What drives and measures public sector internal audit effectiveness? Dependent and independent variables

Abstract

The effectiveness of the internal audit function is important to improve performance in the public sector. This study provides insight into the drivers and measures of internal audit effectiveness.The heads of the internal audit function, senior management of public institutions and chairpersons of the audit committee, within a South African public sector context, responded to a survey based on an extensive review of the internal audit function. Exploratory factor analysis was applied to facilitate the reduction of 92 items into a meaningful number of independent (drivers) and dependent (measures) variables. The result of the study identifies a refined list of drivers and measures of internal audit effectiveness that adds to existing knowledge and presents a foundation for further research. KEYWORDSExploratory factor analysis, internal audit demand-side, internal audit effectiveness, internal audit supply-side, public sector

A review of accounting research in Australasia

“…() examined the effects of individual ethical orientation, independence threat and moral intensity on auditors’ ethical decision‐making process. Audit‐related internal controls include studies on audit committees (Böhm et al ., ), and internal audit (Coetzee and Erasmus, ). Studies on audit quality, for example, focused on the influence of regulation on audit quality (Knechel, ), and studies on audit fees include assessment of the relationships between business group affiliation, board quality and audit pricing (Johl et al ., ).…”

Exploring the antecedents of internal auditors' voice in environmental issues: Implications from China

“…One way that internal auditors contribute to corporate governance and ensure sustained performance is through their voice (Baker, Internal auditors are responsible for speaking up about potential problems (Khelil, Akrout, Hussainey, & Noubbigh, 2018;Wilson, McNellis, & Latham, 2018) and providing recommendations to improve internal control and risk management (Alzeban & Gwilliam, 2014;Arena & Sarens, 2015). Prior studies suggest that implementing recommendations suggested by internal auditors is an important indicator to evaluate the effectiveness of internal audit work (e.g., Alzeban & Gwilliam, 2014;Arena & Azzone, 2009;Coetzee & Erasmus, 2017;Soh & Martinov-Bennie, 2011).…”

Internal Audit as a Tool to Improve the Efficiency of Public Service

“…The most significant determinant affecting the efficiency of the internal audit according to the authors is the competence level and the management strategy at the audit unit with reference to the audited entity's tasks. The auditor's competence level determines the adequate understanding of processes within the organisation, and the efficiency of internal audit function is assessed, among others, by analysing the reasons for rejecting post-audit recommendations (Coetzee and Erasmus, 2017). Some studies also emphasise internal audit efficiency indicators which also refer to internal audit function's capacity to enhance an organisation's performance by achieving relevant goals and tasks (Badara and Saidin, 2013;Bota-Avram and Palfi 2009;Endaya and Hanefah, 2013;Lenz, Sarens, and D'Silva, 2014;Arena and Jeppesen, 2016;Diamond, 2002;Van Gansberghe, 2005;Onumah and Krah, 2012).…”