The development of the internal audit function in Malta : an analysis

Abstract

The current market realities within which organisations are today operating has resulted in a revamp in the way we do business. If the organisation wants to survive the current financial crisis, it has to invest in the right people who constantly monitor the internal controls in place for their appropriateness, identify and deal with the key vulnerabilities on a timely basis, and through effective oversight and consultation, offer accountability to the key stakeholders of the organisation. The IAor is no longer seen as the 'controller of controls', the 'watchdog' who watches over the auditees and reports their every mistake, but is the organisation`s 'internal consultant' offering his independent and objective advice to the board, in order that the organisation`s objectives are achieved in an efficient yet feasible manner. Therefore, to embrace the full potential an IAF would provide, Maltese organisations need to be aware of the function`s relevance and importance. This can be achieved by understanding the IAF`s history and development, the key changes in the role of the IAor as well as the areas where the IAF can improve and grow. The objectives of this study are: 1. Tracking the drivers of the decision to introduce the IAF in Maltese organisations; 2. Assessing how Maltese organisations have introduced this function; 3. Analyzing the development of the IAF to date; 4. Assessing the IA future potential in Malta. This study has been carried out through semi-structured interviews. These were conducted with the CAEs of twenty-two Maltese companies from different industries and with different function size. From this study it emerges the main drivers of the decision to introduce the IAF depend on the size decision to introduce the function, many a time lies with senior management and thus the function needs their full support and backing. The perception of the function has also evolved; with the function today employing increased consultancy projects and recognizing the need to maintain good relationships with its auditees in order that the function can increase its quality and add continuous value. IA is still in its infancy with only a small number of organisations setting up an IAF in Malta. This is because the function is perceived as a luxury, since it does not contribute directly to the organisation`s revenue. The formation of MFIA will help to create awareness about the role of the IAor within the organisation and advocate the profession locally. As the IIA`s motto says, 'Progress through sharing', by working together towards a common goal, the local IAors may stimulate the growth of this profession so that it matures in an indispensible part of each and every aspect of the organisation in the future.