ independence and objectiveness is guaranteed thereby strengthening their oversight role. Keywords: Audit committee, Attributes, Internal audit function, Effectiveness DOI : 10.7176/RJFA/10-24-07 Publication date: December 31 st 2019

Metrics of internal audit effectiveness in banking sector

This article attempts to analyze the metrics of internal audit function effectiveness. The authors review and discuss the metrics perceived as most relevant and appropriate to the banking sector. The literature review is supported by an attempt to introduce an additional metric of the internal audit function effectiveness. The methodology adopted in this paper bases strongly on the qualitative approach. The article involves an analysis of available literature and own studies, as well as authors’ professional experience in auditing. The metrics of internal audit function effectiveness presented in modern studies strongly favor qualitative approach, focused on assessing the input, process and output of internal auditors, and most notably recommendations issued and their implementation by organizations’ management. The authors suggest supplementing the list of available metrics with an additional method, strongly connected to financial performance of the banks employing the internal audit function. This article introduces an additional possible way of measuring the effectiveness of the internal audit function. This metric can be considered by the banks and can be further empirically verified for appropriateness by entities from other industries, from both private and public sector.

The Influence of Competency, Usage of It and Career Expectation on Internal Auditor’s Effectiveness in Ggovernment Linked Companies (GLCs)

National Audit Department (NAD) had repetitively recommended Federal Ministries/ Departments and Government-Linked Companies (GLCs) through its Auditor-General’s Report on the need to have an effective internal audit function to identify and mitigate weaknesses in their activities. Therefore, the purpose of this study is to examine factors that influence the effectiveness of the internal auditors especially for those that work in GLCs in Malaysia. It is to determine the internal auditors’ perception toward the effectiveness of internal audit activities, influenced by the individual factors related to the internal auditors themselves. This study also aims to determine the relationship between factors that contribute to the effectiveness. 300 questionnaires were distributed to internal auditors that work in GLCs in Malaysia using convenience sampling method, of which, 124 internal auditors had responded. Several statistical techniques such as the descriptive statistic, correlation and regression analysis were used to analyse the data from the survey. The result of the study showed that there were significant relationships among the factors analysed in this study which are the internal auditors’ competency, usage of information technology (IT) and career expectation. Hence, the effectiveness of internal audit will depend strongly to the attributes of the factors analysed in this study. This study will help organisations especially GLCs in understanding the factors that influence the internal auditors’ effectiveness and taking necessary action to improve their internal audit function. Consequently, the internal audit function could perform better in reporting findings and giving significant recommendations that give impact to the organisations.

PENGARUH FUNGSI AUDIT INTERNAL TERHADAP PELAKSANAAN GOOD GOVERNANCE (SURVEY PADA KANTOR CABANG BANK UMUM DI TASIKMALAYA)

The aims of this resarch is to known the influence of internal audit function on implementation of good governance at organization’s units (branch offices) of commercial banks which is geographically separated from the home offices, so that senior man agement and board of commissioner/audit committee factors are considered more focused on effectiveness of internal audit function in assessing governance process. The survey was conducted on 27 branch offices of commercial banks which operating in Tasikmalaya by providing the same treatment between conventional commercial banks and syari'ah commercial banks. Based on pearson coefficient analysis at 5% of significant level, shows that the internal audit function has a significant influence on the implementation of good corporate governance, where if the bank's internal audit function is effective, so the implementation of good corporate governance will be better. It is shown by the positive perception of management that the implementation of good governance as required by the Otoritas Jasa Keuangan can be realized one of them by supporting the role of bank’s internal audit function in assessing the governance process.Keywords:internal audit;good governance.Penelitian ini bertujuan untuk mengetahui pengaruh fungsi audit internal terhadap pelaksanaan good goverancepada unit organisasi (kantor cabang) yang terpisah secara geografis dari kantor pusatnya, sehingga faktor manajemen senior, dan dewan komisaris/komite audit dipandang lebih bertumpu kepada efektivitas fungsi audit internal dalam menilai proses governance. Survey dilakukan pada 27 kantor cabang bank umum yang beroperasi di Kota tasikmalaya dengan memberikan perlakukan yang sama antara bank umum konvensional dan bank umum syari’ah. Berdasarkan hasil pengujian hipotesis menggunakan pearson coefficient analysispada taraf nyata 5%, menunjukkan bahwa fungsi audit internal berpengaruh signifikan terhadap pelaksanaan goodgovernnace, dimana bila fungsi audit internal bank efektif, maka pelaksanaan good corporate governanceakan semakin baik. Hal tersebut ditunjukan dengan persepsi positif dari manajemen bahwa pelaksanaan good governanceseperti yang diwajibkan oleh Otoritas Jasa Keuangan dapat terwujud salah satunya dengan mendukung peran fungsi audit internal bank dalam menilai proses governance.Kata Kunci: audit internal;good governance.

A Study on the Role and Effectiveness of Internal Audit in Public Enterprises of Nekemte City Administration

Internal audit plays significant role to achieve organizational objectives. Auditors need to be increasingly competent in many different areas in order to do a good job: risk and control analysis, financial analysis, computer technology, etc. An important factor in the professionalization of internal audit is to create a solid ethical climate. Without an ethical environment, laws will never be properly applied, and the legal framework will only be for show. Failure to address key strategic and operational risks as well as compliance risk in an annual audit programs undermines the effectiveness of the Internal Audit Functions. For effective work performance, internal auditors should have the support of top management and the board of directors. Generally, the effectiveness of internal audit function is influenced by human and capital resources available, the scope of internal audit function and the level of interaction with higher management. In most of public enterprise the objectives, authority, scope, and responsibilities of internal auditing are not spelled out due different factors. Internal auditing is handicapped by a critical shortage of appropriately trained and skilled manpower, inadequate organizational status, and a lack of professional independence. The inadequacies in further professional education and the lack of a coordinated comprehensive training program are critical obstacles to strengthening internal auditing. Purposively sixpublic Enterprises were selected from the total sixteen public Enterprises found in the city administration. Both primary and secondary data were used.For Internal Audit to be effective, internal auditors need appropriate competence to achieve their work effectively, and aspects such as education, training, experience and professional qualifications of the internal auditors influence Internal Audit effectiveness. Keywords: Audit; Internal Audit; Audit effectiveness; Public enterprises DOI : 10.7176/EJBM/11-7-05 Publication date :March 31 st 2019