Valuation of the internal audit mechanisms in the decision support department of the local government organizations usin
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Valuation of the internal audit mechanisms in the decision support department of the local government organizations using mathematical programming George Drogalas1 · Konstantinos Petridis2 · Nikolaos E. Petridis2 · Eleni Zografidou1 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract The importance of internal audit and its impact on the organizations’ effectiveness raised public interest. This study focuses on the internal control mechanisms in the local government organizations (LGO). Specifically, the level of implementation of internal corporate control mechanisms in the Decision Support Department (DSD) of the LGOs is explored. On the basis of data analysis and processing of the results of the study, in which 93 civil servants took part, it is evident that the degree of the added value of internal audit in public organizations depends on the degree of its independency. Also, findings suggest that it is inversely proportional to the degree of compliance with procedures of the DSD. The analysis is extended by incorporating mathematical programming techniques for subset variable selection in order to minimize error values. Decision variables of the proposed models indicate which of the variables will be included in the regression model, to increase adjusted R2 . Keywords Regression analysis · Mathematical programming · Statistical analysis · Quantitative methods · Decision support department (DSD) · Internal audit · Local government organizations (LGOs)
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George Drogalas [email protected] Konstantinos Petridis [email protected] Nikolaos E. Petridis [email protected] Eleni Zografidou [email protected]
1
Department of Business Administration, University of Macedonia, Thessaloniki, Greece
2
Department of Applied Informatics, University of Macedonia, Thessaloniki, Greece
123
Annals of Operations Research
1 Introduction Reforms in some countries have opened up the audit of the public sector (Johnsen 2019). In recent years, especially, internal audit became a major part of public sectors’ reforms of many developing countries, due to the fact that improves public services and contributes to sound governance (Asare 2009; Aikins 2011; Alzeban and Gwilliam 2014). Hence, the impact and the added value that internal audit provides to organizations draw the attention of the public interest over the last years (Chang et al. 2019). Subsequently, the factors which affect effectiveness of internal audit also triggered the academic interest (Dellai and Omri 2016; Rudhani et al. 2017; Oussii and Taktak 2018). The Institute of Internal Auditors defines internal audit as an advisory activity that is designed to add value and improve the organization’s operations (IIA 2008). Internal audit is also defined as a multi-dimensional consulting activity designed to add value, by evaluating and improving the effectiveness of risk management, control and governance processes (Goodwin 2004; Erasmus and Coetzee 2018; Vadasi et al. 2019). Similarly, the internal control system is an or
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