Determinants of internal audit efficiency

The Accounting Review, 2009

ABSTRACT: We develop a model of audit production based on Data Envelopment Analysis (DEA) using labor cost as input and hours spent on evidence-gathering activities that determine the level of assurance as output. Client characteristics are considered exogenous factors that affect audit production as a whole. We apply the model to a sample of U.S.-based engagements from an international accounting firm. Results indicate that a constrained DEA model using variable returns to scale is appropriate for modeling audit production. We find that audits are more efficient for clients that are larger, have a December year-end, and are highly automated. Audits are less efficient when the auditor relies on internal control, tax services are provided, and the client has subsidiaries. We also find that a well-specified regression-based production model can control for factors that influence auditor efficiency. Finally, we find that inefficiencies are impounded in fees for some industries and firm...

The study examined the effect of internal audit practices on allocative efficiencyof government organisations in Nigeria. The population of the study consist of 350 staff in the five surveyed government organizations in Nigeria. The study through the use of Monkey Survey, sampled 310 respondents from Central Bank of Nigeria (CBN), Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), Niger Delta Development Commission (NDDC) and Nigerian National Petroleum Corporation (NNPC) and validly used 310 respondents representing 89% response rate for data analysis. Risk assessment, Asset safeguard and Auditor's independence were used as the dimensions of internal audit practices in this study. The study used allocative efficiency as both dependent and measurable variable. The study used a questionnaire to elicit information from the respondents. The study applied descriptive and inferential statistical tools to analyze the data and test the hypotheses with the help of SPSS 22.0. The study found that risk assessment has a negative and significant effect on allocative efficiency of government organizations. This means that risk assessment as a veritable element for internal audit practices significantly affects allocative efficiency of government organisations even though negatively. Asset safeguard has a positive and insignificant effect on allocative efficiency of government organizations. Auditor independence has a positive and significant effect on allocative efficiency of government organizations. The study therefore recommends that government organizations should encourage auditor independence in order to boost allocative efficiency in public sector organizations.

2021

This study examines the impact of the Internal Audit Control System on Operational Efficiency, a study of Akwa Ibom State Transport Company. The study was a survey design, and the population comprised all the 34 administrative staff of the AKTC finance, administrative and internal audit departments. A sample size of 31 staff was selected for the three chosen departments of the company for the study, and the sampling technique used was a single stage. The data for the study was purely primary data, where information was collected from the staff of the company via a questionnaire. The data obtained were analysed using simple regression analysis. The study's findings revealed a significant relationship between internal audit control and increased revenue generation and net profit. The findings also revealed a statistically significant impact of the internal audit control system on operational efficiency. The relationship between the internal audit control system and further expansi...

EUROPEAN RESEARCH STUDIES JOURNAL, 2020

Purpose: Efficiency and performance measurements in the public sector represent a problematic area considering the nature of public administration's activities. The authors attempt to define the efficiency metrics for internal audit as exemplified by one of the European Union countries and its contribution in improving the performance of public entities and the efficiency of public spending. Design/Methodology/Approach: A mixed methodology combining the results of qualitative and quantitative research is used to empirically verify the hypotheses related to the research problem presented. Qualitative research is based on descriptive analysis, and the quantitative research will include the method of statistical information systemization, based on statistical source data analysis. Findings: Empirical research confirmed a positive impact of internal audit efficiency metrics on the completion of public service tasks at an operational level while no impact was recorded on the scale of completion for the areas at the strategic level of the Council of Ministers. Practical Implications: Managers in the public skateboard should decide to increase the performance budget and decide to link it to an internal audit. Originality/value: Internal audit should be more focused on examining the effectiveness of public administration and, to a lesser extent, only hardening the assessment of the decisionmaking process.

Computers & Operations Research, 2009

This paper develops a method based on data envelopment analysis (DEA) for efficiency assessments taking into account the effect of non-discretionary factors. A typology that classifies the non-discretionary factors into two groups is proposed: the factors that characterize the external conditions where the decision making units (DMUs) operate (external factors), and the factors that are internal to the production process but cannot be controlled by the decision makers (internal factors). This paper proposes an enhanced DEA model that accommodates non-discretionary inputs and outputs and treats them differently depending on their classification as internal or external to the production process. This generalized model integrates the previous approaches for dealing with non-discretionary variables described in the DEA literature. The model defines the efficient frontier based exclusively on the discretionary variables and internal non-discretionary factors, but the potential peers of each DMU are restricted to other units facing comparable external conditions (represented by the external nondiscretionary factors). The peer selection criteria implemented in the DEA model is informed by decision makers' opinion. The applicability of the model developed is illustrated with a real-world assessment of retailing stores.

BSEU, 2021

The objective of this paper is to describe the Data Envelopment Analysis technique (DEA) used to measure the relative efficiency of decision-making units (DMUs), description of the DEA models and processes, as well as analysis of the technique concerned. The paper shows that DEA plays an important role in measuring relative efficiency and works well even with a small sample of organizations. In accordance with the technique, efficiency and productivity are measured by computing the output to input ratio. The DEA method is used throughout the world by various researchers for evaluating efficiency of different organizations, such as banks, universities and hospitals in different countries.

2010

In this article, we introduce a user-written data envelopment analysis command for Stata. Data envelopment analysis is a linear programming method for assessing the efficiency and productivity of units called decision-making units. Over the last decades, data envelopment analysis has gained considerable attention as a managerial tool for measuring performance of organizations, and it has been used widely for assessing the efficiency of public and private sectors such as banks, airlines, hospitals, universities, defense firms, and manufacturers. The dea command in Stata will allow users to conduct the standard optimization procedure and extended managerial analysis. The dea command developed in this article selects the chosen variables from a Stata data file and constructs a linear programming model based on the selected dea options. Examples are given to illustrate how one could use the code to measure the efficiency of decision-making units.

Accounting, Organizations and Society, 1998

, and the anonymous reviewers of both the First Asia-Pacific Interdisciplinary Perspectives on Accounting Conference (Sydney, 1995), and A0.S. Further constructive comments and discussions are welcome My Doctoral studies on this material were supported by the Ph.D. program and Faculty of Graduate Studies, both of the

2007

European Journal of Operational Research, 2009

This paper provides a sketch of some of the major research thrusts in data envelopment analysis (DEA) over the three decades since the appearance of the seminal work of Charnes et al. (1978) [Charnes, A., Cooper, W.W., Rhodes, E.L., 1978. Measuring the efficiency of decision making units. European Journal of Operational Research 2, 429-444]. The focus herein is primarily on methodological developments, and in no manner does the paper address the many excellent applications that have appeared during that period. Specifically, attention is primarily paid to (1) the various models for measuring efficiency, (2) approaches to incorporating restrictions on multipliers, (3) considerations regarding the status of variables, and (4) modeling of data variation.