The corporate governance role of internal auditors in Maltese companies : an assessment

Abstract

Purpose: This study analyses the role of Maltese internal audit functions in light of the existing codes of corporate governance. It assesses the changing role of the Maltese internal auditor in corporate governance since the last study which was carried out in Malta in 2001. It also assesses the extent to which those responsible for good corporate governance perceive such a role and its changes and what may still be needed to enhance such a role. Design: Semi-structured interviews were carried out with fourteen internal auditors and ten board representatives across eighteen companies having an internal audit function. Findings: The majority of Maltese internal auditors do not perform assignments that are specifically related to corporate governance. The primarily roles of Maltese internal auditors are risk assessment and control assurance. Board representatives believe that the internal auditor’s role is to monitor compliance with rules and regulations and they give less importance than internal auditors to their role in the corporate governance process. The provision of additional resources, along with better communication with those responsible for corporate governance are seen as the most important things in order for the role of Maltese internal auditors to be enhanced in the future. Conclusions: Although the role of the internal auditor in corporate governance has improved since 2001, there is still room for further improvement. The perception of those responsible for good corporate governance has not changed a lot since the previous study. Those responsible for good corporate governance need to understand more how the internal auditor can help the organisation to achieve higher corporate governance standards and adhere to existing principles as set out by the Code. In order for Maltese companies to reap all the benefits that the internal auditor can offer, an assessment of the required resources needs to be conducted. This can only be achieved through better communication between those responsible for corporate governance and the internal auditors. Value: This study highlighted the current role of the Maltese internal auditor in corporate governance and it can be utilised to align perceptions and to further improve this role in Maltese companies.