The Evolution of Internal Auditing at a Central Bank: The Maltese Experience

Purpose: The main objectives of this article are to assess how the governance and operational structures that constitute the internal Audit Function (IAF) of the Central Bank of Malta (CBM), have evolved and grown over the years. Design/Methodology/Approach: This study adopted a qualitative, mixed-method approach to ascertain the achievement of these objectives. Semi-structured interviews were carried out with six major players who, to varying degrees, acted as catalysts fuelling such evolution. The selection encompassed both current and ex-IAF officials deployed in various hierarchical positions. These interviews were then backed by an analysis of the CBM Annual Reports and any available unpublished internal audit documentation. Findings: The findings indicate that the core objectives of the IAF remained, in essence, unchanged over the years except for being broadened to enhance organisational value, to meet increasing client expectations and closely align with developments in the profession. As a result, stakeholder perceptions of the IAF improved from being negative and invasive to becoming generally respectful and appreciative. Practical Implications: Audits had to decrease in number over the years as most audits had become considerably more complex and therefore more labour intensive and time-consuming. Staff turnover decreased when more emphasis was placed on staff development, training and career management. Originality/value: The vicissitudes of the IAF history to date, particularly the major historical milestones found to have spurred the various stages in the IAF evolution, may also prove insightful for the IAFs of other financial institutions.