Proficiency of Internal Auditors and Effectiveness of Public Sector Audit in Malaysian Public Organizations

Abstract

Public sector auditing is important, albeit not the most exciting component of government. It is presumed that internal auditors are accountable in carrying out an audit to guarantee compliance to the laws and regulations, in revealing unwarranted components that may lead to ineffective and uneconomical procedures, and in voicing out a judgment on the fairness and truth value of the financial statements. Besides, they are also accountable to make sure that the records are prepared in accordance to the commonly accepted accounting and auditing standards. However, to date, it is still questionable whether this audit is efficient and effective due to the increasing trend in the reported manipulations and frauds in government departments. Moreover, it was revealed that there were cases of auditors who were fined and prohibited from auditing because of falsifying audit report and for non-compliance with audit procedures. Hence, focusing mainly on the public sector, this paper studies the impacts of internal auditors’ proficiency on the efficacy of internal audit. The data were acquired from 203 internal auditors from Malaysian public sector organizations. In the process of collecting the information, self-administered questionnaires were distributed. The method used as the major statistical techniques was the partial least squares structural equation modelling (PLS-SEM) technique. It can be concluded that proficiency promotes the efficacy of public sector audit.