John A. Brierley

THE DEVELOPMENT OF INTERNAL AUDIT IN SAUDI ARABIA: AN INSTITUTIONAL THEORY PERSPECTIVE

Abstract This paper uses institutional theory to interpret the results of two questionnaires and research interviews concerned with internal audit in the Saudi Arabian corporate sector. The results show that internal audit is not well developed. Where it does exist it operates in departments that are inadequately resourced, lack qualified staff, have restrictions on their degree of independence, concentrate on compliance audit rather than performance audit, and where internal auditors are not accepted by management and auditees. Using institutional theory it is suggested that the state should play a more coercive role by encouraging organizations to establish internal audit departments and organize their activities in the manner specified in internal audit standards.

Research into product costing practice: a European perspective

This paper summarizes and reviews research of product costing practice in Europe. The review considers research into how many accounting systems firms use, product cost structures, the use of blanket overhead rates in product costing, the bases used to calculate overhead rates, the application of product costs in decision making and product pricing, and the use of activity-based costing. Although significant progress has been made over the last decade in describing costing practices in Europe, further work remains to be done. Having identified gaps in, and questions arising from, previous research, the paper concludes with recommendations for future research.

An examination of the relationship between internal and external audit in the Saudi Arabian corporate sector

This paper uses questionnaires from and interviews to examine the level of co‐operation and co‐ordination between directors of internal audit departments, and partners and managers in external audit firms in Saudi Arabian companies. The results revealed that external auditors expressed concern about the independence, scope of work and small size of many internal audit departments. Internal auditors considered co‐operation between internal and external audits to be limited, although external auditors were more positive about the extent of co‐operation when the internal audit department was of high quality. The extent of reliance by the external auditor on the work of the internal auditor varied with the quality of the internal audit department. External auditors suggested that the objectivity, competence and work experience were important factors affecting the reliance decision. They felt that the internal audit function in many Saudi companies lacked professionalism and independence from management, which adversely affected its work and the potential for reliance thereon.

An Examination of the Role of Audit Committees in the Saudi Arabian Corporate Sector

Based on a series of research interviews with academics and external and internal auditors, this paper examines the role of audit committees in the Saudi Arabian corporate sector. The interviewees expressed concerns about the terms of reference of audit committees and the scope of work undertaken. The independence of audit committees was called into question, as was the expertise of audit committee members. Audit committees had failed to establish close working relationships with either internal or external auditors. A particular criticism was that the requirements for audit committees as set out in Ministerial Resolve 903 lacked clarity. It was suggested that the Ministry of Commerce should issue further regulations and guidance in order to improve the effectiveness of audit committees and to enhance corporate governance in Saudi Arabia.

Human resource management issues in audit firms: a research agenda

This paper discusses the contribution and value of research into human resource management issues as they affect auditors and audit firms, and to identify areas for future research. The contribution and areas for future research are identified in terms of four areas, namely career development, staffing patterns, the multi‐disciplinery global firm, and the management structure and practice as they relate to audit firms. This is followed by a discussion about the value of this research. In the conclusion the paper argues for future research to adopt a greater sociological and organizational perspective, including studies which work shadow auditors and audit teams, and longitudinal studies.

The problems of establishing internal audit in the Sudanese public sector

This paper uses interview and direct observation research methods to explain the failure to establish internal audit in the Sudanese public sector. The specific problems highlighted in this paper of low salary levels, low levels of staff training and expertise, low esteem and motivation of staff are seen in the context of a very limited technological infrastructure, and a lack of co-operation and co-ordination between the various parties responsible for internal audit in the public sector. Internal audit in the Sudan takes place against a background of economic stagnation and political instability, and within a culture in which corrupt and irregular practice is endemic and institutionalized at all levels of society. In such circumstances and without the political will to strengthen its potential and practice it is likely that internal audit will continue to be marginalized in the foreseeable future.

How product costs are calculated and used in decision making: a pilot study

Reports the findings of a pilot survey into how product costs are calculated and how they are used in decision making in manufacturing industry in the UK. The survey examines how many accounting systems firms use, blanket overhead rates in product costing; the bases used to calculate overhead rates; the application of product costs in decision making; and profitability maps. The results show that a variety of methods are used to calculate product costs and that they are used to a significant extent in decision making.

Accountants, or auditors, tax practitioners, management consultants etc.? A research note

This paper reviews prior research to consider whether there are differences in human resource management terms between auditors and other categories of professional staff within accounting and audit firms, for example those working in taxation or management consultancy. The review reveals conflicting results regarding the extent of these differences, which leaves open the question of whether research results in the human resource field can be generalized across all functions within an accounting and audit firm. We speculate that whereas in the past the similarities between functional groups may have outweighed any differences, increasingly this will no longer be the case.

The Effect of Innovation Characteristics on Activity-Based Costing Adoption

This paper contributes to the analysis of the factors influencing the adoption of ABC by assessing the contribution of the characteristics of an innovation on adoption, which has not been carried out in prior research. Specifically, the paper applies innovation diffusion theory to examine the impact of five characteristics of an innovation, and organisation size, industry and location on the decision to adopt activity-based costing (ABC). The data for the study was obtained from a questionnaire survey of management accountants in Australia, New Zealand and the UK. The relationships with ABC adopted were tested using logistic regression analysis. The best model specification arises when organisations that have adopted ABC are compared with those that have rejected it. The results reveal that organisations are more likely to adopt ABC when they attach a high level of importance to the relative advantages offered by innovations, are large and located in Australasia.

UK Government policy, credit unions and payday loans

ABSTRACT This article outlines how successive UK governments’ policies first created a three-tier system of credit unions and then posited credit unions as alternatives to payday lenders. The three-tier framework is used for an analysis of loans offered on credit union websites. The findings indicate that while the first two tiers of credit unions now offer loans to people who have not saved with them previously, they do so in ways consistent with credit unions’ original character, rather than in ways that replicate commercial payday loans. The other tier of credit unions appears unable to offer such loans.