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Article
Publication date: 1 June 1997

Cai Chun

Focuses on the functions and objectives of internal audit and the conditions necessary for them. Believes the basic function of internal audit is a special kind of…

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4312

Abstract

Focuses on the functions and objectives of internal audit and the conditions necessary for them. Believes the basic function of internal audit is a special kind of economic control. In other words, internal audit itself is a special kind of control function over other controls within an organization. In addition, internal audit still has three sub‐functions, i.e. supervision, attestation and evaluation, which are essential to achieving the control function. Internal audit is an integrated part of the process of accountability; its general objective is to ensure and promote the effective performance of accountability assumed by the management of an organization. Identifies three important conditions necessary for achieving the functions and objectives of internal audit: independence, organizational status and objectivity.

Details

Managerial Auditing Journal, vol. 12 no. 4/5
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 April 2002

J.M.P. Venter and R. du Bruyn

Internal auditing assumes an increased responsibility for the evaluation of entity operations as a service to management and the board of directors. Quality assurance…

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1038

Abstract

Internal auditing assumes an increased responsibility for the evaluation of entity operations as a service to management and the board of directors. Quality assurance review is the process through which assurance is obtained that the internal auditing department’s work is done in accordance with the Standards for the Professional Practice of Internal Auditing. This study examines the current practices of quality assurance review in South Africa. Although not all organisations surveyed do perform internal auditing quality assurance reviews, the organisations that do, benefit from them. Various methods are used in practice to perform internal and external quality assurance reviews. This study provides information on the processes and procedures used in quality assurance review programmes.

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Article
Publication date: 1 December 2006

Zamzulaila Zakaria, Susela Devi Selvaraj and Zarina Zakaria

To provide evidence on the establishment of the internal audit function in the higher education institutions in Malaysia and also to obtain the perceptions of the…

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5295

Abstract

Purpose

To provide evidence on the establishment of the internal audit function in the higher education institutions in Malaysia and also to obtain the perceptions of the management of the higher education institutions towards the role and scope of the internal audit.

Design/methodology/approach

Sample consisted of 17 public universities and 49 private universities in Malaysia and variables used by Gordon and Fischer were adopted for this study.

Findings

The findings revealed that a substantial number of private institutions of higher education do not have an internal audit function. The study also indicates that the management of both types of institutions have similar perceptions on the role of internal auditors and the important audit areas as there are no significant differences between public and private institutions of higher education.

Research limitations/implications

The main limitation of this study is that it only examines whether the scope of internal audit covers the areas mentioned by treasury circular or the IIA Guideline. It ignored the extent to which the higher education institutions comply with both guidelines. It is, therefore, suggested that future research could consider the degree of compliance to the above guidelines. The difference in the role of internal auditing between the education sector and other industries represents an interesting area for further research. Also, since this study only focuses on the perceptions of the management and the internal auditor themselves, the perception of other parties such as regulators and the audit committee on the role of internal audit in institutions of higher education will be an interesting area to explore for future research.

Practical implications

The failure to establish an internal audit function in the private universities calls for government intervention to ensure the existence of an internal audit function in the private sector higher education institutions.

Originality/value

The findings of this paper will be important in further refining the scope of the internal audit function in the higher educations institutions in Malaysia, especially to policymakers concerned with regulations governing the internal audit function.

Details

Managerial Auditing Journal, vol. 21 no. 9
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 28 October 2020

Abdulaziz Alzeban

This paper reports a study that examines the role of the internal audit function as a cornerstone of corporate governance, on economic growth.

Abstract

Purpose

This paper reports a study that examines the role of the internal audit function as a cornerstone of corporate governance, on economic growth.

Design/methodology/approach

Data were obtained from 108 countries for the period 2011–2015. The World Bank, the Institute of Internal Auditors Research Foundation and the Transparency International Corruption Perception Index were the data sources. Two statistical techniques were used: regression analysis to test the study hypotheses and the Chi-squared test to determine whether variations between countries.

Findings

The findings suggest that conformance with internal audit standards and maturity (in years) of the internal audit department contribute to economic growth. They also reveal a relationship between the professional standing of internal audit staff (represented by professional qualifications and number of training hours annually) and the contribution to economic growth, that being that the greater the professional standing of staff, the greater internal audit conformance to the standards and the higher the contribution to economic growth. Further, the findings reveal that the impact of internal audit on economic growth varies among countries according to income classifications.

Originality/value

The consideration of internal audit as one of the four fundamental bases of corporate governance, and therefore, its relationship with economic growth is a neglected topic in the research arena. This study addresses that shortcoming by providing worldwide evidence on the contribution of internal audit to economic growth and, thus, makes a new contribution to the literature. Further, evidence is provided to enlighten poorly performing economies of the value of mandating the presence of internal audit and the compliance of it with international internal audit standards.

Details

Journal of Economic Studies, vol. 48 no. 7
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 26 January 2009

Joe Christopher, Gerrit Sarens and Philomena Leung

This study aims to critically analyse the independence of the internal audit function through its relationship with management and the audit committee.

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10032

Abstract

Purpose

This study aims to critically analyse the independence of the internal audit function through its relationship with management and the audit committee.

Design/methodology/approach

Results are based on a critical comparison of responses from questionnaires sent out to Australian chief audit executives (CAEs) versus existing literature and best practice guidelines.

Findings

With respect to the internal audit function's relationship with management, threats identified include: using the internal audit function as a stepping stone to other positions; having the chief executive officer (CEO) or chief finance officer (CFO) approve the internal audit function's budget and provide input for the internal audit plan; and considering the internal auditor to be a “partner”, especially when combined with other indirect threats. With respect to the relationship with the audit committee, significant threats identified include CAEs not reporting functionally to the audit committee; the audit committee not having sole responsibility for appointing, dismissing and evaluating the CAE; and not having all audit committee members or at least one member qualified in accounting.

Originality/value

This study introduces independence threat scores, thereby generating analysis of the internal audit function's independence taking into account a combination of threats.

Details

Accounting, Auditing & Accountability Journal, vol. 22 no. 2
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 March 2006

Alexandros Galanis and David G Woodward

In the conduct of an organisation’s myriad activities, obtaining value for money is a crucial consideration, and over the years this has increasingly encouraged businesses…

Abstract

In the conduct of an organisation’s myriad activities, obtaining value for money is a crucial consideration, and over the years this has increasingly encouraged businesses to examine both the effectiveness and efficiency of outsourcing specific business functions. Historically, concern was with more‐or‐less peripheral activities where the cost advantage of outsourcing was readily ascertainable. But more recently attention has increasingly been directed towards more fundamental business activities where consideration of mere cost is supplanted by aspects of quality, and the recognition that greater external quality of provision might well override mere considerations of economy.

Details

Journal of Applied Accounting Research, vol. 8 no. 1
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 1 April 2000

D.B. van der Schyf

The point of exit in this research is that there should be an internal audit department in a national government department in South Africa to render a top‐class internal

Abstract

The point of exit in this research is that there should be an internal audit department in a national government department in South Africa to render a top‐class internal auditing service that is cost‐effective and affordable, preferred by clients, continuously complies with the standards of professional practice of internal auditing and best practice and have a positive impact on the national government department’s bottom line. The empirical research has highlighted several factors, including the ignorance of key role players and lack of professional proficiency on the part of internal auditors, as factors that impede the establishment and operation of an internal auditing function in the public sector in South Africa. It is recommended, that audit committees in the public sector should launch a joint marketing action, directed at key role players, to promote the potential value of a top‐class internal auditing service in the public sector, as well as the factors that impede it.

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Article
Publication date: 21 June 2013

Mahbub Zaman and Gerrit Sarens

This paper aims to recognise the importance of informal processes within corporate governance and complement existing research in this area by investigating factors…

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3454

Abstract

Purpose

This paper aims to recognise the importance of informal processes within corporate governance and complement existing research in this area by investigating factors associated with the existence of informal interactions between audit committees and internal audit functions and in providing directions for future research.

Design/methodology/approach

To examine the existence and drivers of informal interactions between audit committees and internal audit functions, this paper relies on a questionnaire survey of chief audit executives (CAEs) in the UK from listed and non‐listed, as well as financial and non‐financial, companies. While prior qualitative research suggests that informal interactions do take place, most of the evidence is based on particular organisational setting or on a very small range of interviews. The use of a questionnaire enabled the examination of the existence of internal interactions across a relatively larger number of entities.

Findings

The paper finds evidence of audit committees and internal audit functions engaging in informal interactions in addition to formal pre‐scheduled regular meetings. Informal interactions complement formal meetings with the audit committee and as such represent additional opportunities for the audit committees to monitor internal audit functions. Audit committees' informal interactions are significantly and positively associated with audit committee independence, audit chair's knowledge and experience, and internal audit quality.

Originality/value

The results demonstrate the importance of the background of the audit committee chair for the effectiveness of the governance process. This is possibly the first paper to examine the relationship between audit committee quality and internal audit, on the existence and driver of informal interactions. Policy makers should recognize that in addition to formal mechanisms, informal processes, such as communication outside of formal pre‐scheduled meetings, play a significant role in corporate governance.

Details

Managerial Auditing Journal, vol. 28 no. 6
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 18 September 2019

Lise Muriel Botha and Naomi Wilkinson

The purpose of this study is to propose a framework for the evaluation of the perceived value internal audit functions add to their organisations. The framework is based…

Abstract

Purpose

The purpose of this study is to propose a framework for the evaluation of the perceived value internal audit functions add to their organisations. The framework is based on service quality measurement principles, specifically SERVPERF, which is applied to internal auditing.

Design/methodology/approach

Insights obtained from the literature on internal auditing and service quality disciplines were synthesised to identify and structure value-adding attributes of internal auditing. A thematic analysis of published profiles (by Protiviti) of various organisations’ internal audit functions were analysed and evaluated against those attributes identified in the literature to formulate an evaluation framework based on service quality measurement principles.

Findings

The identified value-adding attributes were categorised according to the dimensions of the SERVPERF service quality measurement instrument to formulate a framework for evaluation of the value added by internal audit functions. It was found that the SERVPERF dimensions appear to be relevant to internal auditing. The SERVPERF instrument was therefore adapted to evaluate the value added by internal auditing as a service.

Practical implications

This paper contributes to both the theory and practice of internal auditing by proposing formal dimensions of a value-adding internal audit service which can then serve as a reference point from which to evaluate the value added to an organisation. The framework can serve as a starting point for internal audit functions to develop their service offering and/or form the foundation of stakeholder satisfaction surveys.

Originality/value

The study contributes to the literature by applying service quality principles to internal auditing. A holistic framework that can be used for the evaluation of the value added by internal audit functions based on stakeholder perceptions is proposed. The framework juxtaposes attributes of value-adding internal auditing with recognised service quality performance measures. The notion of value added is investigated to better understand the concept in the context of internal auditing services.

Details

Meditari Accountancy Research, vol. 28 no. 3
Type: Research Article
ISSN: 2049-372X

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Article
Publication date: 12 March 2018

Juma Bananuka, Stephen Korutaro Nkundabanyanga, Irene Nalukenge and Twaha Kaawaase

The purpose of this study is to investigate the contribution of internal audit function and audit committee effectiveness on accountability in statutory corporations (SCs).

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1373

Abstract

Purpose

The purpose of this study is to investigate the contribution of internal audit function and audit committee effectiveness on accountability in statutory corporations (SCs).

Design/methodology/approach

This study is cross sectional and correlational. Data have been collected through a questionnaire survey of 52 SCs in Uganda through their Chief Internal Auditors and Chief Finance Officers. Data have been analysed using Statistical Package for Social Sciences.

Findings

The internal audit function significantly contributes to accountability of SCs in Uganda and audit committee effectiveness is not where effective internal audit is present in such organisations. However, audit committee effectiveness significantly contributes to accountability when an internal audit function is not present.

Research limitations/implications

The use of hierarchical regression is prone to problems associated with sampling error. However, the likelihood of these problems is mitigated by the interface with data.

Originality/value

Whereas hitherto both internal audit function and audit committee effectiveness had been viewed as explanations of accountability, this study only confirms the internal audit function as a significant predictor of SCs’ accountability relative to audit committee effectiveness.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 1
Type: Research Article
ISSN: 1985-2517

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