INTERNAL AUDIT FUNCTION, MANAGEMENT SUPPORT AND CORPORATE GOVERNANCE IN PUBLIC SECTOR

Abstract

Having strong corporate governance (CG) in public sectors is very imperative. An effective CG may, to some extent, prevent mismanagement of public monies. Internal audit function might be a significant contributor to achieve this. However, little attention was given on the role of internal audit function within public sector’s CG subject. As such, this paper presents a conceptual discussion on the potential effects of internal audit function attributes on the Malaysian public sector’s CG, and the potential moderating effect of management support on this relationship. Institutional and agency theories were employed to synthesise relevant literature on internal audit function, management support, and CG in public sector setting. Subsequently, a conceptual framework was developed and ten propositions were established. The originality of this paper was in its comprehensive arguments on the possible association of internal audit function attributes on CG of the Malaysian public sector. Moreover, this paper attempted to examine the role of management support in this association. Additionally, the use of the institutional and agency theories offered essential insights pertaining to internal audit function attributes and management support subjects within the context of CG of the public sector. This study is timely in that it offers insights into how the internal audit function may improve the management of public financial resources.