The external assessment of Maltese internal audit units

Abstract

Purpose: The objective of this study is to analyse the application of IIA Standard 1312 in Malta. It aims to evaluate the local gap given that little information and research was previously done on this subject. This study would help in raising awareness about this external review as well as increase the profile of the Internal Audit Function holistically. Design: Semi-structured interviews were conducted online with External Assessors of the Internal Audit Units, Heads of Internal Audit of public listed entities and Members of the Audit Committee, respectively. Findings: Findings show that in Malta, awareness about IIA Standard 1312 is still minimal. In fact, only four out of ten companies interviewed, perform an external quality assessment. The majority do not conform with this Standard because of incurring financial costs, not having adequate resources to perform a quality assurance and improvement program prior to conducting the external review and finally the issue of the COVID-19 pandemic discouraged people from implementing this assessment in their entities. The majority of the interviewees agreed that this review is beneficial and helps improvement in the Internal Audit Function as well as the whole organisation. Furthermore, most participants agree that the IIA Standards are not burdensome but viable for the local scenario. Conclusions: Results show that the Internal Audit Function is still in the developing stages in Malta and is not in line with the External Audit Assessment. This department still needs to be treated with the same level of importance and should be reviewed as necessary. Value: Progress in the Internal Audit Function is expected to come out of this study. Furthermore, recommendations include appointing sufficient personnel in the department, along with raising awareness about this Standard and its implementation.