Internal audit – a tool for the audit committee and the company’s management: a case study
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School of Business |
Master's thesis
Authors
Date
2024
Department
Major/Subject
Mcode
Degree programme
Accounting
Language
en
Pages
69+3
Series
Abstract
This thesis examines the role of internal audit in the corporate governance of Finnish listed companies. The recent accounting crisis like Wirecard scandal and the tightened up corporate governance recommendations have pointed out the importance of the role of internal auditors. In today's business world, organizations see internal auditors as essential parts of a company's governance, providing special support to the audit committee. This study seeks to answer a fundamental research question: How do the audit committee and financial management perceive the role of internal audit and their collaboration with internal auditors? The theoretical framework draws on the concepts of agency theory, comfort theory, and internal audit standards and guidelines. To explore these dynamics and answer the research question,semi-structured interviews were conducted with key stakeholders, including audit committee members, internal auditors, and financial managers. The interviews were done in Finnish listed company. The case company follows the governance code for Finnish listed companies and is genuinely interested in developing the governance practices. The case company had one internal auditor, which cooperated actively with the management team and audit committee. The main findings suggest that the internal auditor plays an important role in providing information, assurance, and advice to the audit committee and the financial management. The cooperation between the internal auditor and the other stakeholders is generally positive and constructive, but there are some challenges and tensions related to the independence, objectivity, and scope of internal audit activities. The audit committee in the case company strategically utilized the internal auditor to mitigate information asymmetry between themselves and the management team. This thesis contributes to the accounting literature by providing empirical insights into the nuanced role and interactions of internal audit within the context of Finnish governance. The identified challenges and positive aspects of collaboration offer valuable implications for companies and internal auditors. Also, the study creates an overview of the internal auditors role and points out some ideas for the directions of future accounting research.Description
Thesis advisor
Vaivio, JuhaniKeywords
internal audit, audit committee, comfort theory, agency theory, corporate governance