The effectiveness of internal audit planning in Maltese companies : an assessment

Abstract

PURPOSE: The objectives of this study were to determine the extent to which the planning process is carried out in Maltese organisations, to evaluate the assessment of long term risks when planning and to examine the effectiveness of the planning process through the establishment of performance measures. DESIGN: The objectives of this study were achieved through forty-six emailed questionnaires, eleven of which were backed up by semi-structured interviews. The participants in this study were representatives from the internal audit function and the user departments (auditees). FINDINGS: Findings indicate that the effectiveness and efficiency of the internal audit functions is reflected through the planning stage. However, there is lack of strategic internal audit planning and the need to increase the staff complement within the internal audit functions. More awareness with respect to the benefits of quality assessments and performance measures is required. CONCLUSIONS: This study concludes that sufficient time is devoted for the internal audit plan, particularly with respect to individual audit engagement planning. Internal auditors however, emphasise the need that they are required to achieve more in the limited time available. The rationale behind in-house resources was stressed because of insightful knowledge and understanding of the organisation which will affect the internal audit function’s perceived effectiveness and performance, even though external service providers are engaged if gaps are highlighted. VALUE: It is hoped that the study provides insight on the effectiveness of internal audit planning. Recommendations include the setting up of a risk management department, the regulation of external independent reviews on the internal audit function and greater utilisation of performance measures.