Internal audit and risk management practices among Malaysian higher education institutions

Abstract

Governance, accountability and integrity of government service delivery are crucial factors in improving the services, operations and finances towards the stakeholders and public. The public and stakeholders are expecting good practices of integrity and it leads towards reformation in delivery of government services. Higher education institutions (HEIs), in particular public universities are striving to improve accountability and transparency in their services, operations and financial management. There are growing interests among the institutions of higher education to promote the effective governance, good financial management and accountability in public management due to various malpractices which happen currently within public HEIs. As such, the need for an effective internal audit function in HEIs is very essential to ensure the effectiveness of governance, risk and control processes. Consequently, this study aims to examine the extent of risk management practices in HEIs and role of internal audit on risk management process. The study analyses data collected from 127 staff of internal audit department from public HEIs with various grade levels. From the results, the study found that all public HEIs do have an internal audit unit which is in line with the requirement of Treasury Circular No. 2/2004. Almost more than two third of the respondents involve in evaluating the effectiveness of risk management process. Two older HEIs already have established and advanced level of risk management process. While, majority of the newer HEIs are still in level of basis and developing stage of risk management process. The findings provide insights on current practices of public HEIs in the area of risk management process and internal audit. In sum, this present study contributes the international literature pertaining to the role of internal audit on risk management in public sector. In fact, it shows that risk management process and internal audit practices in HEIs are very much driven by the changes in competitive environment and also influenced by the pressures to generate own revenue. Therefore, this would provide the awareness to the practitioners as well as the regulators that govern the public sectors to review the standard or policies of internal audit functions particularly those in public sector.