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Article
Publication date: 6 September 2011

Priscilla A. Burnaby and Susan Hass

Increased globalization and cross border trade suggest the importance of consistency in internal controls and the internal auditing activities within organizations when doing…

3228

Abstract

Purpose

Increased globalization and cross border trade suggest the importance of consistency in internal controls and the internal auditing activities within organizations when doing business with a region's neighbors. The purpose of this paper is to investigate whether there are differences in the demographics of internal auditors in the neighboring regions of the USA, Canada, and many Latin American countries, their organizations' compliance with the Institute of Internal Auditors' (IIA) International Standards for the Professional Practice of Internal Auditing (Standards), and the skills and competencies that are most important to perform the profession of internal auditing.

Design/methodology/approach

Data were selected from the IIA's 2006 Common Body of Knowledge database created by the Institute of Internal Auditors Research Foundation. χ2‐tests or F‐tests were used to determine if there were differences in the responses between internal auditors from the US, Canadian and Latin American respondents.

Findings

Although there is less compliance and greater satisfaction with the Standards in participating Latin American countries, the findings indicate remarkable consistency in the USA, Canada, and Latin American countries in their application and compliance with the Standards and the kinds of skills and competencies respondents indicate are important for the practice of internal auditing. Global competition, increased communication and global stakeholder expectations have resulted in increased utilization of internal auditing in the Americas.

Practical implications

Reliability of organizational systems, output and performance must be continually evaluated to ensure effectiveness, efficiency and compliance with entity policies and procedures. One role of the internal auditor is to evaluate this performance using globally accepted Standards, frameworks and procedures. Adding value by making suggestions for system improvements and to provide assurance on the adequacy of system controls to stakeholders at all levels and geographical locations should insure the future of the internal auditing profession.

Originality/value

There has been nothing written about the comparison of the internal auditing profession's usage of the IIA Standards in the USA, Canada, and Latin America. As many organizations are doing business across these borders, reliance on the information provided by their suppliers and customers is important to executives. Systems that are monitored by internal auditors who follow the IIA's Standards should provide more assurance about the reliability of that information. This paper compares the usage of the IIA's Standards by internal auditors in the USA, Canada, and participating Latin American countries.

Details

Managerial Auditing Journal, vol. 26 no. 8
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 12 December 2017

Bryane Michael and Mark Williams

The purpose of this paper is to understand why managers, internal auditors and compliance staff (in financial firms specifically and using Malaysia as a concrete example) can want…

Abstract

Purpose

The purpose of this paper is to understand why managers, internal auditors and compliance staff (in financial firms specifically and using Malaysia as a concrete example) can want to ignore compliance-related legislation (a law on anticompetitive behaviour in this case).

Design/methodology/approach

The authors review, discuss and critique the literature on compliance and institutions in the light of existing data from Malaysia’s financial industry (literally confronting theory with data).

Findings

Legislative design can actually encourage managers and their auditors disobey/ignore the law for reasons which previous theories cannot explain.

Research limitations/implications

This research does not use the regression techniques in vogue now. The findings, nevertheless, imply that attempts to explain phenomenon in management auditing should start with the laws governing managerial activity.

Practical implications

Auditors may use the methods used in this study to assess the extent to which financial services firms’ managers have incentives to comply with laws. Similarly, this research can quantify the extent to which internal auditors in these firms have incentives to find untoward conduct.

Social implications

Poorly designed laws affecting managerial auditing derive from pre-existing social relationships, as well as help shape them (as shown using data). Identifying areas of non-compliance may actually signal deeper problems in the way businessmen and lawmakers make and enforce laws requiring compliance and self-assessment.

Originality/value

The authors know of no study looking at the economic incentives driving internal auditors’ behaviour – particularly in the area of antitrust. They show how law shapes management and auditors’ incentives, quantify these incentives and show how/why previous research fails to explain these incentives.

Details

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

Keywords

Article
Publication date: 19 July 2013

Giuliana Birindelli and Paola Ferretti

The authors' paper aims to examine the organizational issues that come from the recent establishment of the compliance function in Italian banks.

Abstract

Purpose

The authors' paper aims to examine the organizational issues that come from the recent establishment of the compliance function in Italian banks.

Design/methodology/approach

The authors' paper takes as a starting point the Bank of Italy's regulations and the existing literature on compliance, in order to create a theoretical model of an efficient internal control system.

Findings

For each organizational structure of compliance, the authors' paper describes strengths and weakness. It also outlines the scopes of compliance and internal audit in order to avoid overlaps. Having regard to the similarities between operational risk and compliance risk, the study identifies cooperation areas so as to achieve synergies, in terms of costs, and a better operational efficiency.

Research limitations/implications

The authors' paper focuses mainly on the relationship between compliance, on one side, and internal audit and risk management on the other. It focuses also on the positioning of compliance within the internal control system, as it has been regulated by the Italian disposals. Further research could concern the relationship with other functions and the regulations of other countries.

Practical implications

The authors' paper identifies cooperation forms between the internal control system functions. This is the way to suggest organizational solutions able to improve banking efficiency.

Originality/value

This subject has not been analyzed in depth to date. This article attempts to obtain an identification of the roles and responsibilities of the main functions involved in the internal controls system, in order to define organizational models characterized by complementarity of interventions and thus oriented towards the objectives of effectiveness and efficiency.

Details

Journal of Financial Regulation and Compliance, vol. 21 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 October 2008

E. Sadler, M. Marais and H. Fourie

This article deals with internal auditors’ use of and compliance with the Standards for the Professional Practice of Internal Auditing, as well as the Practice Advisories, issued…

Abstract

This article deals with internal auditors’ use of and compliance with the Standards for the Professional Practice of Internal Auditing, as well as the Practice Advisories, issued by the Institute of Internal Auditors (IIA). The results reported here form part of a global research project, the 2006 Common Body of Knowledge in Internal Auditing (CBOK) study. The research shows that internal auditors worldwide believe that overall, their organisations comply with the Standards. Reasons for not using the Standards relate to organisational attributes such as management’s perceptions that these do not add value and are too time‐consuming to comply with.

Article
Publication date: 9 October 2009

Priscilla A. Burnaby, Mohammad Abdolmohammadi, Susan Hass, Gerrit Sarens and Marco Allegrini

The purpose of this paper is to investigate differences in the degree of usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the…

2863

Abstract

Purpose

The purpose of this paper is to investigate differences in the degree of usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by organizations' internal audit activities (IAA) located in the USA and a sample of European countries which have affiliates with the IIA. This paper shows the differences among Belgium, Italy, The Netherlands, the UK and Ireland, and the USA with respect to the level of use of the Standards and compliance with the Standards by respondents' IAAs.

Design/methodology/approach

Survey results from questionnaires sent to IIA members in September 2006 about various topics relating to internal auditing are summarized in the Common Body of Knowledge 2006 database. These results are compared among Belgium, Italy, The Netherlands, the UK and Ireland, and the USA.

Findings

This paper shows the differences among Belgium, Italy, The Netherlands, the UK and Ireland, and the USA with respect to the level of use of the Standards and compliance with the Standards by respondents' IAAs. There are significant levels of variation in responses by country. For Standards 1300, Quality Assurance and Improvement Program, and 2600, Resolution of Management's Acceptance of Risks, respondents indicate high levels of non‐compliance.

Originality/value

This study compares the status of the use of the IIA Standards in five countries to determine if there is any difference in application in different parts of the world.

Details

Managerial Auditing Journal, vol. 24 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 14 April 2020

Paulo Sergio Scoleze Ferrer, Graziela Darla Araujo Galvão and Marly Monteiro de Carvalho

This study aims to investigate how the dynamics of compliance, internal controls and ethics can generate tensions in the domain of project governance. Moreover, it investigates…

1142

Abstract

Purpose

This study aims to investigate how the dynamics of compliance, internal controls and ethics can generate tensions in the domain of project governance. Moreover, it investigates the tensions between these constructs and the search for project success from a practice-based perspective.

Design/methodology/approach

A methodological approach is taken, with a case-based research carried out in a large European multinational company. Data were gathered through 21 interviews, between project managers and other key stakeholders, and documentary data from 64 projects for triangulation and critical analysis.

Findings

As a result, four patterns of tensions were identified: Tension A between compliance and project success, Tension B between internal controls and project success, Tension C between compliance and internal controls and Tension D between compliance and ethics.

Research limitations/implications

Some limitations should be acknowledged. The first, ontological, is inherent in the post-positivist perspective, accepting human subjectivity and the complexity of social reality intrinsic to research applied to the social sciences, respectively implying interpretive bias and incompleteness in the comprehension of the facts. The second limitation comes from the use of a single case study, in which singular contextual characteristics make it difficult to generalise the results.

Practical implications

This study has implications for practice, as it highlights weaknesses that may occur in organisations owing to tensions between the elements of compliance, internal controls and ethics. This, therefore, implies ways of strengthening the consistency of project governance. The project governance domain and its tensions affect the project-success holistic view in both efficiency and effectiveness, since the elements of internal control and compliance can create tensions that favour one project success perspective to detriment of the others. Understanding the nature of tensions, their implications and the long-term holistic perspective can lead to better decisions by managers.

Originality/value

The results suggest that a formal code of ethics, a project management methodology, internal controls and a well-established training programme are not sufficient, because, in the practical context, the interaction between these elements creates tensions that impact their logical consistency lost when interacting with each other.

Details

International Journal of Managing Projects in Business, vol. 13 no. 4
Type: Research Article
ISSN: 1753-8378

Keywords

Book part
Publication date: 18 January 2021

Clint Zammit, Simon Grima and Y. Murat Kizilkaya

The Public Sector is usually assumed to have a risk avoidance culture, with a reactive rather than proactive approach towards the management. However, an improved holistic…

Abstract

The Public Sector is usually assumed to have a risk avoidance culture, with a reactive rather than proactive approach towards the management. However, an improved holistic approach seems to be required, especially when considering the complexity and size of the Public Sector, and the challenges it faces to connect the services, clients and the different levels of governance.

Within this chapter, the authors lay out a maturity level evaluation of Governance, Risk Management and Compliance (GRC) within the Maltese Public Sector. Through documentation analysis of the available literature on the subject, the authors determine the principal themes required to develop an effective GRC practice across the Public Sector. The authors then design statements based on the identified GRC themes and administer it using an online survey tool to Public employees across different Ministries, Departments, Agencies and Entities, in order to obtain their perception. This is in order to determine gaps, weaknesses or limiting factors towards the implementation of an effective GRC.

The results show that, although, there is a substantial percentage of scepticism and few disagreements towards some of the statements, especially those which related to Risk Management (RM) and Internal Auditing (IA), the majority of Public Sector bodies do in fact show high standards of GRC practices integrated and present in their day-to-day operations and internal environment, showing that there is a well-developed Governance, Compliance and Control structure and Internal Audit function across the Sector.

However, the perception of participants is that the RM function is the least developed area. IA needs some improvement especially where trust on advice is involved.

Details

Contemporary Issues in Public Sector Accounting and Auditing
Type: Book
ISBN: 978-1-83909-508-5

Keywords

Article
Publication date: 3 December 2018

Irene Nalukenge, Stephen Korutaro Nkundabanyanga and Joseph Mpeera Ntayi

The purpose of this paper is to establish the relationship between corporate governance, ethical culture, Internal Controls over Financial Reporting (ICFR) and compliance with…

2653

Abstract

Purpose

The purpose of this paper is to establish the relationship between corporate governance, ethical culture, Internal Controls over Financial Reporting (ICFR) and compliance with International Financial Reporting Standards (IFRS) by microfinance institutions (MFIs).

Design/methodology/approach

This is a cross-sectional survey based on a sample of 85 MFIs in Uganda. Hypotheses were tested using partial least squares (PLS) analysis technique. An unweighed IFRS compliance index to capture the level of compliance with IFRS was constructed. Yet to capture corporate governance, ethical culture and ICFR variables, the perceptions of top management of MFIs have been taken into consideration.

Findings

Corporate governance, ethical culture and ICFR, each makes a significant contribution to compliance with IFRS. Also both corporate governance and ethical culture are significantly associated with ICFR. However, compliance with IFRS by MFIs is better enhanced by corporate governance and ethical culture through ICFR.

Research limitations/implications

Results support the idea that in terms of agency and virtue ethics theories, the board should support ICFR to minimize egocentric managers and other employees and also inculcate an ethical culture to achieve better compliance with IFRS because corporate governance and ethical culture are associated with sound ICFR which in turn lead to compliance with IFRS.

Practical/implications

Boards of MFIs should encourage investments that improve ICFR. At the same time, regulators should ensure that boards are composed of members with financial expertise, with no conflict of interest and introduce mechanisms that encourage boards to perform their roles.

Originality/value

The study contributes towards a methodological position by showing that the behavioural perspective of corporate governance can be an alternative to the boards’ structural variables in investigating compliance with IFRS. A direct association of ethical culture and compliance with IFRS and an indirect association through ICFR can be envisaged.

Details

Journal of Financial Reporting and Accounting, vol. 16 no. 4
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 9 October 2009

Philomena Leung and Barry J. Cooper

The purpose of this paper is to provide an overview of the profile of internal audit in five Asia‐Pacific countries and investigate the usage and compliance with the Institute of…

3754

Abstract

Purpose

The purpose of this paper is to provide an overview of the profile of internal audit in five Asia‐Pacific countries and investigate the usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by organizations' internal audit activities (IAAs). This paper shows the differences between Australia, China, Japan, New Zealand and Taiwan. It also discusses part of the results of the Common Body of Knowledge 2006 global study conducted by the IIA.

Design/methodology/approach

The paper reports the results of a questionnaire survey sent to the global membership of the IIA in September 2006 on various aspects of internal audit practices.

Findings

The profile of internal audit differs amongst the countries with much older organizations exist in Australia, Japan and New Zealand. Respondents in New Zealand, Japan, Chinese Taiwan, China and Australia all report to have a reasonably high level of usage of Standards. However, Australia has the highest number of respondents who report that they are in full compliance of the Standards.

Originality/value

This is the first global study of internal auditors' compliance with the IIA Standards.

Details

Managerial Auditing Journal, vol. 24 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 April 2003

A recent study has revealed that too many financial institutions continue to fall short of first‐class compliance. They are failing to recognize and close the gap between the…

Abstract

A recent study has revealed that too many financial institutions continue to fall short of first‐class compliance. They are failing to recognize and close the gap between the historical checklist approach to compliance and whatever is required to assess and mitigate the totality of risks an organization may encounter. These organizations leave themselves extremely vulnerable to reputational damage with their customers, regulators, and other stakeholders. As part of the study entitled Compliance: A gap at the Heart of Risk Management, 160 executives responded to an in‐depth global survey on the subject of compliance. Alarmingly, less than one‐fifth of survey participants considered awareness of compliance‐related risks to be high across all parts of the business and fewer than one‐quarter were very confident in their full compliance with regulatory requirements and internal codes and policies.

Details

Journal of Investment Compliance, vol. 4 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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