Examining the moderating role of senior management support in internal audit effectiveness: evidence from GCC region

Abstract

The main purpose of this paper is to examine the interaction effect of senior management support (SMS) on the factors affecting internal audit (IA) function effectiveness. Data were collected from 207 chief audit executives working in the Gulf Cooperation Council (GCC) countries using a quantitative survey method. The data were analyzed using partial least squares-structural equation modeling approach (PLS-SEM). In addition, a simple slope plots test was used to explore the moderating effect. The results show that SMS has a mixed moderating effect on IA effectiveness. The interaction effect of SMS is positive and significant with IA independence, IA staff competence, and adopting a risk-based audit approach, whereas the effect is negative and significant with the relationship between IA and audit committee, adopting a quality assurance and improvement program, and the role of IA in leading combined assurance implementation. The results also show that there is no moderation effect with IA size and cooperation between IA and external auditor. The paper provides IA practitioners, audit committees, and senior management in organizations with a broad understanding of the role played by senior management in supporting the IA effectiveness and the key factors that should be considered to make their IA functions more effective. Also, it provides an opportunity for policymakers and regulators to enhance the corporate governance legislations by considering the important factors that drive the effectiveness of IA function and senior management role in supporting the IA function.