Factors Affecting the Internal Audit Effectiveness: A Research of the Turkish Private Sector Organizations

Yıl 2021, Cilt: 21 Sayı: 1, 1 - 15, 30.01.2021

Ahmet Onay

https://doi.org/10.21121/eab.873867

Cited By: 7

Öz

The aim of present study is to examine the factors that have an impact on internal audit effectiveness (IAE) in Turkey. The datas of research were obtained from 187 internal auditors who are members of The Institute of Internal Auditors-Turkey, working in private sector organizations through the questionnaire prepared as a result of the item pool assessment. The relationship between the IAE and six main factors revealed by applying Principle Component Analysis was tested with Multiple Regression Analysis. The results supported that specifications of internal audit had a direct impact on IAE. The results of study showed that the factors that have an impact on IAE are management’s support, competence, independence, participation in risk management activities and cooperation with external auditor, respectively. This study has replaced one of the missing pieces of the literature. The results would underpin executives and academics to focus on IAE in Turkish private sector.

Anahtar Kelimeler

internal audit effectiveness, internal audit in developing countries, private sector audit, regression analysis

Kaynakça

• Abu‐Azza, W. (2012). Perceived effectiveness of the internal audit function in Libya: A qualitative study using institutional and Marxist theories. University of Southern Queensland, Australia (unpublished PhD dissertation).
• Ahmad, N., Othman, R., Othman, R., & Jusoff, K. (2009). The effectiveness of internal audit in Malaysian public sector. Journal of Modern Accounting and Auditing, 5(9), 53-62. Allegrini, M. & D’Onza, G. (2003). Internal auditing and risk assessment in large Italian companies: an empirical survey.
• International Journal of Auditing, 7(3), 191-208. Al‐Twaijry, A. M., Brierley, J. A., & Gwilliam, D. R. (2003). The development of internal audit in Saudi Arabia: An institutional theory perspective. Critical Perspectives on Accounting, 14, 507–531.
• Al-Twaijry, A., Brierley, J., & Gwilliam, D. (2004). An examination of the relationship between internal and external audit in the Saudi Arabian corporatesector. Managerial Auditing Journal, 19(7), 929-944.
• Alzeban, A. & Gwilliam, D. (2014). Factors affecting the internal audit effectiveness: A survey of the Saudi public sector. Journal of International Accounting, Auditing and Taxation, 23(2), 74-86.
• American Institute of Certified Public Accountant (AICPA) (1991). The Auditor’s Consideration of the Internal Audit Function in an Audit of Financial Statements. Statement on Auditing Standards No. 65. New York: AICPA.
• Arena, M., & Azzone, G. (2009). Identifying organizational drivers of internal audit effectiveness. International Journal of Auditing, 13(1), 43-60.
• Azzali, S., & Mazza, T. (2018). The Internal Audit Effectiveness Evaluated with an Organizational, Process and Relationship Perspective. International Journal of Business and Management, 13(6), 238-254.
• Castanheira, N., Rodrigues, L.L. & Craig, R. (2010). Factors associated with the adoption of risk-based internal auditing. Managerial Auditing Journal, 25(1), 79-98.
• Coetzee, P., & Erasmus, L. J. (2017). What drives and measures public sector internal audit effectiveness? Dependent and independent variables. International Journal of Auditing, 21(3), 237-248.
• Coetzee, P. & Lubbe, D. (2013). Improving the efficiency and effectiveness of risk-based internal audit engagements. International Journal of Auditing, 18(2), 115-125.
• Chambers, A. (1992). Effective internal audits, how to plan and implement. London: Pitman Publishing.
• Cohen, A., & Sayag, G. (2010). The effectiveness of internal auditing: an empirical examination of its determinants in Israeli organisations. Australian Accounting Review, 20(3), 296-307.
• DeVellis, R. F. (2003). Scale development: Theory and applications (Vol. 26) (Second Edition). United States of America, California: Sage publications.
• D’Onza, G., Selim, G. M., Melville, R., & Allegrini, M. (2015). A Study on Internal Auditor Perceptions of the Function Ability to Add Value. International Journal of Auditing, 19(3), 182-194.
• Drogalas, G., Karagiorgos T. & Arampatzis K.(2015). Factors associated with Internal Audit Effectiveness: Evidence from Greece. Journal of Accounting and Taxation, 7(7), 113-122
• Endaya, K. A. & Hanefah, M. M. (2016). Internal auditor characteristics, internal audit effectiveness, and moderating effect of senior management. Journal of Economic and Administrative Sciences, 32(2), 160-176.
• Erasmus, L., & Coetzee, P. (2018). Drivers of stakeholders’ view of internal audit effectiveness. Managerial Auditing Journal, 33(1), 90-114.
• Felix, Jr, W. L., Gramling, A. A., & Maletta, M. J. (2001). The contribution of internal audit as a determinant of external audit fees and factors influencing this contribution. Journal of Accounting Research, 39(3), 513-534.
• Fowler Jr, F. J. (1995). Improving survey questions: Design and evaluation. California: Sage Publications.
• Goodwin, J. (2004). A comparison of internal audit in the private and public sectors. Managerial Auditing Journal, 19(5), 640-50.
• Gramling, A., Maletta, M., Schneider, A. & Church, B. (2004). The Role of the Internal Audit Function in Corporate Governance: A Synthesis of the Extant Internal Auditing Literature and Directions for Future Research. Journal of Accounting Literature, 23, 194-244.
• Hair J. F., Anderson R. E., Babin B. J. & Black W. C. (2010). Multivariate data analysis: A Global Perspective (7th ed.), NJ: Pearson-Prentice Hall.
• Institute of Internal Auditors (IIA) (2018). Internal Auditing’s Role in Corporate Governance - Position Paper. Altamonte Springs, FL: The Institute of Internal Auditors.
• Institute of Internal Auditors Research Foundation (IIARF) (2013), International Professional Practice Framework. Altamonte Springs, FL: IIA Research Foundation.
• International Federation of Accountants (IFAC) (2013) Using the work of internal auditors and related conformity amendments. International Standard on Auditing (ISA) No. 610, New York, NY: The International Federation of Accountants.
• Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.
• Lawshe, C. H. (1975). A quantitative approach to content validity. Personnel Psychology, 28, 563–575.
• Lenz, R. & Hahn, U. (2015). A synthesis of empirical internal audit effectiveness literature pointing to new research opportunities. Managerial Auditing Journal, 30(1), 5-33.
• Lenz, R., Sarens, G., & D’Silva, K. (2014). Probing the discriminatory power of characteristics of internal audit functions: Sorting the wheat from the chaff. International Journal of Auditing, 18(2), 126–138.
• Lenz, R., Sarens, G., & Jeppesen, K. K. (2018). In search of a measure of effectiveness for internal audit functions: an institutional perspective. EDPACS, 58(2), 1-36.
• Maletta, M.J. (1993). An examination of auditors’ decisions to use internal auditors as assistants: the effect of inherent risk. Contemporary Accounting Research, 9(2), 508-525.
• Mat Zain, M., Zaman, M., & Mohamed, Z. (2015). The effect of internal audit function quality and internal audit contribution to external audit on audit fees. International Journal of Auditing, 19(3), 134-147.
• Messier, W.F. and Schneider, A. (1988). A hierarchical approach to the external auditor’s evaluation of the internal auditing function. Contemporary Accounting Research, 4(2), 337-353.
• Mihret, D. G., James, K., & Mula, J. M. (2010). Antecedents and organisational performance implications of internal audit effectiveness. Pacific Accounting Review, 22(3), 224-252.
• Mihret, D.G. & Yismaw, A.W. (2007). Internal audit effectiveness: an Ethiopian public sector case study. Managerial Auditing Journal, 22(5), 470-484.
• Mustika, A. C. (2015). Factors affecting the internal audit effectiveness. Jurnal Akuntansi & Auditing, 12(2), 89-109.
• Onay, A. and Erdoğan, M. (2019). The Relationship Between Governance-Risk-Compliance (GRC) Approach and Internal Audit Function: Research of Structural Equation Model About The Effect of Internal Audit Responsibilities on GRC Approach. TIDE AcademIA Research, 1(2), 149-198.
• Pallant, J. (2016). A Step by Step Guide to Data Analysis using IBM SPSS (6th Edition). USA: McGraw-Hill Education.
• Prawitt, D. F. (2003). Managing the internal audit function. Florida: The Institute of Internal Auditors Research Foundation.
• Salehi, T. (2016). Investigation factors affecting the effectiveness of internal auditors in the company: Case study Iran. Review of European Studies, 8(2), 224-235.
• Sarens, G. (2009). Internal auditing research: where are we going? Editorial. International Journal of Auditing, 13(1), 1-7.
• Sarens, G., Abdolmohammadi, M.J. & Lenz, R. (2012). Factors associated with the internal audit function’s role in corporate governance. Journal of Applied Accounting Research, 13(2), 191-204.
• Sarens, G., & De Beelde, I. (2006). The relationship between internal audit and senior management: A qualitative analysis of expectations. International Journal of Auditing, 10(3), 219–241.
• Sawyer, L. B., Dittenhofer, M. A. & Scheiner, J. H. (2005). Sawyer’s Internal Auditing (5th Edition). Florida: The Institute of Internal Auditors.
• Selim, G., & McNamee, D. (1999). Risk management and internal auditing: what are the essential building blocks for a successful paradigm change? International Journal of Auditing, 3(2), 147-155.
• Soh, D. S., & Martinov-Bennie, N. (2011). The internal audit function: Perceptions of internal audit roles, effectiveness and evaluation. Managerial auditing journal, 26(7), 605- 622.
• Spira, L.F. & Page, M. (2003). Risk management: the reinvention of internal control and the changing role of internal audit. Accounting, Auditing & Accountability Journal, 16(4), 640- 661.
• Stevens, J. (1996). Applied Multivariate Statistics for the Social Sciences (5th Edition). Mahwah, NJ: Lawrance Erlbaum.
• Stewart, J., & Subramaniam, N. (2010). Internal audit independence and objectivity: emerging research opportunities. Managerial Auditing Journal, 25(4), 328-360.
• Suwaidan, M. S. & Qasım, A. (2010). External Auditors Reliance on Internal Auditors and Its Impact on Fees: An Empirical Investigation. Managerial Auditing Journal, 25(6), 509-525.
• Tabachnick, B. G. & Fidell, L. S. (2013). Using multivariate statistics (Vol. 6). Boston, MA: Pearson.
• Van Peursem, K. (2005). Conversations with internal auditors: The power of ambiguity. Managerial Auditing Journal, 20(5), 489–512.
• Vanasco, R.R. (1994). The IIA code of ethics: an international perspective. Managerial Auditing Journal, 9(1), 12-22.
• Veneziano L. & Hooper J. (1997). A method for quantifying content validity of health-related questionnaires. American Journal of Health Behavior, 21(1), 67-70.
• Wood, D. A. (2004). Increasing Value through Internal and External Auditor Coordination. (Prepared for the IIA Research Foundation Esther R. Sawyer Scholarship Award) Florida: The IIA Research Foundation.
• Yee, C.S.L., Sujan, A., James, K. & Leung, J.K.S. (2008). Perceptions of Singaporean internal audit customers regarding the role and effectiveness of internal audit. Asian Journal of Business and Accounting, 1(2), 147-174.