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Key dimensions and attributes of internal audit process illustrating the relationships between attributes derived from literature review
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One of the preventive measures to situations akin to world financial crises increasingly forwarded is effective internal audit function (IAF) (e.g., Imhoff, 2003; Mohamad & Muhamad Sori, 2011). Internal audit, a component of corporate governance, continues to evolve due to changes in business strategies and requirements placed on it by legislators....
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Citations
... The literature shows a strong association between the efficiency of BG and IC, addressing IC flaws with stronger board management, audit committees, and senior management (Johnstone et al. 2011). The IA is recognized as a core element of BG, playing a crucial role in offering assurances and recommendations to support the supervision of the BG (Abdullah 2014). The contribution of IAF to BG is considered indisputable, especially in light of recent scandals emphasizing the need for good governance (Khlif and Samaha 2014). ...
This study investigates the moderating effect of corporate governance on the associations of the internal audit and quality of the internal audit with the quality of financial reporting among commercial banks in the Republic of Yemen. The final sample includes 210 internal auditors, heads of internal auditors, chairpersons, and members of audit committees. Using a survey-based methodology, the results of the Smart-PL4 analysis showed a positive association between the internal audit and quality of the internal audit and quality of financial reporting. Interestingly, the results showed an insignificant association between the internal audit, quality of the internal audit, and quality of financial reporting when considering the moderating effect of corporate governance. It is worth noting that the results confirm the existence of a positive relationship between the internal audit, quality of the internal audit, and quality of financial reporting. This confirms the importance of the internal audit and quality of the internal audit in enhancing the quality of financial reports and instilling confidence in improving internal control processes and the financial reporting framework. Among the study’s many contributions are that it enhances current research on the interrelationship between internal auditing, quality of internal audits, and quality of financial reporting. It highlights the pivotal role of the internal audit, its effectiveness, and its ability to improve the quality of financial reports. This study calls for more stringent internal controls and posits that strengthening the internal audit and quality of the internal audit, along with improving corporate governance, can enable managers to raise financial reporting standards in banks. It also provides a mechanism for audit committees to monitor internal audit processes and evaluate internal performance.
... Despite current scientific literature focusing on the importance of IAF as a CG mechanism, particularly in developed nations, little research has looked into the role of IAF in developing countries (Ahmad et al., 2009;Al-Twaijry et al., 2003;Alzeban & Gwilliam, 2014;Mihret & Yismaw, 2007;Sakour & Laila, 2015). This prompted many researchers to call for more research into the role of IAF, particularly in different international settings, such as developing countries, where more research and attention are required (Abdullah, 2014;Ahmad et al., 2009;Al-Twaijry et al., 2003;Arena & Azzone, 2007; Barac & Van Staden, 2009;Mihret & Yismaw, 2007;Sarens et al., 2012;Soh & Martinov-Bennie, 2011). ...
... It is widely known that internal audit is an essential component of CG (Bame-Aldred et al., 2013;Burton et al., 2012). Where the internal auditor is seen as a critical member of strategic value and an integral part of CG, and the internal audit is dealt with as the function that will create assurances and provide recommendations for the completion of the implementation and follow-up of the CG framework (Abdullah, 2014). Because of this, the IAF's contribution to CG is unquestionable (Eulerich et al., 2013). ...
This study examines the relationship between internal audit function (IAF) and the effectiveness of corporate governance (CG) in Yemeni commercial banks. The data were collected by a questionnaire survey distributed to internal auditors, heads of internal audit, chairman and members of audit committees, chief executives, and financial managers of Yemeni commercial banks. After distributing the questionnaire survey to the respondents, 158 valid questionnaires were obtained for analysis. Smart PLS 3 was used to analyse the data and test the hypotheses on the relationship between the attributes of the IAF and the effectiveness of CG. The study findings show a strong association between the efficacy of CG and the IAF's objectivity, independence, professional ethics, and IAF size. The results obtained represent a valuable addition to the literature on the attributes of IAF that affect the effectiveness of CG in developing countries, such as Yemen. Finally, the paper concludes that the attributes of the IAF have a significant and influential role in enhancing the effectiveness of CG.
... Kõige olulisem on lähtuda tõsiasjast, et siseaudiitori kutsetegevus on oma olemuselt organisatsioonisisene protsess (AudS § 69 lg 1) ja siseaudiitori tegevuse tulemid on eelkõige 294 Muutuste algataja või katalüsaatori rolli võtmine on põhimõtteliselt õige, kuid SA ei ole võimeline ise seda rolli lõpuni täitma siseaudiitorite vähesuse tõttu. Seetõttu peaksid nad üldjuhul piirduma riskijuhtimise ja muutuste esilekutsuja survestaja rolliga (Anderson 2009, 21 (Abdullah 2015). Selle tagajärjeks on suure tõenäosusega väärotsustuste tegemine siseauditi funktsiooni kohta ja siseaudiitoritele sobimatute nõudmiste ja üle jõu käivate ülesannete seadmine. ...
... 2) riskijuhtimise ja sisekontrolli tõhusust; 3) raamatupidamise aastaaruande või konsolideeritud aruande audiitorkontrolli protsessi; 4) audiitorettevõtja ja seaduse alusel audiitorühingut esindava vandeaudiitori sõltumatust ja tegevuse vastavust teistele käesoleva seaduse nõuetele ja kui see on asjakohane, Euroopa Parlamendi ja nõukogu määruse (EL) nr 537/2014 nõuetele (AudS § 98 lg 1). Auditikomitee kohustuseks on anda selle liikmed valinud organile või nimetanud isikule ülevaade kohustusliku auditi tulemustest ja oma tööst ning teha ettepanekuid vähemalt järgmistes küsimustes: 1) audiitorettevõtja nimetamine või tagasikutsumine; 2) siseaudiitori nimetamine või tagasikutsumine; 3) probleemide ja ebatõhususe vältimine või kõrvaldamine organisatsioonis; 4) vastavus õigusaktidele ja kutsetegevuse heale tavale (AudS § 98 lg 2 (Abdullah 2015). Auditikomitee ei aruta oma koosolekutel sageli üldsegi siseauditi üksuse tegevust ja selle väljundeid (Georges Selim). ...
... Siseaudiitori ja auditi nõukogu roll liiguvad üha enam väärtust lisava lähenemise suunas (Abdullah 2018), sest äristrateegiad muutuvad üha enam korporatiivse jätkusuutlikkuse ja organisatsioonilise oivalisuse suunas (Abdullah 2015). Osa teadlasi tõdevad, et tihe ja töine suhe siseaudiitori ja auditikomitee vahel avaldab positiivset mõju organisatsioonile (Rezaee ja Lander 1993 Vastuoluliste tõendite valguses tuleb hoiduda auditikomitee moodustamise kohustuslikkusest, sidumisest töötajate või nõukogu liikmete arvu ja muude kvantitatiivsete kriteeriumitega, mille mõju on küsitav või vastupidine soovitule. ...
Avaliku halduse doktor Raivo Linnas mõtiskleb raamatus „Avaliku sektori põnev tulevik. Quo vadis, Estoniae?“ ühiskonnas valitseva kontradiktoorsuse üle tormiliselt areneva keskkonna ja aegunud valitsemisparadigma vahel. Autor juhib lugeja tähelepanu olulistele riskidele ja võimalikele probleemidele, mis meid kõiki varem või hiljem, vähem või rohkem mõjutama hakkavad. Raamatus on kolm mõttelist osa: 1. keskkond ja selle tormiline muutus; 2. riik ja kohalik omavalitsus ning 3. valitsemine, sh audit järelevalve ja kontroll muutuste laines. Need kolm suuremat mõttelist teemat mõjutavad meie ühiskonna, riigi ja kohaliku omavalitsuse toimimist üpriski ilmselgelt. Autori mõttevoog keskendub ühiskonnale tehnoloogia arengu ja levi, üleilmastumise, elanikkonna vananemise, kestliku kasinusaja ja linnastumise mõju prisma läbi.
... The purpose of this paper is to estimate the implication of good internal audit practices on the organizational/corporate governing practices in MNCs of Pakistan. The relationship in terms of quality of internal audit performance and its due implications on organizational/corporate governance has been redefined in larger spectrum (Abdullah, 2014;Sarens, et al., 2012). ...
The internal audit is a primitive element for good corporate governance. This need has been largely felt in the developing countries to enhance and promote the corporate governance mechanism. This research evaluates the implication of internal audit of Multinational Corporations (MNCs) of Pakistan on corporate governance’s quality. The outcomes of this research reveal significance of internal audit role in corporate governance of MNCs. The significance of audit committee and management in this aspect is predominant. Similarly the results also show the vitality of corporate governance in terms of quality is significant when there is independent audit department with requisite expertise of auditing. However, the reliability of internal audit is primarily determines the characteristics of management of corporate governance. Contrary to this, the implication of internal audit is insignificant on the external audit workers as well as the board of directors of MNCs in Pakistan.
... The purpose of this paper is to estimate the implication of good internal audit practices on the organizational/corporate governing practices in MNCs of Pakistan. The relationship in terms of quality of internal audit performance and its due implications on organizational/corporate governance has been redefined in larger spectrum (Abdullah, 2014;Sarens, et al., 2012). ...
The internal audit is a primitive element for good corporate governance. This need has been largely felt in the developing countries to enhance and promote the corporate governance mechanism. This research evaluates the implication of internal audit of Multinational Corporations (MNCs) of Pakistan on corporate governance’s quality. The outcomes of this research reveal significance of internal audit role in corporate governance of MNCs. The significance of audit committee and management in this aspect is predominant. Similarly the results also show the vitality of corporate governance in terms of quality is significant when there is independent audit department with requisite expertise of auditing. However, the reliability of internal audit is primarily determines the characteristics of management of corporate governance. Contrary to this, the implication of internal audit is insignificant on the external audit workers as well as the board of directors of MNCs in Pakistan.
... A number of individual theories has been developed to predict and explain the effectiveness of internal auditing, including for example: (i) communications theory, which indicates that the internal audit effectiveness depends mainly on the communication skills possessed by internal auditors (Smith, 2005;Clampitt and Downs, 1993;Carvalho, 2013); (ii) agency theory which has widely been applied not only to explain the effectiveness of external auditors,but also used to provide a useful theoretical explanations for studying the effectiveness of internal auditing (Adams, 1994;Colbert and Jahera, 2011;Mihret, 2014; Sarensand Abdolmohammadi, 2011);(iii) structuration theory, whichindicates that culture, power and morality are the main structural properties needed to explain the interactions between the social actions, including accounting and auditing events (Omoteso et al., 2010;DeSanctis and Poole, 1994;Mahdavi and Daryaei, 2015);and (iv) institutional theory, which indicates that internal audit practices are basically determined by the institutional norms, which in turn identify the institutional changes required to improve the existing internal audit practices (Al-Twaijry et al., 2003;Ahmad, 2015;Mihret et al., 2012). However, very few studies have applied multiple theoretical frameworks to examine the effectiveness of internal auditing, such as agency theory, communication theory and institutional theory (Endaya and Hanefah, 2013;SwinKels, 2012;Abdullah, 2014). Hence, this study extends the literature by applying a multi-theoretical framework. ...
Purpose: The main aim of this research is to assess the effectiveness of internal governance controls and processes with specific focus on the skillsand challenges facing internal auditors operatingin Libya when they conductinternal audits.This study also investigateswhether Libyan internal auditors have sufficient skills needed to implement their internal audit function effectively. Design/methodology/approach:Forty one internal auditors working in six banks and three insurance companies listed on the Libyan Stock Market were surveyed. Wilcoxon signed test and Z-testwere used to test the research hypotheses. Findings:The findings of this study illustrate that internal auditors operating in companies listed on the Libyan Stock Markethave limitedprofessional, interpersonal and technical skills. Specifically, the findings show that internal auditors in Libya have limited skills includingpublic speaking and presentation skills. Additionally, they have limitedskills of ITaudit and international financial report preparation skills. Originality/value:There is a dearth of empirical evidence on the extent of audit, interpersonal, professional and technical skills relating to internal auditors generally, but particularly acute in Arab and developing countries. This study, therefore, contributes to the literature by offering new insights with particular focus on Libya.
The purpose of this study was to determine if senior management support (SMSI) in Yemeni commercial banks mediates the association between internal audit function (IAF) quality characteristics and improved corporate governance effectiveness (CGE). Internal auditors, heads of internal audit, chairmen and participants in audit committees, CEOs, and financial management of Yemeni commercial banks were given a list of questions to answer. 158 full lists were obtained to evaluate after distributing the survey. For data analysis and hypothesis testing in this work, Smart PLS 3 was used. The study findings demonstrate a substantial relationship between CGE and IAF competence and due professional care (CPCI), IAF independence and objectivity (INOI), and IAF professional ethics (PEI). The outcomes of the study also demonstrate that there is no relationship between CGE and chief audit executive (CAE) Leadership Style (CLS). In terms of the moderate variable’s influence, the findings revealed that SMSI positively changes the link between CLS, CPCI, and corporate governance effectiveness. SMSI, on the other hand, has no influence on the link between INOI, PEI, and the efficacy of corporate governance. The findings add to the knowledge on IAF factors affecting the efficacy of CG and the role of SMSI in changing this relationship in developing countries such as Yemen. AcknowledgmentThe authors extend their appreciation to the deanship of scientific research at King Khalid University for funding this work through large groups project under grant number (RGP.2/189/44).
This study investigated the effects of public sector audit, good governance and financial transparency on financial accountability of twenty – six (26) ministries in the Rivers State Civil Service. The study employed cross sectional survey research design. The population consisted of twenty – eight ministries and the Taro Yamene model was used for sample size determination while simple random sampling was employed. The study used primary and secondary sources of data collection. Questionnaire was the primary source of data collections after the application of content and face validity while Cronbach alpha was employed to test the reliability of the instrument. The dependent variable was financial accountability index while the independent variables consisted of financial audit index, performance audit index, compliance audit index, good governance index and financial transparency index. The responses obtained from the questionnaire were analysed with univariate, bivariate and multivariate analysis. The multiple regression analysis suggested that there is a positive and significant relationship between financial audit index, performance audit index, compliance audit index, good governance index and financial transparency index on accountability in public sectors in Rivers State. The study concluded that public sector audit, good governance and financial transparency promote financial accountability in the Nigerian public sector. Therefore, the following recommendations were provided amongst others that The Accounting Officers in government Ministries, Department and Agencies (MDA) should carry out government business in accordance with accountability, transparency, effectiveness and efficiency, responsiveness, forward vision and rule of law for the welfare of the citizens.
Study espouses the inimitable role of the internal auditing, its challenges and
the predicament of state-owned enterprises in emerging markets, setting being Namibia.
Using a quantitative research approach, data was collected and analysed from SOEs to
confirm the role of the internal auditing function (IAF) as an indispensable
concomitant of SOE growth and performance. The weaknesses inherent in the
SOE sector, unfortunately, impacts on the IAF ability to effectively support the SOEs. The study has unearthed IAF potential capabilities to contribute to SOE survival in
Namibia by complementing the governance practices of the sector. Results show the
intractable task will depend on the leadership of the board of directors of the SOEs.
Study also outlined critical priorities needed to motivate politicians, policymakers
and oversight bodies to overcome the iniquities influencing SOE growth, understand and
embrace IAF to salvage a sector that has a lot to offer and yet severely mishandled. Results support literature on IA’s contribution to SOE development from a developing country’s point of view and is the first of its kind in Namibia. Findings suggest ways to enhance knowledge development of future researchers and wet their appetite for further research in emerging markets and globally.
