Methodological Approaches to Assessing the Quality and Effectiveness of Internal Audit

Abstract

The purpose of the article is to examine and synthesise methodological approaches to assessing the quality and efficiency of internal audit in the contemporary context of corporate governance development, and to specify the possibilities of their application for building a comprehensive system for evaluating the performance of the internal audit function.

The paper develops an approach in which internal audit quality is treated as an integral outcome of a balanced relationship between economy, efficiency and effectiveness. It proposes the use of the “economy + efficiency + effectiveness” model as a methodological framework for evaluating the internal audit function, ensuring an integrated combination of its resource, process and impact dimensions. Three groups of internal audit evaluation indicators are identified (process indicators, impact indicators and capability indicators), and the appropriateness of their use within an integrated assessment system is substantiated. The correspondence of these indicator groups to the logic of the 3E model (“economy + efficiency + effectiveness”) is demonstrated, enabling a systematic differentiation of the resource, process and impact dimensions of the internal audit function. It is argued that traditional process-oriented approaches to internal audit evaluation, focused on plan completion and compliance with timelines and procedures, provide a necessary level of functional controllability, yet are insufficient to confirm value creation and real impact on internal control and risk management systems. It is shown that internal audit effectiveness should be captured through indicators of implementation and timeliness of recommendations, reduced recurrence of findings, strengthened control procedures and a decrease in residual risk, whereas efficiency is reflected in productivity and the organisation of the audit process. Capability indicators of the internal audit function (staffing adequacy, professional competences, the availability of methodology, technological tools and a quality assurance programme) are demonstrated to be cross-dimensional in nature and to serve as prerequisites for the sustainable achievement of economy, efficiency and effectiveness.

The article substantiates that, as a result, internal audit evaluation acquires the role of a managerial instrument that supports the professional maturity of the function and enhances organisational resilience in the context of increasing risk-environment complexity. Prospects for further research include developing sets of indicators tailored to specific enterprises, including those of different economic activities and sizes.