Final published version
Research output: Contribution to Journal/Magazine › Journal article › peer-review
Research output: Contribution to Journal/Magazine › Journal article › peer-review
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TY - JOUR
T1 - Changing internal auditing from a compliance-based to a conduct- focused approach
AU - Soh, Woon Gan
AU - Antonacopoulou, Elena
AU - Rigg, Clare
AU - Bento, Regina
AU - White, Lourdes
PY - 2024/5/30
Y1 - 2024/5/30
N2 - Amidst public acknowledgment of recurring ethical violations in the volatile financial services industry, Internal Auditing professionals (IA) do not seem to have done enough to perform their professional responsibility as a line of defence for their employing organizations. This paper explores whether changes in IA approach can effectively enable IA as a practice to fulfil its governance role in managing ‘conduct risk,’ i.e., any behaviour in a firm that could cause problems to consumer protection, market integrity or competition. We examine the ethical implications of the existing compliance-based IA approach and explain its ineffectiveness in auditing conduct risk within a turbulent environment. Using action research, we explain the germane changes necessary to define a new conduct-focused IA approach capable of predicting and preventing ethical wrongdoing. A conduct-focused approach launches auditors into unfamiliar but strategically critical areas to not only identify material risks but also add value to their organizations. We further examine how a change in the auditor’s mindset and other factors promote the effectiveness of the new IA approach in a sustainable way. Based on our literature review, this is the first paper to use action research as a way of introducing impactful change to IA, from a compliance-based to a conduct-focused approach.
AB - Amidst public acknowledgment of recurring ethical violations in the volatile financial services industry, Internal Auditing professionals (IA) do not seem to have done enough to perform their professional responsibility as a line of defence for their employing organizations. This paper explores whether changes in IA approach can effectively enable IA as a practice to fulfil its governance role in managing ‘conduct risk,’ i.e., any behaviour in a firm that could cause problems to consumer protection, market integrity or competition. We examine the ethical implications of the existing compliance-based IA approach and explain its ineffectiveness in auditing conduct risk within a turbulent environment. Using action research, we explain the germane changes necessary to define a new conduct-focused IA approach capable of predicting and preventing ethical wrongdoing. A conduct-focused approach launches auditors into unfamiliar but strategically critical areas to not only identify material risks but also add value to their organizations. We further examine how a change in the auditor’s mindset and other factors promote the effectiveness of the new IA approach in a sustainable way. Based on our literature review, this is the first paper to use action research as a way of introducing impactful change to IA, from a compliance-based to a conduct-focused approach.
M3 - Journal article
JO - Research on Professional Responsibility and Ethics in Accounting
JF - Research on Professional Responsibility and Ethics in Accounting
ER -