Investment in internal auditing and governance characteristics

Park, Hyun-Young; Lee, Ho‐Young; Kim, Jin Wook

doi:10.1108/maj-10-2017-1689

Cited by 7 publications

(6 citation statements)

References 49 publications

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“…Ismael and Roberts (2018) examine the UK setting using data collected from annual reports of 332 non-financial companies listed on Use of in-house internal audit functions the London Stock Exchange and find that key determinants of IAF use include firm size, level of internal risks and the presence of an effective AC. Park et al (2019) find that investment in IAF is linked to greater ownership by large shareholders and with a higher proportion of outside directors. In sum, in-house IAF use therefore may be influenced by factors such as corporate governance attributes, the firm's ability to fund in-house IAF use (including firm size and access to capital) and where the firm regards an in-house IAF to be an important internal resource to manage risk and complexity (as further discussed in the following paragraphs).…”

Section: Use Of In-house Internal Audit Functionsmentioning

confidence: 79%

“…A need for a strong internal governance mechanism stems from the necessity to align organisational behaviour so that firms continue to maximise shareholder value, thereby reducing agency costs. Park et al (2019) find that a higher proportion of outside directors is linked to IAF investment and conclude that demand for monitoring can drive investment in an IAF. A review of literature provides some evidence that AC use is associated with IAF use (Hay et al, 2017).…”

Section: Agency and Resource-based Theorymentioning

confidence: 83%

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Use of in-house internal audit functions in New Zealand

Prasad

Hay

Chen

2022

MEDAR

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Purpose The purpose of this study is to examine which factors explain the use of an in-house internal audit function (IAF) in a voluntary setting. Design/methodology/approach Based on the foundations of agency and resource-based theory, this study examines a unique data set from the New Zealand setting, which combines information obtained from The Institute of Internal Auditors of New Zealand with empirical firm data collected from publicly available sources. Multivariate analysis is performed to test the prediction that in-house IAF use is associated with factors such as strong corporate governance, firm size, risk, complexity and firm ownership structure. Findings There is strong evidence that larger organisations are more likely to use an in-house IAF. The authors also find that listed firms and organisations that use a Big Four auditor are less likely to use in-house-based IAF. The authors learn that the IAF investment decision is dominantly influenced by a firm’s ability to fund an in-house IAF as compared to the IAF being used as a resource to improve firm performance to achieve sustained competitive advantage. This implies that IAFs need to ensure cost efficiency and eliminate unnecessary overheads and demonstrate and make visible the benefits the function offers to the host organisation. Originality/value The unique New Zealand setting, where the establishment and use of an IAF are voluntary, provides an environment to study factors that promote demand for internal audit services. Research implications are applicable to most parts of the world, including the UK, EU nations and the Asia-Pacific region, where IAF use is voluntary.

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Section: Use Of In-house Internal Audit Functionsmentioning

confidence: 79%

Section: Agency and Resource-based Theorymentioning

confidence: 83%

Use of in-house internal audit functions in New Zealand

Prasad

Hay

Chen

2022

MEDAR

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“…Sekaran and Bougie (2016) deem the questionnaire the most crucial and effective technique for gathering data. Moreover, Oppenheim (2000) highlights one of the benefits of using a questionnaire: letting participants independently contemplate their responses and answers more instantaneously than what is produced in interviews. Furthermore, Saunders et al (2019) suggest that a questionnaire survey makes it possible to collect substantial information from a targeted population sample.…”

Section: Data Collection Proceduresmentioning

confidence: 99%

“…For this reason, more research is necessary, as stated by many scholars (Alrawad et al 2023;Apreku-Djan et al 2022;Benli and Celayir 2014;Drogalas and Siopi 2017;Endaya and Hanefah 2016;Grima et al 2023;Mujalli and Almgrashi 2020). For instance, Grima et al (2023) andPark et al (2019) point out insufficient empirical work has been conducted on internal auditing. Similarly, Coetzee and Lubbe (2014), Lois et al (2021), Turetken et al (2020), andAbidin (2017) have specified the necessity for more research to empirically test the factors affecting RBIA implementation.…”

Section: Introductionmentioning

confidence: 99%

Factors Affecting the Implementation of Risk-Based Internal Auditing

Mujalli

2024

JRFM

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This paper aims to investigate the factors affecting risk-based internal audit (RBIA) implementation in public sector organizations in Saudi Arabia. This paper utilized 234 usable answered questionnaires from internal audit managers, internal auditors, accountants, and executives working in Saudi public sector agencies. The gathered data were analyzed by applying partial least squares–structural equation modeling (PLS-SEM). Results show that management support, internal auditor role, risk management system, and training in risk management all positively and significantly influence the RBIA. Improved internal auditing procedures and an efficient internal monitoring system will significantly curtail any risks impeding the organization’s goals, diminish the temptation to fabricate financial data or statistics, and enhance the accuracy of financial reporting/statements. Moreover, this study’s results have crucial implications for managers of public sector organizations, heads of internal audit departments, internal auditors, and accountants seeking to improve the reliability of internal audits and other aspects of financial information. Published research on what variables are influencing RBIA implementation is scarce. This study adds to the nascent literature by focusing on Saudi Arabian public sector organizations, establishing empirical variables based on an in-depth review of the relevant research and conducting an empirical investigation of the factors associated with RBIA implementation in the Saudi economy. By concentrating on public sector organizations in Saudi Arabia, this paper sheds light on other nations with comparable systems for governance policies and processes in their government-run entities.

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“…A need exists for further investigations in this area [54], [95], [65]. For example, [106] highlighted the lack of studies focusing on internal auditing. Similarly, [109] and [59] emphasized the necessity for additional empirical studies to examine the factors influencing internal audit functions.…”

Section: Introductionmentioning

confidence: 99%

Empowering Audit Committees: Enhancing the Efficiency of Internal Audits in Jordanian Industrial Firms

2023

Journal of Southwest Jiaotong University

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This study aims to investigate the impact of the audit committee's empowerment on the efficiency of electronic internal audits in industrial companies listed on the Jordanian stock exchange. This article describes a new idea by monitoring the performance of the audit committee's empowerment as a fundamental aspect of governance, along with their collaboration with internal auditors to encourage improvements in their performance, especially in the digital accounting era. This study used 205 valid responses from internal auditors, audit committee members, and finance managers of Jordanian industrial companies. The authors used the Statistical Package for the Social Sciences (SPSS) version 25 to analyze the collected data. The results of the linear regression test in this study revealed that the audit committee's empowerment has a statistically significant influence on enhancing the efficiency of audit processes in the examined industrial firms. The new research results supplement the prior studies by addressing the empowerment of audit committees and their significant effect on electronic internal audit efficiency and are applicable in future studies related to electronic internal audits. This paper is novel because it focuses on electronic internal audit efficiency and the role of the audit committee's empowerment in enhancing such efficiency, an issue neglected in prior research.

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Investment in internal auditing and governance characteristics

Cited by 7 publications

References 49 publications

Use of in-house internal audit functions in New Zealand

Use of in-house internal audit functions in New Zealand

Factors Affecting the Implementation of Risk-Based Internal Auditing

Empowering Audit Committees: Enhancing the Efficiency of Internal Audits in Jordanian Industrial Firms

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