文献信息：
文献标题：A Theoretical Discussion of Internal Audit Effectiveness in Kuwaiti Industrial SMEs（科威特工业中小企业内部审计有效性的理论探讨）
国外作者：Awn Metlib AL-SHBAIL，Turki A.A.TURKI
文献出处：《International Journal of Academic Research in Accounting, Finance and Management Sciences》, 2017,1(7):107-116
字数统计：英文2221单词，12805字符；中文4184汉字
外文文献：
A Theoretical Discussion of Internal Audit Effectiveness in
Kuwaiti Industrial SMEs
Abstract This paper aims to scrutinise the association between the internal audit effectiveness and the four factors associated with International Standards for Professional Practice of Internal Auditing (ISPPIA): independence of internal auditors, scope of internal auditors, management support, and audited cooperation. The relationship between these factors and Satisfaction of internal auditors is also examined. Further, the moderating effect on the relationship between these factors (if present) and the effectiveness of IA among industrial SMEs in Kuwait are investigated through satisfaction of internal auditors. By ascertaining the effectiveness of IA at the industrial firms via theories as well as variables, this paper broadens the available literature on the effectiveness of IA.
Key words：Internal audit effectiveness, satisfaction of internal auditors, Kuwaiti Industrial SMEs
1.Introduction
Within the past few decades, internal audit departments have significantly contributed to organizational structure through value added services and thus, it has
become crucial part therein (Al- Twaijry et al., 2003; Arena and Azzone, 2009; Coram et al., 2008). Moreover, internal auditing has significantly increased in importance in the previous years, particularly in its consulting role inside the firm’s risk management. Owing to the widespread accounting scandals, and also the bankruptcy of firms, the internal audit (IA) function has been the focus of researchers and practitioners alike as a significant contributor of organizational effectiveness. More specifically, Abu-Azza (2012) contended that IA will contribute firm value through the provision of field services including operational audits and consulting management on various issues. Following the global financial crisis in 2008-2009, IA has transformed into a significant entity used to protect the rate of return on capital and to prevent wasted or devalued capital (Yee et al., 2008). Nevertheless, some studies in literature indicated that the effectiveness of IA function may not always be consistent (Abuazza et al., 2015). This is particularly true in developing countries, like Kuwait where firms may not be aware how much the IA concepts and practices are worth as acknowledged in the West.
Moreover, Kuwaiti listed firms operate in an environment characterized with voluntary governance as Kuwait is considered to be among the Middle Easter nations that have not established a corporate governance code (Koldertsova, 2011). Moreover, such firms display high ownership concentration that may balance the weaker legal protection provided (Abu-Azza, 2012). Contrary to majority of developed nations, the Kuwait government mandates the appointment of a least two distinct auditors in firms, that are known as joint auditors or audit pairs. Despite the increasing importance of the IA function in organizations, the available literature in the domain has largely concentrated on external audit; other related authors indicated that IA function may not demonstrate consistent effectiveness (Al-Twaijry et al., 2003; Mihret et al., 2010; Mihret and Yismaw, 2007). More importantly, although some scholars examined IA effectiveness, as yet, there is no accepted universal guide to conduct such measurement (Arena and Azzone, 2009). Additionally, the literature reveals that no acknowledged approaches have been forwarded for the assessment of IA (Mihret et al., 2010) and as such, various approaches have been used in prior investigations of IA
effectiveness.
2.Internal Audit in Kuwaiti Industrial SMEs
SMEs are an integral part of numerous global economies particularly with respect to employment and their contribution to GDP. They have also played a significant role especially within certain GCC States including the United Arab Emirates (UAE). In UAE SMEs contribute to 30% of the overall GDP and 86% of the country’s employment. Comparably, in Saudi Arabia, SMEs make up 28% of GDP. On the other hand, Kuwait was late to appreciate the key role that can be played by SMEs enterprises in the economy. The private sector and SME contributions to employment lack lustre, and the government currently employs about 85% of Kuwait’s workforce (Alhabashi, 2015). However, Rampurwala and Marafi (2011), and Al Mutairi and Fayez (2015) suggested that, in Kuwait, local policies are fragmented and although several organizations see the benefit of SMEs in various sectors such as industrial, they are still in their beginning stages. This means that the launch of new industrial SMEs is likely to be weak, thus reducing their opportunity to contribute to the economy. In addition, Datta (2009) and Alhabashi (2015), point out that formal banks are usually loathed to lend to industrial SMEs because they suffer from failure to authenticate their information, such as accounting records and financial statements that reflect the efficiency and the capability of the project. Within the context of business market of Kuwait, 99% of firms consists of small and medium enterprises (SMEs) operating in the national economy institutions. Based on the distribution of SMEs in different sectors of Kuwait’s economic sectors, 11.7% of such firms operate in the industrial sector, 4% in the agricultural sector, 51% in the trade sector, 16% in the service sector, 0.3% in the mining sector, and the remaining 17% in other community services and social services sector.
In Kuwait, industrial SMEs Law necessitates that the Kuwait Stock Exchange (KSE) listed companies to appoint two separate auditors to audit accounts. Additionally, this study shows the similarities and differences between audit services in the market in Kuwait and in other countries to enhance the knowledge of world
economy that is increasingly interdependent with accounting and auditing. Besides that, knowledge of the economies of auditing could also be increased (Shammari et al., 2008).
3.Theoretical Perspectives
In the context of IA research, the use of neoclassical economic theories like the agency theory (Adams, 1994) as well as the transaction cost theory (Spraakman, 1997) are not sufficient because they posit a developed a market economy environment characterized as having considerable transaction volume according to the economic development level throughout countries (Reed, 2002). Therefore, this confines the capacity of the theories to explain IA in extensive settings.
Criticism of the above theories also stems from the institutional theories maintaining that individual behavior whether as product consumer or producer, cannot be delineated from the social context wherein the behavior occurs (Hula, 1984). Barley and Tolbert (1997) explained that the institutional theory acknowledges the significant value of cultural and social determinants as a significant impact upon the decision making (cited in Mihret et al. (2010)).
Based on this premise, Mihret et al. (2010) made use of the institutional theory proposed by Dimaggio and Powell (1983), particularly circuit of industrial capital. Institutional theories primarily function as the base for examining organizational phenomenon integrated in extensive social, political and economic environments (Mihret et al., 2010). More importantly, they are capable of providing an insight into the IA practices as one element of organizational systems and shed light on the relationship between IA and the attainment of the objectives of the firms (Mihret et al., 2010).
4.Research Model and Hypotheses
King et al. (1994) illustrated a model to be an approximation, or a straightforward replica of the actual feature and in the current study. The primary objective is to investigate the present perceptions of IA directors, administrative
affairs managers, financial affairs managers, CEOs and internal auditors concerning IA effectiveness through the determination of factors impacting the same. Additionally, several studies that examined this issue have employed various measures (Abu-Azza, 2012; Mihret et al., 2010; Mihret and Yismaw, 2007) but very few of them, as yet, has investigated the effect of internal auditors’ pay satisfaction on the effectiveness of IA. Five variables exist in the Model: Independence of internal auditors, Scope of internal auditors, Management support, Audited cooperation and Satisfaction of internal auditors.
Independent variables
This study aims to explore the critical factors influencing internal auditor effectiveness among industrial SMEs in Kuwait. In order to attain the research goals, the research hypotheses are proposed:
I.Independence of Internal Auditors
In terms of audit function, auditor independence has long been deemed to be a crucial driver as evidenced by the independence definition provided by ISPPIA (glossary) that described independence as the liberation from circumstances threatening objectivity or its appearance and that such objectivity needs to be managed through different levels (individual auditor, engagement, functional and organizational). Internal audit independence is a crucial element of corporate governance and the control system, and without it, the IA department becomes lost in the management group in that it will no longer provide an objective point of view (Al-Twaijry et al., 2003). Moreover, internal audit independence according to prior studies (Abu-Azza, 2012; Cohen and Sayag, 2010; Mihret et al., 2010), positively correlates with perceived effectiveness of IA. Regardless of its importance, independence of IA has received minimal attention from researchers. Accordingly, this study enriches the findings of the earlier studies as it looks into the association between internal auditor independence and IA effectiveness. Based on this discussion, the following hypothesis is proposed for testing;
H1a: Independence of internal auditor positively impacts internal auditor’s effectiveness.
H1b: Independence of internal auditor highly positively impacts internal auditor’s effectiveness mediated by satisfaction of internal auditors.
II.Work Scope of Internal Auditors
The work scope of the internal auditors is also a significant factor affecting IA effectiveness. IA throughout the years, has extended from the evaluation and measurement of internal control effectiveness to the delivery of consultation linked to organizational operations and system developments (Dittenhofer, 2001). Added to this, the IA scope covers services associated with consulting and assurance which include systematic review, reporting and appraisal of system adequacy in terms of finance, management, operations and budget control (Cohen and Sayag, 2010; IIA, 2016; Sakour and Laila, 2015).
In a related study conducted by Mihret et al. (2010), the authors revealed a positive relationship between IA work scope and IA effectiveness and as such, it is only logical to examine such relationship in this research in the context of Kuwaiti firms.
H2a: Work Scope of Internal Auditors impacts positively on internal auditor’s effectiveness.
H2b: Work Scope of Internal Auditors highly positively impacts internal auditor’s effectiveness mediated by satisfaction of internal auditors.
III.Management Support
Management support and commitment have also been evidenced to impact IA effectiveness. In fact, successful IA function depends on the support demonstrated by the management on the process of auditing. It is important that managers acknowledge the fact that IA is a crucial process and activity like any other activities performed within the organization.
In Mihret and Yismaw (2007) study, they highlighted the need to focus on IA recommendations and despite the well-prepared audit reports, the audit results in the past are not highlighted and consistently presented. Aside from this, the authors showed that audit evidence is linked with the reports indicating that the audit reports are physically bulky, which minimizes their readability. Also, the distribution of audit
reports is restricted and thus, copies are not forwarded to senior management officers that relate to them. The authors reached to the conclusion that management support for internal audit determines internal audit effectiveness.
H3a: Management Support impacts positively on internal auditor’s effectiveness. H3b: Management Support highly positively impacts internal audito’s effectiveness mediated by satisfaction of internal auditors.
IV.Audited cooperation
In turn, auditee’s cooperation level impacts the degree to which IA properly attains its objectives (Al‐Twaijry et al., 2003; Mihret and Yismaw, 2007). Hence, auditee’s lack of cooperation can possibly obstruct the endeavour in attaining effective internal audit work. This is because full cooperation from auditee is necessary to allow internal auditors full access to all activities, records and properties (Ahmad et al., 2009). Within the companies in Saudi Arabia, Al‐Twaijryet et al. (2003) found low levels of auditee cooperation. This is especially true when the scope of audit is expanded outside of the traditional domains. Such situation, as argued by the authors, contributes to low levels of IA recommendations’ implementation.
H4a: Auditee cooperation impacts positively on internal auditor’s effectiveness. H4b: Auditee cooperation highly positively impacts on internal auditor’s effectiveness mediated by satisfaction of internal auditors.
Satisfaction of Internal Auditors as a Moderating Variable
The pay satisfaction of employees is described by the level to which employees feel satisfaction towards financial rewards they obtain in terms of the level and process for the work they do (Shahnawaz and Jafri, 2009). It is one of the top crucial factors that measure the effectiveness of the organization (Heneman et al., 1997). Organizations having satisfied employees appear to display more effectiveness compared to their counterparts with dissatisfied employees (Shahnawaz and Jafri, 2009). In a narrower context of internal auditors, Shahnawaz and Jafri (2009) stated that majority of internal auditors were not satisfied with their jobs. This could result in lower productivity and performance. Abu-Azza (2012) supported this claim by his findings that showed the majority of internal auditors working for Libyan public
enterprises appear to be dissatisfied with their pay.
H5: Satisfaction of Internal Auditors impacts positively on internal auditor’s effectiveness.
5.Conclusions
The aim of this research proposal is to look into the impact of the four factors that are linked to IA effectiveness moderated by satisfaction of internal auditors within the Kuwaiti industrial SMEs. This study contributes in the body of knowledge by expanding the already available literature on the IA effectiveness via the determination of the effectiveness of IA at the industrial firms employing the theories and variables that were previously identified and highlighted.
中文译文：
科威特工业中小企业内部审计有效性的理论探讨
摘要 本文旨在审查内部审计的有效性与国际内部审计专业实务标准（ISPPIA）有关的四个因素之间的关系：内部审计师的独立性，内部审计师的工作范围，管理支持和审计合作。还审查了这些因素与内部审计师满意度之间的关系。此外，通过内部审计师的满意度，研究了这些因素（如果存在）之间的关系的调节作用，以及科威特工业中小企业内部审计的有效性。本文通过理论和变量来确定工业企业内部审计的有效性，在有关内部审计有效性的现有文献上进行了拓展。
关键词：内部审计有效性，内部审计师的满意度，科威特工业中小企业
1.引言
在过去的几十年里，内部审计部门通过增值服务对组织结构作出了重大贡献，并由此成为其中关键的部分（Al-Twaijry等人，2003；阿里纳和阿佐内，2009；科拉姆等人，2008）。此外，在过去几年中，内部审计的重要性显著增加，
特别是其在企业风险管理中发挥着咨询作用。由于众多的会计丑闻以及企业的破产，内部审计（IA）的职能一直是研究人员和从业人员关注的重点，它被认为是组织效能的重要贡献因素。更具体地说，阿布阿扎（2012年）认为，通过在各种问题上提供专业服务，包括业务审计和咨询管理，内部审计将为企业创造价值。继2008-2009年全球金融危机之后，内部审计已经转变为一个重要的实体，用于保护资本收益率并防止资本浪费或贬值（伊等人，2008）。然而，一些文献研究表明，内部审计功能的有效性并不总是一致的（阿布阿扎等，2015）。在像科威特这样的发展中国家尤其如此，那里的企业可能不知道被西方国家认可的内部审计的理念和实践究竟有什么价值。
此外，科威特上市公司在自愿治理的环境下运作，因为科威特被认为是尚未建立公司治理代码的中东国家之一（Koldertsova，2011）。此外，这些公司的股权高度集中，可以与所提供的较弱的法律保护达成平衡（阿布阿扎，2012）。与大多数发达国家相反，科威特政府规定企业任命至少两名不同的审计师，被称为联合审计师或审计对。尽管内部审计功能在组织中的重要性日益增加，但该领域的现有文献主要集中在外部审计上；其他相关作者指出，内部审计功能可能没有表现出一致的有效性（Al-Twaijry等人，2003；米哈伊特等人，2010；米哈伊特和伊斯迈尔，2007）。更重要的是，虽然有些学者考察了内部审计的有效性，但迄今为止还没有通用的指南来进行这种测量（阿里纳和阿佐内，2009）。此外，文献显示，对内部审计的评估没有公认的方法（米哈伊特等人，2010），因此，关于内部审计的有效性，先前的调查中已经采用了各种方法。
2.科威特工业中小企业内部审计
中小企业是众多全球经济体中不可或缺的一部分，特别是在就业方面，以及它们对GDP的贡献方面。在包括阿拉伯联合酋长国（UAE）的一些海湾合作委员会国家中，中小企业也发挥了重要作用。在阿联酋，中小企业贡献了全国30%的GDP和全国86% 的就业率。同样，在沙特阿拉伯，中小企业贡献了28％的GDP。另一方面，科威特很晚才意识到中小企业在经济中发挥的关键作用。私营部门和中小企业对就业的贡献不大，目前科威特约85％的劳动力由政府部门雇佣（Alhabashi，2015）。然而，拉普尔瓦拉和马拉菲（2011），以及阿尔穆塔里和