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Introduction and motivation
The purpose of this paper is to investigate the contribution of internal audit function and audit committee effectiveness on accountability in statutory corporations (SCs) in Uganda in a single study. Accountability of state-owned enterprises (SOEs) (also known as SCs in some jurisdictions) is a crucial and growing topic in public management. In their guest editorial, Grossi et al. (2015) exemplified the importance of SCs but lamented the scant empirical studies available on the topic. Yet in Uganda, for example, the Auditor General (AG) has, for a number of years, lamented and discovered accountability failures in this country. Thus, questions continue to abound about which models, mechanisms, instruments and processes SCs could use for effective, efficient and sustainable accountability.
According to Brennan and Solomon (2008), board composition, existence and performance of audit committees, external audit, institutional investors and functioning of internal audit can explain variances in accountability. However, according to Khongmalai et al. (2010), most studies have focused on the private sector rather than the SCs’ sector, and these studies have focused on only one practice of corporate governance, for example, the board of directors or governing boards (Michie and Oughton, 2001; Nkundabanyanga et al., 2015), internal control (Giroux and McLelland, 2003), internal audit (Xie et al., 2003) or risk management (Crawford and Stein, 2004). Except for the study of Khongmalai et al. (2010), whose study’s value lay in the demonstration of the multi-attribute nature of the corporate governance model in SOEs in Thailand, to our knowledge, there is no study that has empirically tested the role of internal audit function and audit committee effectiveness in explaining accountability in the SCs, in a single study.
Initially, we reason that because one of the audit committee roles is to review corporate accounting information and yet also internal audit must evaluate and contribute to improvement of internal controls, internal audit function and audit committee effectiveness should hybridize to obtain better accountability. Like in purely private corporations, this is possible unlike in the SCs because King III (2009) had, for instance, introduced a combined assurance model that considers internal assurance units (e.g. internal and audit committee functions) as one of the three lines of defence along with management and external assurance providers. Within the...