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.