Analysis of Internal Audit Efficiency by Using the Data Development Analysis (DEA) Method and Linear Regression

Author:Alexandra Diana Baicu
Position:PhD in progress, 'Valahia' University Targoviste, Romania
ISSN: 2067 9211 The Youth of Today - The Generation of the Global Development
Analysis of Internal Audit Efficiency by Using the Data Development
Analysis (DEA) Method and Linear Regression
Alexandra Diana Baicu1
Abstract: Internal audit plays a particularly important role in supporting d ecisions within the entity in
the context required by th e need to overcome the difficulties arising fro m the occurrence of different risk
factors, respectively in order to achieve the proposed objectives and improve the performance of the
entity. In the current context, it is the task of internal audit to advise management in decision-making, to
optimize the performance of activities, to identify some dysfunctions in the entitys processes, to inform
decision-makers and to propose solutions to address identified deficiencies. In this respect, a key
objective is to focus on identifying methods and models for quantitative analysis of the effectiveness of
the internal audit function and its effects in providing added value, among them the method of DEA
(Data Development Analysis method and linear regression.
Keywords: internal audit function; efficiency; DEA strategy; linear regression; risk management
JEL Classification: M42 - Audit
1. Introduction
The analysis of the impact of improving internal audit work on decisions in an entity shall start from
determining the degree of achievement of the main objective of internal audit, namely cost reduction
through the provision of effective risk management tools.
A measure of the internal audit impact on management decisions can be obtained by analyzing the link
between the level of performance of the internal audit and the variation of financial indicators or
independant measures.
The results of the internal audit activity department cannot be quantified in monetary terms of
revenues, which is a cost center that uses various resources of the entity in order to offer services to
internal users. The number of services can be a measure of output associated with this department and
analyze the efficiency and performance can be made by analyzing the efficiency of allocated
The degree of efficiency of the internal audit department has an important influence on decisions
developed by the management of an entity that can exercise better cost control or identify more
efficient resource use methods based on internal audit results. Furthermore, determining an indicator
1PhD in progress, “Valahia” University Targoviste, Romania, Address: Blvd. Regele Carol I 2, Targoviste 130024, Romania,
Tel.:0245 206 101, Corresponding author:

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