Providing a Pattern for Effective Internal Audit from Beneficiary’s Perspective

This paper is intended to provide a pattern for effective internal audit function and to recognize its components. The considered statistical group of this research includes experienced managers in public companies, members of audit committees and managers of auditing firms. This research is a descriptive-probative one and its purpose is fundamental. Theme analysis method was adopted in order to analyze qualitative data gathered from interviews. Coding process was performed in three separate phases of inputs, processes and outputs. According to results of theme analysis, identified components of an effective internal audit function categorized in Input phase were providing resources and facilities, independence of internal audit, transparency of information system, codified governance system of company, professional competency of employees and human resources policies. Also, components categorized in process phase were risk management, performance assessment, control approaches, promotion of internal auditors' skills, organizational relations and accordance to modern evolutions were recognized. In output phase, identified indicators of an efficient internal audit function were reporting quality, effectiveness of internal control systems and economic efficiency of internal audit activities. Finally, in order to examine the model from beneficiary’s perspective, current status of internal audit function was assessed. The results of single sample T test showed that effectiveness of internal audit is quite low in input phase. On the other hand, effectiveness of internal audit was rather medium favorable in process phase and normal favorable in output phase.