The internal auditor-management relationship in Maltese companies : an analysis

Abstract

Purpose The aim of the study was to analyse the internal auditor-management relationship by examining their respective roles and responsibilities, the internal auditor's independence, the IA reporting lines and the communication between the internal auditor and management. Design Semi-structured interviews were conducted with a number of internal auditors and managers. Moreover, questionnaires were also sent as this made it possible to cover the whole known population of Maltese organisations having an IAU. Findings Results from this study indicated that it seems that internal auditors enjoy a healthy and practical relationship with managers, which however can still be improved. The main role of internal auditors is that of assurance, while consultancy is still regarded as a secondary role. In addition, it seems that the majority of Maltese internal auditors enjoy a high degree of independence from management. Furthermore, internal auditors follow international best practice by having a dual reporting line with management and the audit committee. On the whole, communication between internal auditors and management seems to be satisfactory. In addition, the audit committee plays a very important role in the relationship. Value Hopefully, this study will inspire further research on the topic, particularly with regards to the study's recommendations - an evaluation of the role of the internal auditor in risk management, control and governance processes; operational audits versus financial audits; internal auditor assessments; internal auditor's remuneration; and the evaluation of the audit committee.