Internal audit effectiveness in the area of enterprise risk management

• Main Author: Mahmoud Kertali
• Format: Thesis
• Language: English; English
• Published: 2018
• Subjects: HF5601-5689 Accounting. Bookkeeping
• Online Access: https://eprints.ums.edu.my/id/eprint/42195/1/24%20PAGES.pdf; https://eprints.ums.edu.my/id/eprint/42195/2/FULLTEXT.pdf; https://eprints.ums.edu.my/id/eprint/42195/

Until recently, there is no consensus among researchers about the effectiveness of internal auditors when they perform their role regarding Enterprise Risk Management (ERM) process. The purpose of this study is to investigate internal audit effectiveness and its related factors in the area of ERM. The study addresses the relationships of internal audit effectiveness with the involvement of internal auditors in ERM process, senior management support, internal audit independence and internal audit objectivity, as well as addresses the mediation effects of internal audit independence and objectivity. The study used a quantitative method based on a cross-sectional survey to understand the effect of the above-mentioned factors on internal audit effectiveness in the light of the recent changes in internal audit function. The data was gathered from 119 members of the Institute of Internal Auditors Malaysia (IIAM) who are currently working as internal auditors in both private and public sector organizations in Malaysia. A structural equation modeling technique was applied in order to examine the direct and the mediating effects hypotheses. The findings of the study revealed that internal auditors’ involvement in ERM, senior management support, and internal audit independence are positively related to internal audit effectiveness. The results also indicate that internal audit independence has a mediation effect. However, the findings failed to support the hypothesized direct effect and the mediation effect of internal audit objectivity. This research would contribute to enriching the literature of internal auditing by identifying the main factors that are positively associated with internal audit effectiveness in the area of ERM as well as describe how internal auditors in Malaysia perceive their current role regarding ERM and whether a thoughtful involvement in ERM influence such effectiveness of internal auditing.