Metrics of internal audit effectiveness in banking sector

This article attempts to analyze the metrics of internal audit function effectiveness. The authors review

and discuss the metrics perceived as most relevant and appropriate to the banking sector. The literature

review is supported by an attempt to introduce an additional metric of the internal audit function effectiveness.

The methodology adopted in this paper bases strongly on the qualitative approach. The article

involves an analysis of available literature and own studies, as well as authors’ professional experience

in auditing. The metrics of internal audit function effectiveness presented in modern studies strongly

favor qualitative approach, focused on assessing the input, process and output of internal auditors,

and most notably recommendations issued and their implementation by organizations’ management.

The authors suggest supplementing the list of available metrics with an additional method, strongly

connected to financial performance of the banks employing the internal audit function. This article

introduces an additional possible way of measuring the effectiveness of the internal audit function. This

metric can be considered by the banks and can be further empirically verified for appropriateness by

entities from other industries, from both private and public sector.