Effectiveness of Internal Audit functions under the framework of International Standards of Internal Auditing in public sector universities of Pakistan.

Abstract

This paper provides empirical evidence that complying with the International Standards of Internal Auditing (ISIA) is helpful for Effectiveness of Internal Audit (EIA) in public sector universities of Pakistan having Audit Committee (AC) as moderating variable. Research site for this study is 50 public sector universities of our interest across Pakistan wherein the mandatory function of internal audit function exists. Questionnaire is adapted in the light of existing literature on a 5-point likert scale. Data is collected from 150 personnel of finance/audit departments and members of statutory bodies. AMOS is used for testing f instrument’ reliability and validity. Data was analyzed for fulfillment of assumptions of regression. The regression results indicates significant positive association between ISIA and EIA. The overall model found significant with F = 66.370 having R² =0.475, p<0.001. This implies that those public sector institutes where the compliance level of international standards is higher have more dynamic role of internal audit. Moderating analysis shows that there is significant moderating effect of AC between the relationship of ISIA and EIA. Findings are useful in strengthening the internal audit in public sector of Pakistan. Policy makers are recommended for adoption of international standards of internal auditing alongwith the establishment of Audit Committee (AC) as a supervisory body which may lead to enhanced effectiveness of internal audit (EIA) function in public sector universities of Pakistan. However, results cannot be generalized for corporate sector. Future studies may be conducted in the private sector perspective for more insight.