Indicators of Effective Internal Auditing in the Iranian Public Sector and Their Impact on Good Governance: A Grounded Theory Approach

Abstract

Objective: The objective of this study is to analyze the indicators of effective internal auditing in Iran’s public sector and examine their impact on good governance using a grounded theory approach.   Methodology: This qualitative study was conducted using the grounded theory methodology. Data were collected via a structured questionnaire distributed to four groups of professionals: university financial experts, auditors at the Supreme Audit Court, treasurers and experts from the Ministry of Economic Affairs and Finance, and members of the internal audit profession. Multiple regression analysis was employed to assess the relationship between internal audit effectiveness and five key indicators. A qualitative modeling framework was also used to identify causal conditions, intervening factors, contextual elements, strategies, and consequences related to internal audit performance.   Findings: The findings indicate that internal audit effectiveness in Iran’s public sector is influenced by five critical indicators: advisory mechanisms and processes, internal control evaluation, audit-reporting communication, accountability and financial reporting, and assurance of processes and operations. These indicators were integrated into a comprehensive model that can guide policy-making and improve internal audit performance in the public sector.   Conclusion: Effective internal auditing is recognized as a crucial pillar for improving governance quality in the public sector. Identifying and reinforcing key indicators can significantly enhance transparency, accountability, and the efficiency of governmental institutions.