A framework for the evaluation of the perceived value added by internal auditing

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.

The dimensions of accounting service quality

“…Previous studies that aimed to investigate service quality aspects in the accounting context used generic models (e.g., Parasuraman et al 1988 ). Because these models are not specifically related to accounting services, the studies obtained divergent findings (e.g., Botha and Wilkinson 2019 ; Fleischman et al 2017 ; Guthrie and Parker 2016 ). Our results show that the accounting service dimensions have specific attributes that need to be observed by professionals who want to identify the quality of the service provided.…”

“…Lee et al ( 2016 ) also used this instrument and found that all the five dimensions were relevant. On the other hand, Botha and Wilkinson ( 2019 ) used the SERVPERF instrument to evaluate the perceived value added by internal audit functions. They used service quality as a proxy and argued that the SERVPERF dimensions appear to be relevant to audit services.…”

“…Accounting services are no different here. Even though there are only a few studies in the management accounting field that investigate service quality, these studies used these general models in the accounting context, obtaining results that differ from each other (e.g., Armstrong and Davision 1995 ; Botha and Wilkinson 2019 ; Fleischman et al 2017 ; Guthrie and Parker 2016 ; Mutlu 2020; Souza et al 2019; Stouthuysen et al 2019).…”

Development and Validation of a Scale for Measuring Internal Auditing Effectiveness in Tunisian Companies

“…In essence, an effective internal audit function should contribute to the creation of the added value for the company by improving the effectiveness of risk management, control, and governance processes ( Botha and Wilkinson (2019) showed that internal auditing can add value by helping companies to achieve their economic objectives through their involvement in the risk management system and the implementation of their recommendations by the top management. Furthermore, Eden and Moriah (1996) found that the performance of bank branches in Israel significantly improved during the six months following the implementation of internal audit.…”

“…International Journal of Advanced Engineering, Management and Science, 7(11) -2021 This article can be downloaded from here: www.ijaems.com 14 ©2021 The Author(s). Published by Infogain Publication.…”