See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/326675351

The Effectiveness of Internal Audit

Article · July 2018

CITATION READS

1 11,478

1 author:

Abdullah Mohammed Ayedh

USIM | Universiti Sains Islam Malaysia
74 PUBLICATIONS   196 CITATIONS   

SEE PROFILE

Some of the authors of this publication are also working on these related projects:

The Effects of the Family Ownership Structure on the Relationship between Board of Directors and Earnings Quality: Evidence Manufacturing Firms in Amman Stock
Exchange. View project

Islamic Finance View project

All content following this page was uploaded by Abdullah Mohammed Ayedh on 20 April 2019.

The user has requested enhancement of the downloaded file.

 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391

Effectiveness of Internal Audit

Saleh M.S. Mahdawi1, Abdullah Mohammed Ahmed Ayedh2, Khairil Faizal Bin Khairi3
1, 2, 3
Faculty of Economics and Muamalat- UniversitiSains Islam Malaysia (USIM),
Bandar BaruNilai, 71800 Nilai, Negeri Sembilan, Malaysia

Abstract: Ever since the last two decades of the 20th century and the beginning of the 21st century, the accounting and auditing
profession has faced numerous problems resulting from the collapse of major public shareholding companies in the United States, the
United Kingdom, Canada, Australia and other countries, and the loss of billions of dollars , And the failure of external auditors, but
some collusion in the disclosure of such abuses, and take appropriate professional action, as well as the decline of the role of internal
auditors to play an effective role in the face of the phenomenon of financial corruption attributable to those companies, despite the The
tremendous professional and technical developments that supported the audit profession both internal and external.The internal audit
function is one of the cores of the effectiveness of jobs in various economic projects, the most important means by which rely on modern
scientific management in the provision of data and information accurately and orderly and needed to make decisions and assist them in
examining systems where the evaluation and safety, in the form that allows to be the goals and targets for all areas under revision.In
recent years, business environment-organizations have faced rapid changes in expanded regulatory requirements and technological
advances. These changes have given the internal audit function a place in the front seat to assist States in fulfilling their responsibilities.
That the effectiveness of the internal audit function has become a major support function for senior management, the Board of
Directors and the Audit Committee. The head of the Institute of Internal Auditors (Gerry Cox, 2007) says that today's internal auditor
works hard with senior management to find solutions, adding that the internal auditor has become more focused on adding value to the
organization from finding a mistake.

Keywords: internal audit, efficiency of internal audit

1. Introduction 1) An internal audit is an objective activity that can be

provided both internally and externally. This revised
Organizations have encountered rapid changes in the definition allows organizations to obtain quality services
business environment, expanded regulatory requirements, for internal auditing through outsourcing.
and technological advancements in recent years. These 2) By emphasizing that the scope of internal audit includes
changes have given internal audit function the front seat to ensuring advisory activities, new projects of internal
assist organization's members in fulfilling their audit as an activity definition, focusing on the key issues
responsibilities. This view supported by several researchers involved in monitoring and risk management.
such as, Ruud (2003) argues that, the internal audit function 3) The internal audit aims to add value to the organization
has become a major support function for senior and improve the Organization's operations, said the new
management, board of directors and its audit committee. definition emphasizes the importance of the contribution
Peter Wilson; the IIA president (1988), confirms that, the of an effective internal audit in any organization.
cooperation between the external and internal auditors is 4) The revised definition makes the internal audit wide-
necessary to ensure the most appropriate coverage of all ranging in the review of the entire organization, to assist
major systems, and more effective reporting of results. Gerry the organization to achieve its overall objectives.
Cox; IIA chairman (2007), says that, the internal auditor 5) The revised definition broadens the scope of theinternal
these days works hard with the senior management to find audit, extending its scope to include risk management
solutions. Cox (2007) adds that they focus much more on and oversight of governance processes.
adding value than finding fault. 6) The revised definition clarifies that the internal audit
profession is based on professional standards and
2. Internal Audit internal audit standards and is presented on the basis of
a systematic, documented and disciplined process that
2.1The nature of the internal audit: emphasizes the quality of internal audit performance.

This section provides information about the nature of 2.1.2 Scope of internal audit:
internal audit without exposure to the date of theinternal The scope of the internal audit is determined as follows:
audit, which is outside the objectives of this study. 1) Review the reliability and reliability of financial and
operational information and the means used to identify,
2.1.1The concept of internal audit: measure and classify such information.
The revised definition expands the prospects for internal 2) Review systems based on ensuring compliance with these
audit, expanding the scope of work to include risk policies, plans, procedures, laws,and regulations that can
management, and control governance processes. (Chapman have a significant impact on processes and reports and
& Anderson, 2002), explained the main changes in the whether the organization is in compliance.
concept of internal audit, as a result of the reformulation of 3) Review and assess theeconomic and efficient use of
internal audit defined by the Institute of Internal Auditors resources.
IIA (1999) In the following important points: 4) Review of operations or programs to ascertain whether
the results were consistent with the goals and objectives,

Volume 7 Issue 1, January 2018

www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790 DOI: 10.21275/ART20179790 1797
 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391
and if the processes or programs that are implemented as 4) Review the organization's conduct of ethics and behavior
planned. policies.
5) Review of specific operations at the request of the 5) Conduct annual audits of follow-up operations and report
Auditor Management Committee, as appropriate. the results to the Audit Committee.
6) Monitor and evaluate the effectiveness of the risk 6) Address the objectives of disclosure and transparency in
management system of the Organization. the annual audit plan.
7) Review of the quality of performance of the external
auditors, with a degree of coordination with internal (Bookal, 2002) noted the need and importance of internal
audit. audit in corporate governance through WorldCom, for
8) Review the internal audit statement from the senior example, where the doubtful debts account was $ 3.8 billion
management regarding the audit opinion and the planning discovered by internal auditors who presented this to the
of the audit process. Chairman of the Audit Committee, Financial action to take
corrective action. Based on the above discussion, the role of
2.1.3 Internal audit effectiveness and corporate internalaudit effectiveness in corporate governance is clear,
governance: internal auditors to helpMembers fulfill their responsibilities
The effectiveness of corporate governance need coordination by taking a more holistic view of corporate status,
and cooperation between the four parties: harmonizing internal audit skills for activities,
1) Audit Committee evaluation,and improvement, and reviewing their
2) Senior management organizations' corporate governance capacities. Today
3) External Auditors internal auditors need to understand corporate governance
4) Internal auditors structures, and where the internal audit function can support
the organization.
(Carcello et al., 2005),They pointed out that the internal
audit function unique opportunity to work an important role 3. The Relationship between Internal Audit
with other parties for the management of companies.
(Stewart &Bouckaert, 2006). That the existence of the and Organization
internal audit function in the organization has a positive
relationship with the strengthening of corporate governance. 3.1 Internal Auditor and Senior Management.

(Stewar&Bouckaert, 2006) They noted that it was difficult The trend to support the relationship must exist between
for audit committees to be effective without the support of senior management and internal audit in helping each other
internal audit. They explained that there is considerable in fulfilling their responsibilities. An internal audit by the
scope for strengthening the relationship between internal revised IIA definition in 1999 makes the main objective of
auditors and audit committees and external auditors. internal audit, adding value to the organization, improving
the organization's operations and achieving a disciplined
methodology for evaluating and improving the effectiveness
of risk management, control, and governance. The
effectiveness of internal audit leads to improvements in both
the internal control system and corporate governance, and as
a result, the performance of senior management is
improving. IIA audit management requires senior
management to provide adequate internal audit support.

First: Senior management should be supported by auditors

who are involved in the continued objectivity of their
business without any interference in determining the scope
of theinternal audit, or in the performance of work and
delivery of results, see paragraph 1110 of the IIA Audit
Figure 1: Elements of effective corporate governance Standards. Appropriate support for internal audit in day-to-
Source from Staciokas & Rupsys (2005) day activities See paragraph 1110 of the IIA Standards.

Recently (Bostan&Grosu, 2010) noted that the role of the Second: It must be the internal audit on an open and direct
internal audit company is of primary importance to corporate with the senior management Connection Manager (see
governance in this area. (Gramling et al., 2004), explaining paragraph 1320 of Internal Auditors IIA standards).
that this depends on the effectiveness of internal audit
functions, "assurance of management's advisory and risk Third: the Director of Internal Audit considers senior
management", as quoted from Whitley (2005), providing management input, the internal audit manager must deliver
examples and steps that internal auditors can take to improve the plan and resource requirements for internal review of
corporate governance Like: senior management for approval of each audit should be
1) Assist the Board in its self-assessment management. through internal audit planning (see paragraph 2010.A1
2) Bringing the best ideas and practices on internal controls standards IIA) (see paragraph 2020 standards IIA), and the
and risk management processes to the Audit Committee. internal audit manager should communicate the plan and
3) Looking for activities that can reduce long-term costs. resource requirements for internal audit. (Sarens&Beelde,

Volume 7 Issue 1, January 2018

www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790 DOI: 10.21275/ART20179790 1798
 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391
2006) presented the relationship between senior management interdependence between them and the strong relationship
and internal auditing as follows: between the Audit Committee and the Internal Audit
function.

(Sarens et al., 2009), and confirm that regular meetings

between the Audit Committee and the Internal Audit
function, enhance the knowledge of the Audit Committee on
issues related to both accounting and auditing functions.

(Sarens et al., 2009), considers effective internal audit as an

important resource for the Audit Committee in discharging
its responsibilities (Davies, 2009), emphasizes that it is
important for both the Audit Committee and the Internal
Audit function to act as a team to be effective.

The internal auditor, in order to obtain an effective

relationship between the internal auditor and the audit
committee, requires the internal audit manager to provide the
following integrated activities: (1) The periodic review of
the risks faced by the organization was sent to the audit
committee. (2) Assist the Audit Committee with respect to
the Charter of the Commission and appropriate activities and
processes. (3) Ensure that the Internal Audit Charter, its
role,and activities are consistent with the needs of the Audit
Committee. (4) Maintain open and effective contacts with
the Audit Committee. (5) Provide training to members of the
Audit Committee on risk and internal control issues.

By the Audit Committee, for internal audit independence,

the Internal Audit Director should report to the Audit
Figure 2: Source from soreness & build (2006) Committee in order to obtain appropriate support to achieve
operational activities for internal audit (see paragraph 1110
(Peter, 1994) Explained that the relationship between of the Institute of Internal Auditors IIA). Also, the Internal
internal auditors and senior management needed to work Audit Manager should communicate and interact directly
closely to ensure a higher level of understanding and to with the Audit Committee (see paragraph 1111 of the
eliminate erroneous assumptions (Peter, 1994). Institute of Internal Auditors IIA). When the Audit
(Sarens&Beelde, 2006), based on five case studies within Committee agrees to appoint and dismiss the Internal Audit
Belgian companies, found that senior management Director, independence becomes further support. In order to
expectations are significantly affected by an internal audit communicate effectively with the Audit Committee, the
performance, and internal audit meets most of these Internal Audit Manager should be in open contact with the
expectations. Audit Committee (see paragraph 1320 of the IIA Criteria).
The Internal Audit Director shall also meet in secret with the
The results of the study also indicate that senior management Audit Committee. These meetings, assist the internal audit
expects internal review: manager to present the audit plan, report on the results of the
1) Compensation for loss of management due to regulatory major audits and the main audit findings or other issues. To
complexity. improve internal audit performance, the internal audit
2) To be a guarantee of corporate culture through personal manager should consider the inputs of the audit committee
contacts with people. during the preparation of the internal audit planning (see
3) To be a supportive function in monitoring and improving paragraph 2010A1. IIA). The internal audit manager should
risk management and internal control system. also communicate internal audit activities, plans and
4) To be a training ground for future managers. resource requirements, including changes and transfers Task
5) Collaborate with external auditors to increase overall for internal audit personnel and approval by the Audit
audit coverage. In terms of internal auditors, senior Committee (see paragraph 2020 of the IIA Criteria), the
management is expected to take the first step in Audit Committee should approve and periodically review
formalizing the risk management system as they seek the Internal Audit Charter, the document approved by the
support and general acceptance from senior management. Administration that provides for the purpose of internal
audit, duty and responsibility.
3.2 Internal Auditor and Audit Committee.
The Audit Committee shall review annually the objectives of
Audit committees and internal auditors have common goals, the Internal Audit Department, the audit schedules, the
a strong relationship of support between them and help each staffing plans and the financial budgets. The Internal Audit
other in fulfilling their responsibilities. (Martinov-Bennie, Director shall inform the Audit Committee of the results of
2009) and (Soh) emphasizes the most important
Volume 7 Issue 1, January 2018
www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790 DOI: 10.21275/ART20179790 1799
 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391
the audits and highlight the important audit findings and understanding can lead to further recommendations for
recommendations. external audit (Engle, 1999).

Through the above-mentioned discussions on the (Lin et al., 2010), based on data collected from 214 US
relationship between internal audit, senior management,and companies, found that the material disclosures and
the Audit Committee, it is clear that there are competing weaknesses reported under Section 404 of Sarbanes-Oxley
claims from senior management and the Audit Committee. Act 2002 may be positively correlated with coordination
Senior management wants the internal auditor to provide between internal and external auditors.
consultation assurance based on operational skills to address
risk and evaluate the efficiency of operations, and stimulate 3.5Auditors and internal control system:
organizational action.
Several requirements have been requested for the evaluation
3.3 Coordination and cooperation between internal and of the internal control system, such as AICPA (SAS No. 55
external auditors and SAS No), SOX (Section 404) and the International
Federation of Accountants (ISA, 400).
Coordination and cooperation have become a necessity for
both internal and external auditors, and the requirement of (Amudo&Inange, 2009) pointed to the lack of an effective
professional bodies such as AICPA, SAS No. 9, No. 65 internal control system often leads to organizational failure.
SAS, SOX, Article 404, IFAC, ISA 610 and IIA standards, Both internal and external auditors have a common goal of
paragraph 2050. (Al-Twaijry et al., 2004). He explained in assessing the internal control system, and they have the
the study of the level of coordination and cooperation responsibility to do so. However, they have different
between companies, between managers of internal audit objectives for this evaluation, the external auditor aims to
departments and managers of external audit firms. Internal apply the second criterion of fieldwork standards, assess risk
auditors rely on cooperation between internal and external control, and determine the sample of the audit. While the
audit, although external auditors are more positive about the objective of the internal auditor is to give some
extent of cooperation when the internal audit management is recommendations that help in developing and improving the
of high quality. This subsection discusses the benefits of internal control system. One of the main objectives of the
coordination and cooperation, the system of internal control, auditors is to assess the internal control system, and
coordination and cooperation on external audit fees, and the coordination and cooperation between internal and external
role of the Audit Committee in such coordination and auditors are essential for the achievement of such an
cooperation. assessment. Such coordination and cooperation should also
improve the effectiveness of audit activities. This will be the
3.4 The benefits of coordination and cooperation between purpose of the discussion at the next point.
internal and external auditors: Presented a study by (Frank, 1980), this relationship is as
The main benefit of coordination and cooperation between follows:
internal and external auditors is to enhance audit
effectiveness, as well as to reduce audit costs. This format Relationship between auditors and internal control system
includes messages related to asset control and fraud risk.
(Schneider, 2009), explained the use of coordination and
cooperation with external auditors, focusing on the internal
auditors' knowledge of the WMO environment system rather
than the external auditors, because internal auditors were
more able to detect fraud from external auditors.

(Kpmg's Fraud Survey 2003), the survey to study the

fraud, in the case of fraud in the government and industry in
the United States study found (Kpmg's Fraud Survey,
2003), that 65% of the fraud was discovered in 2003 by
internal auditors, while only 12% were discovered by Figure 3: Source from:Frank,(1980)
External Auditors.
3.6The Role of the Audit Committee on Coordination
(Engle, 1999) points to three important benefits of and Cooperation between Internal and External
coordination and cooperation between internal and external Auditors
auditors, including (1) Useful review, which contributes
significantly to the achievement of the objectives of the The existence of an effective review committee can enhance
Organization. (2) That, the external audit is able to rely on coordination and cooperation between internal and external
the work of the internal auditors, this provision leads to auditors. We can recognize that one of the objectives of the
significant reductions in the cost of theexternal audit. To Audit Committee is to lend credibility to the provision of
further utilize this coordination and cooperation of the financial information, between the internal audit process and
external auditor in the relationship with senior management the external audit process (Zain, 2005).
in reducing the differences that may ascend from the
application of accounting principles, also strengthening this

Volume 7 Issue 1, January 2018

www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790 DOI: 10.21275/ART20179790 1800
 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391
The Audit Committee also aims to facilitate communication Relationship between the Audit Committee and internal
between senior management and internal and external auditors
auditors of the Organization (Zain et al., 2004), as follows:

Figure 4: Source: Zain, (2005)

(Zain et al., 2004) Studied the Audit Committee's impact on cooperation helps both internal and external auditors to
the characteristics of internal audit and on the contribution of achieve their objectives in an effective manner. Open and
the internal audit function to the financial report and audit direct contacts between internal auditors and members of the
was examined, based on survey data from the internal organization have a strong impact on enhancing the
auditors of (76) companies listed on the Malaysian Kuala effectiveness of audits.
Lumpur Stock Exchange. The results indicate that the Audit
Committee Impact on the relationship between internal audit 4. Internal Audit Effectiveness
and external auditors. The foregoing discussions indicated
that senior management and the Audit Committee differed in In the previous section, it was to clarify the relationship
their requests from the internal audit entity. between internal auditors and members of the
organization,in short, support the members of the
Senior management wants the internal auditor to provide organization would enhance the effectiveness of the internal
consultation assurance based on operational skills to address audit, internal audit, without this support becomes unable to
risk and evaluate the efficiency of operations, and stimulate function to be effective. This aspect discusses the
organizational action. effectiveness of the internal audit function.

On the other hand, the Audit Committee is more concerned 4.1 The concept of effectiveness of internal audit function
about the controls and regulations of the organization's
income. (Hermanson&Rittenberg, 2003). It can be said Efficiency is essential for all control functions, without one
that it is complementary in roles between the Audit of the main reasons for its existence will be lost. The Internal
Committee, the Internal Audit function, and external Audit function is one of these purposes, the issue of
auditors. The audit committee should monitor and coordinate effectiveness is a key issue for the internal audit function and
audit activities. Cooperation between internal and external its auditors to contribute to the achievement of the objectives
auditors should also be used to assist each other in achieving of their institutions. In general, specific effectiveness must
their objectives in effective ways. Open and direct be available to achieve objectives (Dittenhofer, 2001).
communication between them has a strong impact on There is, however, a synergy between efficiency and
enhancing the effectiveness of audits. effectiveness, which simply means that any financial or non-
financial process must benefit from the cost. (Mousa, 2005)
Based on the above in this section, we can conclude that states that effectiveness is a guarantee to achieve the
there is a supportive relationship between the internal audit objectives of the organization, to achieve the pre-defined
and the members of the organization. Significant support goals and to increase the production of these inputs, but
from senior management Management should not interfere production should meet predetermined objectives. While
with internal audit procedures or weaken the internal audit (Blackburn, 2003), you should not focus on the lowest cost,
independence. In addition, the effective audit committee but at the lowest cost specific quality. That was Mentioned
enhances the independence of internal audit and coordinates in (Mousa, 2005) to explain the meanings of the four
cooperation between internal and external auditors. This
Volume 7 Issue 1, January 2018
www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790 DOI: 10.21275/ART20179790 1801
 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391
efficiencies, effectiveness, economy and justice concepts are (Gramling et al., 2004) suggested that internal auditing can
as follows be considered effective when the quality of internal audit has
a positive impact on the quality of corporate governance.
The theory of the four concepts
References
[1] Al-Twaijry, A. M. Brierley, J. A. &Gwilliam, D. R,
(2004), "An examination of the relationship between
internal and external audit in the Saudi Arabian
corporate sector", Managerial Auditing Journal, Vol. 19
No. 7.
[2] Amudo, A. Inanga, E. (2009), "Evaluation of internal
control systems: a case study from Uganda",
International Research Journal of Finance and
Economics. ISSN 1450-2887 Issue 27 (2009),
EuroJournals Publishing, Inc.
[3] Arena, M &Azzone, G. (2009), "Identifying
Figure 5: Source from Chambers et al, (1987) organizational drivers of internal audit effectiveness",
International Journal of Auditing, Vol. 13, Blackwell
(Chambers et al., 1987), explained these concepts are as Publishing Ltd.
follows: [4] Bookal, L. E. (2002), "Internal auditors: integral to good
1) Effectiveness: Compare actual performance with planned corporate governance", The Internal Auditor, Vol. 59.
performance. [5] Bostan, I. &Grosu, V. (2010), "The role of internal audit
2) Efficiency: Ratio of resource consumption to produce in optimization of corporate governance at the groups
benefits. of companies", Theoretical and Applied Economics,
3) Economy: resources consumed towards planned Vol. XVII (2010), No. 2.
consumption. [6] Blackburn,S.(2003),"Reviewingthe effectiveness of
4) Justice: The net effect of the institution on society and your internal audit
the environment. function"availableonlineat:http://www.wayside.org.uk/d
ownloads/Reviewia.pdf.
4.2 Measuring the effectiveness of internal audit [7] Cox, G. (2007), “Going up”, The Internal Auditor, Vol.
function: 64, No 4; ABI/INFORM Global, PP 72-77.
[8] Carcello, J.V. Hermanson, D.R. &Raghunandon, K.
Even today, there is no agreement on how to measure the (2005), "Factors associated with U.S. public companies’
effectiveness of internal audit. The distribution of investment in internal auditing", Accounting Horizons,
researchers on the effectiveness of internal audit As Vol. 19, No 2.
mentioned (Arena &Azzone, 2009), the three groups in their [9] Chapman, C. & Anderson, U. (2002), Implementing the
opinion on this measurement as follows: the first group on professional practices framework (Altamonte Springs,
the relationship of the effectiveness of internal audit with the FL: The Institute of Internal Auditors).
quality of internal audit procedures, the second group on [10] Davies, M. (2009), "Effective working relationships
internal audit and the relationship of effectiveness of the between audit committees and internal audit- the
output of The internal audit activities while the third group cornerstone of corporate governance in local authorities
related to the results of the audit activities. a Welsh perspective", Journal of Management &
Governance, Vol, 13.
(Arena &Azzone, 2009), conducted a study were measured [11] Dittenhofer, M. (2001), "Internal auditing effectiveness:
the effectiveness of internal audit in terms of the percentage an expansion of present methods", Managerial Auditing
of recommendations made by internal auditors and Journal, Vol. 16.
implemented by senior management. I found that the internal [12] Engle, T. J. (1999), “Managing external auditor
audit function is most effective in the Malaysian public relationship”, The Internal Auditor, Vol. 56, 4;
sector when there is: (1) a legal requirement for the ABI/INFORM Global.
establishment of an internal audit function. (2) A strategy for [13] Frank, R. P., (1980), "How external auditors can help
the development of qualification of internal audit staff. (3) you evaluate internal control", The Internal Auditor.
Support from senior management and the presence of the October.
Audit Committee. (4) The Central Internal Audit Policy Unit [14] Gramling, A. A. Maletta, M. J. Schneider, A. & Church,
(a professional body) to develop guidelines, develop B. K. (2004), “The role of the internal audit function in
community and disseminate best practices. (Van- corporate governance: a synthesis of the extant internal
Gansberghe, 2005) identified six key themes in building an auditing literature and directions for future research”,
effective internal audit process. Six key themes were Journal of Accounting Literature, Vol. 23.
identified in the effective building of internal auditing: (1) [15] Hermanson, D. R &Rittenberg, L. E. (2003), "Chapter 2,
the concept of ownership. (2) Organization of the internal audit and organizational governance", The
governance framework. (3) Law. (4) Improve professional Institute of Internal Auditors Research Foundation,
efficiency. (5) Conceptual framework. (6) Resources. available at: http://

Volume 7 Issue 1, January 2018

www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790 DOI: 10.21275/ART20179790 1802
 International Journal of Science and Research (IJSR)
ISSN (Online): 2319-7064
Index Copernicus Value (2016): 79.57 | Impact Factor (2015): 6.391
www.theiia.org/download.cfm?file=1775. (accessed on [30] The Institute of Internal Auditors (IIA) (2009), "Code of
27 January 2010). ethics", available on-
[16] Kpmg Fraud survey (2003), New York, NY: KPMG, lineathttp://www.theiia.org/guidance/standards-and-
available on-line at: guidance/ippf/code-of-ethics/ .
http://us.kpmg.com/RutUS_prod/Documents/9/FINALF [31] The Institute of Internal Auditors (IIA) (2004),
raudSur.pdf "Statement 3.283 auditing guidance - guidance for
[17] Lin, S. Pizzini, M. Vargus, M. &Bardhan, I. (2010), internal auditors", available on-line at: http:// app1.
"The role of internal audit function in the disclosure of hkicpa. org.hk /ebook/HKSA _Members _Handbook
material weaknesses", available on-line at: _Master/ volumeIII/3_283.pdf (accessed 30 November
http://papers.ssrn. com/sol3/ 2009).
papers.cfm?abstract_id=1592593 [32] The Institute of Internal Auditors (IIA), "Audit scope",
[18] Mousa, F. R. (2005), "Developing a model for available on-line at:http://www. theiia.org/
evaluating the effectiveness of the internal audit guidance/additional-resources/audit-committees-board-
function in Libyan organizations: case study with of-directors/ internal-audit-department-charter/.
special reference to oil companies", a Ph.D. Thesis, (accessed on 27 January 2010).
(UK: Manchester Metropolitan University).
[19] Peter, R. (1994), “Understanding internal audit”,
Australian Accountant, Vol. 64, No 3; ABI/INFORM
Global, pp 30-34.
[20] Ruud, T.F. (2003), “the internal audit function: an
integral part of organizational governance”, The
Institute of Internal Auditors Research Foundation,
Altamonte Springs, FL.
[21] Sarens, G. Beelde, I.D. (2006), "The relationship
between internal audit and senior management: a
qualitative analysis of expectations and perceptions",
International Journal of Auditing, Vol.10 pp. 219-241.
[22] Sarens, G. De Beelde, I &Everaert, P. (2009), "Internal
audit: a comfort provider to the audit committee", The
British Accounting Review, Vol. 41, pp 90-106.
[23] Schneider, A. (2009), "The nature, impact and
facilitation of external auditor reliance on internal
auditing", Academy of Accounting and Financial
Studies Journal, Vol. 13, No. 4, pp. 41-53.
[24] Soh, D. S. B. &Martinov-Bennie, N. M. (2009), "The
relationship between the audit committee and the
internal audit function: evidence from
Australia",availableon-lineat:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=147
7852 (accessed on 29 May 2010).
[25] Sterck, M. &Bouckaert, G. (2006), "International audit
trends in the public sector: a comparison of internal
audit function in the government of six OECD countries
finds similarities in legal requirements, organizational
structure and future challenges", Internal Auditor,
August 2006.
[26] Van-Gansberghe, C. N. (2005), "Internal auditing in the
public sector: a consultative forum in Nairobi, Kenya,
shores up best practices for government audit
professionals", Internal Auditor August; pp 69-73.
[27] Whitley, J. (2005), "Internal auditing’s role in corporate
governance", Internal Auditor, Vol. 62, No. 5, pp. 21-
22.
[28] Zain, M. M. Subramaniam, N. & Goodwin, J. (2004),
"Audit committee and internal audit function
characteristics: impact on internal audit
contributiontofinancialstatementaudit",availableon-line
at:http://www.business.qut.com
/faculty/schools/.../2004-014 Goodwin .pdf.
[29] Zain, M. M. (2005), "The impact of audit committee and
internal audit attributes on internal audits and audit fees:
perceptions of Malaysian internal auditors", a Ph.D.
Thesis, (Australia: Griffith University).
Volume 7 Issue 1, January 2018
www.ijsr.net
Licensed Under Creative Commons Attribution CC BY
Paper ID: ART20179790
View publication stats DOI: 10.21275/ART20179790 1803