Hi Rainer,

answering your question, to evaluate the IA efectiveness, I thought two possibilities to suggest for this PhD student (as me): (i) cover the literature about it in order to find some determinants then apply a survey to evaluate it by a regression model which as a dependent variable we could consider an index of efectiveness (or modelling a measure to efectiveness). However you pointed out the Literacture still fuzzy... due to this, he/she can (ii) explore this object qualitativelly.

How? doing some interviews about it.

What he/she supposed to seek? analyse: each context (social, organizational or even institutional); reasons of implementation of IA (pressures, ideology/logics, efectiveness, and so on) - in order to highlight each reflex (if they exist) on efectiveness; what measures of efectiveness each studied organization uses to assess it; what the Internal Audit is supposed to do; does IA complies with what is expected?; what efects IA produces? or What the IA products?; What consequences if IA was wiped out? 

he/she can try quantify it. Thus, we can think in efectiveness as relative for each one, based on ability to produce its usual effect:  what is IA supposed to do in each organization? does IA complies what is expected in each one?

Index of Efectiveness = (what the internal audit are doing) / (what internal audit should do)

anxious by other suggestions

All the best

Tiago

I suggest that you will take a look at the following paper. It has a scale for measuring the audit effectiveness 

Aaron Cohen and Gabriel Sayag, "The Effectiveness of Internal Auditing in Organizations: An Empirical Examination of its Determinants in Israeli Organizations", Australian Accounting Review, 2010, 20(3), 296-307.

I think internal audit is inherent with a very complex issues that only can be explored and explained by using qualitative approach such as a case studies or a good number of individuals interviewers with internal auditors. in addition, studying internal audit function need to explore factors and other parties that can influence on their responsibilities such as audit committee, CFO, CEO, and external auditor.  Thanks for raising such question 

As Internal audit is in charge of evaluating risk within organization using a risk based approach, It think that we need to approach the question of internal audit quality taking into account the perspective of risks, which is missing tooday.

There are a number of different avenues to explore here.  One is the accuracy of the internal audit, its thoroughness and lack of bias.  if the organization also has an external audit, the internal audit is the basis for the external audit.  One measure I use is how long the external audit takes, if the internal audit is well done and all in order, the external audit can be done soon after the end of the fiscal year; if the internal audit is delayed, the external audit will be delayed also, be less timely and hence less useful for management purposes.  it will also take the external auditor longer to find the data required.

An internal audit can vary in terms of scope, it can be a purely financial audit, or it can include performance measures as well, how many of the recommendations of the audit are actually adopted, and with how many dollars of expected savings?  What is the scope of the internal audit, and what kind of cooperation does it get from various departments?  How good is the paper trail that it follows?  

if the internal audit is able to make recommendations for improving the financial risks, are those recommendations received by an audit committee that can examine them and has the ability to implement them?  Process matters here.  How politically independent is the audit function?  

Some of this can be measured quantitatively,, some qualitatively.  

let us look at this research from a more practical perspectives. First we can assess the effectiveness of the internal audit by linking its effects on achieving the objectives of corporate governance in the business enterprise by assessing using interviews and reading minutes of audit committees how internal audit helped audit committee addresses elements of corporate governance related with internal control and monitoring management decisions. Also, the relationship between internal audit and external audit should be assessed in light of internal audit reports and how external auditors rely on such reports. Finally, the structure and documentation of the activities of the internal audit department and employees should be analyzed and critically reviewed for points of strength and weaknesses.

I also grapple with how to measure internal audit effectiveness: qualitative, quantitative or a mix of both?  

I wonder if it helps - maybe not - to turn the question around and measure internal audit in-effectiveness.  I can certainly point to internal audit functions that have failed to find fraud where it existed, failed to optimise the mix between inhouse and external resource, and failed to add monetary value.  

Having headed up various internal audit functions I have always offered management my own set of effectiveness measures around (1) dollar savings achieved, (2) streamlining of workflows and (3) fraud stopped.  This has been similar to a peer review; and is still to this day the basis on which I negotiate my remuneration.  Which is possibly another measure.  

the answers here helped me a lot. thank you all