Title: Financial management performance of public sector: quality of internal auditor

Authors: Takiah Mohd Iskandar; Yati Md Lasa; Norul Syuhada Abu Hassan

Addresses: School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia ' The National Audit Department, 50300 Kuala Lumpur, Malaysia ' School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia

Abstract: This study examines the relationship between internal audit functions and financial management performance in the public sector in Malaysia. The internal auditor is entrusted with a monitoring responsibility to ensure the integrity of the management of public funds. The need for effective monitoring by an internal auditor is increasing as a result of the Auditor General Report concerning weaknesses in the financial management of the public sector. The present study conducts a survey on 80 internal audit units of government agencies and organisations. Financial management performance is measured using the Financial Management Accountability Index issued by the National Audit Department. The results show that the effectiveness of internal audits in enhancing the financial management of public sector relates significantly to the competency of internal auditors, the size of internal audit units, and cooperation between the internal auditors and audit committees. The findings have policy implications concerning the staffing and training programmes of internal audit units that will help improve financial management performance in the public sector.

Keywords: internal audit; financial management performance; public sector finance; accountability; competency; independence; audit quality; auditing; Malaysia; audit committees.

DOI: 10.1504/IJAAPE.2014.064233

International Journal of Accounting, Auditing and Performance Evaluation, 2014 Vol.10 No.3, pp.229 - 254

Received: 06 Jun 2013
Accepted: 03 Dec 2013
Published online: 28 Aug 2014 *

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