The Internal Audit Functions: Competence, Effectiveness and External Auditors ' Reliance in Tanzania
Abstract
This study examines the influence of internal audit function competence on the extent of external auditors ' reliance on internal audit function work and whether the internal audit function effectiveness mediates such a relationship. Data was collected from 100 external auditors of the Dar es Salaam Stock Exchange-listed companies and analysed using a Partial Least Square Structural Equation Modelling. The result indicates that internal audit function competence does not affect the external auditors ' reliance on internal audit function work. Nevertheless, the result shows that the competence of internal audit function has a positive effect on the external auditors ' reliance on internal audit work. Also, the result reveals that internal audit function effectiveness has a positive influence on external auditors ' reliance on internal audit function work. Results suggest that internal audit function effectiveness fully mediates the relationship between internal audit function competence and the external auditors ' reliance on internal audit function work. Thus, improving competence can increase internal audit function effectiveness which can also increase the external auditors ' reliance on internal audit function work. The study contributes to the literature by adding a new dimension, the internal audit function effectiveness, in the external auditors ' reliance on the internal audit function. The study recommends to regulators closely monitor the implementation of the guidelines for internal audit functions to improve their effectivenessReferences
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