Internal audit public sector capability: a case study

Date01 May 2016
Published date01 May 2016
AuthorPhilna Coetzee,Jacobus Oosthuizen Janse van Rensburg
Academic Paper
Internal audit public sector capability: a
case study
Jacobus Oosthuizen Janse van Rensburg
and Philna Coetzee
Department of Auditing, University of Pretoria, Pretoria, Gauteng, South Africa
Department of Auditing, Tshwane University of Technology, Pretoria, Gauteng, South Africa
Internal auditing is an essential part of governance and can be a valuable asset to public sector institutions. However,
for public sector internal auditing to effectively support management, the internal audit function (IAF) should be
capable. The question arises as to how the capability of public sector IAFs can be measured. The Institute of Internal
Auditors Research Foundation published the Internal Audit Capability Model (IA-CM) in 2009 to provide a capability
self-assessment tool for public sector IAFs. The main objective of the study is to determine whether the IA-CM can be
used successfully to measure internal audit capability levels, and a secondary objective is to determine whether the
tool can be successfully adapted for a specic public sector organisation and/or country. To achieve these objectives,
the model was applied in a South African public sector organisation by means of a case study, where the IAF of the
case was ranked against the key process areas (KPAs) of the model. The ranking was conducted based on a documen-
tary review and interviews with applicable ofcials within the case. The model was successfully tested in measuring
the internal audit capability level of a South African public sector organisation; however, a total of eight potential
feasibility hindrances or considerations have been identied that could negatively affect the implementation of seven
of the KPAs of the IA-CM. Copyright © 2015 John Wiley & Sons, Ltd.
No nation can function in an orderly manner with-
out an effective government. The citizens of a coun-
try cannot full all their needs in an individual
capacity and are dependent on their government
for many basic infrastructural needs. There are
many critical success factors that should be in place
for a government to be effective, two of which are
sound public administration policies and gover-
nance structures. The core components of sound
governance relate to good leadership, stakeholder
engagement, sustainability and citizenship (OECD,
2004; IOD, 2009; ASX, 2010: 1012; FRC, 2010: 67).
An essential contributor to sound governance is
internal auditing (OECD, 2004: 62; IOD, 2009: 93;
ASX, 2010: 34). In its role as independent evaluator
in terms of the assurance and consulting services
that it provides, internal auditing should be an inte-
gral part of any organisations governance structure
(IIA, 2012; IOD, 2009: 17, 93), not only in the private
sector, but also the public sector (Subramaniam, Ng
& Carey, 2004: 87; Khoury, 2011: 45).
For internal auditors to perform their role effec-
tively within the public sector governance arena,
they have to be sufciently capable in terms of their
mandate and objectives (Van Gansberghe, 2005: 70;
Mihret & Yismaw, 2007: 472; Asare, 2009: 2223;
IIARF, 2009: 1; Aikins, 2011: 333). Capability is
dened as the measurement of the ability of a de-
partment organisation, person or system to achieve
objectives related to its mission (Mihret & Yismaw,
2007: 471;,2015). As the main
mission of internal auditing is to assist management
in achieving its objectives and to add value by inde-
pendently evaluating the adequacy and effective-
ness of governance, risk management and control
processes (IIA, 2011: 2), the capability of internal
*Correspondence to: Jacobus Janse van Rensburg, Department of
Auditing, University of Pretoria, Pretoria, Gauteng, South Africa.
Journal of Public Affairs
Volume 16 Number 2 pp 181191 (2016)
Published online 19 June 2015 in Wiley Online Library
( DOI: 10.1002/pa.1574
Copyright © 2015 John Wiley & Sons, Ltd.

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