Evaluating the effectiveness of internal auditing in municipalities in Israel
The aim of this research is to evaluate the effectiveness of internal auditing in municipalities in Israel, as perceived by different groups of users. A model to evaluate effectiveness was developed, followed by the preparation of a self-administered questionnaire of the Likert type. After pilot testing, the questionnaire was despatched. The empirical study was conducted on the majority of Israeli municipalities that possess an internal auditing unit. The respondent groups also included journalists at local newspapers who cover the annual municipality internal auditing reports. The returned questionnaires provided the data used in the research analysis. After factor analysis, the model emerged based on the following components: Independence, Competence, Scope of work, Performance of the internal auditing unit, and the Implementation of corrective action following the internal auditing findings. The respondents were divided into five groups: (1) Staff of the municipality internal auditing unit (2) Councillors - elected by the public (3) Top management (4) Middle level management (5) Journalists. Meetings were also held with the mayors of various municipalities to ascertain their opinions on the results of the data analysis. The research findings revealed major differences in the evaluation of effectiveness between different groups of users. In general, the research shows that the closer the user stands to the internal auditing operation, the higher the evaluation. The implementation of corrective action following the internal auditing findings was rated by all the respondent groups as lower than the other components. Another result is that the internal auditing unit tends to be perceived as less effective in smaller municipalities; for this comparison, municipalities were divided into three categories according to population size. The research has yielded various recommendations for operational change in order to improve the effectiveness of internal auditing in municipalities. The model developed in this study can also serve to evaluate the different aspects of effectiveness of individual internal auditing units in individual municipalities in Israel.