The Effects of Personal and Organizational Factors on Role Ambiguity amongst Internal Auditors

• Published date: 01 July 2014
• Author: Shabnam Fazli Aghghaleh,Zakiah Muhammaddun Mohamed,Azlina Ahmad
• Date: 01 July 2014
• DOI: http://doi.org/10.1111/ijau.12015

The Effects of Personal and Organizational Factors on Role Ambiguity

amongst Internal Auditors

Shabnam Fazli Aghghaleh, Zakiah Muhammaddun Mohamed and Azlina Ahmad

Universiti Kebangsaan Malaysia,Malaysia

Increasing concerns about company failures has given rise to the significant role of risk management in

organizations. The Institute of Internal Auditors (IIA) has introduced a new framework which specifies that

internal auditors’ responsibilities include managing risks. This change from traditional to modern obligation may

cause internal auditors to be uncertain regarding this function. This study investigates the effects of personal and

organizational factors on role ambiguity amongst internal auditors in Malaysia. Survey questionnaires were

distributed to 202 internal auditors. The results of this study provide insight into how individual and

organizational factors impact the role ambiguity of internal auditors. The findings suggest that individuals with

higher competency and autonomy experience lower levels of ambiguity. Furthermore, highly structured

companies with in-house internal audit create lower ambiguity for internal auditors in Malaysian companies.

Key words: Autonomy, competency, internal audit, organizational structure, organizational factors, personal

factors, risk management, role ambiguity, source of auditing

INTRODUCTION

The recent emphasis on the concept of risk in society

and the economic environment has been widely

discussed in different studies (Bertram & Chitty,

1994; Burns, 1994). The importance of the internal audit

function has escalated in recent years due to a drastic

increase in corporate failures during the last decade. In

2009 the Institute of Internal Auditors issued a

framework which changes the role of the internal auditin

the risk management function. Theintroduction of a new

framework has extended the role of internal auditors to

include monitoring risk management. This major change

has transformed internal auditorsfrom backroom officers

to a visible productive agent within an organization.

However, this newly acquired status may cause auditors

to be uncertain regarding their functions, particularly in

new areas. This may also lead to possible role ambiguity

amongst internal auditors, which may affect their

performance. Prior studies defined role ambiguity as the

lack of clarity in some aspects of a relationship such as

power distribution, hierarchy, nature of tasks or duties,

or consequences of an individual’s actions. According to

Breaugh and Colihan (1994), role ambiguity refers to

employees’ perceptions of uncertainty concerning

various aspects of their jobs. Kemery et al. (1985) define

four dimensions of role ambiguity,namely,responsibility,

process, priority and behaviour ambiguity. The literature

has shown that ambiguity may have negative effects on

performance, which leads to concerns as to whether

internal auditors can function effectively to prevent

future corporate scandals if role ambiguity prevails

amongst auditors.

Based on previous studies, the factors affecting role

ambiguity can be divided into individual and

organizational factors (Shenkar & Zeira, 1992; Caplan &

Kirschenheiter, 2000; Larson, 2004; Johnstone & Bedard,

2006; Kalbers & Cenker, 2008; Schulz & Auld, 2008).

These factors include competency and autonomy as

individual factors, and organizational structure

(formalization, organic, mechanistic), and source of

internal auditing service (in-house, outsource) as

organizational factors.

Therefore, this study examines the relationship

between antecedent factors and role ambiguity amongst

internal auditors. In the Malaysian case, the study by

Ahmad and Taylor (2009) focused on the personal

characteristics of internal auditors, role ambiguity and

role conflict. The objective of Ahmad and Taylor’s study

was to measure the commitment of independence, role

ambiguity and role conflict amongst internal auditors

in Malaysian companies. The findings suggested that

there is a negative relationship between role ambiguity

and role conflict and commitment to independence. Our

study is different from Ahmad and Taylor’s in various

ways. First, Ahmad and Taylor’s study was limited to

auditor independence, whereas this study focuses on

competency and autonomy as personal factors. Secondly,

the current study adds organizational structure to

indicate its effect on role ambiguity. Finally, the sample of

Ahmad and Taylor’s study was limited to organizations

with only in-house internal auditing, whereas the current

study investigates both in-house and outsourced internal

auditing.

The motivation of this study is to examine the

significant role of internal auditors in the overall

performance of organizations. In recent years, internal

auditors have undergone a paradigm shift from the

traditional practices of compliance audit to value added

auditing (Gramling et al., 2004; Yee, Sujan & James, 2007).

Additionally, financial scandals of large audit firms in the

past decade, such as Enron and WorldCom in the US,

Ahold in the Netherlands and Parmalat in Italy, have

proven the importance of the internal auditor to uphold

business ethics and corporate integrity. The current

study contributes to ambiguity literature by integrating

personal and organizational factors in role ambiguity.

Additionally, the majority of researchers have focused

on ambiguity in sociology, social psychology and

management areas, whereas the current study

investigates in the areas of auditing and internal

auditing.

Correspondence to: Shabnam Fazli Aghghaleh, Department of

Accounting, Graduate School of Business, Universiti Kebangsaan

Malaysia,Bangi, 43600, Selangor, Malaysia. Email: sh.fazli64@yahoo.com

International Journal of Auditing doi:10.1111/ijau.12015

Int. J. Audit. 18: 105–114 (2014)

© 2013 John Wiley & Sons Ltd ISSN 1090-6738