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The Impact of Various Factors on the Effectiveness of Internal Audit in the Public Sector: The Case of Bosnia and Herzegovina

Author

Listed:
  • Veledar Benina

    (University of Sarajevo, School of Economics and Business Sarajevo)

  • Gadžo Amra

    (Faculty of Economics, University of Tuzla)

  • Bajrić Nejra

    (Master in Accounting and Auditing, University of Sarajevo, School of Economics and Business)

Abstract

The paper focuses on analyzing key factors influencing the effectiveness of internal audit in the public sector of Bosnia and Herzegovina (BiH). Through multiple regression analysis (Ordinary Least Squares-OLS), the impact of five independent variables (competence of internal auditors, size of internal audit department, relationship between internal and external auditors, management support for internal audit, and independence of internal auditors), two control variables (organization’s sector and total number of employees in the organization), on the dependent variable (effectiveness of internal audit) was measured. Research results indicate that a significant portion (.2 = 45.00%, Adj .2 = 40.90%) of the variability in the effectiveness of internal audit can be explained by the variability of the five independent variables in the model. The largest positive impact on the effectiveness of internal audit is attributed to the size of the internal audit department and the independence of internal auditors. Conversely, management support for internal audit had the least impact, which contradicts our predictions and the results of previous research. The limited impact of management support on the effectiveness of internal audit in the public sector of BiH may stem from a lack of understanding regarding the role and importance of internal audit, as well as from perceiving it as merely a formal legal requirement without substantial value.

Suggested Citation

  • Veledar Benina & Gadžo Amra & Bajrić Nejra, 2024. "The Impact of Various Factors on the Effectiveness of Internal Audit in the Public Sector: The Case of Bosnia and Herzegovina," Journal of Forensic Accounting Profession, Sciendo, vol. 4(2), pages 1-19.
    • Handle: RePEc:vrs:jfaccp:v:4:y:2024:i:2:p:1-19:n:1001
    DOI: 10.2478/jfap-2024-0006
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    References listed on IDEAS

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    1. Abudu Dawuda & Gariba Oswald Aninanya & Samuel Erasmus Alnaa, 2015. "The Organizational Independence of Internal Auditors in Ghana: Empirical Evidence from Local Government," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 3(2), pages 33-45, June.
    2. Abudu Dawuda & Gariba Oswald Aninanya & Samuel Erasmus Alnaa, 2015. "The Organizational Independence of Internal Auditors in Ghana: Empirical Evidence from Local Government," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 3(2), pages 33-45.
    3. Ghita Emil, 2008. "Remarks On The Importance And Necessity For Public Entities To Associate In Order To Perform Efficient Activities Of Internal Audit," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 4(1), pages 265-268, May.
    4. Anna Cwiakala- Malys & Malgorzata Durbajlo-Mrowiec & Marek Dlugozima, 2020. "Harmonisation and Improvement of Management Control and Internal Audit of Public Finances’ Sector in Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 3), pages 545-555.
    5. Marta Postula & Olga Irodenko & Przemyslaw Dubel, 2020. "Internal Audit as a Tool to Improve the Efficiency of Public Service," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 699-715.
    6. Prem Lal Joshi, 2021. "Which factors affect the internal audit effectiveness in India?," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 12(2), pages 01-13, May.
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