This review is timely as it sheds light on practice in the MENA region by examining research studies and other studies on the IA function conducted by other international institutions (e.g. the World Bank) and provides insight into where potential changes could be most beneficial . Independence is the cornerstone of the IA definition and a crucial condition for the effectiveness of the IA function, and objectivity is considered essential for internal auditors. IIA (2012, p.21) defines independence as “the freedom from conditions that threaten objectivity or the appearance of objectivity.
Studies from the MENA region suggested that the independence and objectivity of IA were aspects critical to the functioning and effectiveness of IA. The authors tested the associations of IA effectiveness with the following: the sector of the organization; The results showed encouraging levels of IA independence, with approximately 70 percent of respondents reporting that internal auditing is happening.
These included IA objectivity (i.e., the existence of a mission statement, the existence of an audit committee, and IA independence), competence (i.e., professional certification, experience, knowledge of the standards, educational level, and professional development), and work effort (i.e. .effective filing systems and computer skills in their audit practice). Threats to the IA's independence resulted from a lack of communication with the board, limited access to organizational documents and activities, and a lack of awareness of the IA's role. Most of the aforementioned studies investigated features of IA functions with particular emphasis on IA independence.
Lack of awareness of the expanded role of AB in advisory activities is another important barrier that is minimizing the scope of AB.
Internal Audit’s Role in Risk Management, Control and Governance The IA profession has become a key driver of the concept of enterprise risk
For example, while many of these studies provide reasons for the limited role played by AI in counseling, future research could identify and test factors associated with the growth of counseling services and suggest ways to conduct and improve such services. . Further, the data showed that ABs in banks provide more consulting services than their counterparts in other industries. Detailed comparative studies can shed light on the reasons for this change and create ways to increase the role of AI in the provision of advisory services across industries.
While risk management is the responsibility of the board, everyone in the organization plays their part in ensuring the successful management of enterprise-wide risk. As mentioned earlier, banks employ more qualified AB staff, resulting in a more prominent role in consulting services. Ismail (2012) explored the risk management models used by Egyptian banks and the role of AB in such services.
The results indicated that IA in banks were knowledgeable and applied risk management models using a risk-based audit. The results also showed that IA, together with audit committees, played an active role in risk management, improving the efficiency and quality of risk-based audit processes. Alkafaji and Majdalawieh (2012) surveyed internal auditors in the United Arab Emirates and inquired about the role of IA in governance and whether the audit committee reviewed the IA results.
It is also clear from Table 5 that the regulations in these countries require internal auditors to undertake some consulting services, mainly related to risk management, control and governance. However, the degree of involvement of internal auditors in these consulting services is not detailed. Future studies may want to examine the extent and types of such services in banks and financial institutions as they use more consulting services.
The investigation could be extended to examine whether there are differences in the role played by AB in consulting services across different industries. Therefore, future studies can assess how internal auditors perceive their role in risk management and the extent of their involvement in control and governance. There is also a need for a more in-depth examination of the differences in the role played by internal auditors in risk management and its implications for objectivity across different sectors, industries and business structures.
Conclusion, Recommendations and Future Research
It explores the links between cultural dimensions and differences in the perceived use of and compliance with internal auditing standards in 19 countries. The Perceived Effectiveness of the Internal Audit Function in Libya: A Qualitative Study Using Institutional and Marxist Theories. Alktani, S., & Ghareeb, A., (2014), Assessing the Quality of the Internal Audit Position in the Public Sector in Saudi Arabia: An Applied Study.
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The AB is independent from management reporting primarily to the audit committee and is dismissed by the BD with the approval of the audit committee. Israel Yes The Israeli Companies Law of 1999, Chapter 5 (B) mandates the independence of auditors from the company directly and indirectly. Also, chapter 4 of the same law, article 152 provides that the AB submits a report to the chairman of the board of directors, the general manager and the chairman of the audit committee (Israeli Company Act, 1999).
Lebanon no IA reports directly to the audit committee of the board and to senior management. Oman no Article 9 states that the IA unit must have a high degree of independence, while Article 10 requires the IA unit to submit the internal audit reports to the general manager/chief executive of the company (with copies marked to audit committee/board of the company) ) at least twice every year (ECGI, 2010a) Qatar yes IAs must be independent and objective and have access to all the company's activities and must be. IA role is limited to traditional services due to lack of qualified staff, absent management support and poor organizational status due to lack of state support.
The study found that the role of IA has yet to expand to advisory services due to the lack of qualified personnel. Bahrain yes IA may assess the adequacy and effectiveness of the company's risk management, control and governance processes (KOB, 2010). Israel no Article 151, Chapter 4 of the Company Law requires IA to examine the propriety of the company's actions from the point of view of compliance with the law and proper business conduct (Israeli Company Act, 1999).
Lebanon Yes The mission of the internal audit unit should include: auditing the Company's operations; ensuring compliance with all laws and regulations, preparing periodic reports at least quarterly on audit activities, identifying and assessing risk management problems and reporting any known violations of the Company's internal control system (The Lebanese Transparency Association, 2010). Tunisia yes Internal auditors of each company must: assess the extent to which operations and program objectives are consistent with those of the company; collaborate with senior management to develop adequate criteria to determine whether the company's objectives have been met; and assess the risks associated with the activity under audit.
