Determinants of Internal Audit Effectiveness

8672 Words Feb 27th, 2013 35 Pages
This study extends the literature by building a conceptual understanding of the determinants of the effectiveness of internal audit in organization. This finding specifically investigates five determinants of internal audit effectiveness which are in-house internal audit vs. outsources internal audit, independent and objectivity of internal audit, staff competency, management support and tone at the top and scope of services and planning.

Toward this end it confirms the five determinants of the effectiveness of internal audit are needed in ensuring the well-being of an organization and for it to achieve its objectives.

Key words: In house internal audit vs. outsources internal audit, independent and objectivity of Internal
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This widen the fundamental and essential role of internal auditing to ensure transparency, integrity, quality and improved service delivery in the end point of any process area. This study explored the significance of effective internal auditing in the organization through the five determinants and its subsequent extent and influence in creating a dynamic management system control of an organization.

Chapter 2 Literature Review

2.0Internal auditing
The Institute of Internal Auditors (IIA) United States defined internal auditing as an independent, objective assurances and consulting activity designed to add value and improve an organization’s operation activities. Internal auditing also assist an organization to achieve its objectives by implement a set of systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. Today, internal auditor may also report directly to the Audit Committee. In fact, only Audit Committee has authority to hiring and firing Chief Audit Officer. This is to ensure that internal auditor’s independence and objectivity is maintainable. .Malaysian Companies Act 1965 has stated that effectiveness internal control reasonably assures and safeguard of company assets against loss from unauthorized use or dispositions and for transactions to be properly accounted for to enable the preparation of true and fair profit and loss account and balance sheets”, and a further