Assessment of Internal Audit Efficiency in Corporate Governance: an Empirical Analysis of the Russian Companies’ Data

Subject. Under conditions of economic stagnation and sanctions regime Russian companies are confronted with an especially acute problem of improving their efficiency as the major driver of attracting investments and mobilizing long-term funds. In this paper the implementation of internal audit system is considered as a tool to achieve the aforementioned goal. Purpose. The research objective is twofold: to assess the efficiency of internal audit in shareholder value creation and to reveal the determinants of the very existence of internal audit departments in companies’ organizational structure. Methodology. Empirical analysis of unbalanced panel data using fixed effects and random effects models as well as logit fixed effect models serves as a methodological basis for the research. The sample comprises data covering the 2005-2015 period for 125 publicly traded Russian companies representing non-financial sectors of economy. Results. The research results reveal that the existence of internal audit service in the company structure is positively related to shareholder value creation. Besides, a number of basic determinants of shareholder value are proved to be statistically significant. As for the analysis of the existence of internal audit service determinants, no statistically significant relation was found between the companies’ characteristics included in the model which, as may be supposed, could provide incentives for implementation of the internal audit service, and the actual existence of this service in company structure. Conclusions. The obtained results allow for the conclusion that the internal audit service can be considered as a value driver, enhancing the efficiency of business-processes and thus contributing to the attractiveness of companies for investors. The absence of statistically significant determinants of the establishment of internal audit service may indicate that currently in Russian publicly traded companies this decision is largely determined by personal intention of management to have such service in the firm structure.

внутренний аудит, служба внутреннего аудита, акционерная стоимость, российские компании, драйвер стоимости, эмпирическое исследование, internal audit, internal audit service, shareholder value, Russian companies, value drivers, empirical study

1. Мельник М. В. Организация системы внутреннего аудита и контроля в крупных организациях // Аудиторские ведомости. 2012. № 1-2. С. 118-134 / Mel’nik M. V. The organization of the internal audit and control system in large companies. Auditorskie vedomosti = Audit Newsletter, 2012, no. 1-2, pp. 118-134. (In Russ.)

2. Christopher J., Sarens G., Leung P. A critical analysis of the independence of the internal audit function: evidence from Australia. Accounting, Auditing & Accountability Journal, 2009, vol. 22, no. 2, pp. 200-220

3. Анкудинов А. Б. Критерии оценки эффективности системы внутреннего контроля // Экономический вестник Республики Татарстан. 2017. № 1. С. 52-56 / Ankudinov A. B. Efficiency criteria of internal control system. Ekonomicheskii vestnik Respubliki Tatarstan = Economic bulletin of the Republic of Tatarstan, 2017, no. 1, pp. 52-56. (In Russ)

4. Ho S., Hutchinson M. Internal Audit Department Characteristics / Activities and Audit Fees: Some Evidence from Hong Kong Firms. Journal of International Accounting, Auditing and Taxation, 2010, no. 19, pp. 121-136

5. Chunlan D., Quan P., Jiating H. Empirical Research on Correlation Between Internal Control and Enterprise Value. Proceeding of the 8th International Conference on Innovation & Management, 2011, pp. 645-649

6. Tong Y., Xu F. Study on the Dynamic Relationship between Internal Control Efficiency and Earnings Quality in Chinese Listed Companies. China Soft Science, 2013, no. 2

7. Zeng J. The Impact of Internal Control of Public Listed Companies on Financial Performance. Business Economy, 2014, no. 9

8. Lin Z.-G., Zheng J., Wang S.-Z. Study on Relation of Internal Control and Enterprise Value: An Empirical Analysis from Shanghai and Shenzhen Stock Markets. Journal of Finance and Economics, 2007, no. 4

9. Eulerich M., Theis J., Velte P., Stiglbauer M. Self-perception of the internal audit function within the corporate governance system - empirical evidence for the European Union. Problems and Perspectives in Management, 2013, vol. 11, issue 2, pp. 57-72

10. Вербик М. Путеводитель по современной эконометрике: пер. с англ. М.: Научная книга, 2008. 616 с. / Verbik M. Guide to Modern Econometrics. Moscow: Nauchnaya kniga Publ., 2008. 616 p. (In Russ.)

11. Wooldridge J. M. Econometric Analysis of Cross Section and Panel Data. The MIT Press, 2002, 735 p

12. Институт внутренних аудиторов. Международные стандарты профессиональной практики внутреннего аудита, 2017. URL: https://na.theiia.org/standards-guidance/Public%20Documents/IPPF-Standards-2017.pdf (дата обращения: 20.10.2017)

13. Сонин А. Зачем компании нужен внутренний аудит? URL: https://www.iia-ru.ru/inner_auditor/publications/articles/testovyy-razdel/a-sonin-zachem-kompanii-nuzhen-vnutrenniy-audit-/ (дата обращения: 21.10.2017)

14. Сонин А. Внутренний аудит как важнейший элемент системы управления компанией. URL: https://www.iia-ru.ru/inner_auditor/publications/articles/vtoroy-testovyy-razdel/a-sonin-vnutrenniy-audit-kak-vazhneyshiy-element-s/ (дата обращения: 21.05.2017)

15. Российский обзор экономических преступлений за 2016 год. URL: www.pwc.ru/ru/forensic-services (дата обращения: 20.05.2017)

16. Jiang L., Messier W. F., Wood D. A. The Effects of Internal Audit Consulting Services on Firm Performance, 2016. URL: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2882787 (дата обращения: 23.05.2017)