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Article
Publication date: 1 November 2001

Mort Dittenhofer

One of the three areas to which internal auditing is targeted is effectiveness. Yet we do not often determine whether the internal auditing function is itself operating…

8876

Abstract

One of the three areas to which internal auditing is targeted is effectiveness. Yet we do not often determine whether the internal auditing function is itself operating effectively. We must identify the basic objective of internal auditing, define the goals to be accomplished, establish measures relative to achieving those goals, and finally evaluate the overall internal auditing process. We must separate the usual measures of output from the overall measures of outcome to determine the cost effectiveness and operational improvement aspects of the internal audit process. The former, the time‐honored internal audit output measures must be supplanted by internal audit effectiveness achievements.

Details

Managerial Auditing Journal, vol. 16 no. 8
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 23 November 2010

Dessalegn Getie Mihret, Kieran James and Joseph M. Mula

The purpose of this paper is to synthesize relevant theoretical and empirical literature to develop propositions and suggest a research agenda on the antecedents and…

3661

Abstract

Purpose

The purpose of this paper is to synthesize relevant theoretical and empirical literature to develop propositions and suggest a research agenda on the antecedents and organisational performance implications of internal audit effectiveness.

Design/methodology/approach

The paper employs institutional theory and Karl Marx's theory of the “circuit of industrial capital” to synthesize relevant internal audit literature to develop theoretically justifiable propositions and highlight an operational research agenda.

Findings

Propositions and a research agenda are provided on potential antecedents of internal audit effectiveness and its possible association with company performance measured as rate of return on capital employed. Also, key variables are identified and operationalisation issues discussed.

Originality/value

As the extant literature does not provide a canon of internal audit effectiveness, the paper's originality is its argument that a positive association between compliance with standards for the professional practice of internal auditors and organisational goal achievement could serve as an approach to assess internal audit effectiveness. Furthermore, the use of the two theories in combination provides additional insights into identifying the antecedents of internal audit effectiveness and its measurement.

Details

Pacific Accounting Review, vol. 22 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 20 November 2020

Azam Abdelhakeem Khalid and Adel M. Sarea

This paper aims to examine bases of effectiveness in internal Shariah auditing undertaken in Islamic financial institutions (IFIs).

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Abstract

Purpose

This paper aims to examine bases of effectiveness in internal Shariah auditing undertaken in Islamic financial institutions (IFIs).

Design/methodology/approach

This paper is theoretical in approach taking, as its starting-point, an extensive literature review. From a general agency theory, an Islamic agency theory is articulated and then applied to ascertain attributes of internal Shariah audit effectiveness revolving around the concept of independence.

Findings

Effective internal Shariah auditing, as a mechanism of assuring Shariah compliance by IFIs, varies directly with the degree of independence enjoyed by internal Shariah auditors themselves. The research propounds that an articulated Islamic agency theory holds potential to serve as a theoretical foundation to build a multi-dimensional conceptual framework based on independence utile for evaluating internal Shariah audit effectiveness.

Research limitations/implications

Evidence is drawn strictly from secondary sources.

Practical implications

To assure effectiveness of internal Shariah auditing, IFIs ought to increase the level of independence of internal Shariah auditors.

Originality/value

Internal Shariah audit effectiveness in IFIs has not been extensively studied in comparison with both studies of external Shariah audit effectiveness in IFIs and internal audit effectiveness undertaken by conventional financial institutions. This research fills that gap.

Details

International Journal of Law and Management, vol. 63 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

Article
Publication date: 21 November 2016

Khaled Ali Endaya and Mustafa Mohd Hanefah

The purpose of this paper is to investigate the direct relationship between internal auditor’s characteristics[1] and internal audit effectiveness[2], and the moderating effect of…

6790

Abstract

Purpose

The purpose of this paper is to investigate the direct relationship between internal auditor’s characteristics[1] and internal audit effectiveness[2], and the moderating effect of senior management[3] support.

Design/methodology/approach

Standard multiple regression and moderated multiple regression are applied, and the data were collected from 114 members of Libyan Association of Accountants and Auditors[4] by using personally administered questionnaire.

Findings

The findings reveal that internal auditor’s characteristics have a significant impact on internal audit effectiveness, and senior management support has a moderating effect.

Practical implications

The findings would encourage Libyan organizations to concentrate on the issue of internal audit effectiveness, and will strengthen the capacity of internal auditing in public organizations.

Originality/value

This paper contributes to the literature of both internal audit and management studies and represents the first effort to examine the impact of internal auditor’s characteristics on internal audit effectiveness with senior management support as a moderating variable.

Details

Journal of Economic and Administrative Sciences, vol. 32 no. 2
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 25 August 2021

Athuman Kalokola Mahyoro and Pendo Shukrani Kasoga

The purpose of this study is to examine how the level of attributes of the internal audit function relates to the effectiveness of internal audit services in local government…

1261

Abstract

Purpose

The purpose of this study is to examine how the level of attributes of the internal audit function relates to the effectiveness of internal audit services in local government authorities (LGAs) in Tanzania.

Design/methodology/approach

Data have been collected through a survey whereby 510 respondents from LGAs in Tanzania through their Heads of Internal Audit Functions, Internal Auditors and Chairpersons of Audit Committees respond to the questionnaire. The data were subjected to principal component analysis and exploratory factor analysis to reduce the set of items and to provide continuous scores for use in multiple regression analyses.

Findings

The findings reveal that audit quality; organization setting and auditee attributes have a significant positive influence on the effectiveness of internal audit services in LGAs in Tanzania.

Research limitations/implications

The study covered only LGAs in Tanzania. Future research in this field should address the gaps identified in the study.

Practical implications

This paper highlights areas that need management attention on the improvement of the effectiveness of internal audit units.

Originality/value

This paper contributes to the literature of both internal auditing and management studies by linking the level of attributes of internal audit function which are audit quality, organization setting, auditee attributes and effectiveness of internal audit services in Tanzania.

Details

Managerial Auditing Journal, vol. 36 no. 7
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 8 May 2017

Azam Abdelhakeem Khalid, Hasnah Haj Haron and Tajul Ariffin Masron

This paper aims to examine the characteristics influencing internal Shariah audit effectiveness in Islamic financial institutions (IFIs) in Bahrain.

2336

Abstract

Purpose

This paper aims to examine the characteristics influencing internal Shariah audit effectiveness in Islamic financial institutions (IFIs) in Bahrain.

Design/methodology/approach

Data were collected from 76 internal Shariah auditors, 23 Shariah supervisory board and 16 audit and governance committee from 52 IFIs in Bahrain. The data were analyzed using structural equation method via SmartPLS 2.0 to examine the relationship between characteristics and effectiveness of internal Shariah audit.

Findings

It was found that competency and work performance were positively significant with internal Shariah audit effectiveness. The findings revealed that the main competency of internal Shariah audit to influence effectiveness were to have professional certification and skills, while work performance to influence effectiveness were engagement planning, performing the engagement and communicating results with management and having sufficient information to provide sound opinion formed by Shariah audit.

Originality/value

From the research perspective, this is the first study that examines the relationship between internal Shariah audit characteristics and its effectiveness in Bahraini IFIs.

Details

Humanomics, vol. 33 no. 2
Type: Research Article
ISSN: 0828-8666

Keywords

Article
Publication date: 30 December 2021

Khurram Ashfaq, Shafique Ur Rehman, Moeez Ul Haq and Muhammad Usman

This study aims to explore the effectiveness and reliability of the performance of internal auditor by the stakeholders for their decision making. The absence of rules and…

Abstract

Purpose

This study aims to explore the effectiveness and reliability of the performance of internal auditor by the stakeholders for their decision making. The absence of rules and regulations generates the debate that the non-standard reporting of the assessment of the internal controls system’s assessment by internal auditor and reliance by the external auditor.

Design/methodology/approach

The study used the mixed-method (triangulation) for the analysis quantitative data was used for regression with Smart PLS 3.2.8, and the qualitative data was used to prove and strengthen the results. The data is collected for five IVs (Objectivity of IAF, Work Performance, Competence, Internal Control System’s Assessment and Sourcing of IAF) and their impact on two DVs (Effectiveness and Reliance). This study used five areas as the target audience (Internal Auditor, External Auditor, Professional bodies, Shareholders, SECP and SBP). A total of 150 respondents were approached and received a valid response of 98 respondents.

Findings

The study explores the positive relationship between Objectivity of IAF, Work Performance, Competence, Sourcing of IAF on Effectiveness and Reliance. Internal Control System’s Assessment having significant relation with Effectiveness and non-significant with reliance because the absence of rules makes it unreliable for stakeholders.

Originality/value

The study found that the system for reporting the internal control needs rules and regulations advancement on the immediate basis for the betterment and safeguard of stakeholders to avoid the events like WorldCom and ENRON.

Article
Publication date: 18 March 2022

Yusun Jung and Moon-Kyung Cho

This paper aims to examine the extent to which two commonly recommended information sharing and communication interventions, direct reporting lines between the internal audit…

Abstract

Purpose

This paper aims to examine the extent to which two commonly recommended information sharing and communication interventions, direct reporting lines between the internal audit function (IAF) and the audit committee (AC) and their joint reviews of internal audit standards and procedures, improve the internal audit in the continuous audit control and monitoring efforts.

Design/methodology/approach

This study uses data from the Audit Intelligence Suite-Benchmarking (AIS) Report for the years 2007 to 2016 published by the Institute of Internal Auditors. The authors test the research hypotheses using the ordinary least squares regression method.

Findings

Functional reporting lines from the IAF to the AC positively impact the internal audit, but administrative lines have a negative impact. Reviews conducted jointly between the IAF and the AC positively influence the internal audit. The impacts of reporting lines and joint reviews are also associated with accounting complexity within a given industry, organizational control structure, organizational scope and the level of IAF’s responsibilities over internal control environment to comply with Sarbanes–Oxley (SOX) Act of 2002.

Research limitations/implications

Because the study uses AIS data, operationalization of variables is constrained to items in the given data set. Future studies, including field studies, may identify other variables and measures using diverse data sources. This study expands the knowledge of effective means of information sharing and communication to enhance interactions between the IAF and the AC.

Practical implications

The results suggest that the use of reporting lines should correspond to accounting complexity, organizational control structure, organizational scope, and reliance on the IAF in handling SOX responsibilities. They also highlight the importance of joint reviews between the IAF and AC in ensuring a high-quality internal audit.

Originality/value

The authors envisioned reporting lines and joint reviews as an excellent tool to balance the relationship between the IAF and the AC for continuous internal auditing beyond generating internal audit reports according to the US Committee of Sponsoring Organizations of the Treadway Commission framework Principle 14.

Details

Managerial Auditing Journal, vol. 37 no. 4
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 10 January 2018

Lourens Erasmus and Philna Coetzee

The purpose of this study is to determine the differences in perception of the key stakeholders on the drivers of internal audit effectiveness, namely, senior management and the…

4390

Abstract

Purpose

The purpose of this study is to determine the differences in perception of the key stakeholders on the drivers of internal audit effectiveness, namely, senior management and the audit committee, in relation to identified measures. To be seen as an effective internal audit function, value needs to be added for both these stakeholders. It is thus important for internal auditing to obtain an understanding of what these stakeholders respectively perceive as the most prominent drivers of internal audit effectiveness.

Design/methodology/approach

Heads of internal audit functions (providing insight into the drivers), chairpersons of audit committees and senior management (providing insight into the measures) within the South African public sector responded to a survey. The data were subjected to an exploratory factor analysis and principal component analysis to reduce the set of items and to provide continuous scores for use in a multivariate multiple regression analyses.

Findings

Senior management and the audit committee differ in their level or order of prominence of the identified drivers that influence the identified measures of internal audit effectiveness. No statistical similarities in their level of views could be found.

Originality/value

To enhance the effectiveness of internal auditing, the internal audit functions should take cognisance of the difference in perceptions of its key stakeholders on the drivers of internal audit effectiveness, in relation to identified measures, to manage these relationships. No previous research could find that statistically compared views of senior management and the audit committee regarding the drivers of internal audit effectiveness.

Details

Managerial Auditing Journal, vol. 33 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 14 January 2020

Oktay Turetken, Stevens Jethefer and Baris Ozkan

The purpose of this paper is to introduce a framework that presents how internal audit effectiveness can be operationalized and what factors are available to influence the…

4059

Abstract

Purpose

The purpose of this paper is to introduce a framework that presents how internal audit effectiveness can be operationalized and what factors are available to influence the effectiveness. Internal audits have become one of the key practices for organizations to control the adherence of their processes to standard procedures and regulations. The benefits of conducting internal audits are well acknowledged in the literature. However, it is difficult for organizations to assess the effectiveness of internal audits and to understand the factors that influence audit effectiveness.

Design/methodology/approach

A systematic literature review was conducted to identify relevant publications and collect and synthesize evidence on the operationalization of internal audit effectiveness and the factors that potentially influence the effectiveness of internal audits.

Findings

A thorough analysis of the relevant studies resulted in a comprehensive list of indicators used for the operationalization of audit effectiveness and a list of potentially influencing factors. The results of the systematic review are synthesized into a framework.

Research limitations/implications

The researchers should consider this study as a comprehensive source that offers pointers on the factors investigated in the literature and a basis for future research in this field to address the gaps that are identified.

Practical implications

Awareness about how the effectiveness of internal audits can be measured, and the factors that can potentially influence this effectiveness can help organizations to understand their current performance and ultimately improve it in the future.

Originality/value

The contributions of this study will help in better understanding the state of the research on internal audit effectiveness, including the influential factors, and gaps and opportunities for future research.

1 – 10 of over 19000