Internal audit quality: a polysemous notion?

Abstract

Purpose – The purpose of this paper is to characterize how those who perform (internal auditors), mandate (audit committee (AC) members), use (AC members and external auditors) and normalize (the Institute of Internal Auditors (IIA)) internal audit work, respectively make sense of the notion of “internal audit quality” (IAQ). Design/methodology/approach – This study is predicated on the meta-analysis of extant literature on IAQ, 56 interviews with internal auditors and AC members of public or para-public sector organizations in Canada, and archival documents published by the IIA, analyzed in the light of framing theory. Findings – Four interpretative schemes (or frames) emerge from the analysis, called “manager,” “éminence grise,” “professional” and “watchdog.” They respectively correspond to internal auditors’, AC members’, the IIA’s and external auditors’ viewpoints and suggest radically different perspectives on how IAQ should be defined and controlled (via input, throughput, output or professional controls). Research limitations/implications – Empirically, the authors focus on rare research data. Theoretically, the authors delineate four previously undocumented competing frames of IAQ. Practical implications – Practically, the various governance actors involved in assessing IAQ can learn from the study that they should confront their views to better coordinate their quality control efforts. Originality/value – Highlighting the contrast between these frames is important because, so far, extant literature has predominantly focussed on only one perspective on IAQ, that of external auditors. The authors suggest that IAQ is more polysemous and complex than previously acknowledged, which justifies the qualitative and interpretive approach.

The Internal Audit Dilemma - The Impact of Executive Directors Versus Audit Committees on Internal Auditing Work

“…This leads to a positive correlation between the monitoring performed by the AC and the IAF's budget for auditing the internal control system and ultimately to an increase in the quality of the IAF (Abbott et al, 2010;Carcello & Neal, 2000). Nevertheless, depending on AC's viewpoints of the IAF, based on the work of Roussy & Brivot (2016) e.g. 'manager', 'watchdog'or 'professional', the specific relationship might be different.…”

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

“…This raises ethical concerns on how far IA should colonize and control employees through the IA of risk culture (Ezzy 2001;McCabe 2014). Second, involvement of different stakeholders (Erasmus and Coetzee 2018;Roussy and Brivot 2016), application to a variety of processes (Hayne and Free 2014;Spira and Page 2003), heterogeneity (Arena and Jeppesen 2015;Jiang et al 2018), and unclear ethical guidelines (Friedberg 1998) have sometimes challenged IA's abilities in achieving its ethical ideal of independence and objectivity (Everett and Tremblay 2014;Neu et al 2013). The compromised nature of existing IA practices raises concern on how IA could assure risk culture (Christopher et al 2009;Mihret 2014).…”

“…Chambers and Odar 2015;Gramling et al 2004;Parker and Johnson 2017) and "how different stakeholders conceive IA expansions" (cf. Erasmus and Coetzee 2018;Roussy and Brivot 2016) created a fertile ground to understand the manifold viewpoints on the IA expansion to assure on risk culture. Consequently, our investigation focused on analyzing (1) how different actors-regulators, normalizers, consultants, and implementers-conceive the IA of risk culture and (2) what type of approaches they embrace to audit risk culture.…”

“…Following Roussy and Brivot (2016), the inductive examination involved analysis of 20 interviews and 295 documents on the IA of risk culture by the four actor groups (regulators, normalizers, consultants, and implementers).…”

A qualitative analysis of the internal audit function in the banking sector

“…Review of strategic and business related risks increases internal audit's credibility and relevance in the business by signaling strong independence (Roussy & Brivot, 2016).…”