• The Journal of Asian Finance, Economics and Business
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• v.8 no.4
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• pp.797-808
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• 2021

This study examines the interaction between internal auditors' personality traits and the internal audit function effectiveness. It also investigates the effect of such interacted variables on financial reporting quality. This study employed a questionnaire survey to collect data from 193 internal auditors of Jordanian companies listed on the Amman Stock Exchange. The study model is validated and tested using the partial least squares structural equation modelling. The results reveal that all the examined personality traits of internal auditors significantly impact internal audit function effectiveness except for the extraversion trait. The results also show that personality traits have indirect effects on financial reporting quality via internal audit function effectiveness. These results suggest that internal auditors with high scores on openness to experience, emotional stability, and conscientiousness traits can be among the most significant contributors to the internal audit function effectiveness. The results also suggest that internal auditors' personality traits can be regarded as an internal audit function intangible resource that enhances effectiveness. The study's findings might be of interest to many different parties interested in enhancing internal audit function effectiveness and boosting the financial reporting quality, such as external and internal auditors, auditees, human resource departments, and Chief Internal Audit Executives.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.5
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• pp.561-573
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• 2022

This study aims to obtain empirical evidence of the absence of testing the effect of professional ethics, emotional intelligence, and internal auditor performance on professional skepticism. According to this study, internal auditors can use professional skepticism to better understand red flag fraud. Questionnaires were used as the research instruments in this study. The participants included 186 auditors. Using structural equation modeling, this study confirms the hypothesis. The results show that the application of professional ethics and emotional intelligence has a positive effect on professional skepticism. The findings show that 1) professional skepticism can improve internal auditors' understanding of the red flags of fraud, 2) professional ethical norms influence how people behave and accomplish jobs, and 3) how constructive findings are produced by an audit procedure that adheres to the requirements of an audit expert, not just an espionage agent trained to infiltrate. As a result, internal auditors' higher performance in performing functions as a building agent rather than a secret agent like intelligence can be attributed to this. This study provides evidence that 1) not only does the use of professional ethics increase professional skepticism, but high emotional intelligence also plays a role, and 2) professional skepticism can improve internal auditors' understanding of red flags of fraud.

• Korean Management Science Review
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• v.19 no.1
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• pp.39-54
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• 2002

With increasing use of the computers and rapid progress of system technology, the Judgment Process of information system auditors is exacerbated and the auditing environment is becoming very complex. Therefore, with limited resources, to achieve the ultimate goals of control & auditing, it is absolutely necessary for the auditors to Identify the relative importance and priority order of controls Accordingly. the auditors'review and evaluation of the internal control are becoming the Important issues in our modern auditing Process. The objectives of this paper are to identify the crucial and important control factors that are necessary for the control system, end to analyze the relative importance of the internal controls.

• The Journal of Asian Finance, Economics and Business
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• v.9 no.2
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• pp.93-102
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• 2022

The goal of this study was to see how big data analytics (BDA) affected external audit procedures in the Middle East. The measurement model and structural model of this investigation were evaluated using PLS-SEM (3.3.3). The study sample members were (361) auditors who work in auditing companies in Kuwait, Saudi Arabia, the United Arab Emirates, Jordan, Bahrain, Egypt, Lebanon, and Iraq. A questionnaire was chosen to the study sample members electronically, and the study sample members were (5093) auditors who work in auditing companies in Kuwait, Saudi Arabia, the United Arab Emirates, Jordan, Bahrain, Egypt, Lebanon, and Iraq. To choose the sample, the researchers used a stratified random sampling procedure. The findings show that BDA has an impact on audit procedures at all phases of the auditing process, where it contributes to information delivery that helps auditors understand the client's internal and external environments, which in turn influences the choice to accept the audit assignment. Furthermore, by providing essential information, BDA enables auditors to simply run analytical procedures, estimate client risks, and understand and evaluate the internal control system. As a result, auditors must develop their abilities in the BDA field, as it adds to the creation of additional value for both auditors and their clients.

• Journal of Distribution Science
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• v.22 no.4
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• pp.59-68
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• 2024

Purpose: The function of internal audit is to help achieve company goals and targets by minimizing the impact of business risks. The distribution of internal audit activities in carrying out control and supervision covers all aspects or activities at all levels of management. The aim of the research is to determine the distribution of risk-based internal audit effectiveness assessments in companies. Data and Research Design Methodology: Researchers examined research trends regarding things that could influence the distribution of the effectiveness of the internal audit function from 2007 to 2023.This research used a systematic literature review (SLR) research method. This research used 23 papers sourced from the Scopus database. Results: The distribution of the effectiveness of audit services provided by internal auditors is more influenced by the personal characteristics of internal auditors and has little to do with the leadership of the chief internal auditor, technology, and risk management. Conclusion: The distribution of monitoring services provided by internal auditors covers all levels of departments or divisions of the organization. The assessment of internal audit effectiveness is more influenced by the auditor's personal attributes such as independence, competence, and management support.

• Proceedings of the Korea Society for Industrial Systems Conference
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• 1998.10a
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• pp.385-391
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• 1998

As the increase in the use of computers and rapid development of information technology exacerbate auditors' judgmental process, achieving objectives(effectiveness) of control and auditing with limited resources requires auditors to identify relative importance and priority of controls. Consequently, auditors' review and evaluation of internal control is been highlighted in modrn auditing process. Especially, as more organizations adopted LAN(Local Area Network) systems. LAN environment is facing with problems arising from characteristics of theLAN and the evaluation of LAN controls. The modern in this study is LAN control evaluation model with information system auditing objectives. This study concludes that auditors' proper evalution of the importance of LAN controls contributes to the effective achievement of IS auditing objectives.

• The Journal of Asian Finance, Economics and Business
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• v.8 no.1
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• pp.271-283
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• 2021

This article provides empirical evidence on factors of internal audit (IA) characteristics affecting the internal audit effectiveness in steel enterprises in Vietnam. The study uses data from survey obtained from 114 responses representing owners, managers, and internal auditors from 38 steel enterprises in Vietnam for period from 2018 to 2019. Data collected is firstly checked with Cronbach's Alpha, then the EFA test, and the model linear regression is used to test the relationship between internal audit characteristics and internal audit effectiveness. Results reveal that internal audit effectiveness in steel enterprises in Vietnam is influenced by various internal factors, including the size of internal audit, the scope of internal audit, the capacity of internal auditors, the independence of internal auditor, and the operational bases and methods of internal audit. Based on the research results, the paper makes six recommendations: strengthening operational basis of IA; increasing the independence of IA; increasing the size and capacity of IA staff; expanding and not underestimate the scope of IA; and reforming the internal governance structure. These proposed recommendations could be applied, not only for steel companies in Vietnam, but also for other companies in Vietnam or other companies in jurisdictions that have similar conditions.

• Journal of East Asia Management
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• v.4 no.1
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• pp.23-51
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• 2023

We investigate whether the association between management overconfident tone and the level of audit effort measured by audit fees and hours differs depending on the level of earnings management. Prior studies suggest that firms led by overconfident managers are likely to initiate risky investments, report low quality financial statements, and have material weaknesses in internal control system. These characteristics, combined together, result in higher audit risk. At the same time, auditors assess audit risk based on the quality of financial reporting, measured by level of earnings management. As a result, the assess audit risk is likely to reflect the combined effect of management overconfidence and the level of earnings management. In this paper, we investigate whether auditors differentiate the effects of real earnings management (REM) and accrual-based earnings management (AEM) when they assess the audit risk related management overconfident. Using the CEO's letter published in 2018, we measure the CEO's tone representing the degree of overconfidence (i.e., activity). Based on this measure, we find that the positive association between managerial overconfident tone and audit effort is more pronounced as the level of REM is higher. However, we find that the baseline association does not vary depending on the level of AEM. These results suggest that auditors consider the managerial overconfident severer when such characteristic accompany the higher level of REM, which can be outcome of aggressive business decisions possibly leading to the higher audit risks. We further find that these results are stronger for Big 4 auditors and continuing auditors. This paper contributes to the literature and practice as follows. First, we provide contextual evidence on how auditors reflect managerial characteristics in the audit process by documenting that auditors actively increase their audit efforts only when overconfident managerial characteristics are highly likely to lead to audit risk. This result suggests that auditors conduct external auditing considering both the efficiency and effectiveness of the audit process. Second, we suggest that auditors use information obtained from a wide range of sources to identify audit risks. Our results provide evidence of how the auditing standards, which do not provide detailed guidelines for audit risk assessment, are being applied in practice. Finally, our results also enhance the understanding of how audit fees are determined. Combined with the studies related to audit pricing, we provide the important reference for discussion between the auditor and the auditee about the audit fee that has created acute tension after the enforcement of the new External Audit Act.

• The Journal of the Korea Contents Association
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• v.4 no.1
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• pp.32-39
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• 2004

Results of the study are summarized as follows. Firstly, it has been analyzed that some differences exist to determine the criteria of materiality in capital market and industrial conditions in the environmental factors of economics, Secondly, it has been analyzed that some differences exist to determine the criteria of materiality in an incorporations history in the environmental factors of incorporation,, Thirdly, it has been analyzed that some differences exist to determine the criteria of materiality in economic planning and customs policy In the environmental factors of politics between internal auditors and external auditors.

• KDI Journal of Economic Policy
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• v.31 no.1
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• pp.71-103
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• 2009

Considering the expenditure size of public institutions centering on public enterprises, about 28% of Korea's GDP in 2007, public institutions have significant influence on the Korean economy. However, still in the new government, there are voices of criticism about the need of constant reform on public enterprises due to their irresponsible management impeding national competitiveness. Especially, political controversy over appointment of executives such as CEOs of public enterprises has caused the distrust of the people. As one of various reform measures for public enterprises, this study analyzes the effect of internal governance structure of public enterprises on their managerial performance, since, regardless of privatization of public enterprises, improving the governance structure of public enterprises is a matter of great importance. There are only a few prior researches focusing on the governance structure and managerial performance of public enterprises compared to those of private enterprises. Most of prior researches studied the relationship between parachuting employment of CEO and managerial performance, and concluded that parachuting produces negative effect on managerial performance. However, different from the results of such researches, recent studies suggest that there is no relationship between employment type of CEOs and managerial performance in public enterprises. This study is distinguished from prior researches in view of following. First, prior researches focused on the relationship between employment type of public enterprises' CEOs and managerial performance. However, in addition to this, this study analyzes the relationship of internal auditors and managerial performance. Second, unlike prior researches studying the relationship between employment type of public corporations' CEOs and managerial performance with an emphasis on parachuting employment, this study researches impact of employment type as well as expertise of CEOs and internal auditors on managerial performance. Third, prior researchers mainly used non-financial indicators from various samples. However, this study eliminated subjectivity of researchers by analyzing public enterprises designated by the government and their financial statements, which were externally audited and inspected. In this study, regression analysis is applied in analyzing the relationship of independence and expertise of public enterprises' CEOs and internal auditors and managerial performance in the same year. Financial information from 2003 to 2007 of 24 public enterprises, which are designated by the government, and their personnel information from the board of directors are used as samples. Independence of CEOs is identified by dividing CEOs into persons from the same public enterprise and persons from other organization, and independence of internal auditors is determined by classifying them into two groups, people from academic field, economic world, and civic groups, and people from political community, government ministries, and military. Also, expertise of CEOs and internal auditors is divided into business expertise and financial expertise. As control variables, this study applied foundation year, asset size, government subsidies as a proportion to corporate earnings, and dummy variables by year. Analysis showed that there is significantly positive relationship between independence and financial expertise of internal auditors and managerial performance. In addition, although business expertise and financial expertise of CEOs were not statistically significant, they have positive relationship with managerial performance. However, unlike a general idea, independence of CEOs is not statistically significant, but it is negatively related to managerial performance. Contrary to general concerns, it seems that the impact of independence of public enterprises' CEOs on managerial performance has slightly decreased. Instead, it explains that expertise of public enterprises' CEOs and internal auditors plays more important role in managerial performance rather than their independence. Meanwhile, there are limitations in this study as follows. First, in contrast to private enterprises, public enterprises simultaneously pursue publicness and entrepreneurship. However, this study focuses on entrepreneurship, excluding considerations on publicness of public enterprises. Second, public enterprises in this study are limited to those in the central government. Accordingly, it should be carefully considered when the result of this study is applied to public enterprises in local governments. Finally, this study excludes factors related to transparency and democracy issues which are raised in appointment process of executives of public enterprises, as it may cause the issue of subjectivity of researchers.