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Which factors affect the internal audit effectiveness in India?

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  • Prem Lal Joshi

    (ICSSR Senior Fellow, Western Regional Centre (Institute of ICSSR), Mumbai, Maharashtra, India)

Abstract

Purpose: In the age of rapid technological changes, the nature of work of internal auditors is also changing and new influencing factors are emerging which affect the internal audit effectiveness. Therefore, the aim of this study is to investigate important factors influencing the effectiveness of internal audit in Nifty-500 listed companies in India. Methodology: The methodology used in this study was proportionate stratified sampling technique and data were collected using questionnaire method which was sent to 252 companies and 74 responses were received; however, only 64 usable questionnaires are included in the analysis. The response rate is 28.2%, non-response bias and common method bias (CMB) are none existence in the data. Factor analysis and multiple regression techniques are used. Findings: Reveal that “internal audit function and audit committee frequent meetings†and “usage of Big Data and Analytics (BDA)†are positively significant with IA effectiveness in Indian context. The regression function is highly significant and 34.2% of variations in dependent variable are explained by variations in independent variables. Implications: The implications are that sound awareness by the head of internal audit functions and top management are important on how the usage of BDA is going to influence the IA performance and frequent meetings and interactions between IA function and AC are necessary in the changing business and technological environment in reshaping the internal audit function. Also, furthermore, how to maximize the support of employees and top management as well as to provide more independence to internal audit should be considered. Originality: The study suggests that additional evidence is warranted to support the increasing relevance and importance of BDA by internal auditors for achieving IA effectiveness.

Suggested Citation

  • Prem Lal Joshi, 2021. "Which factors affect the internal audit effectiveness in India?," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 12(2), pages 01-13, May.
    • Handle: RePEc:aii:ijcmss:v:12:y:2021:i:2:p:01-13
    DOI: 10.18843/ijcms/v12i2/01
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    References listed on IDEAS

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    1. Alzeban, Abdulaziz & Gwilliam, David, 2014. "Factors affecting the internal audit effectiveness: A survey of the Saudi public sector," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 23(2), pages 74-86.
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    6. Prem Lal Joshi & Govindan Marthandan, 2020. "Continuous internal auditing: can big data analytics help?," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 16(1), pages 25-42.
    7. Dessalegn Getie Mihret & Getachew Zemenu Woldeyohannis, 2008. "Value-added role of internal audit: an Ethiopian case study," Managerial Auditing Journal, Emerald Group Publishing, vol. 23(6), pages 567-595, June.
    8. Siregar, Sylvia Veronica & Utama, Sidharta, 2008. "Type of earnings management and the effect of ownership structure, firm size, and corporate-governance practices: Evidence from Indonesia," The International Journal of Accounting, Elsevier, vol. 43(1), pages 1-27, March.
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    Cited by:

    1. Steven Grima & Peter J. Baldacchino & Simon Grima & Murat Kizilkaya & Norbert Tabone & Lauren Ellul, 2023. "Designing a Characteristics Effectiveness Model for Internal Audit," JRFM, MDPI, vol. 16(2), pages 1-44, January.

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