Management Audit Research Articles

Factors Affecting the Implementation of Risk-Based Internal Auditing

This paper aims to investigate the factors affecting risk-based internal audit (RBIA) implementation in public sector organizations in Saudi Arabia. This paper utilized 234 usable answered questionnaires from internal audit managers, internal auditors, accountants, and executives working in Saudi public sector agencies. The gathered data were analyzed by applying partial least squares–structural equation modeling (PLS-SEM). Results show that management support, internal auditor role, risk management system, and training in risk management all positively and significantly influence the RBIA. Improved internal auditing procedures and an efficient internal monitoring system will significantly curtail any risks impeding the organization’s goals, diminish the temptation to fabricate financial data or statistics, and enhance the accuracy of financial reporting/statements. Moreover, this study’s results have crucial implications for managers of public sector organizations, heads of internal audit departments, internal auditors, and accountants seeking to improve the reliability of internal audits and other aspects of financial information. Published research on what variables are influencing RBIA implementation is scarce. This study adds to the nascent literature by focusing on Saudi Arabian public sector organizations, establishing empirical variables based on an in-depth review of the relevant research and conducting an empirical investigation of the factors associated with RBIA implementation in the Saudi economy. By concentrating on public sector organizations in Saudi Arabia, this paper sheds light on other nations with comparable systems for governance policies and processes in their government-run entities.

MANAGERIAL AUDIT IMPROVEMENT OF FINANCIAL PERFORMANCE IN FOOD PROCESSING COMPANIES

The most important way to improve the competitiveness of organizations is the implementation of the managerial audit system for the financial results of economic activity.The article analyzes ways of improving internal control of financial results in food processing organizations from the point of view of introducing management audit. In particular, a methodology for evaluating the cost estimates and their deviations defined by the organization's financial responsibility centers within the framework of the managerial audit is proposed.

Internal Audit Engagement and Risk Management in Public Sector Organizations: Does It Really Exist?

Business entities have undergone a shift in the internal audit function towards a more consultative role. Conversely, in public sector institutions like universities, it is not widely recognized. This study investigates how the new paradigm shift in Internal Audit Engagement in Risk Management impacts the Efficiency of Internal Audit. This study introduces Management Support as a moderating variable in the relationship between the two variables. The study included a sample of 51 internal auditors at PTN BLU. Snowball sampling is employed for sampling, and a questionnaire is used for data collection. The data analysis employed Moderated Regression Analysis (MRA). The results indicate that the first hypothesis is confirmed: Internal Audit's participation in Risk Management impacts the Efficiency of Internal Audit. The second hypothesis is confirmed: Management Support influences the relationship between Internal Audit Engagement in Risk Management and Internal Audit Effectiveness. Management support has a substantial impact on the relationship between the two, accounting for 61.1%. This study confirms that cooperation between internal audits and public entity management can enhance the internal audit's effectiveness.

The environmental consequences of national Audit governance: An analysis based on county-level data in China

Recent years have witnessed growing public concern over air pollution in China, posing a challenge to the government's environmental management efforts. Empirical evidence indicates that the digital economy contributes to mitigating environmental pollution. Given that national audits are a crucial part of the national oversight system and considering the significant role of digital technology in audit governance, it is relevant to explore how the digital economy can support national audits in enhancing China's environmental quality. This study investigates the environmental impact of national audit governance, utilizing a dataset from 1540 counties in China spanning from 2005 to 2018. The findings reveal that effective national audits contribute to reducing haze pollution (HP) levels, with the digital economy playing a moderating role. The results also demonstrate heterogeneity; national audits are particularly effective in regions characterized by high urbanization rates, severe HP, and stringent environmental regulations. The mechanism analysis suggests that industrial transformation and enhanced government governance are the key mechanisms through which national audits reduce regional HP. Additionally, reforming the audit management system can amplify the effects of national audits on reducing HP.

Effectiveness of internal auditing from the lens of internal audit factors: empirical findings from the banking sector of Bangladesh

PurposeThis study aims to assess the impact of determinants on the effectiveness of internal audit (IA) within the banking industry of Bangladesh.Design/methodology/approachThe data was obtained through 152 survey questionnaires from a total of 43 privately owned and six state-owned commercial banks in Bangladesh. The analysis was conducted using structural equation modeling.FindingsThe findings demonstrate that the independence of internal auditors and the quality of IA substantially impact enhancing the efficiency of IA. On the other hand, the competence of internal auditors and management support in IA functions do not significantly impact the effectiveness of IA.Practical implicationsThe study’s findings may have significant policy implications for the government, regulators, internal auditors, management committees and other stakeholders in establishing programmes to enhance the efficacy of IA as a component of banking audit management reforms.Originality/valueThis study makes three distinct contributions to the existing literature. Firstly, previous literature focused on the determinants affecting the external audit efficiency of the public companies and banking sectors in Bangladesh (Hasan, 2018; M. M. U. Reza, 2021). In this study, the author enhances the research by presenting empirical findings on the IA effectiveness of banks. Secondly, the author expands the research by incorporating both private and state-owned commercial banks as samples. Thirdly, the study is unique given that it investigates the effectiveness of IA in response to the recent financial scandals in the banking industry of Bangladesh (The Daily Star, 2023).

Internal Audit Engagement and Risk Management in Public Sector Organizations: Does It Really Exist?

Business entities have undergone a shift in the internal audit function towards a more consultative role. Conversely, in public sector institutions like universities, it is not widely recognized. This study investigates how the new paradigm shift in Internal Audit Engagement in Risk Management impacts the Efficiency of Internal Audit. This study introduces Management Support as a moderating variable in the relationship between the two variables. The study included a sample of 51 internal auditors at PTN BLU. Snowball sampling is employed for sampling, and a questionnaire is used for data collection. The data analysis employed Moderated Regression Analysis (MRA). The results indicate that the first hypothesis is confirmed: Internal Audit's participation in Risk Management impacts the Efficiency of Internal Audit. The second hypothesis is confirmed: Management Support influences the relationship between Internal Audit Engagement in Risk Management and Internal Audit Effectiveness. Management support has a substantial impact on the relationship between the two, accounting for 61.1%. This study confirms that cooperation between internal audits and public entity management can enhance the internal audit's effectiveness.

Strategic Integration for Academic Excellence: Leveraging COBIT and PMBOK in Audit and Project Management Practices

Penelitian ini mengeksplorasi integrasi strategis kerangka COBIT (Control Objectives for Information and Associated Technologies) dan PMBOK (Project Management Body of Knowledge) untuk mengoptimalkan praktik audit dan manajemen proyek di dunia akademis. Dengan menyelaraskan tujuan tata kelola dengan prinsip-prinsip manajemen proyek, universitas dapat meningkatkan upaya mereka mencapai keunggulan akademik. Integrasi COBIT dan PMBOK memperkuat praktik audit dengan memastikan kepatuhan terhadap peraturan, penilaian risiko praktis, dan kontrol yang kuat. Hal ini juga mempromosikan pendekatan terstruktur terhadap manajemen proyek, peningkatan perencanaan, alokasi sumber daya, mitigasi risiko, dan komunikasi. Kolaborasi antara tim audit dan manajemen proyek difasilitasi melalui integrasi ini, memungkinkan komunikasi, koordinasi, dan berbagi pengetahuan yang efektif. Kolaborasi ini menghasilkan peningkatan pengambilan keputusan, pemanfaatan sumber daya, dan hasil proyek. Universitas kemudian dapat memposisikan diri mereka secara strategis untuk mencapai keunggulan akademis, menyelaraskan operasi mereka dengan tujuan strategis dan mendorong efisiensi, transparansi, dan akuntabilitas. Penelitian ini mengacu pada studi kasus, praktik terbaik, dan literatur yang ada untuk menyoroti manfaat dan strategi implementasi integrasi strategis COBIT dan PMBOK di dunia akademis. Dengan mengintegrasikan kerangka kerja ini, universitas dapat memajukan upaya mereka mencapai keunggulan akademik dan memperkuat kepemimpinan mereka dalam bidang pendidikan.

Effectiveness of Audit Committee Features to Asymmetric Information with Audit Quality as Moderating

Purpose: The study aims to explore the effectiveness of audit committee features, such as the total members, meeting frequency, financial competence, and independence, as a determinant of asymmetric information with audit quality as moderating. Design/Method/Approach: We employed a regression model with panel data, analyzing 260 firm-year observations for entities whose shares traded on the Indonesia Stock Market from 2017 to 2021, all of which fall under the category of public interest entities. Findings: Our examination uncovered meeting frequency was statistically significant in reducing asymmetric information, and audit quality enhanced the interrelation of the meeting frequency, reducing asymmetric information. In contrast, our examination could not uncover any correlation between the total members, financial competence, and independence with asymmetric information. In addition, the study demonstrated no relationship between audit quality enhancing correlation between the total members, financial competence, and independence to mitigate asymmetric information. Theoretical Implications: The study supports agency and asymmetric information theories by demonstrating the significant role of oversight through frequent meetings in mitigating conflicts between agents and principals. This academic support enriches the existing literature and provides valuable insights for future research in the field. Practical Implications: Our findings suggest that the regular occurrence of dialogue between audit committees and management needs to be increased to provide better oversight and ultimately improve organizational performance, benefiting stakeholders and the board. Finally, our study implies the current regulations in Indonesia have not succeeded in encouraging the efficacy of audit committee monitoring through other features of audit committees as mandated by Indonesian regulation. Hence, regulatory breakthroughs by policymakers are essential to foster the performance of audit committees. Originality/Value: Our study provides a novel perspective on how audit committee features influence asymmetric information by providing insights by investigating the involvement of audit quality as a moderating factor. Research Limitations/Future Research: While our study may be limited in its applicability due to the constrained data sourced from the Indonesian Stock Market, the potential insufficiency of proxy variables in apprising audit committee efficacy, and the restricted use of control variables, addressing these constraints should be a focus of future studies to achieve a more comprehensive understanding. Paper Type: Empirical JEL Classification: G34, O16

Do key audit matters matter? Correspondence between auditor and management disclosures and the role of audit committees

This study examines whether there is a correspondence between auditor disclosures of key audit matters (KAMs) and management disclosures of significant accounting policies and estimates, following the introduction of the International Standard on Auditing (ISA) 701. In addition, we investigate how audit committees moderate the relationship. We employ a sample of Swedish listed firms (2016–2018), using measures that capture the extent and quality of management disclosures and how they relate to auditor KAM disclosures, including the number of accounting items disclosed, total number of words, and number of unique KAM-related words (via a “bag-of-word” technique). We find a positive correspondence between auditor and management disclosures, and the correlation is greater in firms with an audit committee. Additional analyses provide evidence that management disclosure quality increases after the introduction of ISA 701, but the positive effect is mostly found in firms with a separate audit committee on the board. The results are robust to alternative measures for disclosures and using a matched sample design. Our findings suggest that policymakers should consider the interplay between audit standards and audit committees.

The Effect of Operational Audit and Internal Control on Raw Material Inventory Management

Economic developments in this era are in line with world developments which give rise to competition between companies and require company management to make the best decisions. The aim of this research is to analyze how much influence operational audits and internal control have on raw material inventory management. In this research, a quantitative method was applied where data was collected using a questionnaire, which was then processed using the SPSS data analysis tool. The research target was employees who worked at the house property company at PT Baritana Indah Persada Medan, with a total sample of 60 respondents. The data analysis methods applied in this research include descriptive statistics, classical assumption analysis, multiple linear regression, classical assumption analysis, hypothesis testing and coefficient of determination. The findings of this research reveal that there is a significant relationship between raw material inventory management and operational audits and internal controls to smooth the company's operations well.

Satisfaction with human resource practices, job dedication and job performance: the role of incentive gamification

PurposeWhile the potential of human resource practices (HRPs) for promoting performance is widely recognized, even though crucial, employees’ assessment of HRPs remains under-researched, especially in emerging economies. Hence, the purpose of this research is to examine the influence of employee satisfaction with HRPs on job performance through the mediating role of job dedication (JD) and the moderating role of incentive gamification.Design/methodology/approachThe current research adopts a quantitative method. Specifically, using a questionnaire survey, 418 valid responses collected (through purposive sampling) via cross-sectional method from the employees of Nigerian Information and Communication Technology (ICT) firms were used to test the research hypotheses empirically.FindingsThe results revealed that satisfaction with HRPs has a positive influence on job performance. Satisfaction with human resource practices has a positive influence on job dedication. Job dedication has a positive influence on job performance. The link between employees’ satisfaction with human resource practices and job performance is mediated by job dedication. The link between satisfaction with human resource practices and job dedication is moderated by incentive gamification, that is, the positive link is stronger when incentive gamification is high. The link between satisfaction with human resource practices and job performance is moderated by incentive gamification, that is, the positive link is stronger when incentive gamification is high.Originality/valueThe current study highlights the importance of employees’ assessments of human resource practices, which may be used to promote employee dedication, which in turn results in improved performance. The findings are helpful to open the black box of the impact of satisfaction with HRPs on job performance. The results also offer important new valuable guidance for practitioners and will aid the management of human resource practice design, audits, and communication.

Transforming Infrastructure Project Management: Integrating Blockchain and Predictive Analytics for Enhanced Audit and Risk Management

Transforming Infrastructure Project Management: Integrating Blockchain and Predictive Analytics for Enhanced Audit and Risk Management

The role of managerial hierarchy in the moral reasoning of local government managers

AbstractFalling public trust in Australia's institutions warrants revisiting how public sector managers approach ethical decision‐making. This study presents the findings of in‐depth interviews with 35 local government managers in Australia and seeks to understand how managerial hierarchy influences the moral reasoning of managers. Through the lens of social learning and moral development theoretical perspectives, the findings indicate that local government managers do engage in different types of moral reasoning when presented with hypothetical ethical dilemmas, and their managerial status plays a pronounced role in shaping the content of that reasoning. We also find support for differences in moral reasoning across gender, which appear more evident at lower levels of management. Through providing an in‐depth analysis of managerial hierarchy and ethical decision‐making, the findings from this study can be used to guide organisational and individual managers’ ethics training and development.Points for practitioners The declining public trust in public administrators warrants regular risk management audits of internal and external environments of public sector organisations to identify potential or existing ethical challenges that require a response. Moral reasoning and ethical decision‐making are context specific and include the ethical climate of the organisation. We find support for the importance of organisational leadership visibly ‘walking the talk’ when it comes to ethics. While management hierarchy is seen to influence moral reasoning, or the deliberations when arriving at a decision, there is widespread acceptance of the basic tenets of abiding by the law and being truthful. Therefore, organisational ethical policies and codes of conduct should clearly articulate the legal implications, and consequences of any breaches. A one‐size‐fits‐all approach to ethics training is not advised. We find that moral reasoning differs with managerial experience. A case is made to account for training tailored at different managerial levels, along with scenario‐based training and mentoring from higher levels of management.

Enhancing Procurement Integrity: Key Factors Influencing Internal Audit Effectiveness in Tanzania Public Procurement

This paper analyses the effects of internal audit competence, independence, and procedures on internal audit effectiveness in the procurement process in the public sector of Tanzania. The study is quantitative, and data were collected through questionnaires from accounting officers, senior management officers, audit committees, and internal audit units in public sectors. A total of 318 responses were collected. A Partial Least Structural Equation Modelling (PLS-SEM) technique was applied using R-studio to analyse the collected data, assess the model and test hypotheses. The findings revealed that internal audit characteristics procedures, independence and competence influence internal audit effectiveness in procurement. The study findings provide useful insights for policymakers, academics, and internal audit practitioners on the effect of the characteristics of internal audits in improving the effectiveness of internal audits in procurement in Tanzania.

Real earnings management, CEO experience, family ownership, and external audits: A meta-analysis

This article analyses the relationship between real earnings management (REM) and corporate governance variables, including family ownership, external audit quality, and CEO experience. The studies analysed were published between 2006 and 2021. The Sarbanes-Oxley Act of 2002 and the implementation of international financial reporting standards have led companies to reduce the use of accrual earnings management (AEM), and instead adopt real earnings management. However, many authors claim that using REM might harm a company’s long-term wellbeing, which accentuates the need to study the determinants of REM. The variables analysed in this paper are extensively covered in the literature, however, there is still ambiguity regarding their relationship with REM due to conflicting findings; some studies indicate a positive relationship, while others show a negative one. To resolve this ambiguity, meta-regression analysis is employed. The results indicate a positive relationship between family ownership and REM. This highlights the need to explore other forms of ownership to determine the most effective ownership structure that does not increase REM. This is of interest to legislators. The results provide no evidence to support the statistical or economic significance of CEO experience and external audit in relation to REM.

The Influence of Internal Audit and Risk Control on Crisis Management in the Tourism Industry in Indonesia

This research investigates the complex interactions between Internal Audit, Risk Control, and Crisis Management in the dynamic landscape of Indonesia's tourism industry. Using a quantitative approach, this study employed Structural Equation Modeling with Partial Least Squares (SEM-PLS) to analyze survey data collected from stakeholders in the industry. Descriptive statistics showed positive perceptions of Internal Audit and Risk Control, with room for improvement in Crisis Management effectiveness. Measurement model assessment established reliability and construct validity, paving the way for robust structural model analysis. The results show that Internal Audit and Risk Control significantly and positively influence Crisis Management. Practical implications include customized strategies for optimal crisis resilience, while policy recommendations underscore the importance of a standardized framework. Despite its limitations, this study contributes valuable insights to the crisis resilience literature, offering a nuanced understanding of the dynamics of Indonesia's tourism sector.

Study on the reform dilemma and reform path of administrative examination and approval bureau

The transformation of government functions is the key to comprehensively deepening the reform in China, and the reform of the administrative examination and approval Bureau has played an important role in the process of implementing the "separation of audit management". This kind of reform can effectively promote the construction of our country service-oriented government, has the important rule of law significance. As a new thing, the Administrative examination and approval Bureau, which originally served as a service center, has faced a series of difficulties in the process of promoting reform, including the fuzzy scope of examination and approval items, the lack of professional quality of examination and approval personnel, difficulties in departmental coordination, the unclear division of examination and approval and supervision, and the lack of effective supervision. There are many reasons behind these difficulties, such as conflict of interest, unitary reform mode, restriction of administrative management system and lack of consensus on the direction of reform. In order to overcome these difficulties, a series of measures can be taken, such as promoting local legislation, improving the professionalism of examination and approval personnel, promoting information sharing, and strengthening internal and external supervision, so as to better promote the reform of administrative examination and approval bureaus.

Environmental Auditing and its Importance for Socio-Environmental Management in Organizations

Objective: To analyze the importance of environmental audit for the effectiveness of the socio-environmental management of companies. Methodology: The research consisted of a systematic review of scientific articles on the SciELO and Google Academic platforms, using specific keywords related to environmental audit and socio-environmental management. The inclusion criteria selected only scientific articles in Portuguese, available entirely on the internet and published between 2018 and 2023, excluding other types of studies and those that did not directly address the relationship between the themes. Results and data analysis: The analysis of the texts highlights the importance of environmental audits for organizations, highlighting their essential role in socio-environmental management. These audits not only identify areas of risk and ensure compliance with regulations, but also promote continuous improvements and an organizational culture focused on sustainability. In addition to boosting operational efficiency and reducing costs, they strengthen reputation and confer competitive advantages in the marketplace. While the disadvantages, such as associated costs, are recognized, the benefits of audits are considered crucial for the sustainable success of companies. Conclusion: Thus, it is concluded that environmental audits emerge as indispensable tools to mitigate environmental risks, promote sustainability and ensure competitiveness, meeting the growing social and legal demands. It highlights the need for future research to deepen the understanding of environmental audits and their practical applicability in different organizational contexts, emphasizing the importance of incorporating environmental responsibility into the strategic vision of companies.

School Committees' Effectiveness in the Context of School-based Management Policy

The background of this research is the granting of broad educational autonomy to schools, which is a big concern for the government of Indonesia. School-based Management (SBM) appears as an alternative to the new paradigm of education management offered. One of the characteristics of SBM is inseparable from the participation of the community. School Committee is a forum for parents, communities, stakeholders, and entrepreneurs in school development and can bridge the interests of all the parties. To date, not many School Committees have been able to play an effective role in supporting the implementation of education in schools. One of the contributing factors is that the institutional design is not seriously empowered into an independent and professional institution. This study aimed to examine the effectiveness of school committees in school-based quality improvement management. The study method is qualitative descriptive. Data were collected through interviews, observation, and documentation. Validation of the collected data was done through triangulation techniques. The results showed that thematically the author underlined four important things, namely: first, the school committee has effectiveness as a consideration partner, material support, financial, thought and energy, and learning mediator; second, quality improvement strategies can be achieved through efforts to improve school subject competence and involvement in competitions; third, to measure the results of achievements, an education quality management audit is carried out, and; fourth, the budget as one of the determining factors in achieving school goals and objectives must be optimized by utilizing the flexibility of implementing Law No. 23 of 2014 and optimizing available resources. This research has implications for considerations in the preparation of internal school strategies to prioritize school needs and recommendations related to budget policies and inventory of school components.
 Keywords: effectiveness, School Based Management, School Committee

Public Financial Management (PFM) Laws and Audit Quality in Ghana: The Moderating Role of Auditor-Client Relationship

Purpose: This study examines the extent to which public financial management (PFM) laws contribute to audit quality in the public sector and how the auditor-client relationship moderates this effect. 
 Design/Methodology/Approach: This study used a quantitative survey research design to collect data from about 400 public sector auditors working with Ghana's Supreme Audit Institution (SAI), the Audit Service, by adopting the contextual factor of the IAASB's framework for Audit Quality using the PLS-SEM method of analysis.
 Findings: The study found that in the Public Sector, Public Financial Management (PFM) laws positively influence audit quality, while auditor-client relationships also negatively contribute to audit quality. 
 Furthermore, it was also established that the auditor-client relationship negatively moderated the relationship between Public Financial Management (PFM) laws and audit quality.
 Implications/Research Limitation: The results of this study extend and add to the growing empirical studies on Public Financial Management (PFM), audit quality and the field of public sector auditing. However, the study will be limited to only public sector auditors working with Ghana's Supreme Audit Institution (SAI), the Audit Service.
 Practical Implication: The study results have the prospect of encouraging policy-makers to strengthen the independence and improve the capacity of the State Auditor (i.e. Ghana Audit Service) through appropriate PFM laws that seek to improve auditor-client relationships through relevant compliance and enforcement mechanisms.
 Originality/Value: This study is the first to directly examine how the Public Financial Management (PFM) laws contribute to audit quality in Ghana and how the auditor-client relationship moderates this effect. 
 Nevertheless, this study differs from other prior empirical research on the basis of the method employed and the context of the study.