Internal audit quality framework in the banking sector: A content analysis based on annual reports

Although a definite consensus has not been reached on the evaluation and definition of audit quality, audit quality indicators are tried to be determined by creating an "audit quality framework" with the studies carried out by various authorities and academicians. However, most of these studies are related to external auditing, and there are limited studies on the internal audit quality framework. In this study, in order to conceptually reveal the issues that banks focus on while evaluating the quality and functioning of internal auditing, a content analysis was conducted on the sections related to internal audit in the 10-year annual reports of 6 deposit banks (3 public and 3 private). The identified 54 codes were classified under five dimensions (input-process-output-outcome-external factors) with the perspective of the "internal audit quality framework" suggested in the literature. Thus, the focuses of the banks while evaluating the internal audit were determined from the annual reports, which give very important and reliable information about the internal audit, and they were systematically conceptualized and analyzed. Accordingly, both public banks and private banks focus on the "process" dimension of the internal audit quality framework in the first place in their evaluations on internal audit, similar to each other. In the last 10 years, the process dimension (activities, methods and approaches in the audit process) has always been in the first place among the five dimensions, while the input dimension (qualifications of the audit team and the auditor) has always been in the last place. The most emphasized topics are as follows; (1) in the inputs; number of auditors and training, (2) in processes; risk-based auditing, remote auditing and process audits, (3) in the outputs; reports/meetings submitted to the management and follow-up of findings, (4) in the outcomes; providing accurate and reliable information and being a preventive/deterrent, (5) In external factors; legal regulations and organizational structure. In addition, it has been determined that many current audit approaches are closely followed by deposit banks in Turkey. The internal audit quality framework is very important in identifying and conceptualizing the factors that may affect audit quality and will provide comparability, transparency and awareness in internal audit quality assessments.