Audit committee composition and its interaction with internal audit function : some Malaysian evidence / by Maslinawati binti Mohamad

Abstract

This study presents an analysis of the interaction between the audit committee and the internal audit function. It is believed that the audit committee compositions such as the independence and financial expertise of audit committee members have significant impact on the interaction. The more interactions between them, the more effective the audit committee will be. Based on the statistical analysis, the audit committees that comprised solely independent directors were more likely to provide private meeting to the chief internal auditor. If the audit committee comprised solely independent directors and having more than one financial expertise, then they were more likely to provide private meeting as well as involve in the decision to dismiss the chief internal auditor. There is no positive significant result found for the audit committees that have more than one financial expertise. The results found for the interaction in term of reviewing the internal audit work, were very surprising. If the audit committee comprised some of dependent directors, then the audit committee was more likely to review the internal audit work. Furthermore, if the audit committee comprised some of dependent directors and having more than one financial expertise, then there were more likely to review the internal audit work.