Internal Audit Effectiveness and Audit Committee Characteristics: Empirical Evidence from Pakistan

Abstract

Internal audit function (IAF) is a critical component of corporate governance mechanisms, and researchers have argued that internal audit effectiveness (IAE) is of utmost importance to serve the purpose. The study attempts to contribute to a better understanding on the role of audit committee (AC) characteristics (i.e. AC size, AC meeting frequency, AC expertise and AC independence) as a driver of IAE in public limited companies listed in Pakistan stock exchange (PSX). Two sets of questionnaires were distributed in 400 listed companies, whereas 162 completed sets in all respects with a response rate of 41% were received back. The collected data was analyzed using PLS-SEM. The results of the study indicated a positive influence of AC size and AC meeting frequency on the IAE of the listed companies. At the same time, the responses failed to establish any significant relationship between AC independence and AC expertise on the IAE.

Effectiveness of Internal Audit in Rural Banks

“…Internal audit avoided fraud and created highquality financial reports as a result of the findings. Internal audit study also looks at the characteristics of internal audit (Rashid, Salim, & Ahmad, 2021), the quality of organizational governance (Ratmono & Darsono, 2022), public sector management (Izedonmi & Olateru-Olagbegi, 2021), and management system (Hassan et al, 2021). Meanwhile, Hazaea, Tabash, Zhu, Khatib, & Farhan (2021); Joshi (2021); and Ha (2021) have explored the efficiency of internal audits.…”

“…The BPR's unsoundness mainly was caused by credit disbursement that failed to adhere to prudential standards and good banking practices (pikiran-rakyat.com) According to the Deposit Insurance Corporation (LPS), 39 Rural Banks have been liquidated or are liquidated between 2015 and 2019. Several causes contributed to the BPR's downfall, including internal bank fraud (Sudirman, Sasmita, Djabir D, et al, 2021;Rashid et al, 2021), as well as managerial failure owing to a lack of good corporate governance (Shamsuddin & Bakar, 2020). Therefore, human resources, processes, and procedures, as well as supervision or internal control, are all critical to consider while creating an effective Rural Bank.…”