Internal audit involvement in enterprise risk management

Abstract

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -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.

Manifold Conceptions of the Internal Auditing of Risk Culture in the Financial Sector

“…In contrast to the first approach, the second approach investigates varying goals, configuration, competence, ethics, and techniques of IA in different contexts, especially risk management (Arena et al 2010(Arena et al , 2017Castanheira et al 2009;de Zwaan et al 2011;Vinnari and Skaerbaek 2014) and corporate governance (Arena and Jeppesen 2015;Roussy and Rodrigue 2016). For example, Sarens and Lamboglia (2014) suggest varying competence and knowledge requirements for internal auditors in different domains.…”

Factors Influence Internal Audit Effectiveness

“…In other words, internal auditors have to keep away from (i) setting risk appetite; (ii) imposing risk management processes; (iii) being the core for the assurance of management in such a way to ensure that risks will be effectively managed; (iiiv) taking decisions regarding risk responses; and (v) carrying out risk responses on behalf of the management because they are management's responsibilities not internal auditors ones (Zwaan et al, 2009). …”

The Internal Audit Performance: The Effectiveness of ERM and IT Environments

“…It is known that the greater the extent of ERM implementation, the more efforts may be dedicated to the IA. More recently, Laura, Jenny and Nava [7] examined the relationship between internal auditors' involvement in ERM and the perceptions of their willingness to report to the audit committee. However, the use of ERM and its exact role in the performance of IA definitely merit more attention.…”