Perceptions on the role of the internal audit function in respect of risk (original) (raw)
Related papers
A survey of the standing of and demand for internal auditing in South African companies-an overview
… African Journal of Accountability and Auditing …, 2010
This article explores the standing of and demand for internal auditing within South African companies. Central to the paper is a study of the changing profile of the internal auditor as well as the expanded roles of internal audit functions (IAFs). Key areas investigated include current academic and professional literature; the Chief Audit Executives' (CAEs') perceptions regarding the functions and activities of the Institute of Internal Auditors (IIA) in South Africa; the composition of the IAF's staff complement and the demand for the services of the IAF; the IAF's structure, standing, functions and roles in corporate governance, and risk assessment and risk management within the company. Data was gathered from the CAEs as well as the main users of internal audit services, namely the Chairperson of the Audit Committee (CAC), the Chief Executive Officer (CEO), the Chief Financial Officer (CFO), and/or the Chief Operating Officer (COO) of 30 large, listed South African companies. The findings of the study reported in this article indicate that IAFs have a high standing within South African companies and that there is a demand for all levels of internal auditors.
Internal audit and risk management in South Africa: adherence to guidance
2011
Risk management is a relatively new addition to the wider concept of corporate governance. Sound corporate governance requires, among other things, that the board should ensure that there is an effective risk-based internal audit. The importance of internal audit within risk management and assisting the board of directors in this regard cannot be over-emphasised. The formal guidance of the IIA should be a starting point for internal auditors when performing their duties. Further applicable and comprehensive guidelines and legislation in this regard are urgently needed. This article aims to obtain input from heads of prominent internal audit functions within the private and public sectors on the role of internal auditing in the management of risk. Interne oudit en risikobestuur in Suid-Afrika: voldoening aan riglyne Risikobestuur is 'n relatief nuwe ontwikkeling binne die groter konsep van korporatiewe beheer. Goeie korporatiewe beheer vereis onder andere dat 'n direksie moet verseker dat effektiewe risikogebaseerde interne oudit uitgevoer word. Die belangrikheid van interne oudit binne risikobestuur en hul rol om die direksie in dié verband by te staan, kan nie oorbeklemtoon word nie. Die formele riglyne van die IIA moet die beginpunt wees vir interne ouditeure tydens die uitvoering van hul pligte. Verdere toepaslike en omvattende riglyne hieroor word dringend benodig. Hierdie artikel het ten doel om insette van hoofde van prominente interne ouditdepartemente in die private en openbare sektore aangaande die rol van interne oudit in die bestuur van risiko te bekom.
Improving the Efficiency and Effectiveness of Risk-Based Internal Audit Engagements
The role of internal auditing in assisting with the mitigation of key risks threatening organisations has increased, not least, for example, in ensuring that engagements are performed more effectively and efficiently, and that all the key risks of organisations are addressed, but also to ensure that scarce internal audit resources are used optimally. This article describes the development of a model that can be used by internal auditors to perform this task. The model was developed from a study of the academic literature, current business practice norms, and other documentation whereafter it was tested in a practical scenario, and input from heads of internal audit departments in prominent South African organisations was obtained. The findings of the study, inter alia, support the use of the model. However, a concern is that the risk management strategy currently implemented by organisations is not mature enough for internal auditing to rely on the outcome of the risk management process, a prerequisite for the model to function optimally. A second concern is that internal auditing is reluctant to use a pure risk-based approach when performing audit engagements and still prefers to use a control-based approach with more emphasis placed on high risk areas.
The standing of the internal audit function within South African companies
African Journal of Business Management, 2009
This study examined the standing of the internal audit function in 30 of South Africa's large listed companies as perceived by the chairs of their audit committees, their chief executive officers, chief financial officers, and chief operating officers, as well as the chief audit executives. The standing of the internal audit function in these 30 companies was based on the academic and professional qualifications profiles of the chief audit executives, the composition and qualifications of the internal audit staff complement, the independence of the function and the expectations that various stakeholders have of the function. The study reveals that the overall standing of the internal audit function in these 30 companies was perceived to be high. However, there are a number of concerning aspects that include the fact that most of the chief audit executives are qualified and registered South African Chartered Accountants (CA(SA)) and not holders of the Certified Internal Auditor (CIA) qualification. Additional concerns are that the chief audit executives' reporting lines are not necessarily in line with currently perceived best practices; the stakeholders surveyed for this study held diverse views of the internal audit function; and in-house internal audit functions were viewed to be of a higher standing than those of outsourced functions. This study provides the internal audit profession with a scientifically researched benchmark of their status or standing in the eyes of their stakeholders and will enable them to measure changes to their status and effectiveness within their companies.
2016
The role of internal auditing in assisting with the mitigation of key risks threatening organisations has increased, not least, for example, in ensuring that engagements are performed more effectively and efficiently, and that all the key risks of organisations are addressed, but also to ensure that scarce internal audit resources are used optimally. This article describes the development of a model that can be used by internal auditors to perform this task. The model was developed from a study of the academic literature, current business practice norms, and other documentation whereafter it was tested in a practical scenario, and input from heads of internal audit departments in prominent South African organisations was obtained. The findings of the study, inter alia, support the use of the model. However, a concern is that the risk management strategy currently implemented by organisations is not mature enough for internal auditing to rely on the outcome of the risk management pro...
Dubihlela Job, 2020
The pervasive advances in information technology, coupled with environmental changes and the gruelling real-time stakeholder demands consistently challenge the auditing profession. Modern-day complex interconnected business networks, are progressively making the true nature of emerging risks difficult to assess. Some of these emerging risks are like ticking time-bombs that can erupt rapidly and dramatically without cautionary. Emerging risks are concealed risk exposures with potential to trigger unanticipated and disconcerting shocks. As a result, organisations are more frequently turning to their internal auditing departments to help with the task of identifying emerging risks and guiding risk management protocols consistent with the dynamic risk landscape. The auditing professionals are increasingly being judged and evaluated for their ability to adapt and be forward-looking in matters of risk assessment. For that reason, internal auditors are forced to adopt laterally think and adapt to emerging risks. Several examples in recent years have shown the immense responsibility that internal auditing professionals must carry, and the present paper is to be seen as a contribution to understanding the implications of the changing risk landscape on the internal auditing profession. The qualitative thematic analysis identifies the overwhelming need for agility within the internal auditing profession, that emerging risks are engraining business operations, and remain significant determinants of governance and accountability. The results of the study have several policy implications and ignites pertinent future research propositions.
The Role of Internal Auditing in Risk Management
SSRN Electronic Journal, 2013
This paper is based on a theoretical analysis of the role of internal auditing in the accountability framework of contemporary corporate governance. We conceptualize the risk management rationale of internal auditing by drawing on the concept of accountability. We locate the emergence of internal auditing within the metamorphosis of capitalism. It is argued that this development produced the institutionalization of structural control of the firm to address the control problem in the inherently conflicting relationships that characterize accountability relations of capitalist enterprises. The exercise of control in this context entails ensuring accountability of employees, management and the board of directors to shareholders to increase profit. The extant literature does not provide an integrated conceptual framework that explains the role of internal auditing with a holistic view of this accountability landscape. This paper explains how the accountability relations of advanced capitalism create conditions that produce the demand for internal auditing as a risk management technology deployed to advance the managerial values of efficiency and effectiveness of the firm through assurance and advisory services.
2014
The study analyzed the role of internal audit in Enterprise Risk Management (ERM) by providing empirical Evidence on the Kenyan public sector firms. The study examined the impact of Involvement in ERM by auditors and internal auditors’ willingness to report a breakdown in risk procedures and whether a strong relationship with the audit committee affects willingness to report. The study also investigated the use of ERM and the role of internal audit in ERM. The study was carried out as a cross-sectional survey where the study population was 99 respondents from nine state corporations operating under the State Corporations Act. From the findings, the study concluded that management of State Corporation needs to create an environment that will harness commitment and support to internal audit if it is to effectively perform its responsibility of giving assurance that organizational risks are managed effectively. This will only be possible if individuals within organizations are aware of...
THE ROLE OF RISK BASED INTERNAL AUDIT IN IMPROVING AUDIT QUALITY
IAEME PUBLICATION, 2020
This research was conducted with the aim of identifying the internal auditor's understanding of Risk Based Internal Audit (RBIA), identifying the application of risk assessment and risk matrix in the Government of North Sumatra Province. Produce driving and inhibiting factors for the application of risk based internal audit in the Government of North Sumatra Province. This research was conducted using quantitative approaches. The research population is internal auditors in the local government, while the informants in this study are people who understand the problems of implementing Risk Based Internal Audit. The variables that are thought to affect the successful implementation of risk based internal audit are the role of the internal auditor function, top management commitment, training, policy framework, and communication processes. The results showed that top management commitment, training, policy framework had a significant effect on the success of risk management implementation, while the role of the internal audit function and the communication process had no significant effect on the application of risk based internal audit. The results showed that the application of risk based internal audit has a significant effect on the quality of internal audit. JEL Codes : M42