The sourcing arrangements of internal audit function (IAF) under COVID-19 pandemic: empirical evidence from emerging market

Figures & data

Table 1. Variables measured and summarized.

Variable	Definitions
IAFSU	The dummy variable indicates whether the work of the IAF is outsourced (1) or done in-house (0).
COVID19	The dummy variable takes a value of 1 if the fiscal year ended on or after March 11, 2020, and 0 otherwise.
ACIND	The percentage of directors serving on the AC who are independent.
ACAEXPRT	The percentage of AC’s directors with accounting expertise.
ACSIZE	The overall count of directors on the AC.
ACMT	The total number of meetings AC holds annually.
BIG4	If the audit firm conducting the external audit belongs to the big4, the dummy variable will be set to 1; otherwise, it will be set to 0.
SIZE	The natural logarithm of the sum of all assets.
LEV	The ratio of total liabilities to total assets.
INVREC	The total of inventory and receivables divided by total assets
PRO	The ratio of net income to total assets.
OWNER	Major shareholders’ percentage (> =10%) ownership of the shares.

Table 2. Sample range.

Year-to-date observations for all publicly listed companies from 2019 to 2020	233
Minus year-observations of financial companies	(73)
Minus data delisted and missing of companies-years observations	(19)
Final sample	141

Table 3. Summary statistics for the sampled period 2019–2020.

Variables	min	p25	Mean	Std. Dev	Median	p75	max
IAFSU	0.000	0.000	0.333	0.473	0.000	1.000	1.000
COVID19	0.000	0.000	0.528	0.501	1.000	1.000	1.000
ACID	0.000	0.667	0.722	0.227	0.667	1.000	1.000
ACEX	0.000	0.000	0.269	0.257	0.333	0.333	1.000
ACM	0.000	4.000	4.645	1.389	4.000	5.000	9.000
ACS	0.000	3.000	3.262	0.640	3.000	3.000	5.000
BIG4	0.000	0.000	0.348	0.478	0.000	1.000	1.000
SIZE	8.543	10.502	13.871	3.777	13.331	17.412	20.403
LEV	0.069	0.250	0.524	0.361	0.474	0.699	2.051
INVREC	0.005	0.100	0.265	0.197	0.221	0.413	0.747
ROA	−0.363	−0.017	0.002	0.095	0.023	0.045	0.252
OWNER	0.000	48.240	59.804	21.231	59.670	76.498	99.130

Table 1 shows definition of variables.

Table 4. Correlations matrix.

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)
(1) IAFSU	1.00
(2) COVID19	−0.07	1.00
(3) ACID	0.02	−0.11	1.00
(4) ACEX	−0.08	−0.08	0.05	1.00
(5) ACM	−0.16*	−0.05	0.22***	−0.04	1.00
(6) ACS	0.06	−0.03	0.30***	−0.03	0.18**	1.00
(7) BIG4	−0.20**	−0.04	−0.06	0.31***	0.08	0.07	1.00
(8) SIZE	−0.17**	−0.86***	0.08	0.19**	0.15*	0.06	0.30***	1.00
(9) LEV	−0.03	0.02	−0.13	0.12	−0.01	−0.21**	0.09	0.02	1.00
(10) INVREC	0.35***	−0.11	0.08	−0.12	0.14*	0.08	−0.35***	0.00	0.11	1.00
(11) ROA	−0.17**	−0.14*	0.13	0.14*	−0.04	0.13	0.23***	0.27***	−0.25***	−0.02	1.00
(12) OWNER	0.12	0.04	−0.09	−0.06	−0.20**	−0.04	−0.03	−0.05	0.08	−0.19**	−0.05	1.00

*** p < 0.01, ** p < 0.05, * p < 0.1.

Table 1 shows definition of variables.

Table 5. Estimates for probit regression of IAF arrangement.

Variables	Sign	VIF	IAFSU
			Coefficient	T. statistic
COVID19		5.35	−4.716***	(–3.352)
ACID		1.20	0.097	(0.182)
ACEX		1.17	0.865	(1.531)
ACM		1.23	−0.251*	(–1.764)
ACS		1.19	0.331	(1.557)
BIG4		1.69	1.725***	(3.530)
SIZE		6.15	−0.681***	(–3.408)
LEV		1.23	−0.427	(–1.080)
INVREC		1.32	3.242***	(3.930)
ROA		1.31	−3.405**	(–2.334)
OWNER		1.11	0.019**	(2.364)
_cons			5.039	(1.385)
Wald chi2			495.76
Prob > chi2			0.0000
Observations			141
Pseudo R^2			0.501

t-values are in parentheses.

*** p<.01, ** p<.05, * p<.1.

Table 1 shows definition of variables.

Data availability statement

The study’s supporting data can be obtained from the author. [Dr. Waddah Kamal Hassan Omer], upon reasonable request.