Journal Screenshot

International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

Internal Audit Effectiveness as a Mediating Mechanism between Chief Audit Executive Characteristics and Internal Control Quality

Yuvaraj Ganesan, Yamuna Yashwanthi, Anwar Allah Pitchay, Noha Mamdouh Aboueliz, Muhammad Shabir Shaharudin

http://dx.doi.org/10.6007/IJARAFMS/v15-i4/27122

Open access

Purpose - This study examines whether Chief Audit Executive characteristics, namely gender, knowledge, experience, and training, influence internal audit effectiveness and whether internal audit effectiveness affects internal control quality among publicly listed companies in Malaysia. In addition, the study investigates the mediating role of internal audit effectiveness in the relationship between Chief Audit Executive characteristics and internal control quality. Design/methodology/approach – This study adopts a quantitative research design using primary data collected through an online survey administered to publicly listed companies in Malaysia. The unit of analysis is at the organisational level, with a total of 272 usable responses obtained for analysis. Data are analysed using the Statistical Package for the Social Sciences and Smart Partial Least Squares. Findings – The findings indicate that Chief Audit Executive knowledge, experience, and training have a significant positive effect on internal audit effectiveness, while gender is not found to be a significant determinant. Internal audit effectiveness is shown to have a strong positive relationship with internal control quality. Furthermore, the results reveal that internal audit effectiveness significantly mediates the relationship between Chief Audit Executive knowledge and experience and internal control quality. Practical Implications- The findings provide useful insights for regulators, professional bodies, and corporate boards, including the Institute of Internal Auditors, Bursa Malaysia, and the Securities Commission, in developing policies, guidelines, and competency frameworks aimed at strengthening internal audit functions and enhancing internal control quality in publicly listed companies. Originality/value – This study contributes to the internal audit and corporate governance literature by providing empirical evidence on the mediating role of internal audit effectiveness in the relationship between Chief Audit Executive characteristics and internal control quality within an emerging market context.

Abdolmohammadi, M. J., & Boss, S. R. (2010). Factors associated with IT audits by the internal audit function. International Journal of Accounting Information Systems, 11(3), 140-151.
Abidin, N. H. Z. (2017). Factors influencing the implementation of risk-based auditing. Asian Review of Accounting.
ACFE. (2024). Association of Certified Fraud Examiners.
Adegboye, A., Ojeka, S., Alabi, O., Alo, U., & Aina, A. (2020). Audit committee characteristics and sustainability performance in Nigerian listed banks. Business: Theory and Practice, 21(2), 469-476.
Ahmad, H. (2015). Internal audit (IA) effectiveness: Resource-based and institutional perspectives. Australian Journal of Basic and Applied Sciences, 9(9), 95-104.
Alazzabi, W. Y. E., Mustafa, H., & Issa, M. (2020). Conceptualising the interaction among organisational factors towards internal control quality. Journal of Financial Crime.
Alazzabi, W. Y. E., Mustafa, H., & Karage, A. I. (2020). Risk management, top management support, internal audit activities and fraud mitigation. Journal of Financial Crime.
Algabry, L., Alhabshi, S. M., Soualhi, Y., & Alaeddin, O. (2020). Conceptual framework of internal Shar??ah audit effectiveness factors in Islamic banks. ISRA International Journal of Islamic Finance.
Alqudah, H. M., Amran, N. A., & Hassan, H. (2019). Factors affecting the internal auditors’ effectiveness in the Jordanian public sector. EuroMed Journal of Business.
Alshamry, H., Ganesan, Y., & Hashim, F. (2024). Audit Committee as a Corporate Governance Mechanism with the Firm Financial Performance in Saudi Arabi. INTERNATIONAL JOURNAL OF ACADEMIC RESEARCH IN BUSINESS AND SOCIAL SCIENCES, 14(11).
Alzeban, A. (2018). The association between internal audit department characteristics and IFRS compliance. Asian Review of Accounting.
Alzeban, A. (2020). The relationship between the audit committee, internal audit and firm performance. Journal of Applied Accounting Research.
Alzeban, A., & Gwilliam, D. (2014). Factors affecting the internal audit effectiveness: A survey of the Saudi public sector. Journal of International Accounting, Auditing and Taxation, 23(2), 74-86.
Asare, S. K., & Wright, A. M. (2012). Investors', auditors', and lenders' understanding of the message conveyed by the standard audit report on the financial statements. Accounting Horizons, 26(2), 193-217.
Barney, J. (1991). Firm resources and sustained competitive advantage. Journal of management, 17(1), 99-120.
Barratt, M., & Oke, A. (2007). Antecedents of supply chain visibility in retail supply chains: a resource-based theory perspective. Journal of operations management, 25(6), 1217-1233.
Betti, N., & Sarens, G. (2020). Understanding the internal audit function in a digitalised business environment. Journal of Accounting & Organizational Change.
Bills, K. L., Huang, H. W., Lin, Y.-H., & Wood, D. A. (2020). Chief Audit Executive Turnover: Market Reactions, Financial Reporting Quality, and Audit Risk Assessment. Financial Reporting Quality, and Audit Risk Assessment (August 3, 2020).
Breger, D., Edmonds, M., & Ortegren, M. (2020). Internal audit standard compliance, potentially competing duties, and external auditors' reliance decision. Journal of Corporate Accounting & Finance, 31(1), 112-124.
Carlisle, M., & Jenkins, J. G. (2019). The effect of communication mode and client competence information on evidence persuasiveness. Available at SSRN 3105452.
Chalmers, K., Hay, D., & Khlif, H. (2019). Internal control in accounting research: A review. Journal of Accounting Literature, 42, 80-103.
Chang, Y.-T., Chen, H., Cheng, R. K., & Chi, W. (2019). The impact of internal audit attributes on the effectiveness of internal control over operations and compliance. Journal of Contemporary Accounting & Economics, 15(1), 1-19.
Cohen, S. (1988). Perceived stress in a probability sample of the United States.
COSO. (2017). Enterprise Risk Management – Integrated Framework.
COSO. (2023). ACHIEVING EFFECTIVE INTERNAL CONTROL OVER SUSTAINABILITY REPORTING (ICSR): Building Trust and Confidence through the COSO Internal Control—Integrated Framework. Retrieved from
Dal Mas, L. O., & Barac, K. (2018). The influence of the chief audit executive’s leadership style on factors related to internal audit effectiveness. Managerial Auditing Journal.
DeSimone, S., D’Onza, G., & Sarens, G. (2020). Correlates of internal audit function involvement in sustainability audits. Journal of Management and Governance, 1-31.
Dong, J. Q., Karhade, P. P., Rai, A., & Xu, S. X. (2021). How firms make information technology investment decisions: Toward a behavioral agency theory. Journal of Management Information Systems, 38(1), 29-58.
Edge. (2020). More small- and mid-cap companies aim to have 30% of board comprising women directors.
Elias, R. Z. (2004). The impact of corporate ethical values on perceptions of earnings management. Managerial Auditing Journal.
Endaya, K. A., & Hanefah, M. M. (2013). Internal audit effectiveness: An approach proposition to develop the theoretical framework. Research Journal of Finance and Accounting, 4(10), 92-102.
Endaya, K. A., & Hanefah, M. M. (2016). Internal auditor characteristics, internal audit effectiveness, and moderating effect of senior management. Journal of Economic and Administrative Sciences.
Erasmus, L., & Coetzee, P. (2018). Drivers of stakeholders’ view of internal audit effectiveness. Managerial Auditing Journal.
Fadzil, F. H., Haron, H., & Jantan, M. (2005). Internal auditing practices and internal control system. Managerial Auditing Journal.
Farkas, M., Hirsch, R., & Kokina, J. (2019). Internal auditor communications: An experimental investigation of managerial perceptions. Managerial Auditing Journal.
Feng. (2020). Individual auditor characteristics and audit quality: evidence from nonprofits in the US. Journal of Public Budgeting, Accounting & Financial Management.
Feng, M., Li, C., & McVay, S. (2009). Internal control and management guidance. Journal of accounting and economics, 48(2-3), 190-209.
Fine, C., Sojo, V., & Lawford?Smith, H. (2020). Why does workplace gender diversity matter? Justice, organizational benefits, and policy. Social Issues and Policy Review, 14(1), 36-72.
Gal, G., & Akisik, O. (2020). The impact of internal control, external assurance, and integrated reports on market value. Corporate Social Responsibility and Environmental Management, 27(3), 1227-1240.
Ganesan, Y., Shaharudin, M. S., Sadaa, A. M., Narayanan, R., Sharma, R., & Haron, H. (2024). The effect of audit characteristics on financial reporting quality and the mediating role of audit quality: Evidence from Malaysian public companies. International Journal of Business and Society, 25(1). doi:10.33736/ijbs.6920.2024
Garven, S., & Scarlata, A. (2020). An examination of factors associated with investment in internal auditing technology. Managerial Auditing Journal.
Ghaleb, B. A. A., Kamardin, H., & Al-Qadasi, A. A. (2020). Internal audit function and real earnings management practices in an emerging market. Meditari Accountancy Research.
Green, C. P., & Homroy, S. (2018). Female directors, board committees and firm performance. European Economic Review, 102, 19-38.
Haeridistia, N., & Fadjarenie, A. (2019). The Effect Of Independence, Professional Ethics & Auditor Experience On Audit Quality. International Journal of Scientific & Technology Research Vol, 8.
Hair, J., Black, W., Babin, B., & Anderson, R. (2010). Advanced diagnostics for multiple regression: A supplement to multivariate data analysis. Advanced Diagnostics for Multiple Regression: A Supplement to Multivariate Data Analysis.
Hair Jr, J. F., Sarstedt, M., Ringle, C. M., & Gudergan, S. P. (2017). Advanced issues in partial least squares structural equation modeling: saGe publications.
Haron, H., Chambers, A., Ramsi, R., & Ismail, I. (2004). The reliance of external auditors on internal auditors. Managerial Auditing Journal.
Hazami-Ammar, S. (2019). Internal auditors’ perceptions of the function’s ability to investigate fraud. Journal of Applied Accounting Research.
Henseler, J., Ringle, C. M., & Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the academy of marketing science, 43(1), 115-135.
Hwang, S. S., Shin, T., & Han, I. (2004). CRAS?CBR: Internal control risk assessment system using case?based reasoning. Expert Systems, 21(1), 22-33.
IIA. (2013). The Institute of Internal Auditors.
IIA. (2017). The Institute of Internal Auditors.
IIA. (2024). Global Internal Audit Standards. The Institute of Internal Auditors. Retrieved from
Ittonen, K., & Peni, E. (2012). Auditor's gender and audit fees. International Journal of Auditing, 16(1), 1-18.
Khlif, H., & Achek, I. (2017). Gender in accounting research: a review. Managerial Auditing Journal.
Khlif, H., & Samaha, K. (2016). Audit committee activity and internal control quality in Egypt. Managerial Auditing Journal.
Khlif, H., Samaha, K., & Soliman, M. (2019). Internal control quality, voluntary disclosure, and cost of equity capital: The case of an unregulated market. International Journal of Auditing, 23(1), 144-160.
Kidron, A., Ofek, Y., & Cohen, H. (2016). New perspective on the black box of internal auditing and organisational change. Managerial Auditing Journal.
Kline, R. B. (2011). Convergence of structural equation modeling and multilevel modeling. In: na.
Kock, N., & Lynn, G. (2012). Lateral collinearity and misleading results in variance-based SEM: An illustration and recommendations. Journal of the Association for information Systems, 13(7).
Krichene, A., & Baklouti, E. (2020). Internal audit quality: perceptions of Tunisian internal auditors an explanatory research. Journal of Financial Reporting and Accounting.
Krishnasamy, V., Ganesan, Y., & Shaharudin, M. S. (2024). Organizations Involvements and Risk Management Influence on Organization Carbon Accounting: Moderated by Internal Audit Functions. Paper presented at the International Scientific Conference Management and Engineering.
Lee, H. S., Nagy, A. L., & Zimmerman, A. B. (2019). Audit partner assignments and audit quality in the United States. The accounting review, 94(2), 297-323.
Lenz, R., Sarens, G., & Hoos, F. (2017). Internal audit effectiveness: multiple case study research involving chief audit executives and senior management. EDPACS, 55(1), 1-17.
Mazza, T., & Azzali, S. (2018). Information technology controls quality and audit fees: Evidence from Italy. Journal of Accounting, Auditing & Finance, 33(1), 123-146.
McNally, M.-A., Cerbone, D., & Maroun, W. (2017). Exploring the challenges of preparing an integrated report. Meditari Accountancy Research.
MICG. (2021). Malaysian Institute of Corporate Governance.
Mihret, D. G., James, K., & Mula, J. M. (2010). Antecedents and organisational performance implications of internal audit effectiveness. Pacific Accounting Review.
Mohamed, Z., Mat Zain, M., Subramaniam, N., & Wan Yusoff, W. F. (2012). Internal audit attributes and external audit's reliance on internal audit: Implications for audit fees. International Journal of Auditing, 16(3), 268-285.
Murugason, S. S., Ganesan, Y., & Shaharudin, M. S. (2023). The Role of Corporate Governance on Firm Performance of Public Listed Companies in Malaysia. International Journal of Advanced Research in Economics and Finance, 5(1), 287-302.
Nekhili, M., Gull, A. A., Chtioui, T., & Radhouane, I. (2020). Gender?diverse boards and audit fees: What difference does gender quota legislation make? Journal of Business Finance & Accounting, 47(1-2), 52-99.
NST. (2021). Malaysia's top 100 PLCs have 25.8 per cent women on their board of directors.
Orazalin, N., & Baydauletov, M. (2020). Corporate social responsibility strategy and corporate environmental and social performance: The moderating role of board gender diversity. Corporate Social Responsibility and Environmental Management, 27(4), 1664-1676.
Oussii, A. A., & Klibi, M. F. (2019). Does the chief audit executive gender matter to internal audit effectiveness? Evidence from Tunisia. African Journal of Economic and Management Studies.
Oussii, A. A., & Taktak, N. B. (2018). The impact of internal audit function characteristics on internal control quality. Managerial Auditing Journal.
Pickett, S. (2000). Developing internal audit competencies. Managerial Auditing Journal.
Preacher, K. J., & Hayes, A. F. (2008). Asymptotic and resampling strategies for assessing and comparing indirect effects in multiple mediator models. Behavior research methods, 40(3), 879-891.
Putra, G. S. A., & Dwirandra, A. A. N. B. (2019). The effect of auditor experience, type of personality and fraud auditing training on auditors ability in fraud detecting with professional skepticism as a mediation variable. International research journal of management, IT and social sciences, 6(2), 31-43.
Putri, A. L., & Nengzih, N. (2021). The Effect of Competence, Work Experience, and Internal Control Auditor's on Audit Quality (Case Study on Internal Auditors of Pt Bank Rakyat Indonesia (Bri) Tbk). Saudi J Econ Fin, 5(4), 133-140.
PWC. (2020). Price water house Coopers.
Reheul, A.-M., Van Caneghem, T., Van den Bogaerd, M., & Verbruggen, S. (2017). Auditor gender, experience and reporting in nonprofit organizations. Managerial Auditing Journal.
Roussy, M., Barbe, O., & Raimbault, S. (2020). Internal audit: from effectiveness to organizational significance. Managerial Auditing Journal.
Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. Academy of management Journal, 40(3), 534-559.
Salehi, M., Shiri, M. M., & Hossini, S. Z. (2019). The relationship between managerial ability, earnings management and internal control quality on audit fees in Iran. International Journal of Productivity and Performance Management.
See, J. K. P., Pitchay, A. A., Ganesan, Y., Haron, H., & Hendayani, R. (2020). The effect of audit committee characteristics on audit quality: the moderating role of internal audit function. Journal of Governance and Integrity, 3(2).
Sekaran, U., & Bougie, R. (2016). Research methods for business: A skill building approach: John Wiley & Sons.
Sharp, D. R. (2019). External Auditor Attributes applied to Internal Auditor Attributes and their Correlation to Internal Control Design: A Quantitative Study. Northcentral University,
Shu, W., Chen, Y., & Lin, B. (2018). Does corporate integrity improve the quality of internal control? China journal of accounting research, 11(4), 407-427.
Singh, K. S. D., Ravindran, S., Ganesan, Y., Abbasi, G. A., & Haron, H. (2021). Antecedents and internal audit quality implications of internal audit effectiveness. International Journal of Business Science & Applied Management (IJBSAM), 16(2), 1-21.
Siriwardane, H. P., Kin Hoi Hu, B., & Low, K. Y. (2014). Skills, knowledge, and attitudes important for present?day auditors. International Journal of Auditing, 18(3), 193-205.
Soh, D. S., & Martinov?Bennie, N. (2011). The internal audit function: Perceptions of internal audit roles, effectiveness and evaluation. Managerial Auditing Journal.
Steinbart, P. J., Raschke, R. L., Gal, G., & Dilla, W. N. (2013). Information security professionals' perceptions about the relationship between the information security and internal audit functions. Journal of Information Systems, 27(2), 65-86.
Sulistyawati, A. I., Nurfitriana, A., & Janie, D. N. A. (2020). Auditors’ perception of the effectiveness level of the red flags method in detecting frauds. Paper presented at the Facing Global Digital Revolution: Proceedings of the 1st International Conference on Economics, Management, and Accounting (BES 2019), July 10, 2019, Semarang, Indonesia.
Sunyoto, Y. (2020). Auditor's experience, professional commitment, and knowledge on financial audit performance in Indonesia.
Tang, F., Norman, C. S., & Vendrzyk, V. P. (2017). Exploring perceptions of data analytics in the internal audit function. Behaviour & Information Technology, 36(11), 1125-1136.
Thiruvadi, S., & Huang, H. W. (2011). Audit committee gender differences and earnings management. Gender in Management: An International Journal.
Tušek, B., & Halar, P. (2020). The New and Emerging Roles of Chief Audit Executives in the Era of Disruptive Changes. Paper presented at the Proceedings of the 8th International OFEL Conference on Governance, Management and Entrepreneurship:“From Corporations to Social Entrepreneurs: Exploring the Different Faces of Social Innovation”.
Ud Din, N., Cheng, X., Ahmad, B., Sheikh, M. F., Adedigba, O. G., Zhao, Y., & Nazneen, S. (2020). Gender diversity in the audit committee and the efficiency of internal control and financial reporting quality. Economic Research-Ekonomska Istraživanja, 1-20.
Van Borm, S., Fu, Q., Winand, R., Vanneste, K., Hakhverdyan, M., Hoper, D., & Vandenbussche, F. (2020). Evaluation of a commercial exogenous internal process control for diagnostic RNA virus metagenomics from different animal clinical samples. J Virol Methods, 283, 113916. doi:10.1016/j.jviromet.2020.113916
van Kuijck, B., & Paresi, V. (2020). Personality of internal auditors; an exploratory study in The Netherlands. Maandblad Voor Accountancy en Bedrijfseconomie, 94, 113.
Vitolla, F., Raimo, N., & Rubino, M. (2020). Board characteristics and integrated reporting quality: an agency theory perspective. Corporate Social Responsibility and Environmental Management, 27(2), 1152-1163.
Wali, S., & Masmoudi, S. M. (2020). Internal control and real earnings management in the French context. Journal of Financial Reporting and Accounting.
Zahmatkesh, S., & Rezazadeh, J. (2017). The effect of auditor features on audit quality. Tékhne, 15(2), 79-87.
Zhou, H., Chen, H., & Cheng, Z. (2016). Internal control, corporate life cycle, and firm performance. In The Political Economy of Chinese Finance: Emerald Group Publishing Limited.

Ganesan, Y., Yashwanthi, Y., Pitchay, A. A., Aboueliz, N. M., & Shaharudin, M. S. (2025). Internal Audit Effectiveness as a Mediating Mechanism between Chief Audit Executive Characteristics and Internal Control Quality. International Journal of Academic Research in Accounting, Finance and Management Sciences, 15(4), 516-540.