THE SOUTHERN AFRICAN JOURNAL OF ACCOUNTABILITY AND AUDITING RESEARCH VOLUME 15: 2013 CONTENTS Introduction: Internal auditing: how South Africa compares Views on the applicability of the internal audit standards and competencies for internal auditors: an African perspective Are the knowledge areas covered by dedicated internal auditing programmes currently offered by South African public universities meeting expectations? Professionalism apparent from South African internal audit functions' use of the Standards The adequacy, use and compliance with internal auditing standards – South African perceptions in comparison with other specific regions Internal audit competencies: skills requirements for chief audit executives in South Africa Internal audit competencies: skills requirements for internal audit staff in South Africa Internal audit competencies: skills requirements for internal audit management in South Africa [ BACK TO THE TOP ] ABSTRACTS Introduction: Internal auditing: how South Africa compares In this edition all the articles use (with IIA SA’s permission) the IIARF’s CBOK research database as a secondary data source, in a comparative study intended to determine the position of internal auditing in South Africa relative to the internal audit functions elsewhere in the world, with regard to competencies of internal auditors. The first article in this edition presents an African view of the application of the International Standards for the Practice of Internal Auditing (Standards), and of the core competencies required by internal auditors. These core competencies include specific knowledge areas, technical skills, and behavioural skills relevant to internal auditing. This article also introduces the remaining articles in this edition. The other articles report on the knowledge requirements applicable to internal auditing, the levels of professionalism required of internal auditors and the degree of compliance with the Standards currently being achieved. In addition, the competencies required of Chief Audit Executives (CAEs), internal audit staff and internal audit management in order to perform at an acceptable level, are also discussed. The articles can help internal auditors in South Africa improve their competencies by addressing the identified shortcomings, or to update their knowledge levels to better align them with international best practices. Furthermore, these articles can assist academics in their development of relevant curricula to stay abreast of international best practices, while also considering the specific demands of the South African business and legislative environments. Lastly, the articles can assist the Institute of Internal Auditors in South Africa (IIA(SA)) to provide appropriate assistance to their members through the various continuous professional development programs they offer. [ BACK TO THE TOP ] Views on the applicability of the internal audit standards and competencies for internal auditors: an African perspective (B Steyn, K Barac, KN Motubatse, K Plant) Through its Research Foundation, the Institute of Internal Auditors has engaged in various studies to develop a common body of knowledge for internal auditors. These results were reported on from a global perspective; however, local context also has an influence, and there are country-specific forces that influence the application of the International Standards for the Professional Practice of Internal Auditing and the core competencies needed by internal auditors. Views expressed by internal auditing stakeholders from different countries on the application of the Standards and core competencies – including knowledge areas, tools and techniques, technical skills, and behavioural aspects – therefore exhibit distinctive characteristics depending on the country-specific context. This article presents an overview that highlights the African perspective and provides an introduction to and overview of the articles that follow in this special edition of the Southern African Journal of Accountability that use data extracted from the CBOK database to contrast the situation of internal audit in South Africa and the rest of Africa with that of other regions internationally. This article reports on the performance of a comparative analysis of the views of internal auditors on core competencies and the application of the Standards as presented in the Institute of Internal Auditors Research Foundation’s 2010 CBOK study’ response database. Being the first study that compares the views of internal audit stakeholders from an African perspective, it adds value by recognising that Africa consists of countries that are still developing, and highlights the regional similarities and differences of views held by internal auditors in South Africa, Ethiopia and other countries in Africa to those of selected developed countries, to show an African perspective on and appreciation of internal audit. [ BACK TO THE TOP ] Are the knowledge areas covered by dedicated internal auditing programmes currently offered by South African public universities meeting expectations? (K Barac, KN Motubatse, LJ Erasmus, JM van Staden) The role of internal auditors has changed especially dramatically over the last 20 years, with resultant challenges to their formally acquired competencies. In response, the internal auditing profession regularly updates its competency framework and its global internal audit curriculum to reflect these developments and the changing expectations of internal audit’s stakeholders, including those relating to the required knowledge areas. Very little research has been done on internal audit education in South Africa, and no studies have focused on identifying and understanding the knowledge areas being covered in higher education institutions. This article explores the latter by identifying the knowledge areas currently being covered by dedicated internal auditing programmes at South African universities, determining whether the expectations of global internal audit stakeholders regarding internal audit knowledge requirements has similarities with the expectations of their South African counterparts, and establishing whether they are being met by formal internal audit education programmes offered by South Africa’s publicly funded higher education institutions. A content analysis of knowledge areas covered by these South African universities’ courses was performed. A similar analysis was performed on the secondary data contained in the 2010 CBOK survey, in order to determine stakeholders’ knowledge requirement expectations. A comparative analysis was then carried out using the university programme content analysis and the secondary data’s indications of stakeholders’ expectations. The study found that the South African programmes cover nearly all the knowledge areas of the profession’s competency framework and globally recognised internal audit curriculum, which generally correlates with the expectations of internal audit’s stakeholders internationally and in South Africa. It was further revealed that South African internal audit stakeholders’ expectations and rankings of the importance of the official knowledge areas do not differ significantly from those held by stakeholders from the rest of Africa, and that stakeholders in Australia and North America display similar tendencies, also without statistically significant differences. [ BACK TO THE TOP ] Professionalism apparent from South African internal audit functions' use of the Standards (JM van Staden, K Barac, LJ Erasmus, KN Motubatse ) When stakeholders perceive that members of a profession do not live up to their professional obligations, the profession loses prestige. Professions use various measures, including professional standards, disciplinary processes and dedicated quality assurance standards to remain relevant to their clients and to the greater business community. The internal audit profession often expresses a desire to improve its standing as a profession. This paper asserts that members’ compliance with professional standards, including those on quality assurance, impacts on the internal audit profession’s standing. Firstly, this paper provides a theoretical overview of the link between professional standards and professionalisation, and secondly, describes aspects of the current use of professional standards by South African internal audit functions. The data used was collected by the Institute of Internal Auditors Research Foundation as part of its 2010 Common Body of Knowledge study. A large percentage of South African chief audit executives responded, reporting that their internal audit functions did not comply fully with professional standards, while of those who did report full compliance, only a minority reported having implemented a quality assurance and improvement programme, and only a small number reported having had external quality assurance reviews. This paper contributes to corporate governance literature in a developing country setting and it provides insights into possible reasons why the internal audit profession’s quest for professionalisation remains a challenge. [ BACK TO THE TOP ] The adequacy, use and compliance with internal auditing standards – South African perceptions in comparison with other specific regions (LJ Erasmus, B Steyn, H Fourie, GP Coetzee) This article focusses on determining the adequacy of the International Standards for the Professional Practice of Internal Auditing (Standards) for use in South Africa, as well as examining how local entities comply with the Standards as compared to those in other specific regions, from both emerging economies and developed economies. Data used in this article’s analysis, interpretation, and comparisons comes from the USA-based Institute of Internal Auditors Research Foundation’s Common Body of Knowledge questionnaire respondents database. Findings indicated that the Standards provide adequate guidance to internal auditors, with South African respondents providing the highest rating. South African respondents also indicated that their organisations have the highest rate of compliance with the Standards, compared to those of other specific regions. Reasons for and theories explaining the non-compliance with the Standards are discussed. The findings of the study can be valuable to internal auditors in other emerging economies (as they shed light on possible reasons for non-compliance with the Standards), as well as for internal audit researchers as a basis for further research. [ BACK TO THE TOP ] Internal audit competencies: skills requirements for chief audit executives in South Africa (GP Coetzee, H Fourie, K Plant, K Barac) The role that internal auditing plays within organisations is changing and the need for competent internal auditors who are able to address this change is also increasing. In South Africa internal auditing is recognised as a ‘scarce skill’ profession. Prior research addressed competencies in various disciplines, general competencies for internal auditors, and the role and function of chief audit executives, but little research has been done on the level of importance of the competencies requirements for the head of the internal audit function. This study aims to expand this knowledge area first by identifying the levels of importance of various competencies as presented in formal professional guidance. Thereafter, these levels are compared with the perceptions of South African and of global internal audit leaders of the importance of these required levels of competencies for chief audit executives. The article concludes that the terminology used in the various guidance documents of the IIA, and in studies performed by the Institute of Internal Auditors are inconsistent and therefore unclear and should be standardised. The majority of internal audit leaders do not have the same perception of the relative importance of the competencies for chief audit executives as those prescribed by the professional guidance. Furthermore, quality-related issues are not addressed effectively in the guidance which reveals significant differences in the levels of importance from those held by the various internal audit leaders. Other areas where significant differences exist are soft skills, areas focussing on the performance of the audit engagement, as well as operational and management research. [ BACK TO THE TOP ] Internal audit competencies: skills requirements for internal audit staff in South Africa (K Plant, GP Coetzee, H Fourie, B Steyn) The need for competent internal audit staff in South Africa is increasing significantly. Skills development initiatives are high on the agenda of the internal audit profession globally. Prior research has addressed competencies in various professional disciplines, as well as general competencies for internal auditors, but little research has been done to determine the perceived levels of importance of the competency requirements specifically for internal audit staff. This study aims to expand this knowledge area, first by identifying the levels of importance accorded to the various competencies, as presented in formal professional guidance. Thereafter, these required levels of competencies for internal audit staff are compared with the perceived levels of importance ascribed to them by South African and global internal audit leaders. The study found that there are inconsistencies in the categorisation of competencies and skills in the officially published internal audit guidance. Despite this, the views of South African leaders do not differ significantly from their global counterparts, although it appears that the overall level of perceived importance held by those in internal audit practice is higher than that in the published internal audit guidance. It is recommended that the IIA standardise, align and revise its guidance on required competencies and skills. This article should be read in conjunction with the following two articles in this special edition: Internal audit competencies: skills requirements for internal audit management in South Africa, by Fourie et al. Internal audit competencies: skills requirements for chief audit executives in South Africa, by Coetzee et al. [ BACK TO THE TOP ] Internal audit competencies: skills requirements for internal audit management in South Africa (H Fourie, K Plant, GP Coetzee, JM van Staden) Internal auditing is playing an increasingly important role within organisations. The growing demand for internal auditors, as business and corporate governance partners to organisational management, places a larger burden on internal audit managers in respect of the competence and skill requirements they need in order to meet their increasingly diverse and divergent responsibilities. In South Africa, internal auditing is regarded as a scarce skill profession. Published research addresses competencies in various disciplines and professions, including the general competencies required by internal auditors, and the role and function of internal audit managers. However, limited information is available with respect to the relative importance of specific competencies and skills required by internal audit managers. The purpose of this article is to broaden this knowledge area firstly, by identifying the relative importance of various competencies included in IIA guidance pronouncements as being mandatory for internal audit managers. Then, secondly, these ranked IIA competencies are compared with South African and global internal audit leaders’ perceptions of these competencies’ relative importance. The article concludes that the terminology used in the various IIA guidance pronouncements and the published reports on studies conducted by the Institute of Internal Auditors Research Foundation are ambiguous and should be standardised. Furthermore, it is believed that quality-related issues are not appropriately addressed in the guidance pronouncements. This article also identifies substantial differences in the levels of importance attributed to quality-related competencies by the various internal audit leaders. Other areas where significant differences exist are those of soft skills (areas focussing on the performance of the audit engagement) and of operational and management research. [ BACK TO THE TOP ]
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