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- Research Title - Efficacy and Efficiency of Internal Audit Systems in Petrochemical Manufacturing Units of Selected Companies

- Research Title - Efficacy and Efficiency of Internal Audit Systems in Petrochemical Manufacturing Units of
- Research Title - Efficacy and Efficiency of Internal Audit Systems in Petrochemical Manufacturing Units of

Research Scholar Ms. Krishna A Kapadia Research Supervisor Dr. Deepak Raste

Presentation Contents

Chapter No

Chapter-Title

1

Introduction

The first chapter deals with introduction & the role of internal auditor.

2

Literature Review

This chapter is focusing on the literature review surrounding both the nature of organisation culture & nature of the

internal audit would be examined.

3

Models of Organisational Culture and its Applicability to the Research Study

This chapter focuses on surrounding models of organisational culture and discuss the most appropriate model to use in

analysing the research questions about the role of organisational culture and the nature of internal audit.

4

Research Methodology

This chapter depicts the choice of methodology in examining an organisations culture and its internal audit function.

5

Case Study Approach

This chapter depicts the significance and selection of case study approach for giving justice to research.

6

Data Collection and Analysis Discussion

This chapter examines the selected sample organisations and classify those organisations by culture using the chosen

cultural model outlined in chapter 3.

7

Findings of the Research Study

The findings of the research study is tabulated and narrated under this chapter.

8

Conclusion

The conclusion is elaborated under this section by taking the research questions and discussing the extent to which the

results of the study provide answers to research questions together with possibility of future research.

Introduction

The scope of internal auditing within an organisation is broad and may involve topics such as the efficacy of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets and compliance with laws and regulations.

  • 1. Meaning of Audit

  • 2. Broad Category of Audits

1) Internal Audit 2) External Audit

  • 3. Role of Auditing

  • 4. Role of the Internal Auditor

  • 5. Understanding Organisation Culture

  • 6. Problem Statement

    • During the last few years there has been a growing interest in organizational culture.

    • The purpose of this study is to look at the organizational culture of organizations and their internal audit operations from the perspective of operational audit.

    • The proposed study uses an organizational cultural model to see if operational internal audit has identical cultural to the organization, and if not what differences exist, and how these differences might be seen to mean that the operational internal audit with a particular cultural profile better achieves its goals, and assists the organization as a

result.

Introduction

  • 7. Significance of the Research Study

    • This research provides an approach for our economy to adopt a sound and sensible but utmost transparent and practicable organizational structure for envisioned enhancement and multifaceted dynamic heights so as to offer legitimate and due financial fruits to the management, shareholders, investors’ specifically general public commonly on the basis of the principles of social justice.

    • Hence, the research study is significant for the organization, management bodies, shareholders and investors at large.

  • 8. Objectives of the Study

  • The aim of the research is to provide a model that would offer guidance to the cultural relationship between the organization and the internal audit function.

    The research questions provide a broad framework to work on. However, breaking down the question into smaller aims would make the research process more effective and efficient.

    Introduction

    Therefore following questions would form basis of this research:

    • 1. Does the internal audit section have the organizational culture different from the culture of the organization?

    • 2. If the internal audit section have the organizational culture distinct from the culture of the organization within which it operates, what types of differences exist?

    • 3. Is the culture of the internal audit section influenced by the culture of the organization as a whole?

    • 4. Do the cultures of the different internal audit sections in different organizations have similarities despite the organizational cultures of different organizations being different?

    • 5. Do these differences lead to tensions within the organization?

    • 6. If so are these tensions likely to be destructive or productive?

    Therefore the objectives of this research study are as under:

    To determine the nature of organisation’s culture. To determine the nature and form of internal audit within the organisation.

    This is a two part question. The first part involves determining the structure of internal audit

    within the organisation. The second part is concerned with the power or authority of internal audit within the organisation.

    Introduction

    9. Scope of the Research

    Align to objectives of the research the scope of the research would be as under:

    1) To understand the fundamentals of organisational culture.

    2) To understand the relationship between organisation culture & internal audit function.

    3) To understand the expanding role of the Internal Auditor and how culture would influence the way the Internal Auditor carries out this Role. 4) Three organizations operating within the Petrochemical sector were selected for analysis. 5) The research involves the analysis of historical data generated from the structured interview undertaken. 6) Research would be completed in span of 1.5 Years.

    Literature Review

    Literature review focused on following important aspects

    • 1. Difference between Internal Audit & External Audit

    • 2. Evolution of Internal Audit

    • 3. Need of Internal Audit

    • 4. The Current Role of Internal Audit

    • 5. Potential Role of Internal Audit

    • 6. Influence of Organisation Structure on the Internal Audit

    • 7. Culture of the Organisation

    • 8. Audit Effectiveness

    Literature Review

    1. Difference between Internal Audit & External Audit

    Basis of Comparison

    Internal Audit

     

    External Audit

     

    Meaning

    Internal Audit refers to an ongoing

    External Audit

    is

    an

    audit

    function

    audit function performed within an organization by a separate internal auditing department.

    performed by the independent body which is not a part of the organization

    Objective

    To review the routine activities and

    To

    analyse

    and

    verify

    the

    financial

    provide

    suggestion

    for

    the

    statement of the company.

     

    improvement

       

    Conducted by

    Employees

    Third Party

    Appointment

    Management

     

    Members

    Users of Report

    Management

     

    Stakeholders

    Opinion

    Effectiveness

    of

    the

    operational

    Truthfulness

    and

    fairness

    of

    financial

    activities

    statements

    Scope

    Decided by Management

     

    Decided by Statute

     

    Obligation

    No, Voluntary

     

    Yes, Indian Companies Act, 1956

     

    Period

    Continuous Process

     

    Once in a Year

    Checks

    Operational Efficiency

     

    Accuracy

    and

    Validity

    of

    Financial

     

    Statements

    Literature Review

    • 2. Evaluation of Audit

      • a) As a Sibling of External Audit

      • b) As a Cross Check

      • c) As a Probity Police

      • d) As a Non-Financial System Police

  • 3. Need for Internal Audit

    • a) Increased Size and Complexity of Business

    • b) Enhanced Compliance Requirements

    • c) Focus on Risk Management and Internal Controls

    • d) Use of Information Technology

    • e) An Increasing Competitive Environment

  • 4. Current Role of Internal Audit

    • a) Safeguarding of Assets

    • b) Economic and Efficient Use of Resources

    • c) Accomplishment of Organisations Objectives

  • 5. Potential Role of Internal Audit

  • Leading organizations are looking for the internal audit function to assume a leadership role in assessing and managing their strategic risks, adding value to the organization and identifying operational improvement opportunities.

    Literature Review

    6. The Influence of Organisational Structure on the Internal Audit

    Literature Review 6. The Influence of Organisational Structure on the Internal Audit

    Literature Review

    • 7. The Culture of the Organisations

    Robbins and Barnwell (1994) defined organizational culture in terms of ten characteristics of the organization:

    • a. Attitude to individual initiative;

    • b. Risk taking;

    • c. Direction or objectives;

    • d. Integration within the organization;

    • e. Management support;

    • f. Control;

    • g. Identity;

    • h. Reward system;

    • i. Conflict tolerance;

    • j. Communication patterns.

      • 8. Audit Effectiveness - There are several ways of considering audit effectiveness. The Institute of Chartered Accountants of India has developed one set of criteria, which are as follows:

        • A. Level of Management Involvement

          • B. Risk Management

          • C. Audit Plan

          • D. Conduct Audit as per. the Accounting and Auditing standards of the Institute of Internal Auditors and the Institute of Chartered Accountants of India.

          • E. Effective Communication

          • F. Proper follow up of recommendations must exist.

          • G. Compliance requirements of the Indian Companies Act, 1956.

          • H. Ethical Considerations

    Research Methodology

    • 1. Organisations Studied and their Selection Criteria

      • To assist with the comparability of data, it was decided to restrict the organizations selected to one industry and to choose organizations of comparable size within that industry.

      • Three organizations operating within the Petrochemical sector were chosen for the analysis.

      • Organizations turnover in excess of 100 Crores in sales in the year prior to the analysis, and all the organizations employed (directly or through subsidiaries) in excess of 5000 employees.

    Sr. No.

    Name of the Organisation

    1

    Reliance Industries Limited, Hazira Manufacturing Division, Surat

    2

    ONGC Petro Additions (OPAL) Limited, Dahej Division, Bharuch

    3

    GAIL (India) Limited, Dahej Division, Bharuch

    • 2. Data Collection Method - Interviews

      • The method of data collection was by way of structured interview using the questionnaire set out in Appendix-1.

      • Other Sources Books, Journals, Press Articles

  • 3. Choice of Research Method - The richness of data underlying a multiple-case study approach helps better to determine causal relationships at least within the cases. Accordingly, a case approach gives this study greater validity, both internal and external than a survey would. It also recognizes that replication of the real world in an experimental environment would be complex and of little practical benefit. For this reason the research method best suited to this study is a Multiple Case Based Approach.

  • Key Organizational Culture Model

    • 1. Key Business Models Studied to Understand Organisation Culture

      • I. Hofstede’s Multidimensional Model Ouchi and Machintosh’s three dimensional Model

    II.

    III. Cameron and Quinn’s Competing Value Framework

    • I. Hofstede’s Multidimensional Model - Develop a model of culture based on the following dimensions:

      • a) Power Distance Decision making styles of management

      • b) Masculinity/Femininity Social rights of men/women

      • c) Uncertainty Avoidance -

      • d) Individualism/Collectivism Attitude of worker/employee

    II.

    Ouchi’s & Machintosh’s three Dimensional Model - Ouchi’s & Machintosh’s considered three types of culture i.e.

    • a) Bureaucracy Hierarchy structure

    • b) Market Strong desire to meet market needs and beat competition

    • c) Clan Importance to team

    III. Cameron and Quinn’s Competing Value Framework - The identifiers of the culture listed by them were:

    • a) Clan Extended family, Working in Team

    • b) Adhocracy Ad hoc decision making

    • c) Market Strong desire to meet market needs and beat competition

    • d) Hierarchy Rules and Regulations

    Key Organizational Culture Model

    2. Choice of the Model

    • Hofstede’s Model has been validated as a test of the effect of certain aspects of country’s culture on the changes in management that may be necessary within division of same organisations operating in different countries.

    • Ouchi used his model as an attempt to explain the difference between US corporate decisions and Japanese corporate decisions based in the same country, all exhibiting the country culture of their base.

    • Cameron and Quinn have tested their model using different corporations based in the same country, all exhibiting the country’s culture of their base.

    Cameron model.

    and Quinn’s

    Model appear to

    be more suitable choice of cultural

    • a) This study considers internal audit to be sub-unit within an organisation, further this study is looking at organisational culture and organisational sub-culture from the viewpoint of organisational units within the same organisation rather than sections of an organisation operating in different countries.

    • b) Thus three organizations operating within the Petrochemical sector were selected for analysis

    Key Organizational Culture Model

    3. Cameron and Quinn Cultural Model as a Tool for Analysis

    • A. Cameron and Quinn (1999) have simplified the method of measuring culture that is developed into six four dimensional questions.

      • B. Each of the six questions is worded such as to identify a key aspect of organizational culture in terms of the four dimensional model.

      • C. Each of the six questions consists of four simple descriptions of that aspect or characteristic of one of the four cultures recognized by Cameron and Quinn. The descriptions given by Cameron and Quinn (1999) are:

    1) Dominant Characteristics:

    The organization is:

    I. A very personal place. It is like an extended family. People seem to share

    a lot of themselves.

    II.Very dynamic and entrepreneurial. People are willing to stick their necks out and take risks. III.Very results oriented. A major concern is with getting the job done. People are very competitive and achievement oriented IV.A very controlled and structured place. Formal procedures generally govern what people do.

    Key Organizational Culture Model

    2) Organisation Leadership

    The leadership is generally considered to exemplify:

    i.

    Mentoring, facilitating or nurturing

    ii.

    Entrepreneurship innovating or risk taking

    iii.

    A no-nonsense aggressive results oriented focus

    iv.

    Coordinating, organising or smooth running efficiency.

    3) Management of Employees

    The management style in the organization is characterised by:

    i.

    Teamwork consensus and participation

    ii.

    Individual risk taking, innovation freedom and uniqueness.

    iii.

    Hard driving competitiveness, high demands and achievement

    iv.

    Security of employment, conformity, predictability, and stability in relationships

    4) Organisational Glue

    The glue that holds organisation together:

    a) Loyalty and mutual trust. Commitment to this organization runs high b) Commitment to innovation and development. There is an emphasis on being on the cutting edge

    c) The emphasis on achievement and goal accomplishment. Aggressiveness and

    winning are common themes d) Formal rules and policies. Maintaining a smooth running organization is important

    Key Organizational Culture Model

    5) Strategic Emphasis

    The organization emphasises:

    a)Human development. High trust, openness and participation persist b)Acquiring new resources and creating new challenges. Trying new things and prospecting for opportunities are valued.

    c) Competitive actions and achievement. Hitting stretch targets and

    winning in the marketplace are dominant.

    d)Permanence and stability. Efficiency, control, and smooth operations are important.

    6) Criteria for Success

    The organization defines success on the basis of:

    a)The development of human resources, teamwork, employee commitment and concern for people. b)Having the most unique or newest product. It is a product leader and innovator. c) Winning in the marketplace and outpacing the competition. Competitive

    market leadership is the key.

    d)Efficiency. Dependable delivery smooth scheduling and low cost production are critical.

    Key Organizational Culture Model

    4. Application of Cameron and Quinn Cultural Model as a Tool for Analysis

    • a) The respondent were asked to evaluate the extent to which he agreed or disagreed with each statement individually on a seven point scale ranging from strong agreement, through neutral to strong disagreement.

    • b) Thus, the maximum score each of the four competing cultural attributes could obtain was 42 and the minimum score was 6.

    • c) The reason for selecting a positive 6 as a minimum score was to avoid plotting through the origin.

    • d) A neutral position would be indicated by a score on the ray under consideration of

    24.

    • e) Thus, where a respondent scored a particular attribute of their organization’s culture at below 24, that attribute was to be considered a less important influence within the organization.

    • f) Where a score of greater than 24 was achieved then that attribute was of greater importance in determining the organization’s culture.

    • g) When an organization that scored, say, 6 for the six questions designed to draw out its hierarchical tendencies, would be positively opposed to hierarchical cultural activities.

    • h) While an organization that scored 42 would be positively in favour of hierarchical activities.

    • i) Further it was possible for an organization to record a strong preference in favour of more than one of the cultural measures without this reducing the strength of the preferences recorded in favour of any of the other cultural measures.

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    Data Collection and Analysis

    • Organisation -1 Reliance Industries Limited Operational Internal Audit

    Data Collection and Analysis  Organisation -1 – Reliance Industries Limited – Operational Internal Audit

    Data Collection and Analysis

    • Organisation -1 Reliance Industries Limited Line Manager

    Data Collection and Analysis  Organisation -1 – Reliance Industries Limited – Line Manager

    Data Collection and Analysis

    • Organisation -2 OPALOperational Internal Audit

    Data Collection and Analysis  Organisation -2 – OPAL – Operational Internal Audit

    Data Collection and Analysis

    • Organisation -2 OPAL-Line Manager

    Data Collection and Analysis  Organisation -2 – OPAL-Line Manager

    Data Collection and Analysis

    • Organisation -3 GAIL- Operational Internal Audit

    Data Collection and Analysis  Organisation -3 – GAIL- Operational Internal Audit

    Data Collection and Analysis

    • Organisation -3 GAIL- Line Manager

    Data Collection and Analysis  Organisation -3 – GAIL- Line Manager

    Data Collection and Analysis

    • Approach to the Internal Controls by Each Organisations

      • A. Organisation Values Internal Control 3,16,17,24,25

    B. Organisation Values

    Contribution

    1,4,5,6,7,10,11,12,13,14,21,22,23

    of

    Internal

    Auditor

    • C. Operational Audit Involvement in Ethical Consideration 8,9

    D. Use of Control Self Assessment 15,20 E. Influence of Informal (Undocumented) Internal Controls 18,19

    A. Organisation Values Internal Control

    Data Collection and Analysis  Approach to the Internal Controls by Each Organisations A. Organisation Values

    Organisation-1 values internal control

    Data Collection and Analysis

    • B. Organisation Values Contribution of Internal Auditor

    Data Collection and Analysis B. Organisation Values Contribution of Internal Auditor Organisation-2 give more values to

    Organisation-2 give more values to the contribution of internal auditor

    • C. Operational Audit Involvement in Ethical Consideration 8,9

    Data Collection and Analysis B. Organisation Values Contribution of Internal Auditor Organisation-2 give more values to

    Organisation-1 & 2 give some weightage to ethics while Organisation-3 is very much silent

    Data Collection and Analysis

    • D. Usage of Control Self Assessment

    Data Collection and Analysis D. Usage of Control Self Assessment Organisation-1 is neutral, Organisation-3 is worst

    Organisation-1 is neutral, Organisation-3 is worst on this aspect while

    Organisation-2 is receptive on taking line manager’s advice for the controls under which they work

    • E. Influence of Informal (Undocumented) Internal Controls

    Data Collection and Analysis D. Usage of Control Self Assessment Organisation-1 is neutral, Organisation-3 is worst

    Results indicates that operational internal auditors are most highly respected

    in Organisation-2. Ad hoc controls exist in Organisation-3.

    Data Collection and Analysis

    • Summary of Results

      • a) Reliance Industries and GAIL accepted operational internal audit without undue conflict.

      • b) At the same time operational internal audit is highly bureaucratic/hierarchical in Reliance Industries and GAIL.

      • c) In OPAL, there was a conflict between the line manager and operational internal audits over the value of operational internal auditor but at the same time both parties accepted undocumented internal controls.

      • d) Further in OPAL element of submissiveness to senior management was seen from the viewpoint of operational internal auditors and the line managers.

    Findings of the Research

    1) Does the internal audit section have the organizational culture different organization?

    from

    the culture

    of

    the

    A. Organisation-1 (Reliance Industries Limited)

    • i. Both line manager and operational internal auditor considered that organisation was a market driven

    ii.

    hierarchy with a minimum score adhocracy.

    Internal auditor did not see his section giving more weight to market as he saw company as a whole.

    iii. According to internal auditor his organisation was both ad hoc oriented and more market driven than his operational internal audit section. iv. His view of the company as a whole corresponded closely with the view held by line manager. B. Organisation 2 (OPAL)

    • I. Both line manager and operational internal auditor considered that organisation was very market driven.

    II. The operational internal auditor saw the culture of the operational internal audit as trying to satisfy all needs.

    III. It experienced both bureaucratic and ad hoc organisational culture within the operational internal audit

    area. IV. Operational internal auditor gave the operational internal audit section a higher value for hierarchy/bureaucracy than the organisation as a whole.

    • V. His view of the company as a whole corresponded closely with the view held by line manager.

    C. Organisation-3 (GAIL)

    I. The operational internal auditor on the other hand held a similar cultural position to the operational

    internal audit of Organisation-1 (Reliance Industries Limited)

    II. Strongly bureaucratic, partly clan and market oriented with little interest in an ad hoc culture. III. Again the view of operational internal auditor matches with the view of line manager, except line manager considered the organisation to be more ad hoc.

    Thus, in all 3 organisation the culture of the organisation as a whole as plotted by both operational internal auditor and line manager was distinctly different from the culture of the operational internal audit as plotted by the operational internal auditor.

    Findings of the Research

    2)If the internal audit section have the organisational culture different from the culture organisation, what types of differences exist ?

    of

    • A. Organisation-1 (Reliance Industries Limited)

    i.

    The

    operational

    internal

    audit

    of

    this

    organisation

    was

    more

    clannish

    and

    more

    hierarchical/bureaucratic than the organisation as a whole.

    • B. Organisation 2 (OPAL)

    I.

    While the operational internal audit of this organisation exhibited slight differences relative to

    organisation as a whole. II. The operational internal audit of this organisation was more strongly bureaucratic and more clannish than the organisation as a whole.

    • C. Organisation-3 (GAIL)

      • I. The operational internal audit of this organisation was more bureaucratic than the organisation as a whole.

    II. This organisation was considered clannish by the operational internal auditor.

    III.While the clannishness of the operational internal audit was high but it was not higher than the organisation as a whole.

    IV. High level of bureaucratic/hierarchical values displayed in internal audit section of the organisation

    was not matched with organisation as a whole.

    Thus, all the operational internal audit sections of all the organisations see themselves as more bureaucratic/hierarchical than the respective parent organisation as a whole and very less clannish. The organisation culture as a whole as plotted by both operational internal auditor and line manager

    was distinctly different from the culture of the operational internal audit as plotted by the operational

    internal auditor.

    Findings of the Research

    3)Is the culture of the internal audit section influenced by the culture of the organisation as

    a whole ?

    • This is relatively difficult question to answer from the data available.

    • Orgainisation-2 – OPAL’s organisation culture was interpreted substantially differently by the internal audit subject when compared to the interpretation given by the line manager.

    • Internal auditor saw the organisation as a market driven hierarchy/bureaucracy, while line manager saw organisation-2 OPAL as a market driven adhocracy.

    • Line manager pointed out that fear factor was used as a control tool.

    • The operational internal auditor did not mention fear, however indirectly he did indicate that fear was used to control staff on occasion.

    • From the perspective of the operational internal audit of Organisation-2-OPAL does not appear to have been influenced by its organisation.

    • While Organisation-1-Reliance Industries and Organisation-3-GAIL have quite different organisational cultures. This showed that operational internal audit sections that have cultures that do not appear to be submissive to the organisations own culture.

    • Thus risk of tension between the operational audit and the organisation under examination would appear in Organisation-1-Reliance Industries and Organisation-3-GAIL.

    In nutshell, organisational culture of the organisation as a whole can have a significant influence on the operational internal audit in situations where fear is used to supress the independence of

    the culture of subsections of the organisation, including the operational audit section. When fear is

    not used, operational audit would assert its cultural independence to a much greater degree. Operational internal audit culture would reflect the attributes of both strong rule based culture, and a clan of persons with common values and attach substantially less importance to market and while being averse to ad hoc actions.

    Findings of the Research

    • 4. Do the cultures of the different internal audit sections in different organisations have similarities, despite the organisational cultures of different organisation being different.

      • Within all three organisations, operational internal auditors were all strongly bureaucratic.

      • The operational internal sections of both Orgainsation-1 (Reliance Industries) and Organisation-3 (GAIL) had very similar culture, the difference between them and the operational audit section of Organisation-2 (OPAL) were substantial.

      • Answer to this question is Yes.

  • 5. Do these differences lead to tensions within the organisation?

    • This is not a statistical exercise, the implication of the cultural model outcome is that there would some tensions between operational internal auditor and line managers.

    • The above opinion is in juncture to the comments from line manager of Organisation-1 (Reliance Industries Limited), who remarked that sometimes the desire to follow rules exhibited by operational

  • internal auditors was considered extreme by the line managers.

    • 6. If so these tensions would be destructive or productive?

      • One approach to analyse this question is to consider the outcome for different organisations.

      • Principle objective of the operational internal audit is the safety of the organisation.

      • Organisation-2-OPAL’s operational internal audit was very rule oriented in comparison with other two organisations were other aspects of cultural model (market, clan and adhocracy) was strongly present.

      • The particular attitude to adhocracy would seem to be anathema to a rule based bureaucracy, yet the operational internal audit reflected the corporate ‘can do’ attitude.

      • Unfortunately, organisation-2 (OPAL) had the worst safety records in comparison to other two organisations.

      • Thus if operational internal audit is guided by the senior management then the audit process would fail.

    Conclusion

    The study can be summarized as contributing the following to the research on both organizational culture and sub-cultures with an organization in regards to the interplay between the organization’s culture as a whole and the sub-culture of an organization’s operational internal audit section, and how that may influence the organization’s use of internal controls.

    1) The operational

    internal auditor

    has

    a

    organization’s culture as a whole.

    unique

    culture within an organization different

    from

    the

    2) The operational internal auditor’s culture tends to be far more bureaucratic than the organization as a whole.

    3) The operational internal auditor’s culture is also strongly clannish, generally more so than the organization as a whole. In this regard the nature of the clannishness is in favour of the operational internal auditors rather than the organization as a whole. In other words, the operational internal auditors see themselves as being “superior” to the run of the mill than the line managers from whom they have been selected.

    4) Tensions between the organization and the operational internal auditor would exist because of the cultural

    difference, and the strong bureaucratic/hierarchical culture of the operational internal auditor which is reflected in the strong desire to follow rules.

    5) These tensions are strongest when the operational internal

    audit

    is

    not

    strongly instilled

    with

    the

    organizational culture of the whole organization and thus does not have a culture that is subservient to that

    of the organization as a whole.

    6) At least some cultural difference and, therefore, tension between the organization and its operational

    internal audit is a good thing, as it appears to avoid the operational internal auditor coming under the influence of the organization to the point at which independence is lost, and with it the value of the operational audit as a way of “keeping the organization on the straight and narrow”. This is demonstrated by the differences in outcomes for Organization 2 (OPAL) as against Organizations 1 (Reliance Industries Limited) and 3 (GAIL India Limited).

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