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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 economic…

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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

Keywords

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 review is…

1734

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.

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 management of…

5775

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

Keywords

Article
Publication date: 23 June 2023

Iman Harymawan and Fiona Vista Putri

How does the internal audit function make external auditors work more efficiently at the early stage of the COVID-19 pandemic? This study examines the relationship between internal

Abstract

Purpose

How does the internal audit function make external auditors work more efficiently at the early stage of the COVID-19 pandemic? This study examines the relationship between internal audit function, audit report lag and audit fee at the early stage of the COVID-19 pandemic.

Design/methodology/approach

This study uses data from all public firms listed on the Indonesia Stock Exchange from 2018 to 2019 using the difference-in-difference test technique to answer the proposed hypothesis. In addition, this study also tested the issue of endogeneity using Coarsened Exact Matching (CEM) and Two-Stage Least Square (Heckman, 1979).

Findings

This study finds that, at the early stage of the COVID-19 pandemic, a good internal audit function significantly reduced audit report lag and audit fee. These findings indicate that good corporate governance implemented through an internal audit function during the COVID-19 pandemic can give assurance to prevent and mitigate the firm's risk so that external auditors can work more efficiently. Furthermore, this study also carries out an additional analysis by subsampling the high and low technological industries. Based on the robustness test, it is revealed that the results of this study are consistent.

Originality/value

This study contributes to the novelty of literature in auditing studies that highlights the audit process at the early stage of the COVID-19 pandemic

Details

Journal of Accounting in Emerging Economies, vol. 13 no. 4
Type: Research Article
ISSN: 2042-1168

Keywords

Article
Publication date: 12 December 2022

Salvatore Polizzi, Fabio Lupo and Sara Testella

Quality Assurance and Improvement Program (QAIP) is defined as “an ongoing and periodic assessment of the entire spectrum of audit and consulting work performed by the internal

Abstract

Purpose

Quality Assurance and Improvement Program (QAIP) is defined as “an ongoing and periodic assessment of the entire spectrum of audit and consulting work performed by the internal audit (IA) activity”. QAIP is an important component of internal auditors’ commitment to improve internal audit (IA) quality. The pressure towards improvement is urgent for central banks, in light of the vulnerabilities of their IA functions identified by the International Monetary Fund. The authors analyse the professional standards and the literature on IA and QAIP, aiming to propose general considerations to enhance IA quality and to develop and maintain a QAIP, with reference to central banks, also shedding light on the synergies among IA, QAIP and total quality management (TQM).

Design/methodology/approach

This paper reviews the most relevant professional standards in light of the professional and academic literature regarding IA quality, QAIP and their relationship with TQM. The analysis of these sources represents an important step to identify general measures to improve IA quality and develop effective QAIP in central banks.

Findings

This analysis shows that it is important to understand the rationale behind the development of an IA function and its theoretical and practical foundation, especially for complex organisations such as central banks. In addition, the authors show that QAIP represents an important tool to exploit the synergies between TQM and IA. These synergies could result in higher levels of quality for the IA function and more effective implementation of TQM within the whole organisation. Lastly, the authors provide practical suggestions to support the implementation of an effective QAIP in central banks and to spread TQM philosophy within the organisation.

Originality/value

The authors contribute to the scant literature on IA quality and QAIP by focusing on central banks and shedding light on the relationship with TQM. Regardless of their importance, these topics have been largely neglected by the extant literature.

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.

10889

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

Keywords

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

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: 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 to…

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

Keywords

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 auditing

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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