The dilemma of internal audit function adaptation

Abstract

Purpose – The purpose of this paper is to provide a conceptual framework that helps to investigate how the internal audit function (IAF) responds to both the introduction of the control logic of Enterprise Resource Planning (ERP) systems, and corporate governance’s (CG) institutional pressures. Furthermore, the paper aims to articulate the concurrence between the external pressures of CG and internal control logic of ERP systems. Design/methodology/approach – The paper presents a review of the normative literature pertaining to the increase in significance of CG in the light of the worldwide economic crisis. The paper highlights a literature gap related to the lack of studies focusing on the impact of ERP systems implementation on the IAF practices. Findings – The authors articulate institutional theory to formulate a conceptual framework that explains the reciprocal interplay between the macro external governance pressures, micro internal institutional logics inscribed in the ERP systems and their effect on IAF practices and structure within organisations. Research limitations/implications – The paper is conceptual in nature and therefore the proposed framework will be subsequently validated using a qualitative research approach in future research. Practical implications – The conceptual framework would offer the internal auditors some strategies for enabling adaptation to the different internal and external pressures. Also the paper provides a platform for research community to investigate the influence of CG and ERP systems implementation on IAF adaptation. Originality/value – The paper provides a clearer articulation of the various constructs that affect the IAF, which has gained great attention for assuring good CG.

Relationship between Corporate Sustainability and Compliance with State-Owned Enterprises in Central-Europe: A Case Study from Hungary

“…The purpose of performance audits, on the other hand, is to determine whether the operation of the organization, its operating principles and procedures can be subordinated to the principles of economy, efficiency and effectiveness. Finally, the standard emphasizes preventive mechanisms in the context of compliance auditing and states that such auditing should be aimed at examining whether a particular management decision, measure, or regulator within an organization meets predefined compliance criteria-that is, to what extent it is possible to minimize the compliance risks already mentioned [27][28][29][30][31].…”

“…In addition to the transparency clauses contained in the Nvtv., Act CVI of 2007 on State Property states that the state may only participate in or establish an enterprise in which its liability does not exceed the amount of its financial contribution. On behalf of the state, the owner of property rights has a duty to enforce the responsibility of the management and the management of [31] property in the public interest.…”

Impact of Enterprise Resource Planning (Erp) on Internal Audit Functions

“…Sophistication of the ERP system has an impact on the functions of internal auditors (Elbardan, Ali and Ghoneim, 2015) and (Madani, 2015) where these internal auditors no longer run or control company activities manually with this ERP system all data flow systems can be integrated so that they do not easy errors or cheating. For this reason, the function of the internal auditor is emphasized to take a role in the advancement of technology so that it can develop the existing system.…”

“…Internal auditors must have the ability in the field of technology, this is very important when conducting the audit process. Elbardan, Ali, and Ghoneim (2015) changes in internal audit function as a form of response to the ERP system. Internal audit is expected to be able to expand their skills to work more effectively and efficiently in the ERP system work environment.…”

Enterprise Resource Planning Systems Introduction and Internal Auditing Legitimacy: An Institutional Analysis

“…A number of authors have used institutional analysis in the context of ERP systems implementation and as a framework to identify factors that drive the existence of an internal audit (Elbardan et al, 2015;Al-Twaijry, Brierley, & Gwilliam, 2003;Arena, Arnaboldi, & Azzone, 2006). However, most studies that examined the relationship of action and institutions have focused on the organizational field (Maheshwari et al, 2010).…”