The Effect of Internal Auditors’ Involvement in Enterprise Risk Management on Internal Audit Objectivity: Evidence from Malaysia

Abstract

In the last two decades, the role of internal auditors has been growing significantly within organizations, especially in some specific areas such as Enterprise Risk Management (ERM) and internal control. The purpose of conducting this study is twofold: First, to determine the level of internal auditors’ involvement in the ERM process in order to examine their compliance with the recommendations of the Institute of Internal Auditors (IIA). And second, to investigate the effect of this involvement on the objectivity of internal auditors. A quantitative method has been used based on a cross-sectional survey. The data has been collected from 119 participants who are members of the Institute of Internal Auditor Malaysia (IIAM). The findings of the study indicate that the majority of internal auditors in Malaysia are low involved in the ERM process. Also, found that internal audit objectivity is affected by the level of internal auditors’ involvement in ERM. This study would contribute to enrichment the literature of internal auditing by describing how internal auditors in Malaysia perceive their current role concerning ERM activities and reinforce the need for internal auditors to adhere to the recommendations of the IIA by avoiding the participation in the roles that could impair their objectivity.