Use this URL to cite or link to this record in EThOS: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.577608
Title: Internal auditing in the UK : factors affecting its use and its effectiveness
Author: Ismael, Hazem Ramadan Hafez
Awarding Body: University of Aberdeen
Current Institution: University of Aberdeen
Date of Award: 2013
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Abstract:
The objective of this study is to identify the factors that lead UK non-financial listed companies to voluntary use an IAF. In addition, this study aims to investigate the IAF effectiveness in these companies, the factors affecting this, and the relative importance of these factors. Using the Agency and the Transactions Cost Economics (TCE) theories, the study collected financial and non-financial data from the annual reports and the DataStream for 332 UK non-financial companies listed in the London Stock Exchange main market in 2009. In addition, postal questionnaires were sent to the head of internal audit and the audit committee chairman in 213 companies which have an internal audit department. The study provides evidence that firm size, level of risks, agency problem between owners and managers, and the existence of an effective audit committee are important drivers for the voluntary use of IAF. In addition, it provides strong evidence that firm’s characteristics affect the IAF quality characteristics. Large companies with an effective audit committee are more likely to have high quality IAFs. Furthermore, the questionnaire’s findings provide evidence that IAFs provide different types of both assurance and consulting activities to their companies, and that the majority of respondents are satisfied that the IAF is effective and has a positive impact on internal control, risk management, and governance processes. However, the results indicate that the IAF characteristics significantly affect its scope of services and its perceived effectiveness. Consistent with this, respondents acknowledge that having a strong relationship with the audit committee, adopting risk based internal audit, and having IAF staff with various backgrounds are the most important factors for IAF effectiveness. Collectively, the results of this study suggest the importance of having an IAF to corporate governance and the importance of redesigning it in a way that enhance its effectiveness.
Supervisor: Not available Sponsor: Not available
Qualification Name: Thesis (Ph.D.) Qualification Level: Doctoral
EThOS ID: uk.bl.ethos.577608  DOI: Not available
Keywords: Auditing ; Internal
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