The Effectiveness of Internal Auditing: An Empirical Examination of its Determinants in Israeli Organisations

Abstract

Internal auditing (IA) has become an indispensable control mechanism in both public and private organisations. Yet very few academic studies have been conducted on the effectiveness of IA. The current exploratory study aims to build a conceptual understanding of the effectiveness of IA in organisations. Towards this end it develops a scale to measure the effectiveness of IA and a model of its determinants. One hundred and eight Israeli organisations that employ IA participated in the study (a 37% response rate). Data on the effectiveness of IA were collected from the organisations’ general managers and data on the determinants from their internal auditors. The findings reveal good psychometric properties for the scale developed in this study. The correlation and regression analyses show support from top management to be the main determinant of IA effectiveness, with some effect also found for the organisational independence of IA. The effect of the predictors was consistent between the public and private sectors. The research model explained a large amount of variance of IA effectiveness. The findings are discussed in terms of how they can help guide and encourage the continuation of research on this issue.

The influence of the audit committee on the internal audit operations in the system of corporate governance – evidence from Croatia

“…In addition, according to results of the research, the independence of the audit committee members has no significant influence on the interaction between the audit committee and the internal audit function. Cohen and Sayag (2010) in their empirical research tried to prove the hypothesis that greater support of the highest management level is related to internal auditing quality. They have empirically identified the existence of very high correlation between the support of the highest management level and the internal audit quality within companies from Israel.…”

Determinants of Internal Audit Effectiveness in Decentralized Local Government Administrative Systems

“…We adapted the determinants of effective internal auditing as used by Cohen and Sayag (2010). The first three determinants (professional proficiency of the auditors; the quality of auditing work; and the organisational independence of auditing departments) represent instances where the auditor's interests reflect those of the profession, rather than the employing organisation.…”

“…Many studies on the effectiveness of IA in Ghana and elsewhere have been conducted (see for examples, Mihret & Yismaw, 2007;Asare, 2008;Ernst & Young, 2008;Nomo, 2009;Abbey, 2010;PricewaterhouseCoopers, 2010;Bota-Avram & Palfi, 2009); Arena & Azzone, 2009);Cohen & Sayag, 2010;Karagiorgos, Drogalas & Giovanis, 2011). However, to the best of our knowledge, no research has focused on the internal audit effectiveness of decentralized local government administrative systems in a developing regional context.…”

The Relationship between Audit Experience and Internal Audit Effectiveness in the Public Sector Organizations

“…Therefore, in line with this, there are needs for a more comprehensive study on the issue of internal audit effectiveness both conceptual and empirical (Cohen & Sayag, 2010), also considering the little literature about the measurement of auditing effectiveness particularly in the public sector, more need to be done (Mizrahi & NessWeisman, 2007). Similarly, earnings quality of both public and private companies is increasing in auditor experience (Chi et al, 2010) this is because auditors that have experience tend to perform best audit practices in order to achieve better audit outcomes that would lead to audit success due to their abilities to react to their clients expectations, needs and the requirements due to their awareness to various auditing standards and practice (Ussahawanitchakit, 2012).…”