Change in internal auditing practice:Evolution, constraints and ingenious solutions (original) (raw)
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Managerial Auditing Journal, 2015
"Purpose – Ten years after Bailey, Gramling and Ramamoorti (2003) presented research opportunities in Internal Audit (IA) this paper provides a synopsis of what academic literature says about IA effectiveness. A new set of research questions that may help to bring the best out of IA is proposed. Design/methodology/approach – Empirical studies based on internal auditors’ self-assessments (“inside-out”) and empirical studies based on other stakeholders’ perspectives (“outside-in”) are reviewed through an “effectiveness lens”. The “outside-in” perspective is regarded as particularly valuable. Findings – First, we identify common themes in the empirical literature. Second, we synthesize the main threads into a model comprising macro and micro factors that influence IA effectiveness. Third, we derive promising future research paths that may enhance IA’s value proposition. Practical implications – The “outside-in” perspective indicates a disposition to stakeholders’ disappointment in IA: IA is either running a risk of marginalization (IIA, 2013; PWC, 2013) or has to embrace the challenge to emerge as a recognized and stronger profession. The suggested research agenda identifies empirical research threads that can help IA practitioners to make a difference for their organization, be recognized, respected and trusted, and help the IA profession in its pursuit of creating a unique identity. This paper wishes to motivate researchers to explore innovative research strategies and probing new theories as well as benefitting from cross-fertilization with other research streams. Originality/value - This paper summarizes the state of research on IA effectiveness and proposes a guide for future IA research. It provides pointed questions that may further advance the understanding of what constitutes IA and how IA can enhance its value proposition. Keywords - Internal audit, effectiveness, positioning, relevance, profession, relationship, board, stakeholder, new research opportunities Paper type - Literature review, conceptual paper"
The journey so far on internal audit effectiveness
Internal audit effectiveness has become a fruitful topic over the decade; this is because of the important roles play by the internal auditors in organizational survival and achievement. Most of the organizations whether public or private has established internal audit department with the mind of enjoying the benefit behind the internal audit service. Therefore, in line with this, the aim of this paper is to present the journey so far on internal audit effectiveness right from the period of 2000-2013 with a calling for more research to be conducted on internal audit effectiveness so that to add on the existing literature on internal audit effectiveness particularly in the public sectors like local government level. It's a conceptual paper.
Reflections on the Internal Auditing Profession: What might have gone wrong?
2012
Purpose – The purpose of this paper is to investigate and discuss potential reasons why the internal auditing (IA) profession has been marginalized in the governance debate on solutions after the financial crisis that started in 2007, also noting recent studies questioning the value of IA’s work. The key aim of this paper is to make readers aware of ambiguities concerning the ultimate customer of IA and its core business, and to stimulate critical reflection thereon. Design/methodology/approach – The conceptual discussion of this paper is based on an objective review of relevant literature, both practitioner and academic. Findings – Positioning IA as agent to the board/audit committee and, at the same time, as partner to management is challenging in practice. The IA function should clarify the customer dimension in ist organizational context. Furthermore, this paper argues for a consolidation of internal audit around ist core function of providing assurance when seeking to establish IA as a profession. Practical implications – Practitioners will benefit as this paper demands fundamental questions to be addressed in the organizational context, about the ultimate customer and the core business of the IA service rendered. The Institute of Internal Auditors will benefit from this paper and subsequent discussions in academia and practice, supporting its pursuit to gain universal recognition for IA as a profession. Originality/value – This paper may open a new research area in IA that addresses a more critical way of evaluating IA practices. Keywords Internal auditing, Corporate governance, Professions Paper type Conceptual paper
Insights into the effectiveness of internal audit: a multi-method and multi-perspective study
Louvain School of Management Research Institute, Doctoral Thesis
This doctoral dissertation includes five related working papers that provide valuable contributions to the understanding of internal audit (IA) and its effectiveness. Paper 1 is a literature review that uses the perspective of new institutional theory as a framework and acknowledges that IA effectiveness is largely still viewed as a “black box” that is under-explored in academic research. Paper 2 is an explorative work that studies the variables that are theoretically associated with the IA function’s active role in corporate governance. This paper was published in the Journal of Applied Accounting Research (JAAR 2012). Paper 3 is a conceptual essay that discusses the status of IA as a profession and questions why the IA profession has not generally been seen as playing a significant role in the financial crisis, either as part of the problem or as part of the solution. This paper was published in the Managerial Auditing Journal (MAJ 2012). Paper 4 is an empirical survey that clarifies the discriminatory power of characteristics suggested by practitioners and academic research that may indicate IA effectiveness. Paper 5 is a qualitative research paper that breaks new ground in applying role theory (Kahn et al. 1964) in combination with the theory of relational coordination (Gittell 2006) to the research context of IA effectiveness. This dissertation builds on an exhaustive literature review, provides a mix of different methods and perspectives and offers innovative and complementary insights that open the door for further research.
Internal Audit Effectiveness: An Approach Proposition to Develop the Theoretical Framework
Research Journal of Finance and Accounting, 2013
Until now, there is no consensus among researchers either about the factors influencing internal auditing and how it can be measured, or the best framework for internal audit effectiveness. This could be partly related to lack of sufficient attention to the theories. This paper extends the literature of internal auditing, and its originality; and the argument is that agency theory, institutional theory, and communication theory could serve as an approach to build a theoretical framework of internal audit effectiveness. In addition to that, this study argues that the internal audit effectiveness is impacted directly by internal auditors' characteristics and internal audit department performance, as well as organization members' support as a moderating variable on these relationships which could provide insights for future research.
Pacific Accounting Review, 2010
Purpose-This paper synthesises relevant theoretical and empirical literature to develop propositions and suggests a research agenda on the antecedents and organisational performance implications of internal audit effectiveness. Design/methodology/approach-The paper employs institutional theory and Karl Marx's theory of the ‗circuit of industrial capital' to synthesize relevant internal audit literature to develop theoretically justifiable propositions and highlight an operational research agenda. Findings-Propositions and a research agenda are provided on potential antecedents of internal audit effectiveness and its possible association with company performance measured as rate of return on capital employed. Also, key variables are identified and operationalisation issues discussed. Originality/value-As the extant literature does not provide a canon of internal audit effectiveness, the paper's originality is its argument that a positive association between compliance with standards for the professional practice of internal auditors and organisational goal achievement could serve as an approach to assess internal audit effectiveness. Furthermore, the use of the two theories in combination provides additional insights into identifying the antecedents of internal audit effectiveness and its measurement. Paper type-Literature review, theory
In Search of a Measure of Effectiveness for Internal Audit Functions: An Institutional Perspective
EDPACS, 2018
Internal auditing (IA) effectiveness is still viewed, to large extent, as a ‘black box’ in academic research. In this paper, relevant empirical studies based on self-assessments of internal auditors and on other stakeholders’ perspectives are reviewed through an ‘effectiveness lens’. Major patterns are identified in the existing literature, and the paper complements the work of Gramling et al. (2004), who examined the literature related to IA quality, largely from the viewpoint of external auditors. This paper reviews the empirical literature on IA effectiveness that has been published since the latest revision of the IA definition in 1999, using the perspectives of new institutional theory and institutional entrepreneurship (DiMaggio and Powell, 1983; DiMaggio, 1988) as a framework, thereby recognizing the tension between institutional forces and the role of agency. In cases where isomorphic forces are in conflict with other organizational demands, chief auditing executives (CAE) agency can be a solution that enables local adaptation (institutional entrepreneurship). The ability to exploit fully the potential of agency is an opportunity for the CAE to tailor and advance the role of IA in its specific organizational context. Key words: Internal auditing, effectiveness, new institutional theory, institutional entrepreneurship
Internal Audit in the Era of Continuous Transformation. Survey of Internal Auditors in Romania
Audit Financiar
In the era of continuous transformation, the role of internal audit has steadily increased, becoming one of the strategic pillars of today's companies. In the current context, where corporate governance, risk management and internal controls are increasingly in the hands of regulators, shareholders and the general public, internal auditors have the task of reacting proactively and responsibly to the challenges of the market. Thus, it is important to understand the way in which internal audit activity is being carried out as well as its directions of development. This study aims to provide an overview of the priorities identified by companies in the field of internal audit and to illustrate opportunities to improve the efficiency and effectiveness of the activity of internal audit departments The themes approached in this research aim to define the role of the internal audit function and to describe the way in which internal audit processes are currently being carried out. The research also aims to identify the prospects for transformation of the internal audit function from one that is focused on regulatory compliance into one that can add value to companies. Issues related to the impact of new technologies in process optimization are explored and another topic of interest is the perceived level of current staff skills and the extent to which the budgets and the size of the audit departments currently correspond to their business needs.