Abstract
Internal audit functions around the world are faced with the challenge of assisting key
stakeholders such as audit committees and senior management in discharging their
responsibilities. Organisations face many risk, governance, control and compliance
challenges and having proper functions in place to assist in managing these
challenges is integral to the success of organisations. Internal audit functions are a
critical component of the combined assurance model providing stakeholders with
independent and objective assurance and consulting services on internal control, risk
management and governance processes. It is therefore crucial that internal audit
functions operate properly.
The research problem was defined as follows: if internal audit functions are providing
inadequate services to audit committees in the areas of internal control, risk
management and governance, the ability of audit committees to perform their
responsibilities effectively could be hampered. The research problem thus called for a
study into the functioning of internal audit functions within the current framework of the
International Standards for the Professional Practice of Internal Auditing and other
related best practices. The research problem was explored through qualitative content
analysis of annual reports and through questionnaires sent to audit committee
members and chief audit executives of the eight metropolitan municipalities in South
Africa. The three data sets were presented separately and triangulated.
The study found that internal audit functions are crucial informants to audit committees
in the areas of internal control, risk management, governance and compliance issues.
In this regard, internal audit provides a broad scope of work which audit committees
use to assist them in discharging their responsibilities. This is underpinned by the fact
that internal audit is regarded as ethical, competent in its core technical areas and able
to provide internal audit reports which are informative, persuasive and calling for
action. However, overall competency is regarded as problematic by audit committee
members. The study also found that internal audit’s true functioning is not reflected in
annual reports and the opportunity thus exists to implement internal audit disclosure
policies as this would contribute to transparency and accountability which, in turn,...
D.Phil. (Auditing)