Bridging the Gap of Internal Audit functions: An Exploratory Evidence of Malaysian Cooperatives and Public Sector Organisations

Internal audit function has always been recognised as one element of good corporate governance, being an integral part of the control mechanism in both public and private organisations. The issue is whether it is effective in achieving its objectives. To be effective, internal audit function must possess certain characteristics and must be positioned appropriately in the organisation and be given relevant tasks or functions which would be appraised to measure effectiveness. Under the Cooperatives Societies Act (CSA) 1993, cooperative is required to establish an internal audit committee (IAC), of which members are appointed from among its members. The IAC function is determined by the CSA 1993 and the Cooperatives Societies Regulations 1995. This paper focuses on the IAC functions with the aim of exploring the need for an effective IAC to assist in ensuring the sustainability of cooperative and thus contribute to the economic growth of the country. Comparisons were made between the best practices of internal auditor in public sector organisation, as recommended by the Institute of Internal Auditors Malaysia in its guidelines of Internal Audit Function with the current role and function of internal auditor of cooperatives as required by relevant legislations. The gap of these two functions was identified to conclude that the function of internal audit in cooperatives to be expanded, covering both the financial and operational areas.