Article

The Impact of Culture on the

Quality of Internal Audit: An
Empirical Study

Journal of Accounting,
Auditing & Finance
2015, Vol. 30(1) 5777
The Author(s) 2014
Reprints and permissions:
sagepub.com/journalsPermissions.nav
DOI: 10.1177/0148558X14549460
jaf.sagepub.com

Abdulaziz Alzeban1

Abstract
This study draws on Hofstedes theoretical framework to examine the impact of different
dimensions of culture on the quality of internal audit (QIA) in Saudi Arabia. A sample of
chief internal auditors from 67 listed companies has been used to examine the direct effect
of the cultural dimensions of power distance, uncertainty avoidance, and individualism on
the QIA. Evidence was found that organizations, in which power distance and uncertainty
avoidance are high, are characterized by lower QIA. The results also show a positive association between individualism and the QIA, indicating that internal audit is largely based on
the accomplishments of the individual internal auditors associated with the process.
Considering these outcomes from the Saudi Arabian standpoint, where the cultural and
economic contexts are underpinned by collectivism rather than individualism, it emerges
that it is only comparatively recently that a tradition of governance and audit has started to
develop, and that quite particular and strong cultural influences stemming from tribalism
and pervasive core traditions beliefs operate to condition the effort to achieve the ideal
internal audit environment.
Keywords
internal audit, quality of internal audit, culture

Introduction
The importance of internal audit quality is well-accepted in the developed countries, where
the International Standards for the Professional Practice of Internal Auditing (ISPPIA) are
complied with through the actions of Chief Audit Executives (CAEs), who facilitate the
internal audit function (IAF) in a variety of ways. In this respect, their brief is to instill a
sense of professionalism within internal auditors, and implement organizational structures
to allow them to operate unhindered in the interests of effective internal control and transparency. In parts of the developing world, however, attitudes toward the types of action
required by CAEs to safeguard the independence of the IAF are different, thereby raising
obstacles to the effective discharge of internal audit duties. These varying attitudes are the
result of differing cultural outlooks and traditions, a topic which has raised interest among
1

King Abdulaziz University, Jeddah, Saudi Arabia

Corresponding Author:
Abdulaziz Alzeban, King Abdulaziz University, Jeddah, Saudi Arabia.
Email: aziztheban@yahoo.com

58

Journal of Accounting, Auditing & Finance

researchers concerning the influential role of culture upon the way in which auditing in
general operates (e.g., Abdolmohammadi & Tucker, 2002; Chan, Lin, & Lan Mo, 2003;
Cohen, Pant, & Sharp, 1995; Hell & Wang, 2009; Hope, Kang, Thomas, & Yoo, 2008;
Jeffery, Dilla, & Weatherholt, 2004; Patel, Harrison, & McKinnon, 2002; Sim & Goodwin,
2004; Umar & Anandarajan, 2004; Wingate, 1997).
However, despite such interest, very few researchers have addressed the impact of culture upon the way in which internal as opposed to external audit performs its duties (e.g.,
Abdolmohammadi & Sarens, 2011; Sarens & Abdolmohammadi, 2010). Nonetheless, the
study conducted by Sarens and Abdolmohammadi (2010), that does focus on internal audit,
has provided a commentary on the link between the professionalism of internal auditing
and the prevailing cultural context in which that takes place and the uniformity of internal
audit practice. These researchers reveal that in countries believed to score low on uncertainty avoidance, collectivism, and assertiveness, it is more common to find a professional
internal audit community than in countries not characterized by these traits. At the same
time, they find that in countries where a lower level of power distance and collectivism
prevails, it is more likely to find a high degree of uniformity in internal audit practice.
Saudi Arabia, like the rest of the Arab World, scores high on uncertainty avoidance, collectivism, and power distance, and consequently can be expected to generate a lack of uniformity in internal audit practice in tandem with a lack of professionalism among its internal
audit personnel.
This absence of uniformity and professionalism can be seen as a result of particular cultural hallmarks resulting from the fact that Saudi society is predicated on the notion of
familial and personal ties, and traditional imperatives. These mean that it is highly likely
that the activities undertaken by the IAF, which operates as a monitoring and control
mechanism to remove personal interest from financial dealings, may well be compromised,
and with that so too efforts to engender good corporate governance.
Despite these underlying suppositions, however, no empirical research has yet been
undertaken to directly examine the relationship between culture and the quality of internal
audit (QIA; as measured by competence, objectivity, and the work performed by internal
auditors). In an attempt, therefore, to contribute to the literature, this study focuses on the
issue of whether the QIA is affected by particular cultural dimensions that can be identified
in the Saudi Arabian context. Consequently, its findings offer empirical evidence of the
way in which certain cultural dimensions impinge upon the QIA, and identify the relative
force of each of these dimensions on the process.
In so doing, they extend existing literature in the field and address the shortcoming in
the literature by examining the way in which internal audit is conceived and performed in
an oil-based economy where a definite robust traditional culture straddles liberal market
capitalism. This effort thus has implications for Middle Eastern and other developing contexts, where similar traditions prevail and share a similar socioeconomic environment.
The three dimensions of culture identified (power distance, uncertainty avoidance, and
individualism) as affecting the QIA are used to operationalize the study, and hypotheses on
the impact of these constructs in this respect formulated and tested using data collected
from 67 listed companies in Saudi Arabia, and doing so with the use of regression models.
Beyond this opening introduction, the article is structured as follows. The next section
(The Prevailing Dimensions of Culture in Saudi Arabia section) discusses the dimensions of culture prevailing in Saudi Arabia. The Literature Review and Development of
Hypotheses Concerning the Cultural Influence on Auditing section considers the influence
of culture on auditing and formulates the research hypotheses. In the Research Method

Alzeban

59

section, the research methodology is presented, and the main variables and the manner in
which they are measured are defined and explained. The Statistical Tests of Hypotheses
section reports the statistical tests of hypotheses. The Discussion section reports the
main findings of the analysis, and finally in the Conclusion section, a conclusion is
drawn in which the results are contextualized and their wider implications are considered.

The Prevailing Dimensions of Culture in Saudi Arabia

In Hofstedes framework, there are six dimensions along which it is possible to compare
national cultures, these being power distance, uncertainty avoidance, individualism versus
collectivism, masculinity versus femininity, long-term versus short-term orientation, and
indulgence versus restraint. Specifically in terms of Saudi Arabia, it has been argued by
Idris (2007) that a reasonably homogeneous culture exists, but nonetheless, the Muslim
faith is influential in all decision making in the Kingdom and has a substantial impact upon
business and legal practices (Idris, 2007). Consequently, for any enterprise to be successful
in Saudi Arabia, it is essential that a strong grasp of the national culture is possessed, and
in this section, three of the dimensions of culture have been identified as dimensions that
relate closely to national auditing environments (Hughes, Sander, Higgs, & Cullinan,
2009), these being power distance, uncertainty avoidance, and individualism. For example,
Abdolmohammadi and Sarens (2011) undertook a large cross-cultural sample spanning 19
different countries. They examined the potential relationships between certain cultural
dimensions and differences in the use of internal audit standards and in the degree of overall compliance with these standards. They found an inverse relationship between uncertainty avoidance and both use and compliance. Moreover, they revealed a positive
association between assertiveness and human orientation to compliance, but not to the use
of standards.

Power Distance
Power distance is a concept relating to inequality in society, and fundamentally it gives an
indication of how the culture views this. Hofstede (n.d.) states this as being the extent to
which the less powerful members of institutions and organisations within a country expect
and accept that power is distributed unequally. According to Hofstedes ranking, Saudi
Arabia scores 80,1 which demonstrates a high level of inequality in respect of power and
wealth within Saudi society (Cassell & Blake, 2011). This implies that the hierarchy existent within Saudi society is accepted as functional, and that no rationale needs to be provided for the fact that some people have more than others in status or financial terms. In
organizations, this is demonstrated by heavily centralized structures in which the inherent
inequalities are evident in the command and control culture, with those in junior positions
receiving instructions from those further up the hierarchy, irrespective of qualification or
ability. Subordinates have the expectation that they will be told how to behave, and they do
not question this arrangement.

Uncertainty Avoidance
Hofstede (n.d.) explains the dimension of uncertainty avoidance as the degree to which
organizational or societal members depend on, and revert to, social norms, rituals, and
bureaucracy in a bid to minimize the unpredictability of events that will happen in the

60

Journal of Accounting, Auditing & Finance

future. Having received a ranking of 68 on Hofstedes uncertainty avoidance index, Saudi

Arabia demonstrates that it does not tolerate uncertainty well (Cassell & Blake, 2011), and
the strict regulatory system in operation in the Kingdom is one strategy to help reduce
levels of uncertainty. In societies that score high on uncertainty avoidance, there are continual efforts to keep control of as many variables in life as possible, and not surprisingly in
such environments, change is not readily accepted, and generally, people are risk averse
(Butler, n.d.). Hofstede (2001) confirmed this aversion, emphasizing that populations with
this mentality try to reduce the threat which ambiguous situations bring to them by searching for stability in their careers, operating within the rule system, rejecting deviant ideas
and behavior, and accepting the possibility of absolute truths and the attainment of
expertise.

Individualism
The dimension of individualism concerns the extent to which people are concerned with
their own well-being rather than accepting responsibility for the well-being of others. As a
polar concept, collectivism is about the degree to which individuals perceive themselves as
being part of a group which can legitimately demand their loyalty in exchange for protection or support (Hofstede, n.d.). Self-interest and personal prestige are prevalent in cultures
scoring high on individualism, and in organizations in such cultures, the relationship
between the employer and employee is perceived as no more than a business contract
founded on mutual benefit. Conversely, in collectivist cultures, peoples motives are influenced by the aims and objectives of the group, and these are generally elevated above personal goals in circumstances where a choice has to be made. In the organizational setting,
collectivism is seen in the use of teams, in the sharing of praise and reward, and in the
high level of loyalty which employees demonstrate toward the organization (Hofstede,
2001).
In Hofstedes ranking for Saudi Arabia, the individualism score is low at 38, thereby
indicating society to be collectivist in nature. Indeed, this is apparent in the long-term commitment to the group, whether this be the family, extended family, tribe, or other ties
(Cassell & Blake, 2011). This long-term commitment overrides other societal norms, loyalty being considered as an all-important characteristic (Butler, n.d.), which guarantees a
natural disposition among people to take care of others in their immediate and wider group.
Concepts such as loss-of face are prevalent in collectivist societies where supportive
behavior to others within ones group is expected, and where failure to deliver leads to
shame.

Literature Review and Development of Hypotheses Concerning

the Cultural Influence on Auditing
Cultural dimensions have served as the basis for a number of cross-cultural studies in auditing, in which it has been found that a significant variation exists in practice according to
cultural context. One of these studies, undertaken by Hughes et al. (2009), explored the
role played by three of the cultural dimensions proposed by Hofstedepower distance,
uncertainty avoidance, and individualismin the investigative procedures performed by
entry-level auditors in Mexico and the United States. In that particular study, it emerged
that the participants abilities to predict income statement balances were not in themselves
impaired by these cultural dimensions, but that there was the potential for these dimensions

Alzeban

61

to affect their ability to predict changes in balance sheet accounts. Moreover, they highlighted the effect of culture upon the risk assessment process, showing that auditors rarely
differentiated between accounts that changed according to, from those that changed contrary to, expectation; instead they amended their risk assessments to match the direction of
balances that increase or decrease.
In another recent study, Hope et al. (2008) constructed a novel measure of how secretive
societies are based on Hofstedes (1980) cultural factors and employed a large sample of
firms (i.e., 91,030 firm-year observations) from 37 countries, to explore the impact of
national culture on the choice of auditors. They found that in a large sample of firms from
37 countries, those firms in more secretive cultures were less likely to employ one of the
Big 4 auditors.
Clearly, auditor independence is a consideration of those seeking to appoint auditors
who are expected to work within the confines created by home-country norms, and shedding light on the process in this respect, Kosmala (2007) considered the influence of
aspects of culture upon the actual construct of auditor independence, particularly, ideas
concerning individual freedom, political and economic liberalism, and economic reality.
A little earlier, Chan et al. (2003) investigated the influence of the cultural dimensions
identified by Hofstede on the detection of accounting errors by auditors finding that power
distance and individualism were significant in explaining the variations in the relative magnitude of errors. In addition, they found that the concentration of power in just a few
people, the practice by management of overriding audit controls, and the employment of
personnel on attributes other than competence were unsatisfactory outcomes of a large
power distance culture, and that these phenomena underpinned the production of many
more mistakes in the audit process.
From the literature, it is evident that much of the research effort surrounding culture to
date has focused on auditing per se, rather than on internal audit. However, the conceptual
frameworks offered by Gray (1988) and Hofstede (1991, 2001) have been used as the basis
for some studies that have sought to explore the relationship between culture and internal
audit (e.g., Abdolmohammadi & Sarens, 2011; Abdolmohammadi & Tucker, 2002; Sarens
& Abdolmohammadi, 2010). In particular, Abdolmohammadi and Sarens (2011) undertook
a large cross-cultural sample spanning 19 different countries. These researchers examined
the potential relationships between certain cultural dimensions and differences in the use of
internal audit standards and in the degree of overall compliance with these standards. Using
CAEs and internal audit managers as their informants, Abdolmohammadi and Sarens found
an inverse relationship between uncertainty avoidance and both use and compliance.
Moreover, they revealed a positive association between assertiveness and human orientation
to compliance, but not to the use of standards. In respect of the control variables, positive
relationships were identified between the length of Institute of Internal Auditors (IIA)
membership, professional certification in internal auditing, and hours of continuing professional education (CPE) training, and both perceived use and compliance. However, none of
the previous studies specifically examine the association between cultural dimensions and
the QIA. This is the issue that is addressed in the current study, which concentrates on the
impact of culture on the QIA function.
Focusing on three of Hofstedes cultural dimensions (power distance, uncertainty avoidance, and individualism), this study extends prior literature by examining directly the
impact of culture on the QIA. Hypotheses in this respect are developed in the following
sections.

62

Journal of Accounting, Auditing & Finance

Power Distance
Hofstedes (2001) understanding is that power distance can be explained as the degree to
which the less powerful members of organizations anticipate power to be distributed
unequally, and accept this status quo. In organizational terms, certain differences are apparent between those where high and low power distance exist. Particularly, high power distance organizations have strong centralization (Wong & Birnbaum-More, 1994). In
countries scoring high on power distance, employees are relatively uneducated (Hofstede,
2001), and this influences the QIA as competency is an indication of quality (e.g., AlShetwi, Ramadili, Chowdury, & Sori, 2011; Al-Twaijry, Brierley, & Gwilliam, 2004;
Arena & Azzone, 2009). Auditors in high power distance environments should anticipate
greater levels of fraud from employees, and place more efforts in ensuring the effectiveness
of internal controls (Hell & Wang, 2009). In low power distance organizations, however,
the hierarchy merely exists for administrative usefulness, and there is greater decentralization of power with a tendency for people throughout the workforce to be well qualified.
Given their level of qualification, subordinates are usually consulted in decision making,
and superiors are easily accessible for discussion (Hofstede, 2001).
Undoubtedly, there are implications for the effectiveness of internal audit of these characteristics, and hence, it is vital to consider these in any exploration of internal audit quality, because, as noted by Gramling and Vandervelde (2006), low QIA can represent
material weaknesses in internal controls. Indeed, Hofstede (2001) has identified that in
organizations where there is high power distance, top management often regard accounting
systems as available for their manipulation to justify their decisions, and in this situation,
figures are often presented in a less than complete way so as to project the desired image
(Hofstede, 2001). Often in these organizations, managerial staff will circumvent or override
controls that exist to guarantee transparency. The centralization of power in the hands of
just a few people is believed to precipitate an increased risk of material misstatements in
the reporting of financial matters (Haskins, 1987). Moreover, as already mentioned,
employees in high power distance organizations are usually less knowledgeable than those
in low power distance organizations, and it is known that the QIA is dependent among
other things, on an educated and trained team of auditors.
Clearly, in a small power distance organization, the use of power should be legitimate,
and subject to more checks and balances. There is an expectation in such organizations that
the integrity of auditors is relatively high and that the greater level of education, training,
and qualification will lead to a better QIA (Gray, 1988; Hofstede, 1991). Sarens and
Abdolmohammadi (2010) found that the uniformity in internal audit practice is characterized by a significantly lower degree of power distance. Thus, it can be argued that in low
power distance organizations, a high QIA is expected. Accordingly, the following hypothesis is formulated:
Hypothesis 1 (H1): Power distance is negatively associated with the QIA.

Uncertainty Avoidance
As already stated, uncertainty avoidance concerns the degree to which ambiguity is perceived by individuals as a threat to them, and to reduce this threat, those individuals seek
out situations where there are formalized rules to guide and protect them. Transferred into
an internal audit environment, this concept would suggest that the standards stipulated by

Alzeban

63

the IAF would serve to reduce uncertainty and ambiguity in practice because they engender
predictability, consistency, and uniformity. The regulation of internal audit procedures does
not allow for interpretation at the local level, which could be rife in the absence of strict
rules. In a study by Sarens and Abdolmohammadi (2010), it emerged that uncertainty
avoidance was negatively associated with internal auditing professionalism. And other
researchers, such as Hell and Wang (2009) and Hughes et al. (2009), claim that high uncertainty avoidance environments promote less accurate audit. Thus, it can be argued that
organizations with high uncertainty avoidance have less QIA. Accordingly, the following
hypothesis is formulated:
Hypothesis 2 (H2): Uncertainty avoidance is negatively associated with the QIA.

Individualism
Individualism, as already mentioned, relates to the extent to which people perceive themselves in a nuclear perspective, responsible for their own well-being and unreliant upon
others for support. When people perceive themselves as members of a group to which they
owe loyalty and from which they expect support and commitment, they score low on individualism and are considered to be collectivist in character. In collectivist societies, people live
in tightly knit groups in which relatives and friends care for each other, demonstrating
unquestioning loyalty (Hofstede, 2001). It is expected that those within cultures where there
is a high degree of individualism will behave according to their own interest and promote
themselves on the basis of their personal achievements. They believe in the value of individual achievement and perceive this as much more important than achievement by a collective.
In an organization where such individualist attitudes prevail, the management culture is one
that rewards individuals for effort expended such that the employeremployee relationship is
based on mutual advantage. This is in stark contrast to the atmosphere in a collectivist organization, because in that environment individuals behave according to the interests of the
wider groups to which they belong, and in the situation where conflict arises between personal and collective goals; the personal goals are downgraded in favor of the commitment to
the team. Employees in collectivist organizations demonstrate strong loyalty for their work
colleagues, their departments, and their organizations generally (Hofstede, 2001).
Conversely, it can also be argued that the self-interest inherent in individualism can precipitate risks to the internal control system. Glover and Aono (1995) made the point that
personnel policies and practices are important in ensuring that audit procedures are properly
followed. Chan et al. (2003) also observed that staff turnover has an effect upon the control
environment. Organizations that are individualist in character tend to experience low
employee loyalty, and hence, high turnover, as people continually look elsewhere for better
employment opportunities, and clearly with frequent changes of personnel, the chances of
errors and irregularities are increased. This is especially the case with senior accounting
staff, as the lack of familiarity with an organizations business and financial practices will
increase the inherent risk factors. In contrast, organizations that are collectivist in nature
will tend to attract employees who actively want to work in a supportive environment and
who will demonstrate loyalty to the employer. Indeed, in collectivist societies, there is a
tendency for unquestioning loyalty, and jobs are often for life. In this scenario, employees
are confident in their colleagues intention and willingness to support them. There is implicit trust, and as observed by Chan et al. (2003) and Abdolmohammadi and Sarens (2011),
this is a hallmark of an effective control environment and good quality audit. Certainly,

64

Journal of Accounting, Auditing & Finance

one might suggest that individuals who appreciate the support of a formal professional
community will be predisposed to implement best practice, and hence, enhance the QIA.
Moreover, it could be argued that among internal auditors, in-group (professional) collectivism may well be strong, and this may precipitate greater professional attitudes toward
the use of, and compliance with, standards (Abdolmohammadi & Sarens, 2011), thereby
enhancing the QIA. Certainly, it is logical for individuals who perceive themselves as part
of a professional community to strive to adhere to best practice as identified by that community, thereby preserving quality within the IAF. This leads to the following hypothesis:
Hypothesis 3 (H3): Individualism is negatively associated with the QIA.

Research Method
Hofstedes framework is used as a theoretical underpinning, and specifically, three of the
dimensions embodied in his model are used, these being power distance, uncertainty avoidance, and individualism.
To ensure that the scales used in the formal study are statistically reliable, a pilot study
of Certified Internal Auditors (CIAs) in the Saudi Arabian private sector was conducted,
when 15 questionnaires were distributed. The total number of questionnaires collected was
11 (73% response rate). A quantitative questionnaire which measured Hofstedes (1980,
2001)2 cultural dimensions (power distance, uncertainty avoidance, and individualism)
were used as the research instrument.3 All cultural dimensions were measured using a 7point Likert-type scale. The first section of the questionnaire was related to the respondents background. The second, third, and fourth sections covered the cultural dimensions
under study, and the fifth section covered the QIA.
Consistent with much prior internal audit research (e.g., Abbott, Parker, & Peters, 2010;
Carcello, Hermanson, & Raghunandan, 2005; Mat Zain, Subramaniam, & Stewart, 2006), the
survey was sent to CIAs. The sample frame included all Saudi companies listed in the Saudi
Stock Exchange TADAWL in 2013, which amounted to 156 in total. Completed questionnaires were received from 67 of these 156 companies, representing 42% of all listed companies. The researcher undertook the distribution and the collection of the questionnaires in
person. The method of administering the questionnaires personally was found the most appropriate and efficient way to collect data from the Saudi private sector.

Measurement of the Variables

Independent variables. The three cultural dimensionspower distance, uncertainty avoidance, and individualismserve as the independent variables. It has been indicated that the
work on work-related cultural dimensions undertaken by Hofstede (1980, 2001) is considered internationally as a robust model in cross-cultural studies. In particular, researchers
have devoted much attention to Hofstedes work-related cultural values, but it is notable
that despite the apparent lasting relevance of these ideas, the data were gathered three
decades ago now, and are somewhat dated. In gathering data from Saudi Arabia, the current
study re-visits three of Hofstedes (1980, 2001) cultural dimensions in a specific setting
that Hofstede himself did not explore as a separate entity, his score being based on a cluster
of Arab countries.4 To do this, it employs a quantitative questionnaire in which the three
cultural dimensions are measured as shown in Table 1.5

65

1. Managers should make most decisions without consulting subordinates.

2. It is frequently necessary for a manager to use authority and power when dealing with subordinates.
3. Managers should seldom ask for the opinions of employees.
4. Employees should not disagree with management decisions.
5. Managers should not delegate important tasks to employees.
1. It is important to have job requirements and instructions spelled out in detail, so that employees always know
what they are expected to do.
2. Managers expect workers to closely follow instructions and procedures.
3. Rules and regulations are important because they inform workers what their organizations expect of them.
4. Standard operating procedures are helpful to employees on the job.
5. Instructions for operations are important for employees on the job.
1. Members assume that they are independent of the organization and believe that it is important to bring their
unique skills and abilities to the organizations.
2. Employees develop short-term relationships and change companies at their own discretion.
3. Organizations are primarily interested in the work that employees perform and not their personal or family welfare.
4. Important decisions tend to be made by individuals.
5. Jobs are designed individually to maximize autonomy.

Measurementa

Measurements of cultural dimensions that have been operationalized in earlier studies were employed in this study (e.g., Hofstede, 1984, 2001; House, Hanges, Javidan,
Dorfman, & Gupta, 2004; Yi Wu, 2006).

Individualism versus
collectivism

Uncertainty
avoidance

Power distance

Independent variables

Table 1. Measures of the Independent Variables.

66

Journal of Accounting, Auditing & Finance

Dependent variable. The QIA is the dependent variable in this study. It is assessed using a
composite measure which has been employed in several previous studies (e.g., Al-Shetwi
et al., 2011; Al-Twaijry, Brierley, & Gwilliam, 2003, 2004; Arena & Azzone, 2009;
Gramling & Vandervelde, 2006; Lin, Pizzini, Vargus, & Bardhan, 2011; Messier,
Reynolds, Simon, & Wood, 2011; Prawitt, Smith, & Wood, 2009). The attributes forming
the composite are competence, objectivity, and the work performed by internal auditors.
In respect of the first attribute, competence, it is stated by the International Standards
that [i]nternal auditors must possess the knowledge, skills, and other competencies needed
to perform their individual responsibilities (IIA, 2012, p. 5). Several factors are considered in evaluating competence, including professional experience, education, professional
certification, and training (Lin et al., 2011; Prawitt et al., 2009). Experience is the average
number of years of internal auditing experience of the internal audit staff. Education is the
average number of years of undergraduate and graduate education. Previous studies have
recommended the inclusion of internal audit as a separate course in universities (AlTwaijry, 2006; Cooper, Leung, & Mathews, 1994; Fernandes, Poposky, & Savage, 1995).
Certification is the percentage of professional staff members who have the CIA or Certified
Public Accountant (CPA) certification. Training is the average of annual hours of training
completed by internal auditors during the year.
The second attribute, objectivity, is defined as an unbiased mental attitude that allows
internal auditors to perform engagements in such a manner that they believe in their work
product and that no quality compromises are made (IIA, 2012, p. 4). The indicator of the
objectivity of internal audit is generally considered to be whether the CAE reports to the
audit committee (Messier et al., 2011; Prawitt, Sharp, & Wood, 2011; Prawitt et al., 2009).
Indeed, it is noted by Gramling, Maletta, Schneider, and Church (2004) that external auditors usually take this reporting relationship when they are making an assessment of the
objectivity of internal audit.
The third attribute, work performance, has been evaluated according to different criteria
by previous research studies, including managements overall support of internal audit,
external auditors satisfaction with previous internal audit work, supervision of internal
audit work, follow-up procedures, and internal audit scope (Brown, 1983; Clark, Gibbs, &
Schroeder, 1980; Messier & Schneider, 1988). Following Al-Shetwi et al. (2011) and Lin
et al. (2011), internal audit work performance is measured by several items, including quality assurance, working papers, control, internal audit report, and audit client feedback.

Model. The hypotheses are tested using multiple linear regression. A multiple regression
was performed between QIA as the dependent variable and the independent variables,
namely, power distance (PD), uncertainty avoidance (UA), and individualism (IDV).
Analysis was performed using SPSS regression, and the regression model used was as
follows:
QIA = b0 + b1 SIZE + b2 INDEPENDENCE + b3 EXPERTISE
+ b4 ACSIZE + b5 PD + b6 UA + b7 IDV + ei ,
where QIA is the quality of internal audit (1 = strongly disagree to 7 = strongly agree),
SIZE is the firm size, INDEPENDENCE is the number of independent members on the
audit committee as a percentage of total number of members on the committee,
EXPERTISE is the number of audit committee members with knowledge in accounting and

Alzeban

67

auditing, ACSIZE is the number of audit committee members, PD is power distance (1 =

strongly disagree to 7 = strongly agree), UA is uncertainty avoidance (1 = strongly disagree to 7 = strongly agree), and IDV is individualism (1 = strongly disagree to 7 =
strongly agree).
The control variables are based on the results of previous researchers (Barua, Rama, &
Sharma, 2010; Carcello et al., 2005; Goodwin & Kent, 2006; Sarens & Abdolmohammadi,
2011) who find that firm size is positively and significantly related to QIA (investment of
Internal Audit Function (IAF)): firm size (measured by total assets); and also independence
of committee members, expertise of committee members, and size of audit committee were
added in the regression model (Beasley, Carcello, Hermanson, & Neal, 2009; Raghunandan,
Read, & Rama, 2001; Zaman & Sarens, 2013). The other variables in the regression model
test the hypotheses as follows: PD testing H1, UA testing H2, and IDV testing H3.

Statistical Tests of Hypotheses

Table 2 presents descriptive statistics for the variables of this study. It provides the average
ratings for the variables. The scale for these averages is 1 to 7 (strongly disagree to
strongly agree).
Table 2 shows the mean values of the measurements of the QIA, indicating that the
level of QIA is low for all attributes of QIA. These results are comparable with the findings
of other studies conducted in Saudi Arabia (e.g., Al-Shetwi et al., 2011; Al-Twaijry et al.,
2003, 2004).
As mentioned previously, power distance measures the extent to which a society accepts
the unequal distribution of power in institutions and organizations. The power distance
ranges from 1 to 7, with a score of 3.5 as the midpoint. A power distance of more than 3.5
represents a large power distance. Table 2 shows that Saudi Arabia has a high power distance scores. However, it must be noted that Hofstedes classification of Arab countries
(including Saudi Arabia) as large power distance countries was formulated in the 1970s
and confirmed in 2001,6 and that since then, the Kingdom has witnessed certain social
development as a result of wealth accumulation that has been directed toward Joint
Venture business activity. Such activity has made the country more aware of other national
cultures and especially those in Western countries. This can be attributed to one reason for
the difference between the score obtained in this study, and that of Hofstedes.
With regard to uncertainty avoidance, Hofstede confirms this aversion, emphasizing that
populations with this mentality try to reduce the threat which ambiguous situations bring to
them, by searching for stability in their careers, operating within the rule system, rejecting
deviant ideas and behavior, and accepting the possibility of absolute truths and the attainment of expertise. Table 2 shows that Saudi Arabia has a high uncertainty avoidance score.
Results from this study confirm those found by Hofstede, and indeed by Al-Twaijri and AlMuhaiza (1996) in categorizing the Arab countries as rating highly on uncertainty
avoidance.
Table 2 also shows lower individualism score, which is similar to that reported by
Hofstede for the Arab group in his study and also to the results obtained by Al-Twaijri and
Al-Muhaiza, thereby indicating that Saudi Arabia is indeed collectivist in its culture.
Furthermore, power distance and individualism are inversely associated. In general, countries with large power distance are more likely to be lower on individualism (Hofstede,
2001). These results suggest that despite lifestyle changes in the Arab World between the
1970s and 2013, some values have remained constant, such as the linkage of the individual

68

Journal of Accounting, Auditing & Finance

Table 2. Descriptive Statistics Quality of Internal Audit and Cultural Dimensions.

Variables
SIZE (million)
INDEPENDENCE
EXPERTISE
ACSIZE
COM
OBJ
PERF
PDA
PDB
PDC
PDD
PDE
UAA
UAB
UAC
UAD
UAE
IDVA
IDVB
IDVC
IDVD
IDVE

Maximum

Minimum

SD

165
3
2
4
5
5
6
7
7
7
7
7
7
7
7
7
7
5
5
5
5
6

92
1
1
2
2
2
1
2
3
2
2
2
3
2
2
3
1
1
1
1
1
1

136
2.2
1.3
3.4
2.3
2.6
2.8
5.6
5.5
5.3
5.3
5.6
5.4
5.5
5.5
5.3
5.4
2.1
2.0
2.3
2.1
2.2

24
0.47
0.34
0.61
1.2
1.2
1.5
1.4
1.1
1.2
1.3
1.2
1.1
1.3
1.2
1.1
1.5
1.2
1.3
1.3
1.1
1.4

Note. SIZE: Firm size (total assets); INDEPENDENCE = number of independent members on the audit committee
as a percentage of total number of members on the committee; EXPERTISE = number of audit committee members with knowledge in accounting and auditing; ACSIZE = audit committee size; COM = competence; OBJ =
objectivity; PERF = work performance; PDA = managers should make most decisions without consulting subordinates; PDB = it is frequently necessary for a manager to use authority and power when dealing with subordinates;
PDC = managers should seldom ask for the opinions of employees; PDD = employees should not disagree with
management decisions; PDE = managers should not delegate important tasks to employees; UAA = it is important
to have job requirements and instructions spelled out in detail, so that employees always know what they are
expected to do; UAB = managers expect workers to closely follow instructions and procedures; UAC = rules and
regulations are important because they inform workers what their organizations expect of them; UAD = standard
operating procedures are helpful to employees on the job; UAE = instructions for operations are important for
employees on the job; IDVA = individualism versus collectivism: Members assume that they are independent of the
organization and believe that it is important to bring their unique skills and abilities to the organizations; IDVB =
employees develop short-term relationships and change companies at their own discretion; IDVC = organizations
are primarily interested in the work that employees perform and not their personal or family welfare; IDVD =
important decisions tend to be made by individuals; IDVE = jobs are designed individually to maximize autonomy.

to a group, family, and relatives. Hofstedes Law of Conservation, which asserts that old
values simply do not vanish overnight and are often sustained even in very new settings, is
confirmed by these events.
Before running the correlation tests and regression analysis, Reliability test was conducted to determine the connections where items are maximally correlated with one another
and minimally correlated with other variables. The results showed that the reliability QIA
was .67 (Cronbachs a). The reliability of the PD was .79; the third variable, UA, received
a reliability score of .61; and the last variable, IDV, had a reliability score of .78.

Alzeban

69

Table 3. Correlation Between the QIA and Average Scores of Cultural Dimensions.
1

10

1. SIZE
1.00
2. INDEPENDENCE .25** 1.00
3. EXPERTISE
.12
.35** 1.00
4. ACSIZE
.19
.02
.17
1.00
5. COM
.50** .43** .26** .09 1.00
6. OBJ
.44** .31** .38** .01 .19
1.00
7. PERF
.23*
.22*
.27** .06 .28** .31** 1.00
8. PD
2.12
2.04
2.05
2.09 2.30** 2.28** 2.31** 1.00
9. UA
2.16
2.26** 2.36** 2.18 2.16
2.25** 2.24*
.23* 1.00
10. IDV
.13
.33** .22*
.14 .24*
.26** .16
2.27* 2.31** 1.00
Note. QIA = quality of internal audit; SIZE: firm size (total assets); INDEPENDENCE = number of independent
members on the audit committee as a percentage of total number of members on the committee; EXPERTISE =
number of audit committee members with knowledge in accounting and auditing; ACSIZE = audit committee size;
COM = competence; OBJ = objectivity; PERF = work performance; PD = power distance; UA = uncertainty avoidance; IDV = individualism.
*Correlation is significant at the .05 level. **Correlation is significant at the .01 level.

Table 3 documents the results of the correlation between the QIA and average scores of
cultural dimensions, and Table 4 reports correlation results between the QIA and all items
of cultural dimensions. Both results show a negative association between the three attributes of the QIA (competence [COM], objectivity [OBJ], and work performance [PERF])
and PD and UA, whereas IDV is positively associated with the attributes of QIA (COM:
p \ .05; OBJ: p . .01; and PERF: p \ .05). The coefficients on all control variables,
except ACSIZE, are significant at conventional levels with the expected signs.
Table 5 presents the basic regression results. The overall model is significant (p \ .01)
with an adjusted R2 of .32. The results show that PD and UA are negatively associated
with QIA (p \ .01 and p \ .05). These findings support H1 and H2. These results are
consistent with the results of Sarens and Abdolmohammadi (2010). The results also show
that IDV is positively associated with QIA (p \ .05), indicating that the result is inconsistent with the expectation of H3.

Discussion
Power distance is quite clearly inversely associated with the QIA. These results support the
hypotheses that higher QIA is expected in organizations with lower power distance. Sarens
and Abdolmohammadi (2010) found that power distance is negatively associated with uniformity of internal audit practice. As can be seen that Saudi Arabia attracts a large power
distance ranking, the level of QIA can be understood as being low. Saudi Arabia has strong
cultural traditions, including familial allegiances and pervasive and core traditional beliefs,
and this has promoted a heavily centralized system of governance that in itself reinforces
the power distance existing between different strata in society, although there have been
some changes in recent years.
Consequently, it is probable that a gradual shift to a more relaxed and consultative
approach in the workplace will ensue, thereby precipitating a drop in the extent of power
distance within business organizations, and by implication, the national culture.

70

1.00
.19
.28**
2.29**
2.24*
2.35**
2.08
2.12
2.07
2.08
2.13
2.10
2.12
.21*
.17
.15
.11
.25*

1.00
.31**
2.33**
2.11
2.13
2.29*
2.18
2.22*
2.13
2.23*
2.08
2.10
.13
.19
.17
.24*
.22*

1.00
2.34**
2.16
2.26*
2.06
2.29**
2.15
2.11
2.21*
2.12
2.17
.17
.13
.11
.07
.12

1.00
.44**
.48**
.50**
.54**
.19
.24*
.16
.25*
.12
2.16
2.43**
2.22*
2.35**
2.21*

1.00
.39**
.53**
.43**
.07
.23*
.08
.11
.15
2.16
2.23
2.11
2.04
2.12

1.00
.30**
.40**
.87
.13
2.01
2.02
2.03
2.07
2.18
2.18
2.14
2.09

1.00
.35**
.21*
.17
.09
.10
.01
2.09
2.24*
2.14
2.09
2.10

1.00
.06
.19
.06
.13
.09
.01
2.22*
.04
2.12
2.01

10

1.00
.12
1.00
.43**
.27**
.26**
.15
.16
.11
2.19
2.1
2.20*
2.07
2.21*
2.11
2.22*
2.22*
2.14 212

1.00
.26**
.21*
2.16
2.13
2.01
2.08
2.10

11

1.00
.33**
2.36**
2.21*
2.14
2.09
2.13

12

1.00
2.26**
2.16
2.05
2.03
2.04

13

1.00
.45**
.60**
.37**
.16

14

16

17

18

1.00
.58** 1.00
.60** .56** 1.00
.30** .34** .25* 1.00

15

Note. QIA = quality of internal audit; COM = competence; OBJ = objectivity; PERF = work performance; PDA = managers should make most decisions without consulting subordinates; PDB = it is frequently necessary for a manager to use authority and power when dealing with subordinates; PDC = managers should seldom ask for the opinions of
employees; PDD = employees should not disagree with management decisions; PDE = managers should not delegate important tasks to employees; UAA = it is important to
have job requirements and instructions spelled out in detail, so that employees always know what they are expected to do; UAB = managers expect workers to closely follow
instructions and procedures; UAC = rules and regulations are important because they inform workers what their organizations expect of them; UAD = standard operating procedures are helpful to employees on the job; UAE = instructions for operations are important for employees on the job; IDVA = individualism versus collectivism: Members
assume that they are independent of the organization and believe that it is important to bring their unique skills and abilities to the organizations; IDVB = employees develop
short-term relationships and change companies at their own discretion; IDVC = organizations are primarily interested in the work that employees perform and not their personal or family welfare; IDVD = important decisions tend to be made by individuals; IDVE = jobs are designed individually to maximize autonomy.
*Correlation is significant at the .05 level. **Correlation is significant at the .01 level.

1 COM
2 OBJ
3 PERF
4 PDA
5 PDB
6 PDC
7 PDD
8 PDE
9 UAA
10 UAB
11 UAC
12 UAD
13 UAE
14 IDVA
15 IDVB
16 IDVC
17 IDVD
18 IDVE

Table 4. Correlation Between the QIA and Cultural Dimensions.

Alzeban

71

Table 5. Regression Results of the QIA Against the Three Cultural Dimensions.
Variable
Constant
SIZE
INDEPENDENCE
EXPERTISE
ACSIZE
PD
UA
IDV

Expected sign

p value

+
+
+
+
2
2
2

.238
.270
.205
.047
2.310
2.193
.170

3.249
2.345
2.844
2.010
0.491
23.232
22.235
2.102

.000
.021
.005
.047
.625
.002
.028
.038

Note. R2 = .35. Adjusted R2 = .32. F = 13.071. p \ .01. QIA = quality of internal audit; SIZE = firm size (total
assets); INDEPENDENCE = number of independent members on the audit committee as a percentage of total
number of members on the committee; EXPERTISE = number of audit committee members with knowledge in
accounting and auditing; ACSIZE = audit committee size; PD = power distance; UA = uncertainty avoidance; IDV =
individualism.

With regard to uncertainty avoidance, the results indicate that uncertainty avoidance is
negatively correlated with QIA. These results support the hypotheses that higher QIA is
expected in organizations with lower uncertainty avoidance. This suggests that organizations where uncertainty avoidance is low are characterized by higher QIA. These results
provide empirical support for the findings of Sarens and Abdolmohammadi (2010) who
found uncertainty avoidance to be negatively associated with internal auditing professionalism. In addition, Abdolmohammadi and Sarens (2011) found that uncertainty avoidance is
inversely associated with both the use and the compliance of ISPPIA.
In countries ranking high on uncertainty avoidance, lifetime employment is more
common than in countries which rate low on this dimension (Hofstede, 2001). The situation
in Saudi Arabia is that a company is not able to terminate the employment of any Saudi
national unless that person has committed a criminal act. This is clearly a protection delivered by the state to its citizens, but at the same time, citizens have a strong respect for their
workplace, and are sensitized to their position in the hierarchy, and the roles and responsibilities accruing to them. In this respect, in high power distance and high uncertainty avoidance, workers are aware of the pyramidal structure of their organizations, employees are
very much aware of the line management applying to them, and follow the formal lines of
communication which are seen to channel from top to bottom.
Moving to the third hypothesis, the results indicate that individualism is positively correlated with QIA. These results do not support H3. Rather, they indicate that organizations
where individualism is low are characterized by low QIA. Sarens and Abdolmohammadi
(2010) found that individualism is positively correlated with uniformity of internal audit
practice, and countries with a lower degree of collectivism have more uniform internal
audit practice. This relationship can be seen in Saudi Arabia through the results of this
study, which demonstrate that when there is a lower degree of individualism, QIA is negatively correlated with this.
Interestingly, the increasing wealth experienced by Saudi Arabians has not provoked
changes in societys level of collectivism, as the expectation that this would cause a reduction in the dependence of individuals on one another has not been met. Rather, Hofstede
found that a strong social framework still exists in the Kingdom, possibly because tradition

72

Journal of Accounting, Auditing & Finance

imperatives, external threats, and long-embedded social forces have been much more influential on peoples beliefs and behavior than their relatively new-found affluence.
It is essential to return to the specific cultural context of Saudi Arabia, which as highlighted earlier, results in the family being regarded as the center of community. In this concept of society, individuals are responsible for the survival and general well-being of their
families, and this extends to their greater family network, including their relatives. Hence,
individual behavior in all of lifes circumstances is an expression of family patterns.7 As
noted by Haniffa and Hudaib (2007), mediation (wastah)8 is an expected and dynamic
force in routine life, representing the interdependence of family members and the use of
intervention to help those in need (see also Aldraehim, Edwards, Watson, & Chan, 2012).
These conditions which militate against the notion of social independence can do no other
but impinge upon the way in which internal audit is conceived, as auditors, like all other
individuals, must respond to family pressure if it arises, and consequently, compromise
their professional behavior. This is likely to result in an internal auditor failing to issue an
accurate report on an auditee for whom he or she has some social responsibility (i.e.,
family/relatives/clan member, or even a friend) if that report would be negative and have
unwanted repercussions. Consequently, professional independence cannot be guaranteed in
the absence of the ability of internal auditors to reject the social pressure to show favoritism and nepotism in their work. Given the collective nature of Saudi society, this would
seem to be a tall order for internal auditors as they cannot isolate themselves from their
relatives, and essentially are motivated in all their behavior to promote those relatives
interests.
At the same time, it is noted that centralization is a feature of all Saudi organizations
and that internal audit departments are themselves subjected to the instructions coming
from the organizational hierarchy (see also Al-Twaijry et al., 2003; Alzeban & Sawan,
2013). The outcome of such centralization is that despite the expectations of directors of
internal audit departments concerning how IAFs should be discharged, the reality is often
quite different as senior managers intervene to ensure compliance with cultural rather than
professional norms.
Such intervention may take several forms, one being related to the recruitment of personnel, as the procedures involved are subject to favoritism, friendship, and the obligation
to please the relatives from which the appointers and organizations supporters come (see
also Haniffa & Hudaib, 2007). In addition, however, there is often an obligation to curry
favor with more senior personnel by appointing those whom such personnel would like to
be employed. Undoubtedly, employment practices such as recruitment and indeed, promotions, are often influenced by the desire to cater to family and friends, and it is not surprising, therefore, that the selection process in respect of internal audit staff can be flawed, as
indicated by Alzeban and Sawan (2013), who noted that this was based on relationships
with top management. Thus, the existence of favoritism and nepotism when recruiting new
staff is also influential in the choice of internal audit staff and that has implications for the
competence of the auditors appointed.
It is no surprise that these (favoritism and nepotism) might influence any attempt to construct a rigorous IAF, as these are able to exert pressure on internal auditors to act in their
interest (and often do so), thereby disrespecting internal auditors professionalism.
That said, it should come as a surprise to see such phenomena operating in Saudi Arabia
as the expectations of Islam are that individuals behave ethically in all their dealings with
others, and this demands socially responsible actions that respect fairness. Consequently,
practices that encourage a disregard for what is right and proper (as do favoritism and

Alzeban

73

nepotism) fall outside Islamic teachings as they go against the fundamental responsibility
of all people to be accountable to God. In fact, in their studies of audit practice, Omer,
Sharp, and Wang, reporting in both 2010 and 2013, were able to demonstrate that in the
United States, a greater frequency of reporting in respect of going-concern decisions is
present in areas that are highly religious, the reason being that auditors behave more professionally when they have religious convictions.

Conclusion
This study provides indicative evidence as to the manner in which cultural
dimensionspower distance, uncertainty avoidance, and individualismaffect the QIA.
Hofstedes theoretical framework is used to examine the impact of these cultural dimensions on the QIA in Saudi Arabia. The results indicate that power distance is negatively
associated with the QIA. More specifically, organizations where power distance is high are
characterized by lower QIA and vice versa. Furthermore, these results suggest that the best
practice in operation within internal audit departments is not imposed by hierarchical
means but rather by the professionalism of those working within them. Moreover, evidence
was found that uncertainty avoidance is negatively associated with the quality of internal
auditing, which confirms that organizations characterized by high uncertainty avoidance
progress slower to the IAF. The results also confirm that individualism is positively associated with the quality of internal auditing, thereby suggesting that it is the accomplishments
of individual internal auditors and their personal professionalism which influences the quality of audit performance. Internal auditors who behave in an individualistic as opposed to a
collectivist manner are believed to be intrinsically motivated to work toward improving
their professional practice as ultimately this will be advantageous to their own promotion.
The deeply held traditions beliefs and observances, the co-existence of almost unparalleled wealth with a perception of lack of opportunity and employment for many younger
people, and ambivalent attitudes at all levels to Westernization and Western powers,
all make for a social and cultural milieu within which it would perhaps be surprising if
internal audit developed in a manner identical with, or even consistent with, that in countries with a longer traditioncountries more secularized and perhaps most importantly,
with less emphasis on traditions and friendships and linked associations. Furthermore,
Saudi Arabia, like other countries emerging from a long history of close tribal relationships
and overarching traditional structure and doctrine, still adheres to a concept of employment,
which elevates the social aspects rather than the functional aspects of work, and this is
obviously a factor which militates against the effective discharge of any attempt at procedural control, as represented by the IAF. Moreover, the desire to avoid disharmony and
indeed repercussions within the clearly structured and hierarchical environment characteristic of Saudi society impinges upon internal auditor independence (Marnet, 2008). All these
cultural predispositions combine to produce a situation where internal audit is neither effective nor given sufficient credence and importance, as has been identified by other researchers (Al-Twaijry, 2000).
It is important at this point to consider how far the results of this study might be generalized. On one hand, Saudi Arabia is part of the wider Arab World and theoretically can be
considered a developing country. On the other hand, it is a country of substantial wealth
occasioned by its oil resources, which set it apart from the vast majority of other Arab
countries. Consequently, while it mirrors other Arab countries in certain cultural respects, it
is questionable whether it can stand as a representative for other developing countries.

74

Journal of Accounting, Auditing & Finance

Likewise, in considering how similar it may be to advanced countries, it is also likely to be

shown that there are few similarities because the strong traditions and their effects upon
social structure differ entirely from traditions and structures in the Western world.
Furthermore, this study has focused on the main effects of three particular cultural
dimensions, as identified by Hofstede, on the QIA, and has revealed some interesting findings. However, Hofstedes is not the only theoretical model in this field, and indeed, not all
of Hofstedes suggested dimensions have been included in this study. Indeed, the literature
provides other frameworks with quantitative measures of national culture (e.g., Sarens &
Abdolmohammadi, 2010; Schwartz, 1994), and a useful extension of this study could be
another one in which other cultural dimensions are included, and possibly studied using a
different methodological approach.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/
or publication of this article.

Funding
The author(s) received no financial support for the research, authorship, and/or publication of this
article.

Notes
1. Al-Twaijri and Al-Muhaiza (1996) reported that Saudi Arabia had the highest power distance
score of 61 among the Gulf countries. This study was conducted in oil companies in five Gulf
countries (Saudi Arabia, Kuwait, Bahrain, Qatar, and Oman). Also in the same study, the scores
of uncertainty avoidance and individualism were reported as 88 and 41, respectively.
2. Measurements of cultural dimensions that have been operationalized in earlier studies (Hofstede,
1980, 2001; House, Hanges, Javidan, Dorfman, & Gupta, 2004) were employed in this study to
guarantee the validity of the questionnaire (measures what it is intended to measure, and provides
satisfactory coverage of the issue under investigation). In addition to that and to review the validity of the instrument, the first draft of the instrument was emailed to two researchers specialized
in internal audit to review on the validity of the questions measuring the intended construct.
Both reviewers confirmed the appropriateness of the instrument. As a result, there is no issue on
the validity of the instrument measuring what it purported to measure as it is based on wellestablished frameworks.
3. In an attempt to extend Hofstedes work, House et al. (2004) gathered data from 62 societies to
classify these societies into cultural clusters. The outcome revealed convergence in the ratings by
both Hofstede and House et al. on most dimensions. For instance, a significant positive correlation was found between Hofstedes power distance scale and the societal power distance scale by
House et al. Likewise, a significant positive correlation was found to exist between Hofstedes
uncertainty avoidance scale and that of House et al., and Hofstedes individualism scale is significantly and inversely related to the institutional collectivism scale of House et al. Finally,
Hofstedes individualism scale is significantly and inversely correlated with that of House et al.
4. Fernandez, Carlson, Stepina, and Nicholson (1997) conducted a study of Hofstedes work-related
cultural dimensions in nine countries and discussed the changes in the past 25 years by collecting
data from senior business students and business professionals. They argued that societal changes
such as economic growth, education, and democracy could affect work-related cultural dimensions. Significant changes in cultural values occur as external environmental factors shape a
society (p. 52).

Alzeban

75

5. As it is recommended to use questions that have previously been successfully used to collect
similar data (Bryman & Bell, 2007), a number of measurements from a similar study were
adopted from Yi Wu (2006).
6. As mentioned previously, Al-Twaijri and Al-Muhaiza (1996) reported that Saudi Arabia had the
highest power distance score of 61 among the Gulf countries.
7. Al-Twaijry, Brierley, and Gwilliam (2003) described family as an important repository of individuals personal identity.
8. Wastah means having connection to higher authority.

References
Abbott, L., Parker, S., & Peters, G. (2010). Serving two masters: The association between audit committee internal audit oversight and internal audit activities. Accounting Horizons, 24, 1-24.
Abdolmohammadi, M., & Sarens, G. (2011). An investigation of the association between cultural
dimensions and variations in perceived use of and compliance with internal auditing standards in
19 countries. The International Journal of Accounting, 46, 365-389.
Abdolmohammadi, M., & Tucker, R. (2002). The influence of accounting and auditing on a countrys
economic development. Review of Accounting and Finance, 1(3), 42-53.
Aldraehim, M., Edwards, S., Watson, J., & Chan, T. (2012). Cultural impact on e-service use in
Saudi Arabia: The role of nepotism. International Journal for Infonomics, 5, 655-662.
Al-Shetwi, M., Ramadili, S., Chowdury, T., & Sori, Z. (2011). Impact of internal audit function (IAF)
on financial reporting quality (FRQ): Evidence from Saudi Arabia. African Journal of Business
Management, 5, 11189-11198.
Al-Twaijri, M., & Al-Muhaiza, I. (1996). Hofstedes cultural dimensions in the GCC countries: An
empirical investigation. International Journal of Value-Based Management, 9, 121-131.
Al-Twaijry, A. (2000). The role, practice and value-added of the internal audit function in the corporate sector of Saudi Arabia: An empirical investigation (Doctoral thesis). University of Wales
Aberystwyth, UK.
Al-Twaijry, A. (2006). Expectation gaps in relation to corporate auditing in developing countries:
Case of Saudi Arabia. Florence, Italy: EABR & ETLC.
Al-Twaijry, A., Brierley, J., & Gwilliam, D. (2003). The development of internal audit in Saudi
Arabia: An institutional theory perspective. Critical Perspectives on Accounting, 14, 507-531.
Al-Twaijry, A., Brierley, J., & Gwilliam, D. (2004). An examination of the relationship between
internal and external audit in the Saudi Arabian corporate sector. Managerial Auditing Journal,
19, 929-944.
Alzeban, A., & Sawan, N. (2013). The role of internal audit function in the public sector context in
Saudi Arabia. African Journal of Business Management, 7, 443-454.
Arena, M., & Azzone, G. (2009). Identifying organizational drivers of internal audit effectiveness.
International Journal of Auditing, 13, 43-60.
Barua, A., Rama, D., & Sharma, V. (2010). Audit committee characteristics and investment in internal auditing. Journal of Accounting and Public Policy, 29, 503-513.
Beasley, M., Carcello, J., Hermanson, D., & Neal, T. (2009). The audit committee oversight process.
Contemporary Accounting Research, 26, 935-936.
Brown, P. (1983). Independent auditor judgment in the evaluation of internal audit functions. Journal
of Accounting Research, 21, 444-455.
Bryman, A., & Bell, E. (2007). Business research methods (2nd ed.). Oxford, UK: Oxford University
Press.
Butler, P. (n.d.). Saudi Arabia. Retrieved from http://www.cyborlink.com/besite/saudi-arabia.htm
Carcello, J., Hermanson, D., & Raghunandan, K. (2005). Factors associated with US public companies investment in internal auditing. Accounting Horizons, 19, 65-80.

76

Journal of Accounting, Auditing & Finance

Cassell, M., & Blake, R. (2011, March 14-16). Analysis of Hofstedes 5-D model: The implications of
conducting business in Saudi Arabia. The New Orleans International Academic Conference, New
Orleans, LA.
Chan, H., Lin, K., & Lan Mo, P. (2003). An empirical study on the impact of culture on auditdetected accounting errors. Auditing: A Journal of Practice & Theory, 22, 281-295.
Clark, M., Gibbs, T., & Schroeder, R. (1980). Evaluating internal audit departments under SAS No.
9: Criteria for judging competence, objectivity, and performance. The Woman CPA, 2, 8-11.
Cohen, J., Pant, L., & Sharp, D. (1995). An exploratory examination of international differences in
auditors ethical perceptions. Behavioral Research in Accounting, 7, 37-64.
Cooper, B., Leung, P., & Mathews, C. (1994). Internal audit: An Australian profile. Managerial
Auditing Journal, 9(3), 13-19.
Fernandes, J., Poposky, M., & Savage, L. (1995). Operational auditing education: High-impact techniques. Managerial Auditing Journal, 10(3), 19-22.
Fernandez, D., Carlson, D., Stepina, L., & Nicholson, J. (1997). Hofstedes country classification 25
years later. The Journal of Social Psychology, 137, 43-54.
Glover, H., & Aono, J. (1995). Changing the model for prevention and detection of fraud.
Managerial Auditing Journal, 10(5), 3-9.
Goodwin, J., & Kent, P. (2006). The use of internal audit by Australian companies. Managerial
Auditing Journal, 21, 81101.
Gramling, A., Maletta, M., Schneider, A., & Church, B. (2004). The role of the internal audit function
in corporate governance: A synthesis of the extant internal auditing literature and directions for
future research. Journal of Accounting Literature, 23, 194-244.
Gramling, A., & Vandervelde, S. (2006). Assessing internal audit quality. Internal Auditing, 21(3),
26-33.
Gray, S. (1988). Towards a theory of cultural influence on the development of accounting systems
internationally. Abacus, 24, 1-15.
Haniffa, R., & Hudaib, M. (2007). Locating audit expectations gap within a cultural context: The
case of Saudi Arabia. Journal of International Accounting, Auditing and Taxation, 16, 179-206.
Haskins, M. (1987). Client control environments: An examination of auditors perceptions. The
Accounting Review, 62, 542-563.
Hell, R., & Wang, D. (2009). Cultural impact on the auditing planning phase: An empirical study in
China and Finance (Masters thesis). Umea University, Sweden.
Hofstede, G. (1980). Cultures consequences: International differences in work-related values.
London, England: SAGE.
Hofstede, G. (1991). Cultures and organizations: Software of the mind. Berkshire, UK: McGraw-Hill.
Hofstede, G. (2001). Cultures consequences (2nd ed.). Thousand Oaks, CA: SAGE.
Hofstede, G. (n.d.). Research and VSM. Retrieved from http://www.geerthofstede.nl/research
vsm.aspx
Hope, O., Kang, T., Thomas, W., & Yoo, Y. (2008). Culture and auditor choice: A test of the secrecy
hypothesis. Journal Account Public Policy, 27, 357-373.
House, R., Hanges, P., Javidan, M., Dorfman, P., & Gupta, V. (2004). Culture, leadership, and organizations: The GLOBE study of 62 societies. Thousand Oaks, CA: SAGE.
Hughes, S., Sander, J., Higgs, S., & Cullinan, C. (2009). The impact of cultural environment on
entry-level auditors abilities to perform analytical procedures. Journal of International
Accounting, Auditing and Taxation, 18, 29-43.
Idris, A. (2007). Cultural barriers to improved organizational performance in Saudi Arabia. SAM
Advanced Management Journal, 72(2), 36-54.
Institute of Internal Auditors. (2012). International Standards for the Professional Practice of
Internal Auditing (ISPPIA). Available from www.theiia.org
Jeffery, C., Dilla, W., & Weatherholt, N. (2004). The impact of ethical development and cultural
constructs on auditor judgments: A study of auditors in Taiwan. Business Ethic Quarterly, 14,
553-579.

Alzeban

77

Kosmala, K. (2007). (Un)realised independence in the CEE region: Insights from interpretive cultural
theory. Critical Perspectives on Accounting, 18, 315-342.
Lin, S., Pizzini, M., Vargus, M., & Bardhan, I. (2011). The role of the internal audit function in the
disclosure of material weaknesses. The Accounting Review, 86, 287-323.
Marnet, O. (2008). Behaviour and rationality in corporate governance. London, England: Routledge.
Mat Zain, M., Subramaniam, N., & Stewart, J. (2006). Internal auditors assessment of their contribution to financial statement audits: The relationship with audit committee and internal audit function characteristics. International Journal of Auditing, 18, 1-18.
Messier, W., Reynolds, J., Simon, C., & Wood, D. (2011). The effect of using the internal audit function as a management training ground on the external auditors reliance decision. The Accounting
Review, 86, 2131-2154.
Messier, W., & Schneider, A. (1988). A hierarchical approach to the external auditors evaluation of
the internal auditing function. Contemporary Accounting Research, 4, 337-353.
Omer, T., Sharp, N., & Wang, D. (2010). Do local religious norms affect auditors going concern
decisions? Available from researchgate.net
Omer, T., Sharp, N., & Wang, D. (2013). The impact of religion on the going concern reporting decisions of local audit practice offices. Retrieved from http://papers.ssrn.com/AbstractNotFound.cfm
Patel, C., Harrison, G., & McKinnon, J. (2002). Cultural influences on judgments of professional
accountants in auditor-client conflict resolution. Journal of International Financial Management
& Accounting, 13, 1-31.
Prawitt, D., Sharp, N., & Wood, D. (2011). Reconciling archival and experimental research: Does
internal audit contribution affect the external audit fee? Behavioral Research in Accounting, 23,
187-206.
Prawitt, D., Smith, J., & Wood, D. (2009). Internal audit quality and earnings management. The
Accounting Review, 84, 1255-1280.
Raghunandan, K., Read, W., & Rama, D. (2001). Audit committee composition, gray directors, and
interactions with internal auditing. Accounting Horizons, 15, 105-118.
Sarens, G., & Abdolmohammadi, M. (2010, January 14-16). Cultural dimension effects on professionalism and uniformity of internal auditing practice in various countries. Mid-Year meeting of the
Auditing Section of American Accounting Association, San Diego, CA.
Sarens, G., & Abdolmohammadi, M. (2011). Monitoring effects of the internal audit function:
Agency theory versus other explanatory variables. International Journal of Auditing, 15, 1-20.
Schwartz, S. (1994). Beyond individualism/collectivism: New cultural dimensions of values. In S. H.
Schwartz (Ed.), Individualism and collectivism: Theory, method, and applications (pp. 85-119).
Thousand Oaks, CA: SAGE.
Sim, M., & Goodwin, J. (2004). Effects of national culture on audit planning in groups (Working
Paper 2004-003). Sunshine Coast, Taiwan: University of the Sunshine Coast.
Umar, A., & Anandarajan, A. (2004). Dimensions of pressures faced by auditors and its impact on
auditors independence: A comparative study of the USA and Australia. Managerial Auditing
Journal, 19, 99-116.
Wingate, M. (1997). An examination of cultural influence on audit environments. Research in
Accounting Regulation, Suppl. 1, 129-148.
Wong, G., & Birnbaum-More, P. (1994). Culture, context and structure: A test on Hong Kong banks.
Organization Studies, 15, 99-123.
Yi Wu, M. (2006). Hofstedes cultural dimensions 30 years later: A study of Taiwan and the United
States. Intercultural Communication Studies, XV(1), 33-42.
Zaman, M., & Sarens, G. (2013). Informal interactions between audit committees and internal audit
functions: Exploratory evidence and directions for future research. Managerial Auditing Journal,
28, 495-515.

Copyright of Journal of Accounting, Auditing & Finance is the property of Sage Publications
Inc. and its content may not be copied or emailed to multiple sites or posted to a listserv
without the copyright holder's express written permission. However, users may print,
download, or email articles for individual use.