Internal audit’s evolving performance role: lessons from the South African public sector

Abstract

Purpose

The formal adoption of internal auditing within the South African public sector was made compulsory by the Public Finance Management Act, No. 1 of 1999. Despite internal auditing’s primary role of adding value and assisting organisations to accomplish pre-defined strategic objectives, the increasing frequency of service delivery protests in South Africa, suggests that mandatory internal auditing may not have contributed to improving public sector performance and enhancing service delivery, as envisaged. This paper aims to identify the factors preventing internal audits from effectively contributing to improved public sector performance and service delivery.

Design/methodology/approach

The study adopted a sequential mixed-methods research approach. Firstly, a survey instrument was used to collect empirical data from survey respondents at South African national government departments. Secondly, semi-structured interviews and focus group discussions were held with a purposively selected sample of participants to explore the observations from the first phase. The observations from the first two phases were validated through an analysis of pertinent documents and records.

Findings

Despite all departments adopting internal auditing, management’s expectations of internal auditing and the services provided by the internal audit function diverged. The results suggest that the emergence of a compliance approach to organisational governance together with poor performance management skills has impaired internal auditing’s ability to effectively contribute to strategic and performance management.

Research limitations/implications

Despite its South African orientation, as internal auditing is a global association and given that service delivery protests continue to occur in several countries around the world, increases the study’s international relevance. Moreover, the mandate of internal auditing requires it to add value to an organisation irrespective of its geographical location.

Originality/value

The study contributes to the existing body of knowledge on internal auditing, particularly its adoption and implementation in the South African public sector. In addition to identifying the factors inhibiting effective internal auditing, the study advances a suggested framework for the future of internal auditing.

Citation

Moodley, A., Ackers, B. and Odendaal, E. (2022), "Internal audit’s evolving performance role: lessons from the South African public sector", Journal of Accounting & Organizational Change, Vol. 18 No. 5, pp. 704-726. https://doi.org/10.1108/JAOC-05-2021-0063