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The impact of internal audit attributes on the effectiveness of internal control over operations and compliance

Author

Listed:
  • Chang, Yu-Tzu
  • Chen, Hanchung
  • Cheng, Rainbow K.
  • Chi, Wuchun

Abstract

The internal audit function (IAF) assists management in improving internal controls over operations, reporting, and compliance. While many studies examine the association between the IAF and the internal control over financial reporting (ICFR), little is known about internal control over operations and compliance. Using a unique dataset from Taiwan, this paper examines the association between IAF quality and internal control deficiencies in operations and compliance. The results suggest that a larger internal audit team can enhance internal audit performance for both operations and compliance, whereas internal auditor competence is positively associated with the effectiveness of internal control over compliance, but not operations. This study contributes to the literature by shedding light on the determinants of the achievement of operations and compliance objectives. It also provides important implications for stakeholders and practitioners, as a company’s control over operations and compliance may mutually influence its ICFR and ultimately its business success.

Suggested Citation

  • Chang, Yu-Tzu & Chen, Hanchung & Cheng, Rainbow K. & Chi, Wuchun, 2019. "The impact of internal audit attributes on the effectiveness of internal control over operations and compliance," Journal of Contemporary Accounting and Economics, Elsevier, vol. 15(1), pages 1-19.
    • Handle: RePEc:eee:jocaae:v:15:y:2019:i:1:p:1-19
    DOI: 10.1016/j.jcae.2018.11.002
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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