Transformations  in
Business & Economics

INFLUENCE OF THE INTERNAL AUDIT ACTIVITY ON THE INCREASE OF EFFECTIVENESS OF THE AUDIT COMMITTEE IN A SYSTEM OF CORPORATE GOVERNANCE: EVIDENCE FROM CROATIA
Boris Tusek

ABSTRACT. Activities of the internal audit function and the audit committee within a company is of remarkable importance for a good practice of the corporate governance. Activity of the audit committee is related to the corresponding communication with the internal audit function. Related to that, this paper includes a research on an influence of the internal audit activity on the increase of effectiveness of the audit committee in terms of realization its supervisory role and tasks in the system of corporate governance. Based on the conducted empirical research, by using the survey method, the following hypothesis is tested: the internal audit activity contributes to the improvement of the audit committee operations. Before the analysis itself and debate on the results of the conducted empirical research, features of the internal audit activity as an instrument of the corporate governance and role and responsibilities of the audit committee in the system of corporate governance are given by applying the method of analysis and synthesis, induction and deduction and the comparative method .

KEYWORDS: internal audit activity, the audit committee, corporate governance.

JEL classification: M42, G38.