Main Article Content
Abstract
The study addresses the dearth of research on internal audit activity independence (IAAI) and internal auditors' objectivity within South Africa's (SA) provincial governance systems, despite their crucial role in government department performance. A mixed research approach was employed, using 260 purposely selected participants. Questionnaires, telephone interviews, and focus group discussions were used as data collection instruments. A triangulation of descriptive statistics and thematic analysis was applied to report the findings. The study found that management is not taking timely corrective action based on audit findings and recommendations. Internal auditors have friendship relationships with auditee employees, sectional heads are not cooperating with the internal audit function (IAF), and management has a negative perception of the IAF, viewing it more as a fault-finder than as adding value to the organization. Furthermore, the study's insights offer practical implications for improving internal audit practices within provincial governance systems, thereby facilitating better governance and operational efficiency.
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References
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- Abdulkadir, U., & Alifiah, M.N. (2020). Review of related literature on the influence of corporate governance attributes on corporate social responsibility disclosure. Journal of Critical Reviews, 7(7), 818-882.
- Akther, T., & Xu, F. (2020). Existence of the audit expectation gap and its impact on stakeholders’ confidence: the moderating role of the financial reporting council. International Journal of Financial Studies, 8(4), 1-25.
- Alander, G. E. (2023). Internal auditor independence as a situated practice: four archetypes. Accounting, Auditing & Accountability Journal, 36(9), 108-13.
- Baotham, S., & Ussahawanitchakit, P. (2009). Audit independence, quality and credibility: effects on reputation and sustainable success of CPAs in Thailand. International Journal of Business Research, 9(1). Retrieved from http://www.freepatentsonline.com/article/International-Journal-Business-Research/208535065.html
- Bag, S. 2015. A short review on structural equation modelling: Applications and future research directions. Journal of Supply Chain Management Systems, 4(3), 64-69
- Besterci, D.M., & Hazel, M. (2014). Communication audit of organization: a employees embedded within personnel recovery education & training center. Communication Audit Report. Retrieved from https://static1.squarespAC.com/static/58fc23dfe3df2820540323b4/t/59051967c534a5c0bcd9f6ca/1493506408971/Communication-Audit.pdf
- Biswas, R., Jana, A., Arya, K., & Ramamritham, K. (2019). A good-governance framework for urban management, Journal of Urban Management, 8(2), 225-236.
- Boamah, K. (2020). Impact of internal audit and corporate governance practices on the performance of state-owned enterprises in Namibia. Unpublished PhD Thesis, Cape Peninsula University of Technology, South Africa.
- Bryman, A., & Bell, E. (2007). Business Research Methods. 2nd edition. Oxford: University Press.
- Castrillón, G., & Alfonso, M. (2021). The concept of corporate governance. Revista Científica "Visión de Futuro", 25(2), 177-190
- Chen, J., Choi, J., Weiss, B.A., & Stapleton, L. (2014). An empirical evaluation of mediation affect analysis with manifest and latent variables using markov chain monte carlo and alternative estimation methods, structural equation modeling. A Multidisciplinary Journal, 21(2), 253-262. https://doi.org/10.1080/10705511.20 14.882688.
- Davis, P.E., Bendickson, J.S., Muldoon, J., & McDowell, W.C. (2021). Agency theory utility and social entrepreneurship: issues of identity and role conflict. Review of Managerial Science, 15, 2299–2318. https://doi.org/10.1007/s11846-020-00423-y.
- Dubihlela, J., & Chauke, X.D. (2017). A generation x cohort analysis of e-shoppers: satisfaction, loyalty and repurchase intentions in a developing country. Journal of Social Sciences, 52(3), 145-154
- Đorđević, M., & Đukić, T. (2017). Independence and objectivity of internal auditors as determinants of their effectiveness. Economics and Organization, 14(3), 231-242.
- Dozie, O.B., Mohammed, A.M., & Onipe, A.A. (2019). Assessing the reliability of the internal audit functions: the issues. Journal of Contemporary Research in Business, Economics and Finance, 1(1), 46-55.
- Eichler, C. M., Wu, Y., Cox, S. S., Klaus, S., & Boardman, G. D. (2018). Evaluation of sampling techniques for gas-phase siloxanes in biogas. Biomass and Bioenergy, 108, 1–6.
- Eulerich, A, & Eulerich, M. (2020). What is the value of internal auditing? – a literature review on qualitative and quantitative perspectives. Maandblad voor Accountancy en Bedrijfseconomie, 94(3/4) (2020), 83–92.
- Mirzay Fashami, A., Krishansing Boolaky, P., & Omoteso, K. (2020). Threats to auditor independence: evidence from Iran. Athens Journal of Business & Economics, 6(4), 253–302. https://doi.org/10.30958/ajbe.6-4-1
- Gao, C., Shi, D., & Maydeu-Olivares, A. (2022). Estimating the maximum likelihood root mean square error of approximation (RMSEA) with non-normal data: a monte-carlo study. structural equation modeling. A Multidisciplinary Journal, 27(2), 1–10. https://doi.org/10.1080/10705511.2019.1637741.
- Geqeza, A. (2021), September. Non-compliance to control activities lead to financial misuse of public funds: a case of the eastern cape department of rural development and agrarian reform. Paper presented at the 10thAnnual African Accounting and Finance association (AAFA) Conference and Colloquium Virtual, African Accounting and Finance association.
- Geqeza, A. (2019). Internal control systems and the compliance support structures of the Eastern Cape Department of Rural Development and Agrarian Reform. Unpublished master’s thesis. Cape Peninsula University of Technology, South Africa.
- Geqeza, A & Dubihlela, D. (2019). Factors leading to non-compliance of control activities within public service: case of the eastern cape department of rural development. Proceeding of 5th International Conference on Business and Management Dynamics ICBMD-2019: Pragmatic business solutions by Africa for Africa, IFRDs (137-150). Namibia: International Conference on Business and Management Dynamics,
- Gravetter, F.J., & Wallnau, L.B. (2013). Essentials of statistics for the behavioral sciences. (8th ed.). Belmont, CA: Wadsworth Cengage Learning.
- Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010) Multivariate data analysis. 7th Edition, Pearson, New York
- Hashim, U.J., Ahmad, N., & Salleh, Z. (2018). Enhancing investors knowledge through the new auditor’s report requirement: the underpinning theories. International Journal of Academic Research in Business and Social Sciences, 8(12), 658-668.
- Hox, J.J., & Bechger, T.M. (1998). An introduction to structural equation modelling. Family Science Review, 11, 354-373.
- Iacobucci, D. (2010). Structural equation modelling: fit indices, sample size, and advanced topics. Journal of Consumer Psychology, 20(1), 90-98.
- Ikiseh, B.N. (2020). The internal communication barriers: a communication audit report of a nonprofit organization. global journal of management and business research: Administration and Management, 20(6), 26-37
- Jachi, M., & Yona, L. (2019). The impact of ethics & objectivity of internal audit personnel on transparency & accountability case of Zimbabwe local authorities. European Journal of Business and Management, 11(7), 108-124.
- Jiyane, N. (2020). Investigation of the value-added role of internal auditing in the governance of selected South African municipalities. Unpublished master’s Thesis, North-West University, South Africa.
- Kerlinger, F. N., & Lee, H. B. (Eds.). (2000). Foundations of behavioral research. Orlando, FL: Harcourt College Publishers
- Kline, R.B. (2011) Principles and practice of structural equation modeling. Guilford Press: New York.
- Lichtman, M. (2012). Qualitative research in education: a user’s guide. California: Sage publications.
- Mamaile, l.J. (2018). developing of a framework to evaluate the internal audit functions at municipalities in South Africa. Unpublished PhD thesis. Northwest University, South Africa.
- Mensah, O.A., Ngwenya, B., & Pelser, T. (2020). ‘Investigating the impact of antecedents of internal audit function effectiveness at a private university in Ghana’, Acta Commercii, 20(1), a778. https://doi.org/10.4102/ac.v20i1.778
- Moser, R., Winkler, J., Narayanamurthy, G., & Pereira,V. (2020). Organizational knowledgeable responses to institutional pressures – a review, synthesis and extension. Journal of Knowledge Management, 24(9), 2243-2271.
- Musarrat, A., & Harani, B. (2020). Integrated reporting insight: why organisation voluntarily reports. International Journal of Scientific & Technology Research, 9(1), 3055-3059.
- Prasad, N.N. (2020). Exploration of the effectiveness of internal audit function in New Zealand. Unpublished Accounting PhD Thesis. University of Auckland, New Zealand.
- Razzaq, R.S., & Thijeel, A.M. (2019). The Role of internal auditing in auditing the strategic plan of the organization using strategic: an applied research in the state company for rubber industries and tires. Journal of Engineering and Applied Sciences, 14(12), 4116-4123.
- Schreiber, J., Nora, A., Stage, F., Barlow, E., & King, J. (2006). Reporting structural equation modeling and confirmatory factor analysis results: a review. Journal of Educational Research, 99, 323–338. https://doi.org/10.3200/JOER.99.6.323-338
- Shadfar, S., & Malekmohammadi, I. (2013). Application of structural equation modelling (SEM) in restructuring state intervention strategies toward paddy production development’. International Journal of Academic Research in Business and Social Sciences, 3(12), 576-618. https://doi.org/10.6007/IJARBSS/v3-i12/472.
- Shalimova, N., & Kuzmenko H. (2022). Independence as a mandatory principle of internal auditors. Innovative Economics and Management, 9(1), 48-56.
- Siyaya, M.C., Epizitone, A., Jali, L.F., & Olugbara, O.O. (2021). Determinants of internal auditing effectiveness in a public higher education institution. Academy of Accounting and Financial Studies Journal, 25(2), 1-18.
- Surbhi, S., (2016). Difference between probability and non-probability sampling, online: Key Difference.
- Syofyan, Misri, Sopian, E., & Usman. (2020). Principal agents and village’s fund allocation: from problems to solution. International Journal of Scientific & Technology Research, 9(2), 4135-4139.
- Wakil, G.K., Alifiah, M.N., & Teru, P. (2020). Auditor independence and audit quality in Nigeria public sector: a critical review. Journal of Critical Reviews, 7(7), 839-845.
- Yong, A., G., & Pearce, S. (2013). A beginner’s guide to factor analysis: focusing on exploratory factor analysis. Tutorials in Quantitative Methods for Psychology, 9(2), 83-84.
References
Abdullah, Z., Ling, T.Y., Sulaiman, N.S., Radzi, R.A.M., & Putri, K.Y.S. (2020). The effects of verbal communication behaviors on communication competence in the pharmaceutical industry. Journal of Critical Reviews, 7(12), 697-703.
Abdulkadir, U., & Alifiah, M.N. (2020). Review of related literature on the influence of corporate governance attributes on corporate social responsibility disclosure. Journal of Critical Reviews, 7(7), 818-882.
Akther, T., & Xu, F. (2020). Existence of the audit expectation gap and its impact on stakeholders’ confidence: the moderating role of the financial reporting council. International Journal of Financial Studies, 8(4), 1-25.
Alander, G. E. (2023). Internal auditor independence as a situated practice: four archetypes. Accounting, Auditing & Accountability Journal, 36(9), 108-13.
Baotham, S., & Ussahawanitchakit, P. (2009). Audit independence, quality and credibility: effects on reputation and sustainable success of CPAs in Thailand. International Journal of Business Research, 9(1). Retrieved from http://www.freepatentsonline.com/article/International-Journal-Business-Research/208535065.html
Bag, S. 2015. A short review on structural equation modelling: Applications and future research directions. Journal of Supply Chain Management Systems, 4(3), 64-69
Besterci, D.M., & Hazel, M. (2014). Communication audit of organization: a employees embedded within personnel recovery education & training center. Communication Audit Report. Retrieved from https://static1.squarespAC.com/static/58fc23dfe3df2820540323b4/t/59051967c534a5c0bcd9f6ca/1493506408971/Communication-Audit.pdf
Biswas, R., Jana, A., Arya, K., & Ramamritham, K. (2019). A good-governance framework for urban management, Journal of Urban Management, 8(2), 225-236.
Boamah, K. (2020). Impact of internal audit and corporate governance practices on the performance of state-owned enterprises in Namibia. Unpublished PhD Thesis, Cape Peninsula University of Technology, South Africa.
Bryman, A., & Bell, E. (2007). Business Research Methods. 2nd edition. Oxford: University Press.
Castrillón, G., & Alfonso, M. (2021). The concept of corporate governance. Revista Científica "Visión de Futuro", 25(2), 177-190
Chen, J., Choi, J., Weiss, B.A., & Stapleton, L. (2014). An empirical evaluation of mediation affect analysis with manifest and latent variables using markov chain monte carlo and alternative estimation methods, structural equation modeling. A Multidisciplinary Journal, 21(2), 253-262. https://doi.org/10.1080/10705511.20 14.882688.
Davis, P.E., Bendickson, J.S., Muldoon, J., & McDowell, W.C. (2021). Agency theory utility and social entrepreneurship: issues of identity and role conflict. Review of Managerial Science, 15, 2299–2318. https://doi.org/10.1007/s11846-020-00423-y.
Dubihlela, J., & Chauke, X.D. (2017). A generation x cohort analysis of e-shoppers: satisfaction, loyalty and repurchase intentions in a developing country. Journal of Social Sciences, 52(3), 145-154
Đorđević, M., & Đukić, T. (2017). Independence and objectivity of internal auditors as determinants of their effectiveness. Economics and Organization, 14(3), 231-242.
Dozie, O.B., Mohammed, A.M., & Onipe, A.A. (2019). Assessing the reliability of the internal audit functions: the issues. Journal of Contemporary Research in Business, Economics and Finance, 1(1), 46-55.
Eichler, C. M., Wu, Y., Cox, S. S., Klaus, S., & Boardman, G. D. (2018). Evaluation of sampling techniques for gas-phase siloxanes in biogas. Biomass and Bioenergy, 108, 1–6.
Eulerich, A, & Eulerich, M. (2020). What is the value of internal auditing? – a literature review on qualitative and quantitative perspectives. Maandblad voor Accountancy en Bedrijfseconomie, 94(3/4) (2020), 83–92.
Mirzay Fashami, A., Krishansing Boolaky, P., & Omoteso, K. (2020). Threats to auditor independence: evidence from Iran. Athens Journal of Business & Economics, 6(4), 253–302. https://doi.org/10.30958/ajbe.6-4-1
Gao, C., Shi, D., & Maydeu-Olivares, A. (2022). Estimating the maximum likelihood root mean square error of approximation (RMSEA) with non-normal data: a monte-carlo study. structural equation modeling. A Multidisciplinary Journal, 27(2), 1–10. https://doi.org/10.1080/10705511.2019.1637741.
Geqeza, A. (2021), September. Non-compliance to control activities lead to financial misuse of public funds: a case of the eastern cape department of rural development and agrarian reform. Paper presented at the 10thAnnual African Accounting and Finance association (AAFA) Conference and Colloquium Virtual, African Accounting and Finance association.
Geqeza, A. (2019). Internal control systems and the compliance support structures of the Eastern Cape Department of Rural Development and Agrarian Reform. Unpublished master’s thesis. Cape Peninsula University of Technology, South Africa.
Geqeza, A & Dubihlela, D. (2019). Factors leading to non-compliance of control activities within public service: case of the eastern cape department of rural development. Proceeding of 5th International Conference on Business and Management Dynamics ICBMD-2019: Pragmatic business solutions by Africa for Africa, IFRDs (137-150). Namibia: International Conference on Business and Management Dynamics,
Gravetter, F.J., & Wallnau, L.B. (2013). Essentials of statistics for the behavioral sciences. (8th ed.). Belmont, CA: Wadsworth Cengage Learning.
Hair, J.F., Black, W.C., Babin, B.J. and Anderson, R.E. (2010) Multivariate data analysis. 7th Edition, Pearson, New York
Hashim, U.J., Ahmad, N., & Salleh, Z. (2018). Enhancing investors knowledge through the new auditor’s report requirement: the underpinning theories. International Journal of Academic Research in Business and Social Sciences, 8(12), 658-668.
Hox, J.J., & Bechger, T.M. (1998). An introduction to structural equation modelling. Family Science Review, 11, 354-373.
Iacobucci, D. (2010). Structural equation modelling: fit indices, sample size, and advanced topics. Journal of Consumer Psychology, 20(1), 90-98.
Ikiseh, B.N. (2020). The internal communication barriers: a communication audit report of a nonprofit organization. global journal of management and business research: Administration and Management, 20(6), 26-37
Jachi, M., & Yona, L. (2019). The impact of ethics & objectivity of internal audit personnel on transparency & accountability case of Zimbabwe local authorities. European Journal of Business and Management, 11(7), 108-124.
Jiyane, N. (2020). Investigation of the value-added role of internal auditing in the governance of selected South African municipalities. Unpublished master’s Thesis, North-West University, South Africa.
Kerlinger, F. N., & Lee, H. B. (Eds.). (2000). Foundations of behavioral research. Orlando, FL: Harcourt College Publishers
Kline, R.B. (2011) Principles and practice of structural equation modeling. Guilford Press: New York.
Lichtman, M. (2012). Qualitative research in education: a user’s guide. California: Sage publications.
Mamaile, l.J. (2018). developing of a framework to evaluate the internal audit functions at municipalities in South Africa. Unpublished PhD thesis. Northwest University, South Africa.
Mensah, O.A., Ngwenya, B., & Pelser, T. (2020). ‘Investigating the impact of antecedents of internal audit function effectiveness at a private university in Ghana’, Acta Commercii, 20(1), a778. https://doi.org/10.4102/ac.v20i1.778
Moser, R., Winkler, J., Narayanamurthy, G., & Pereira,V. (2020). Organizational knowledgeable responses to institutional pressures – a review, synthesis and extension. Journal of Knowledge Management, 24(9), 2243-2271.
Musarrat, A., & Harani, B. (2020). Integrated reporting insight: why organisation voluntarily reports. International Journal of Scientific & Technology Research, 9(1), 3055-3059.
Prasad, N.N. (2020). Exploration of the effectiveness of internal audit function in New Zealand. Unpublished Accounting PhD Thesis. University of Auckland, New Zealand.
Razzaq, R.S., & Thijeel, A.M. (2019). The Role of internal auditing in auditing the strategic plan of the organization using strategic: an applied research in the state company for rubber industries and tires. Journal of Engineering and Applied Sciences, 14(12), 4116-4123.
Schreiber, J., Nora, A., Stage, F., Barlow, E., & King, J. (2006). Reporting structural equation modeling and confirmatory factor analysis results: a review. Journal of Educational Research, 99, 323–338. https://doi.org/10.3200/JOER.99.6.323-338
Shadfar, S., & Malekmohammadi, I. (2013). Application of structural equation modelling (SEM) in restructuring state intervention strategies toward paddy production development’. International Journal of Academic Research in Business and Social Sciences, 3(12), 576-618. https://doi.org/10.6007/IJARBSS/v3-i12/472.
Shalimova, N., & Kuzmenko H. (2022). Independence as a mandatory principle of internal auditors. Innovative Economics and Management, 9(1), 48-56.
Siyaya, M.C., Epizitone, A., Jali, L.F., & Olugbara, O.O. (2021). Determinants of internal auditing effectiveness in a public higher education institution. Academy of Accounting and Financial Studies Journal, 25(2), 1-18.
Surbhi, S., (2016). Difference between probability and non-probability sampling, online: Key Difference.
Syofyan, Misri, Sopian, E., & Usman. (2020). Principal agents and village’s fund allocation: from problems to solution. International Journal of Scientific & Technology Research, 9(2), 4135-4139.
Wakil, G.K., Alifiah, M.N., & Teru, P. (2020). Auditor independence and audit quality in Nigeria public sector: a critical review. Journal of Critical Reviews, 7(7), 839-845.
Yong, A., G., & Pearce, S. (2013). A beginner’s guide to factor analysis: focusing on exploratory factor analysis. Tutorials in Quantitative Methods for Psychology, 9(2), 83-84.