Examining the critical factors of internal audit effectiveness from internal auditors' perspective: Moderating role of extrinsic rewards

Hamza Alqudah; Noor Afza Amran; Haslinda Hassan; Abdalwali Lutfi; Noha Alessa; Mahmaod Alrawad; Mohammed Amin Almaiah

doi:10.1016/j.heliyon.2023.e20497

Examining the critical factors of internal audit effectiveness from internal auditors' perspective: Moderating role of extrinsic rewards

Heliyon. 2023 Sep 30;9(10):e20497. doi: 10.1016/j.heliyon.2023.e20497. eCollection 2023 Oct.

Authors

Hamza Alqudah¹, Noor Afza Amran², Haslinda Hassan², Abdalwali Lutfi³, Noha Alessa⁴, Mahmaod Alrawad⁵, Mohammed Amin Almaiah^{6

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Affiliations

¹ Accounting Department, Faculty of Administrative and Financial Sciences, Irbid National University, Irbid, 2600, Jordan.
² Tunku Puteri Intan Safinaz School of Accountancy (TISSA), University Utara Malaysia (UUM), Sintok, Kedah, 06010, Malaysia.
³ Department of Accounting, College of Business, King Faisal University, Al-Ahsa, 31982, Saudi Arabia.
⁴ Department of Accounting, College of Business and Administration, Princess Nourah bint Abdulrahman University, P.O. Box 84428, Riyadh, 11671, Saudi Arabia.
⁵ College of Business Administration and Economics, Al-Hussein Bin Talal University, Ma'an, 71111, Jordan.
⁶ Department of Computer Science, Aqaba University of Technology, Aqaba, Jordan.
⁷ King Abdullah the II IT School, The University of Jordan, Amman, 11942, Jordan.
⁸ Applied Science Research Center, Applied Science Private University, Amman 11931, Jordan.

Abstract

An effective internal auditor can support an organization in achieving its goals and protect its assets and funds. However, to be effective, the internal auditors need to be empowered with relevant resources. This study aims at probing the influence of the empowerments (management support, external auditors' collaboration, independence, size of internal audit units, and extrinsic rewards) on the internal auditors' effectiveness, and to examin whether extrinsic rewards moderate the association between respective empowerments and the effectiveness of Jordanian public sector internal auditors'. The current work relied on 117 surveys collected from Jordan's internal audit and financial managers in the public sectors. According to the Resource-Based View (RBV), the findings show that management support, external auditors cooperation, independence, and extrinsic rewards all have a significant influence on the effectiveness of internal auditor. The of the Internal Audit Department (IAD) size was discovered to be insignificant. Also, the results have revealed partial support for the influence of the extrinsic reward as a moderator. Because of the prominence of the public sector in the Jordanian market, this current research expands on the idea of enabling internal auditor (IA) to accomplish their assigned objectives. The findings might help authorities develop new norms and legislation for the internal audit profession. These empowering characteristics may also improve internal auditors' capacity to execute their duty in saving public monies and limiting corrupt practices inside public sector organizations.

Keywords: Empowerments; Extrinsic rewards; Internal auditors' effectiveness; Jordan; Public sector.