Evaluation of Internal Audit Performance by the Balanced Scorecard (Bs) Method

Author:Nicoleta Ardeleanu (Trifu)
Position:PhD, 'Valahia' Targoviste University, Dambovita, Romania
Pages:393-401
ISSN: 2067 9211 The Youth of Today - The Generation of the Global Development
393
Evaluation of Internal Audit Performance by the
Balanced Scorecard (Bs) Method
Nicoleta Ardeleanu (Trifu)1
Abstract: The motivation of studying the ways in which the internal audit activity can be improved as well
as the impact that this activity has on the decisions of the entity is justified by the complexity of the internal
audit field as well as its rapid development. The evaluation of the efficiency and effectiveness of the internal
audit function is an important objective of the entity's management, and it must be carried out annually in
order to make this function more efficient and to determine the cost-benefit ratio. Analyzing the effective
ways of evaluating the performance of the internal audit presented in the specialized li terature, two
methodological approaches of evaluating the performance of the internal audit were identified: a traditional
approach through the structure, quantitative and qualitative indicators, and an approach by the Balanced
Scorecard (BS) method, the latter being used in the presented study.
Key words: internal audit; balanced scorecard method; internal audit function; internal audit strategy; ris k
management.
JEL Classification: M42 - Audit
1. Introduction
Analysing the effective ways of evaluating the performance of the internal audit presented in the
specialized literature, two methodological approaches of evaluating the performance of the internal
audit are identified: a traditional approach through the structure, quantitative and qualitative indicators,
and an approach using the Balanced Scorecard method.
From the perspective of the traditional methods of performance evaluation, the main quantitative
measures of efficiency evaluation are the indicators, in this case it is possible to easily calculate, based
on the information contained in the budgets, the daily cost of the audit, the number of audit reports, the
number of recommendations made and related to the audit objectives, the time required for the audit,
etc.
In the case of effectiveness, this can be measured by comparing the measure of compliance with the
audit plan initially established. The difficulty of the quantitative evaluation of the effectiveness,
however, comes from the fact that the operational objectives set may not reflect the general purpose of
the internal audit, namely the offering of assurances to the management on the internal control system
and on the risk management or offering support to the management in order to improve the operations,
the control and risk management. Thus, it must be evaluated, the extent to which the internal audit
1 PhD, “Valahia” Targoviste University, Da mbovita, Romania, Address: Blvd. Carol I, Nr. 2, 130024, Targoviste,
Dambovita, Romania, Corresponding author: nico75ard@yahoo.com.

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