The impact of internal audit attributes on the effectiveness of internal control over operations and compliance

Chang, Yu-Tzu; Chen, Han-Chung; Cheng, Rainbow K.; Chi, Wuchun

doi:10.1016/j.jcae.2018.11.002

Cited by 96 publications

(75 citation statements)

References 33 publications

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“…When it comes to the IA effectiveness, and the PD&A of fraudulent activities, a conducive control environment, and the hiring of qualified and trusted individuals are important factors that need to be taken care of, in the context of the IAF (Mihret & Yismaw, 2007). After the recruitment of individuals in the IAF, it is important that they must be trained continuously, so that they are able to take informed, effective and efficient decisions, and also make use of any special measures for PD&A of fraudulent activities in a more systematic manner (Chang, Chen, Cheng & Chi, 2019). Monisola (2013) identified a positive relationship between the PD&A of fraudulent activities, and the effectiveness of the IAF.…”

Section: Ia Effectiveness and The Pdanda Of Fraudmentioning

confidence: 99%

Attributes of Internal Audit and Prevention, Detection and Assessment of Fraud in Pakistan

Khan¹,

Rafay²,

Shakeel³

2020

LJB

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With it being considered as avalue-added activity,theInternal Auditfunction (IAF)of a firm is one of the most important functionsin anorganization. During the last decade,the roleof this particular functionhas become very useful,especially in creating awareness regarding the Prevention, Detection and Assessment (PD&A) of fraudulent activities. In many countries, carrying out an Internal Audit isa legal compulsion for public companies, in orderto establish an effective,and efficient IAF.This study aims to explore the relationship between the various attributes of IAF(effectiveness, independence, staff training, qualification and experience),and the PD&A of fraudulent activitiesin Pakistan. For this purpose, the convenientsampling technique,for data collection,is used and the questionnaires are collected fromtherespondents belonging to Pakistan. The questionnaire has been prepared in the form of a Likert scale. Respondents for this study include (1) staff members working in the Internal Audit (IA),finance and accounting departments of the companies listed on the Pakistan Stock Exchange(PSX), and(2) staff members of firms that are engaged in external statutory audit in Pakistan. Descriptive statistics show the details regarding the demographic questions, IAFand PD&A ofthefraudulent activitiesthat take place in the companies. Moreover, in order to get to the effective and relevant results, the regression analysis is performed in order to find out if there exists any relationship between these variables. The results show that all five independent variables positively affect the PD&A of fraudulent activities. However, three of the independent variables (IAE, IAT, and IAQ) are statistically significant,whereas twoof thevariables taken into account (IAI, and IAE) are statistically insignificant. It is recommended thattheIAFshould be more independent,and effectiveso asto attainthe required results. Moreover, firms should also focus on the qualificationsand proper training of the staff that are responsible forexecutingthe IAF.

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Section: Ia Effectiveness and The Pdanda Of Fraudmentioning

confidence: 99%

Attributes of Internal Audit and Prevention, Detection and Assessment of Fraud in Pakistan

Khan¹,

Rafay²,

Shakeel³

2020

LJB

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“…Internal audit can promote consistent strategic objectives and management systems in parent-subsidiary organizations, improve business performance, and ensure internal control compliance (Ackermann and Fourie 2013;Chang et al 2018). An effective internal control system can properly regulate the company's various operations and contribute greatly to its sustainable and stable operation (Aziz et al 2017).…”

Section: Integrated Audit Managementmentioning

confidence: 99%

“…Traditional RST has two significant data pre-processing deficiencies that need to be overcome: (1) it only can handle crisp data (i.e., it cannot handle real-valued data) and (2) it is inadequate at finding the minimal reduct (i.e., the smallest sets of features possible) because its run time of generating all reducts is exponential (Chang et al 2018;Keramati et al 2016;Jensen and Shen 2005). To solve these issues simultaneously, this study adopted the characteristics of the membership function of the fuzzy set theory (FST) to solve the RST defect of data loss and to improve data quality and the reliability of decision-making.…”

Section: Introductionmentioning

confidence: 99%

Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment

Hsu

Chen

et al. 2021

Financ Innov

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In a highly intertwined and connected business environment, globalized layout planning can be an effective way for enterprises to expand their market. Nevertheless, conflicts and contradictions always exist between parent and subsidiary enterprises; if they are in different countries, these conflicts can become especially problematic. Internal control systems for subsidiary supervision and management seem to be particularly important when aiming to align subsidiaries’ decisions with parent enterprises’ strategic intentions, and such systems undoubtedly involve numerous criteria/dimensions. An effective tool is urgently needed to clarify the relevant issues and discern the cause-and-effect relationships among them in these conflicts. Traditional statistical approaches cannot fully explain these situations due to the complexity and invisibility of the criteria/dimensions; thus, the fuzzy rough set theory (FRST), with its superior data exploration ability and impreciseness tolerance, can be considered to adequately address the complexities. Motivated by efficient integrated systems, aggregating multiple dissimilar systems’ outputs and converting them into a consensus result can be useful for realizing outstanding performances. Based on this concept, we insert selected criteria/dimensions via FRST into DEMATEL to identify and analyze the dependency and feedback relations among variables of parent/subsidiary gaps and conflicts. The results present the improvement priorities based on their magnitude of impact, in the following order: organizational control structure, business and financial information system management, major financial management, business strategy management, construction of a management system, and integrated audit management. Managers can consider the potential implications herein when formulating future targeted policies to improve subsidiary supervision and strengthen overall corporate governance.

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“…They are intended to offer a practical affirmation of the accomplishment of objectives with regard to the Asian Economic and Financial Review that IAF activities and practices are negatively influenced by the disclosure of weaknesses in a company's internal controls. On the other hand, studies carried out by Chang, Chen, Cheng, and Chi (2019) and Oussii and Boulila (2018) found that, altogether, internal control quality is decidedly connected with IAF.…”

Section: Introductionmentioning

confidence: 99%

Internal Audit Function Characteristics and the Quality of Internal Control Systems: Moderating the Effect of Enterprise Resource Planning System Maturity

Shaiti

Al-Matari

2020

Asian Economic and Financial Review

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The aim of this study is to investigate the relationship between the internal audit function (IAF) (independence and competence) and the quality of internal control systems (ICSQ). It also aims to assess the moderating role of the maturity of enterprise resource planning (ERP) on these relationships. Using data from 98 Saudi Arabian small and medium-sized enterprises (SMEs) that have implemented an ERP system, this paper uses a Structural Equation Model to examine the hypotheses. In particular, the Partial Least Squares Structural Equation Modelling (PLS-SEM) is adopted for data analysis and hypothesis testing. The results reveal that both internal audit competence and independence are positively associated with ICSQ. Moreover, the maturity of ERP moderates the relationship between internal audit competence and ICSQ. These findings have significant implications with regard to the ICSQ, as the identification of the internal audit function's characteristics affects the internal control quality of SMEs. In addition, the findings have implications on those who are concerned with measuring ICSQ, such as company managers and regulatory bodies. This study uses the COSO framework to measure ICSQ. Contribution/ Originality: This study is one of very few studies to investigate the impact of the internal audit function (independence and competence) on ICSQ in SMEs, as well as assessing the moderating effect of ERP maturity on this relationship.

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The impact of internal audit attributes on the effectiveness of internal control over operations and compliance

Cited by 96 publications

References 33 publications

Attributes of Internal Audit and Prevention, Detection and Assessment of Fraud in Pakistan

Attributes of Internal Audit and Prevention, Detection and Assessment of Fraud in Pakistan

Identifying the key factors of subsidiary supervision and management using an innovative hybrid architecture in a big data environment

Internal Audit Function Characteristics and the Quality of Internal Control Systems: Moderating the Effect of Enterprise Resource Planning System Maturity

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