Internal Audits as a Source of Ethical Behavior, Efficiency, and Effectiveness in Work Units

Abstract

This study of internal auditors and auditees, who engage in both financial and operational internal audits in Israel, extends theory and research on internal audits in organizational units. It develops and tests a model that examines the role of top management and internal auditors in facilitating learning from internal audits and driving perceived performance improvement. We argue that support from the top management for the internal audit as well as the auditor's capacity (skills, resources, and behaviors) facilitate learning from audits and help audited units to improve ethicality, efficiency, and effectiveness in organizations. The results of time-lagged survey data provide general support for the hypothesized indirect relationships between auditor capacity, auditor-auditee relational exchanges, learning from audits, and three different perceived performance measures: ethical behavior, efficiency, and effectiveness. We discuss the implications for research on internal audits, proactive learning, ethics, and performance improvement of organizational units in the public sector.

The influence of a good relationship between the internal audit and information security functions on information security outcomes

“…In doing so, it answers Gramling, et al's (2004) call for research into how the IAF contributes to the overall effectiveness of governance. It also extends recent research on the association between internal audit working relationships and audit effectiveness (Ma'ayan & Carmeli, 2016) to the information security context. This study's use of multiple outcome measures enables us to provide some insight into how the quality of the relationship between the IAF and the information security function affects outcomes.…”

“…It is likely that those characteristics may significantly affect the quality of the relationship between the internal audit and information security functions (Merhout & Havelka, 2008;Stoel et al, 2012;Havelka & Merhout, 2013;Ma'ayan & Carmeli, 2016). Therefore, an important topic for future research is to investigate the influence of these internal audit quality measures, not only on the relationship between the internal audit and information security functions, but also on information security outcomes.…”

“…Despite this consensus among academics, managers, and internal audit professionals that an effective IAF should improve governance and risk management, there is little research that addresses whether the IAF actually does improve governance and risk management outcomes (Carcello, Hermanson, & Ye, 2011;Eden & Moriah, 1996;Gramling, Maletta, Schneider, & Church, 2004). Instead, prior research has tended to focus on respondents' perceptions of the efficacy of the IAF in improving risk management processes, without reporting objective data on the outcomes from these processes (e.g., Arena, Arnaboldi, & Azzone, 2010;Carcello, Eulerich, Masli, & Wood, 2017; de Zwaan, Stewart, & Subramaniam, 2011;Ma'ayan & Carmeli, 2016;Paape & Speklè, 2013).…”

Editorial: Internal Auditing: Creating Stepping Stones for the Future

“…IA can also support the external auditor who may rely on work already performed by the IA or request direct assistance when doing an audit (e.g., Maletta, 1993;Felix, Gramling & Maletta, 2001). On top of all of these functions, IA can also be viewed as a consultant, challenging management and acting as a catalyst for improvement, using their knowledge of risk and control to enhance business practices (e.g., Arena & Azzone, 2009;Ma'ayan & Carmeli, 2015;Soh & Martinov-Bennie, 2015).…”

New Perspectives in Internal Audit Research: A Structured Literature Review

“…Further, several studies identified the IAF as an important organizational actor in key strategic activities such as organizational learning, training of prospective senior managers, IT governance, and sustainability. Ma'ayan and Carmeli () suggested that the IAF facilitates learning by business units, while Anderson et al () found that organizations have two philosophies regarding internal audit staffing. The first sees internal auditing as a career in itself, whereas the second views it as a training ground for top managers, an aspect that could fall under the category of internal audit's other roles.…”