Performance measurement and balanced scorecard applicability to Maltese internal audit units

Abstract

The purpose of this study is to analyse performance measurement and the balanced scorecard applicability within the sphere of internal auditing. It aims at ascertaining whether recent trends in performance measurement for internal auditing are pertinent to the Maltese scenario, and at assessing the approaches adopted (if any) by the internal audit units. Furthermore, the applicability of the balanced scorecard framework is evaluated alongside a basic model created for Maltese internal audit units. The objective of this study was achieved through a series of semi-structured interviews with 20 Maltese Chief Audit Executives representing all the known internal audit units. This study ascertains that Maltese IAUs face the same trends (except for one) as their foreign counterparts. Maltese CAEs acknowledge the significance of performance measurement. However, this research reveals that formal frameworks are not widely adopted. The use of informal KPIs is the most prevalent, followed by the balanced scorecard, which is common amongst the users of formal frameworks. Throughout their lifecycle, Maltese internal audit units follow a 'journey' towards the implementation of the balanced scorecard, along which they face several barriers. Thus, its applicability is largely dependent on a number of factors. It is hoped that this study will encourage further development in the area, particularly with respect to the study's recommendations: more compliance with professional standards, engagement of external reviewers; formalisation of performance measurement and implementation of the balanced scorecard framework, where applicable.