Implications of internal audit effectiveness on corporate governance: Research agenda

Abstract

This paper aims to use theoretical literature to develop propositions and suggest a research agenda on the implications of internal audit (IA) on corporate governance (CG). The paper uses institutional theory and Marx’s theory of the circuit of industrial capital to develop theoretical and justifiable propositions and highlight influential research agenda. The key variables are identified and operationalization issues are discussed. To demonstrate the relationship between CG and IA, researchers used theories such as institutional theory, agency theory, stewardship theory, and resource dependence theory (Tripathi, 2019; Činčalová & Hedija, 2020). The existing literature does not offer norms for IA effectiveness. We claim that a positive relationship between IA compliance with standards and CG could be used to assess IA performance. It is high time that the IA should be given consideration as a service to the board, and the IA should be made independent of the top management. Studies in settings where IA is well-developed and in different contexts, similar to Fiji, where IA is relatively at an early stage of development, could provide valuable insights.

Audit Committee Characteristics and Firm Performance with the Moderating Role of Political Connections

“…This is because internal auditors and managers may prioritize meeting the requirements of the committee members, thereby diverting attention away from the core activities of the company. The primary purpose of implementing an internal audit is to function as a corporate governance instrument employed for the purpose of overseeing and regulating corporations (Prasad et al, 2022). There is a lack of statistically significant and corroborative evidence about the associations between audit committees and corporate performance.…”