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Article
Publication date: 12 October 2012

Bob Lillis and Marek Szwejczewski

The purpose of this paper is to close the gap between theoretical approaches to strategic operations auditing and empirical analysis of practice in service organisations. Through…

2243

Abstract

Purpose

The purpose of this paper is to close the gap between theoretical approaches to strategic operations auditing and empirical analysis of practice in service organisations. Through analysis of the two different views of strategy formulation – environment‐market and resource‐based – the paper aims to provide insights on how strategic operations audit methods are being used and under what circumstances.

Design/methodology/approach

The case study methodology was employed which involved a three‐stage data collection and analytical process. Its purpose was to identify how strategic operations audit methods were being used, why they were used and the particular circumstances of their use. Trails of operational improvement within each of six case studies show links between service operational activities, the benefits achieved by the improvements and the formulation and/or execution of each service company's business strategy. These trails of improvement provided a means by which to reveal some of the strategic operations audit methods being used. In addition, interviews and analysis of supporting documentation ensured the complete set of methods being utilised was identified.

Findings

The results indicate three main findings. First it is recognised that the service companies all look to adopt a top down approach to strategic operations auditing and seek to maintain, and where possible, gain greater strategic impact from their service operations. Second, the competitive state of the business impacts the choice of strategic operations audit method used. All companies studied employed an environment‐market method to assess operations – market fit. Only when a company is confident of its competitive position will managers then look to also devise a resource‐based method in order to assess its current ability to nurture new capabilities to exploit. Third, companies use a variety of integration techniques to verify on‐going cohesion across infrastructural decision‐making categories of the content of service operations strategy. The assessment of cohesion within service operations strategy takes place within subsets of the content of the strategy. The authors did not find integration techniques that hone structural decision categories or service operations strategy as a whole. The results also show that methods used by managers are pale imitations of the rigorous procedures originally devised by researchers.

Practical implications

Service operations managers possess inadequate understanding of how the application of a strategic operations audit method should be made and limited ability to undertake the audit in a structured and meaningful way. A strategic operations audit methods selection process is put forward to remedy this. The process acknowledges that the choice of a particular method is contingent on the stage of development of the company's service operations strategy. It guides managers through the decision‐making process of what strategic operations audit method to use and when managers should be using it. The message for academics is that new resource‐based methods need to be created that are accessible to managers and relevant when service operations strategy has successfully evolved to the point where greater influence is being sought from it in the formulation of business strategy.

Originality/value

An empirical study within service operations management of the practice of strategic operations auditing is rare. The paper's findings begin to address the gap between theory and practice. The paper presents revisions and additions to the operations manager's tool kit of strategic operations audit methods and culminates in a selection process to guide managers on which tool to use and when.

Details

International Journal of Operations & Production Management, vol. 32 no. 11
Type: Research Article
ISSN: 0144-3577

Keywords

Article
Publication date: 1 June 2005

Daniel A. Verreault and MaryAnne Hyland

To communicate the development and results of strategic human resource management (HRM) research to the audit research community in order to stimulate audit research specific to…

5651

Abstract

Purpose

To communicate the development and results of strategic human resource management (HRM) research to the audit research community in order to stimulate audit research specific to HRM audits.

Design/methodology/approach

Prior research that served as impetus for this paper is discussed. The findings of other studies are presented to make a case for the business impact of strategic human resource management practices.

Findings

Studies on the competitive environment of firms, theoretical development in HRM, empirical work on the link between HRM practice and firm performance, and emerging models based on intellectual capital, suggest that there are compelling reasons for internal audit to devote substantial resources to the evaluation of strategic risk in HRM audits.

Research limitations/implications

The literature is still developing. The literature presented here is not an exhaustive list and does not include all findings, but rather what we perceive to be the most important findings.

Practical implications

Both “high performance work systems” and “strategic fit” should guide internal audit in planning, designing audit programs, and executing strategic audits of human resources consistent with the risk management paradigm.

Originality/value

This paper bridges a gap between the human resource management literature and the internal auditing literature.

Details

Managerial Auditing Journal, vol. 20 no. 5
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 August 2003

MaryAnne M. Hyland and Daniel A. Verreault

Presents a model for analyzing the potential for value creation of the internal audit (IA) function, the human resource management (HRM) function, and the IA‐HRM pairing. A survey…

5563

Abstract

Presents a model for analyzing the potential for value creation of the internal audit (IA) function, the human resource management (HRM) function, and the IA‐HRM pairing. A survey of 161 chief audit executives indicated that virtually all IA functions are risk managing in their audit approaches, while a great majority of HRM clients are also moderately or strongly strategic in their outlook. Findings included that a productive working relationship was strongest when a risk m anaging IA function is paired with a strategic HRM function. Also, the IA planning process was found to be more strategic in the presence of the same pairing. Analysis of written examples of strategic findings related to HRM supplied by the respondents suggested that there may be a significant gap between auditors’ knowledge of strategic HRM practices as developed in the literature and their self‐reported examples. Future research should use both HRM and IA responses to reduce bias. Additonally, there is a need for case studies of the IA‐HRM partnership.

Details

Managerial Auditing Journal, vol. 18 no. 6/7
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 25 July 2008

Steven Dellaportas, P.W. Senarath Yapa and Sivakaran Sivanantham

The purpose of this paper is to examine and evaluate the internationalisation of Australian auditing standards by analysing the submissions to the Auditing and Assurance Standards…

3102

Abstract

Purpose

The purpose of this paper is to examine and evaluate the internationalisation of Australian auditing standards by analysing the submissions to the Auditing and Assurance Standards Board's (AUASB) strategic directions paper (SDP) and comparing the proposed and approved strategic directions frameworks of the AUASB.

Design/methodology/approach

A content analysis of the submissions to the SDP is conducted to identify the extent of support, and arguments for and against the proposed strategic directions. This study attempts to find a link, if any, between the proposed strategic directions, the views expressed by the stakeholders, and the final set of strategic directions issued by Australia's Financial Reporting Council.

Findings

Overall, the final set of strategic directions released in April 2005 are consistent with the views expressed in the submissions, which support minimal divergence from International Standards on Auditing (ISAs) and using the ISAs as the base for developing Australian auditing standards. Major changes from the SDP include a requirement for the AUASB to undertake research and monitor auditing standards issued by national standard setters. However, the AUASB is no longer obliged to contribute to the international standard arena and need only have regard to any program initiated by the International Auditing and Assurance Standards Board.

Research limitations/implications

The findings of this study provide an insight into the future of Australia's role in the international arena and increase awareness of stakeholders' views on the international harmonisation of auditing standards.

Originality/value

While there have been several studies examining the international harmonisation of accounting standards, there is comparatively little research on the international harmonisation of auditing standards. This paper attempts to address this void, in part, and contribute to the literature on the convergence of auditing standards with ISAs.

Details

Managerial Auditing Journal, vol. 23 no. 7
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 January 1992

Peter J. Mellalieu

If strategic planning is to have a valuable impact on anorganization′s performance, dispassionate analysis of the plan isobligatory. In a limited context, auditing the strategic…

2336

Abstract

If strategic planning is to have a valuable impact on an organization′s performance, dispassionate analysis of the plan is obligatory. In a limited context, auditing the strategic plan involves examining the extent to which the plan is being implemented as originally conceived. In a broader context, strategic auditing should also help to identify improvements to the strategic management process itself so the internal auditor might audit: the process used, the plan immediately after it is produced and its implementation three to six months later, and the control and regulatory systems in place to ensure the process is effective.

Details

Managerial Auditing Journal, vol. 7 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 February 1986

Michael P. Mokwa

Marketing is innovative thinking and inventive doing for many organizations. Most noncommercial organizations and small businesses are exploring formal marketing concepts and…

1366

Abstract

Marketing is innovative thinking and inventive doing for many organizations. Most noncommercial organizations and small businesses are exploring formal marketing concepts and methods for the first time. Industrial and high technology companies are becoming more sensitive to their customers and competitors and, therefore, to marketing efforts. Environmental uncertainty and pressures have challenged conventional practices in traditionally marketing‐oriented industries such as retailing and packaged goods.

Details

Journal of Business Strategy, vol. 6 no. 4
Type: Research Article
ISSN: 0275-6668

Article
Publication date: 17 November 2021

Asogan Moodley, Barry Ackers and Elza Odendaal

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…

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.

Article
Publication date: 6 September 2022

Lexis Alexander Tetteh, Cletus Agyenim-Boateng and Samuel Nana Yaw Simpson

This paper aims to explore the role of public sectors auditors in strategically responding to institutional pressures to conduct a performance audit of Sustainable Development…

Abstract

Purpose

This paper aims to explore the role of public sectors auditors in strategically responding to institutional pressures to conduct a performance audit of Sustainable Development Goals (SDGs) implementation in Ghana.

Design/methodology/approach

To gather in-depth and rich empirical data, semi-structured interviews were conducted with 12 senior and middle management auditors of Ghana's Supreme Audit Institution (SAI).

Findings

The findings indicate that the International Organisation of Supreme Audit Institutions, the government, auditees, political executives and the Audit Service Board all exert institutional pressure on Ghana's audit of SDG implementation. In response to these pressures, the SAI deploys acquiescence, compromise and manipulation strategies that result in the coupling, and in some cases, the loose coupling of SDG audit practices.

Research limitations/implications

Observation method of data collection would have given the researchers first-hand knowledge of the role of auditors, the institutional pressures to SDG audit and the strategic response to the institutional pressures. The authors were unable to accompany the public sector auditors to their field audits. This would have aided in obtaining more detailed empirical data.

Practical implications

The findings suggest that external and internal factors affect public sector audit of SDG implementation. Because the SAI of Ghana is dependent on the central government for budgetary allocation and auditees for miscellaneous logistics, it is under coercive pressure to meet rent seeking demands of political executives. As a result, SAIs in emerging economies must revisit the other side of accountability by reinforcing a constructive dialogue with those held accountable, particularly politicians and auditees.

Originality/value

This study's contribution is the exploration and application of institutional theory and Oliver (1991) model for responding to institutional pressures to a novel research area, namely, SDG implementation audit by public sector auditors in an emerging economy.

Details

Journal of Applied Accounting Research, vol. 24 no. 2
Type: Research Article
ISSN: 0967-5426

Keywords

Book part
Publication date: 19 May 2010

Keith L. Jones

Ethics play an important role in society; however, many economics models assume that individual players act “economically” rational and ignore situations where an individual may…

Abstract

Ethics play an important role in society; however, many economics models assume that individual players act “economically” rational and ignore situations where an individual may forgo economic benefit for the public good. This chapter models the strategic interaction between auditors and management and allows for management to choose the economically irrational outcome of behaving ethically even when doing so defies their own financial self-interest. One of the model's assumption is that a certain percentage of managers do not engage in a “strategy” to misreport their financial statements because doing so is “unethical”. If recent accounting scandals are indicative of an ethical crisis in this country, this model offers hope because an increase in the percentage of unethical mangers leads to a decrease in fraudulent reporting. The model also illustrates the effects of an increase in the rewards for committing fraud (e.g., greater numbers of stock options, restricted stock, and accounting-based performance incentives) and an increase in the penalty for detected fraud (e.g., stiffer penalties for fraud from Sarbanes–Oxley).

Details

Ethics, Equity, and Regulation
Type: Book
ISBN: 978-1-84950-729-5

Article
Publication date: 10 August 2023

Md. Khokan Bepari, Shamsun Nahar, Mohammad Istiaq Azim and Abu Taher Mollik

This study aims to examine the strategies that auditors in Bangladesh follow in identifying and reporting key audit matters (KAMs). The study also examines the factors affecting…

Abstract

Purpose

This study aims to examine the strategies that auditors in Bangladesh follow in identifying and reporting key audit matters (KAMs). The study also examines the factors affecting auditors’ strategies in the identification and disclosures of KAMs.

Design/methodology/approach

The authors have conducted interviews with audit partners, chief financial officers (CFOs) and regulators involved in KAMs reporting and monitoring. The authors have used the lens of institutional theory of coercive, mimetic and normative isomorphism and the concept of decoupling.

Findings

Auditors have used a decoupling strategy by identifying and reporting greater number of industry-generic KAMs than that of other countries in an effort to minimize risks and avoid regulatory scrutiny, although they disclose remote risks as KAMs and mask severe problem areas of the client. Because of the principle-based approach of International Standards on Auditing (ISA) 701 and because of the pressure and misunderstanding from the audit committee, auditors report industry-generic items and generic descriptions of KAMs.

Practical implications

The findings have important implications for the standard setters and local and global audit firms for the diffusion of new auditing standards in different jurisdictions. Without the development of audit firm-level capability and the corporate governance environment, changes in standards may not be effective in achieving the objectives of the standards.

Social implications

Although auditors consider that the KAMs reporting requirements provide with opportunities to enhance audit profession’s legitimacy and public trusts, the actual KAMs reporting practices are driven by the market logic, an urge to maintain the status quo with clients and eventual rationalization of the impairment of professional independence.

Originality/value

Given the dearth of prior research on the implementation and diffusion patterns of ISA 701 KAMs reporting, this study fills the gap in the literature. To the best of the authors’ knowledge, this is the first known study to examine auditors’ strategic responses to balance among conflicting priorities in reporting KAMs.

Details

Journal of Accounting & Organizational Change, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1832-5912

Keywords

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