Internal audit involvement in enterprise risk management

Purpose – The purpose of this paper is to examine the impact of internal auditors’ involvement in enterprise risk management (ERM) on perceptions of their willingness to report a breakdown in risk procedures and whether a strong relationship with the audit committee affects such willingness to report. The study also investigates the use of ERM and the role of internal audit in ERM in Australian private and public sector entities.
Design/methodology/approach – The study uses an experimental design, manipulating the internal auditor’s involvement in ERM and the strength of the relationship between internal audit and the audit committee. Participants are 117 certified internal auditors. The study also gathers descriptive data on the use of ERM.
Findings – The study indicates that a high involvement in ERM impacts the perceptions of internal
auditors’ willingness to report a breakdown in risk procedures to the audit committee. However, a strong relationship with the audit committee does not appear to affect their perceived willingness to report. The study also finds that the majority of organisations have recently adopted ERM. Internal auditors are involved in ERM assurance activities but some also engage in activities that could compromise objectivity.
Research limitations/implications – There are internal and external validity threats associated with the experimental design.
Practical implications – The findings reinforce the need for organisations to adhere to the recommendations of the Institute of Internal Auditors and to ensure that internal auditors do not play an inappropriate role in ERM.
Originality/value – The paper contributes to our understanding of the impact of involvement in ERM on internal audit objectivity and of the current role of internal audit in ERM in Australia.

Accountability structures and management relationships of internal audit : an Australian study

Purpose – The purpose of this study is to examine the accountability structures and the management relationships of internal audit. In particular, related issues such as the predominant internal audit objectives and the related functions, the extent to which internal audit addresses any financial reporting risks and the manner in which internal auditors in Australia perform their tasks, are identified. The study also looks at the extent of compliance with the Institute of Internal Auditors (IIA) Standards.
Design/methodology/approach – Based on a survey of the chief audit executives in Australia, the study identifies the reporting mechanisms, functions and relationships of internal audit, including the contributions made towards good corporate governance. There is, however, some misalignment between the aspirations of internal auditors and their relationships with management.
Findings – While internal audit objectives have been established with a focus on controls, risks and governance, the study has highlighted the fact that there is a lack of correlation between the tasks performed by internal auditors and the important internal audit objectives, with the exception of internal control and risks. The results also suggest that internal auditors have been providing an internal consulting and advisory role in matters concerning IT systems, strategic risks and financial issues. If internal auditors are to proactively contribute to good corporate governance, they need to define how, and in what way, this can be done. In regard to corporate governance processes, the results of the research indicate that issues surrounding internal control, risk assessment and management processes are regarded as the key factors for internal audit to contribute to good corporate governance.
Originality/value – This study complements and contributes to the existing literature in providing insights into the evolving role of the internal audit function in terms of accountabilities and relationships with management. It also provides a valuable insight into how the internal audit profession can build upon its inherent strengths and address any apparent areas of concern. This will assist both the profession and policy makers alike, in better understanding and improving the role of the internal audit process.

The interactional effects of the internal and external university environment, and the influence of personal values, on satisfaction among international postgraduate students

The article investigates the interactional effects of internal and external university learning environments, and the influence of personal values, in the satisfaction formation process of international postgraduate students from Asia. Past research on student satisfaction has been narrowly focused on certain aspects of the university internal environment such as teaching, learning and support services. While acknowledging the impact of the internal learning environment on student satisfaction, the article argues that the external community environment, where students spend most of their academic life, has a much stronger influence on their satisfaction. It is also argued that students’ personal values have a mediating influence on the impact on student satisfaction of the internal and external learning environments. A sample of 411 international postgraduate business students from five Australian universities is used in the study. Structural equation modelling is used to analyse the data. Practical implications for universities are provided.

Pressurized internal lenticular cracks at healed mica interfaces

The equilibrium states of internal penny cracks at interfaces in thin-sheet bodies are investigated. Consideration is given to cracks held open by a center-loading force from an entrapped particle in combination with a uniform pressure from a fixed mass of entrapped gas. A fracture mechanics analysis indicates that under these conditions the cracks are stable, but are amenable to growth from an enhancement in net pressure (increase in internal pressure or decrease in external pressure) or effective particle size. Essential details of the theory are confirmed by experiments on lenticular cracks at healed interfaces in muscovite mica. The results are pertinent to flaw responses in brittle ceramic systems where structural integrity is an issue.

Internal organizational factors influencing sustainable implementation of information systems : experiences from a local government in Indonesia

Many information systems (IS) studies have found that information systems implementation sustainability is determined by internal organizational factors. In general these studies have been conducted in private organizations and these factors may not be applicable to IS implementations sustainability within public organizations. This study examines what internal organizational factors play a role in the sustainable implementation of e-government initiatives using a case study of local e-government in Indonesia. It also considers how these factors contribute to sustainable systems by strengthening stakeholders’ commitment through invoking feelings of involvement as responsibilities are assigned to them. The study concludes that the internal factors contribute to collective action that influences sustainable implementation of information systems. Limitations and future research are briefly discussed.

Internal audit attributes and external audit's reliance on internal audit : implications for audit fees

This study aims to examine two aspects of internal audit quality, namely internal audit competency and internal audit contribution to financial statement audits. Consistent with the substitution view, this study predicts a negative relationship between the competency aspects of internal audit (the tenure of the existence of internal audit in the organization, internal audit staff expertise in IT and computer skills, training hours, internal audit staff professional certifications in accounting and auditing, and internal audit staff experience in auditing) and audit fees. Second, this study tests whether the contribution of internal auditors to financial statement audit reduces audit fees. The data analysis is based on a cross-sectional regression model with observations of 73 public-listed firms in Malaysia, which include publicly available data matched with survey responses from their internal and external auditors. The results of the study suggest that the competency of internal audit, namely the tenure of the existence of internal audit in the organization, training, internal audit staff prior experience in auditing and accounting, and certifications are associated with lower audit fees. Our findings for both aspects of internal audit quality (competency and internal audit contribution) lend support to the substitution view for explaining the links between internal audit quality and audit fees.