Signalling of internal audit effectiveness
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Date
Authors
Pooe, Jabile Brenda
Barac, Karin
Plant, Kato
Steyn, Blanche
Journal Title
Journal ISSN
Volume Title
Publisher
NISC Pty (Ltd) and Informa Limited (trading as Taylor & Francis Group)
Abstract
The internal audit function is increasingly recognised as an important internal governance mechanism and consequently factors that contribute to its effectiveness are now an area of great interest to researchers and practitioners. This study draws on signalling theory to fill a gap in the internal audit effectiveness (IAE) literature by investigating which IAE signals are sent by large South African companies in their company reports. Using a self-developed IAE signalling frame, a content analysis was performed on the integrated reports and other annual reports of the top 100 listed companies in South Africa over a five-year period. Thereafter a multiple correspondence analysis was used to extract IAE signals. The results revealed that IAE disclosure patterns of South African listed companies follow the normative dictates of the King Code and the Companies Act. The study also discovered a low average IAE disclosure rate linked to non-mandatory disclosure requirements. Disclosing more detail on IAE represents a missed opportunity to signal superiority through voluntary communication of the IAE signals especially on internal aspects such as management support for internal audit recommendations and the continuous professional development of internal auditors.
Description
This article is based on the DCom study of thefirst author at the University of Pretoria under the supervision of the co-authors. (https://repository.up.ac.za/handle/2263/85675)
Keywords
Disclosure, Signalling, Multiple correspondence analysis (MCA), Content analysis, Internal audit effectiveness (IAE)
Sustainable Development Goals
Citation
Jabile Brenda Pooe, Karin Barac, Kato Plant & Blanche Steyn (2022)
Signalling of internal audit effectiveness, South African Journal of Accounting Research, 36:3, 213-249, DOI: 10.1080/10291954.2021.2000727.