View More View Less
  • 1 Corvinus University of Budapest
Restricted access

This study examines the relationship between the existence and independence of internal audit and other corporate governance factors in an emerging market, building on disclosed data from Hungarian listed companies in 2011. The results indicate that almost half of the listed fi rms use internal audit, however, independence of the function is less common. Ordinal regression results confi rm the negative impact of concentrated foreign ownership on the need of internal audit, and the complementary relation between internal audit and supervisory board monitoring. The complementary role of internal audit to external one is partially evidenced. The results also indicate that larger fi rms are supposed to establish internal audit and strengthen its independence more than smaller ones. The fi ndings of the study have important implications for sound corporate governance in Hungary. The study, by assessing the institutional and regulatory context of an emerging market, contributes to the literature by providing an improved understanding of the existence and independence of internal audit.

  • Agresti, A. (2010): Analysis of Ordinal Categorical Data. Hoboken, N. J.: Wiley.

  • Arena, M.Azzone, G. (2009): Identifying Organizational Drivers of Internal Audit Effectiveness. International Journal of Auditing 13(1): 4360.

    • Search Google Scholar
    • Export Citation
  • Audrey, G. et al. (2004): Role of the Internal Audit Function in Corporate Governance: A Synthesis of the Extant Internal Auditing Literature and Directions for Future Research. Journal of Accounting Literature 23: 194244.

    • Search Google Scholar
    • Export Citation
  • Brody, R. G.Lowe, D. J. (2000): The New Role of the Internal Auditor: Implications for Internal Auditor Objectivity. International Journal of Auditing 4(2): 169176.

    • Search Google Scholar
    • Export Citation
  • BSE (2008): Corporate Governance Recommendations. http://www.ecgi.org/codes/documents/ cg_recommendations_bsu_mar2008_en.pdf, accessed 07/11/2016.

    • Search Google Scholar
    • Export Citation
  • Carcello, V.Hermanson, D. R.Raghunandan, K. (2005): Factors Associated with US Public Companies’ Investment in Internal Auditing. Accounting Horizons 19(2): 6984.

    • Search Google Scholar
    • Export Citation
  • Carey, P.Craswell, A.Simnett, R. (2000a): The Association between the External Audit Fee and External Auditors’ Reliance on the Work of Internal Audit. Paper presented at AAANZ Conference, Hamilton Island, Australia, July.

    • Search Google Scholar
    • Export Citation
  • Carey, P.Simnett, R.Tanewski, G. (2000b): Voluntary Demand for Internal and External Auditing by Family Businesses. Auditing: A Journal of Practice & Theory 19 (Suppl): 3751.

    • Search Google Scholar
    • Export Citation
  • Cohen, A.Sayag, G. (2010): The Effectiveness of Internal Auditing: An Empirical Examination of Its Determinants in Israeli Organisations. Australian Accounting Review 20(3): 296307.

    • Search Google Scholar
    • Export Citation
  • Cohen, J.Krishnamoorthy, G.Wright, A. (2004): The Corporate Governance Mosaic and Financial Reporting Quality. Journal of Accounting Literature 23: 87152.

    • Search Google Scholar
    • Export Citation
  • Collier, P.Gregory, A. (1996): Audit Committee Effectiveness and the Audit Fee. The European Accounting Review 5(2): 177198.

  • Collier, P.Zaman, M. (2005): Convergence in European Governance Codes: The Audit Committee Concept. Corporate Governance 13(6): 753768.

    • Search Google Scholar
    • Export Citation
  • Collier, P. A. (1996): Audit Committees in UK Quoted Companies: A Curious Phenomenon? Accounting and Business History 6(2): 121140.

  • COSO (2015): Leveraging COSO across the Three Lines of Defence. 1st ed. Altamonte Springs, Fl.: COSO.

  • Cristopher, J.Sarens, G.Leung, P. (2009): A Critical Analysis of the Independence of the Internal Audit Function: Evidence from Australia. Accounting, Auditing & Accountability Journal 22(2): 200220.

    • Search Google Scholar
    • Export Citation
  • Dobák, M. (2006): Corporate Governance in Central and Eastern Europe. Society and Economy 28: 2740.

  • Drent, D. (2002): The Duets for Increased Relevance: Internal Auditors Who Successfully Communicate and Balance Their Needs and Those of Their Clients can Increase Their Relevance to the Organisation. Internal Auditor 59(1): 4954.

    • Search Google Scholar
    • Export Citation
  • FEE (2003): Discussion Paper on the Financial Reporting and Auditing Aspects of Corporate Governance. Brussels: FEE.

  • Goodwin, J. (2003): The Relationship between the Audit Committee and the Internal Audit Function: Evidence from Australia and New Zealand. Internal Journal of Auditing 7(3): 263278.

    • Search Google Scholar
    • Export Citation
  • Goodwin-Stewart, J.Kent, P. (2006a): The Relation between External Audit Fees, Audit Committee Characteristics and Internal Audit. Accounting and Finance 46(3): 387404.

    • Search Google Scholar
    • Export Citation
  • Goodwin-Stewart, J.Kent, P. (2006b): The Use of Internal Audit by Australian Companies. Managerial Auditing Journal 21(1): 81101.

    • Search Google Scholar
    • Export Citation
  • Halimah, A.Othman, R.Kamaruzaman, J. (2009): The Effectiveness of Internal Audit in Malaysian Public Sector. Journal of Modern Accounting and Auditing 5(9): 5362.

    • Search Google Scholar
    • Export Citation
  • Holt, T. (2012): The Effects of Internal Audit Role and Reporting Relationships on Investor Perceptions of Disclosure Credibility. Managerial Auditing Journal 27(9): 878898.

    • Search Google Scholar
    • Export Citation
  • IFAC (2013): International Standard on Auditing 610 (Revised 2013). Using the Work of Internal Auditors. https://www.ifac.org/publications-resources/isa-610-revised-2013-using-work-internal- auditors, accessed 07/11/2016.

    • Search Google Scholar
    • Export Citation
  • IIA (2013): IIA Position Paper: The Three Lines of Defense in Effective Risk Management and Control. The Institute of Internal Auditors.

    • Search Google Scholar
    • Export Citation
  • IIA (2016): The International Standards for the Professional Practice of Internal Auditing. https:// na.theiia.org/standards-guidance/mandatory-guidance/pages/standards.aspx, accessed 07/11/ 2016.

    • Search Google Scholar
    • Export Citation
  • Ismael, H. (2014): Factors Affecting the Use of Internal Audit: Evidence from the UK. Paper presented at the BAFA Conference (14–16 April).

    • Search Google Scholar
    • Export Citation
  • Jensen, M.Meckling, W. (1976): Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics 3(4): 305360.

    • Search Google Scholar
    • Export Citation
  • Kalbers, L.Fogarty, T. (1993): Audit Committee Effectiveness: An Empirical Investigation of the Contribution of Power: Auditing: A Journal of Practice & Theory 12(1): 2449.

  • Knechel, R.Willekens, M. (2006): The Role of Risk Management and Governance in Determining Audit Demand. Journal of Business Finance & Accounting 33(9-10): 13441367.

    • Search Google Scholar
    • Export Citation
  • Leung, P.Cooper, B. J.Perera, L. (2011): Accountability Structures and Management Relationships of Internal Audit: An Australian Study. Managerial Auditing Journal 26(9): 794816.

    • Search Google Scholar
    • Export Citation
  • Mihályi, P. (2004): Growing Irrelevance of Corporate Governance. In: Dabrowski, M.Slay, B.Neneman, J. (eds): Beyond Transition. Development Perspectives and Dilemmas. Aldershot: Ashgate, pp. 203220.

    • Search Google Scholar
    • Export Citation
  • Mutchler, J. (2003): Independence and Objectivity: A Framework for Research Opportunities in Internal Auditing. In: Bailey, A. D.Gramling, A. A.Ramamoorti, S. (eds): Research Opportunities in Internal Auditing. Altamonte Springs, Fl.: The Institute of Internal Auditors Research Foundation, pp. 231268.

    • Search Google Scholar
    • Export Citation
  • Mutchler, J.Chang, S.Prawitt, D. (2001): Independence and Objectivity: A Framework for Internal Auditors. Altamonte Springs, Fl.: The Institute of Internal Auditors Research Foundation.

    • Search Google Scholar
    • Export Citation
  • Paape, L.Scheffe, J.Snoep, P. (2003): The Relationship between the Internal Audit Function and Corporate Governance in the EU – A Survey. International Journal of Auditing 7(3): 247262.

    • Search Google Scholar
    • Export Citation
  • Ramamoorti, S. (2003): Internal Auditing: History, Evolution, and Prospects. In: Bailey, A. D.Gramling, A. A.Ramamoorti, S. (eds): Research Opportunities in Internal Auditing. Altamonte Springs, Fl.: The Institute of Internal Auditors Research Foundation, pp. 123.

    • Search Google Scholar
    • Export Citation
  • Regoliosi, C.d’Eri, A. (2014): Good Corporate Governance and the Quality of Internal Auditing Departments in Italian Listed Firms. An Exploratory Investigation in Italian Listed Firms. Journal of Management Governance 18: 891920.

    • Search Google Scholar
    • Export Citation
  • RiskMetrics Group (2009): Study on Monitoring and Enforcement Practices in Corporate Governance in the Member States. Brussels: European Commission.

    • Search Google Scholar
    • Export Citation
  • Sarens, G.Abdolmohammadi, M. (2011): Monitoring Effects of the Internal Audit Function: Agency Theory versus Other Explanatory Variables. International Journal of Auditing 15(1): 120.

    • Search Google Scholar
    • Export Citation
  • Sarens, G.Abdolmohammadi, M.Lenz, R. (2012): Factors Associated with the Internal Audit Function’s Role in Corporate Governance. Journal of Applied Accounting Research 13(2): 191204.

    • Search Google Scholar
    • Export Citation
  • Sarens, G. – De Beelde, I. (2006a): Building a Research Model for Internal Auditing: Insights from Literature and Theory Specification Cases. International Journal of Accounting, Auditing and Performance 3(4): 452470.

    • Search Google Scholar
    • Export Citation
  • Sarens, G. – De Beelde, I. (2006b): Internal Auditors’ Perception about Their Role in Risk Management: Comparison between Belgian and US Companies. Managerial Auditing Journal 21(1): 6380.

    • Search Google Scholar
    • Export Citation
  • Selim, G.Woodward, S.Allegrini, M. (2009): Internal Auditing and Consulting Practice: A Comparison between UK/Ireland and Italy. International Journal of Auditing 13: 925.

    • Search Google Scholar
    • Export Citation
  • Spira, L. F.Page, M. (2003): Risk Management: The Reinvention of Internal Control and the Changing Role of Internal Audit. Accounting, Auditing & Accountability Journal 16(4): 640661.

    • Search Google Scholar
    • Export Citation
  • Stewart, J.Subramaniam, N. (2010): Internal Audit Independence and Objectivity: Emerging Research Opportunities. Managerial Auditing Journal 25(4): 328360.

    • Search Google Scholar
    • Export Citation
  • TOP 200 (2003): Dun & Bradstreet Hungary Ltd. Budapest: Ecostat.

  • TOP 200 (2012): Dun & Bradstreet Hungary Ltd. Budapest: Ecostat.

  • Turnbull Review Group (2005): Review of the Turnbull Guidance on Internal Control. Financial Reporting Council, June

  • Van Gansberghe, C. N. (2005): Internal Audit: Finding Its Place in Public Finance Management. Washington, DC: The World Bank.

The author instruction is available in PDF.
Please, download the file from HERE.
 
The Open Access statement together with the description of the Copyright and License Policy are available in PDF.
Please, download the file from HERE.

Editor-in-chief: Balázs SZENT-IVÁNYI

Co-Editors:

  • Péter MARTON (Corvinus University, Budapest)
  • István KÓNYA (Corvinus University, Budapest)
  • László SAJTOS (The University of Auckland)
  • Gábor VIRÁG (University of Toronto)

Associate Editors:

  • Tamás BOKOR (Corvinus University, Budapest)
  • Sándor BOZÓKI (Corvinus University Budapest)
  • Bronwyn HOWELL (Victoria University of Wellington)
  • Hintea CALIN (Babeş-Bolyai University)
  • Christian EWERHART (University of Zürich)
  • Clemens PUPPE (Karlsruhe Institute of Technology)
  • Zsolt DARVAS (Bruegel)
  • Szabina FODOR (Corvinus University Budapest)
  • Sándor GALLAI (Corvinus University Budapest)
  • László GULÁCSI (Óbuda University)
  • Dóra GYŐRFFY (Corvinus University Budapest)
  • György HAJNAL (Corvinus University Budapest)
  • Krisztina KOLOS (Corvinus University Budapest)
  • Alexandra KÖVES (Corvinus University Budapest)
  • Lacina LUBOR (Mendel University in Brno)
  • Péter MEDVEGYEV (Corvinus University Budapest)
  • Miroslava RAJČÁNIOVÁ (Slovak University of Agriculture)
  • Ariel MITEV (Corvinus University Budapest)
  • Éva PERPÉK (Corvinus University Budapest)
  • Petrus H. POTGIETER (University of South Africa)
  • Sergei IZMALKOV (MIT Economics)
  • Anita SZŰCS (Corvinus University Budapest)
  • László TRAUTMANN (Corvinus University Budapest)
  • Trenton G. SMITH (University of Otago)
  • György WALTER (Corvinus University Budapest)
  • Zoltán CSEDŐ (Corvinus University Budapest)
  • Zoltán LŐRINCZI (Ministry of Human Capacities)

Society and Economy
Institute: Corvinus University of Budapest
Address: Fővám tér 8. H-1093 Budapest, Hungary
Phone: (36 1) 482 5406
E-mail: balazs.szentivanyi@uni-corvinus.hu

Indexing and Abstracting Services:

  • DOAJ
  • International Bibliographies IBZ and IBR
  • International Political Science Abstracts
  • JSTOR
  • SCOPUS
  • RePEc
  • Referativnyi Zhurnal

 

2020  
Scimago
H-index
11
Scimago
Journal Rank
0,157
Scimago
Quartile Score
Business and International Management Q4
Economics, Econometrics and Finance (miscellaneous) Q4
Industrial Relations Q4
Public Administration Q4
Sociology and Political Science Q3
Strategy and Management Q4
Scopus
Cite Score
103/117=0,9
Scopus
Cite Score Rank
Business and International Management 305/399 (Q4)
General Economics, Econometrics and Finance 137/243 (Q3)
Industrial Relations 40/54 (Q3)
Public Administration 116/165 (Q3)
Sociology and Political Science 665/1269 (Q3)
Strategy and Management 351/440 (Q4)
Scopus
SNIP
0,171
Scopus
Cites
157
Scopus
Documents
24
Days from submission to acceptance 148
Days from acceptance to publication 50

 

2019  
Scimago
H-index
10
Scimago
Journal Rank
0,228
Scimago
Quartile Score
Business and International Management Q3
Economics, Econometrics and Finance (miscellaneous) Q3
Industrial Relations Q3
Public Administration Q3
Sociology and Political Science Q3
Strategy and Management Q3
Scopus
Cite Score
87/110=0,8
Scopus
Cite Score Rank
Business and International Management 286/394 (Q3)
General Economics, Econometrics and Finance 125/228 (Q3)
Industrial Relations 38/58 (Q3)
Public Administration 114/157 (Q3)
Sociology and Political Science 645/1243 (Q3)
Strategy and Management 330/427 (Q4)
Scopus
SNIP
0,308
Scopus
Cites
132
Scopus
Documents
22

 

Society and Economy
Publication Model Gold Open Access
Submission Fee none
Article Processing Charge 900 EUR/article
Regional discounts on country of the funding agency World Bank Lower-middle-income economies: 50%
World Bank Low-income economies: 100%
Further Discounts Sufficient number of full waiver available. Editorial Board / Advisory Board members: 50%
Corresponding authors, affiliated to an EISZ member institution subscribing to the journal package of Akadémiai Kiadó: 100%
Subscription Information Gold Open Access
Purchase per Title  

Society and Economy
Language English
Size B5
Year of
Foundation
1972
Publication
Programme
2021 Volume 43
Volumes
per Year
1
Issues
per Year
4
Founder Budapesti Corvinus Egyetem
Founder's
Address
H-1093 Budapest, Hungary Fővám tér 8.
Publisher Akadémiai Kiadó
Publisher's
Address
H-1117 Budapest, Hungary 1516 Budapest, PO Box 245.
Responsible
Publisher
Chief Executive Officer, Akadémiai Kiadó
ISSN 1588-9726 (Print)
ISSN 1588-970X (Online)