Abstract

The auditing of organizations’ activities plays a crucial role in ensuring the direction chosen by top management and identifying early signs of upcoming changes and threats. The audit assesses the efficient use of resources and processes and promotes corporate credibility, which is essential from investors’ perspectives, particularly in ecosystems of innovations. Meanwhile, little is known about lean auditing, which is crucial in achieving effective processes. This paper summarises the arguments and counterarguments within the scientific discussion on the issue of auditing. The research’s primary purpose is to identify types of waste in auditing and formulate the principles of lean auditing. The systematic literature review and approaches for solving the problem based on grounded theory and triangulation of methods enabled the resolving of research problems. This article analyses the internal auditing standards and guidelines and uses in-depth interviews with 19 internal auditors from different Polish public organizations from 2017 to 2020. The choice of a qualitative approach resulted from the research phenomenon’s open nature, with very few studies. It created a need for a reflective approach with respondents simultaneously being key informants and experts. The results of an empirical analysis showed that internal auditors little knew about the lean concept in audit processes. However, they noticed the benefits of using the lean concept in the audit. The research enabled the development of the model of lean auditing. It could help improve the audit process, which is particularly important from the innovation ecosystem perspective. Besides, one determined the waste of auditing and formulated the principles of lean auditing. The research results develop the audit theory and are helpful for practitioners. Improved internal audit better meets stakeholders’ expectations regarding the spending of funds and implementation of tasks.

Keywords: audit theory, internal audit, lean management, corporate governance, business, management, accounting.

JEL Classification: M40, M42, M49.

Cite as: Dobrowolski, Z., Sulkowski, L., & Adamisin, P (2022). Innovative ecosystem: the role of lean management auditing Marketing and Management of Innovations, 3, 9-20. https://doi.org/10.21272/mmi.2022.3-01

This work is licensed under a Creative Commons Attribution 4.0 International License

References

1. Agyabeng-Mensah, Y., Tang, L., Afum, E., Baah, C. & Dacosta, E. (2021). Organisational identity and circular economy: Are inter and intra organisational learning, lean management and zero waste practices worth pursuing? Sustainable Production and Consumption, 28, 648-662. [Google Scholar] [CrossRef]
2. Allegrini, M., D’Onza, G., Paape, L., Melville, R. & Sarens, G. (2006). The European literature review on internal auditing. Managerial Auditing Journal, 21(8), 845-853. [Google Scholar] [CrossRef]
3. Alles, M. G., Kogan, A. & Vasarhelyi, M. A. (2008). Audit Automation for Implementing Continuous Auditing: Principles and Problems. Rutgers Business School, 1-23. Retrieved from [Link]
4. Araújo, A. Alves, A. C. & Romero, F. (2021). Barriers to Lean and Pull System implementation: a case study. 9th Manufacturing Engineering Society International Conference (MESIC 2021). IOP Conf. Series: Materials Science and Engineering, 1193, 012048. [Google Scholar] [CrossRef]
5. Arnheiter, E. D. & Maleyeff, J. (2005). The integration of lean management and Six Sigma. The TQM Magazine, 17(1), 5-18. [Google Scholar] [CrossRef]
6. Ballard, G. & Tommelein, I. (2012). Lean management methods for complex projects. Engineering Project Organization Journal, 2(1-2), 85-96. [Google Scholar] [CrossRef]
7. Bell, E. & Davison, J. (2012). Visual Management Studies: Empirical and Theoretical Approaches. International Journal of Management Review, 15(2), 167-184. [Google Scholar] [CrossRef]
8. Blume, L. & Voigt, S. (2011). Does the organizational design of supreme audit institutions matter? A cross-country assessment, European Journal of Political Economy 27(2), 215-229. [Google Scholar] [CrossRef]
9. Bonner, S. E. (1990). Experience Effects in Auditing: The Role of Task-Specific Knowledge. The Accounting Review, 65(1), 72–92. Retrieved from [Link]
10. Bringselius, L. (2014). The Dissemination of Results from Supreme Audit Institutions: Independent Partners with the Media? Financial Accountability & Management 30(1), 75-94. [Google Scholar] [CrossRef]
11. Burrell, G. & Morgan, G. (2017). Sociological Paradigms and Organisational Analysis. In Elements of the Sociology of Corporate Life. London: Routledge. [Google Scholar]
12. Campbell, D. T. & Fiske, D. W. (1959). Convergent and discriminant validation by the multitrait-multimethod matrix. Psychological Bulletin, 56(2), 81–105. [Google Scholar] [CrossRef]
13. Caputo, A., Pizzi, S., Pellegrini, M.M. & Dabić, M. (2021). Digitalization and business models: Where are we going? A science map of the field. Journal of Business Research, 123, 489-501. [Google Scholar] [CrossRef]
14. Cayón, E., & Gutierrez, J. C. (2021). Sin stocks and ESG scores: Does the nature of your business really matter? Journal of International Studies, 14(3), 114-123. [Google Scholar]
15. Chiarini, A., Castellani, P., Rossato, Ch., & Cobelli, N. (2021). Quality management internal auditing in small and medium-sized companies: an exploratory study on factors for significantly improving quality performance. Total Quality Management & Business Excellence, 32(15-16), 1829-1849. [Google Scholar] [CrossRef]
16. Clark, T. (2010). On ‘being researched’: Why do people engage with qualitative research? Qualitative Research, 10(4), 399-419. [Google Scholar] [CrossRef]
17. Cohen, A. & Sayag, G. (2010). The Effectiveness of Internal Auditing: An Empirical Examination of its Determinants in Israeli Organisations. Australian Accounting Review, 20(3), 296-307. [Google Scholar] [CrossRef]
18. Cook, W., van Bommel, S. & Turnhout, E. (2016). Inside environmental auditing: effectiveness, objectivity, and transparency. Current Opinion in Environmental Sustainability, 18, 33-39. [Google Scholar] [CrossRef]
19. Cordery, C. J. & Hay, D. (2019). Supreme Audit Institutions and Public Value: Demonstrating Relevance, Financial Accountability & Management, 35(2), 128-142. [Google Scholar] [CrossRef]
20. de Assis, R.F., de Santa-Eulalia, L.A., Ferreira, W.d.P., Armellini, F., Anholon, R., Rampasso, I.S. & Cruz Lopes dos Santos, J.G. (2021). Translating value stream maps into system dynamics models: a practical framework. The International Journal of Advanced Manufacturing Technology, 114, 3537–3550. [Google Scholar] [CrossRef]
21. Denzin, N. K. (1989). The Research Act: A Theoretical Introduction to Sociological Methods. 3^rd Ed. Hoboken: Prentice Hall. [Google Scholar]
22. Deshmukh, A., Karim, K. E. & Siegel, P. H. (1998). An Analysis of Efficiency and Effectiveness of Auditing to Detect Management Fraud: A Signal Detection Theory Approach. Internal Journal of Auditing, 2(2), 127-138. [Google Scholar] [CrossRef]
23. Dittenhofer, M. (2001). Internal auditing effectiveness: an expansion of present methods. Managerial Auditing Journal, 16(8), 443-450. [Google Scholar] [CrossRef]
24. Dobrowolska, M. (2021). Lean Management and Law Firms. The Preliminary Study. Przedsiębiorczość i Zarządzanie, 22(3), 5-17. Retrieved from [Link]
25. Dobrowolski, Z. & Sulkowski, L. (2020a). Public Ethnocentrism. A cognitive orientation and preventive measures. Journal of International Studies, 13(2), 178-190. [Google Scholar] [CrossRef]
26. Dobrowolski, Z. & Sulkowski, L. (2020b). Implementing a Sustainable Model for Anti-Money Laundering in the United Nations Development Goals, Sustainability, 12(1), 244. [Google Scholar] [CrossRef]
27. Dobrowolski, Z. & Sulkowski, L. (2021). Business Model Canvas and Energy Enterprises. Energies, 14(21), 7198. [Google Scholar] [CrossRef]
28. Dobrowolski, Z. (2001). Korupcja w życiu publicznym. Międzynarodowe doświadczenia w zwalczaniu korupcji. Zielona Góra: Organon [Google Scholar]
29. Dobrowolski, Z. (2003). Teoretyczne podstawy kontroli. Zielona Góra: Organon.
30. Dobrowolski, Z. (2017). Combating Corruption and Other Organizational Pathologies. Frankfurt Am Main: Peter Lang GmbH, Internationaler Verlag der Wissenschaften.
31. Dobrowolski, Z. (2020). The supreme audit institutions readiness to uncertainty. Entrepreneurship and Sustainability Issues, 8(1), 513-525. [Google Scholar] [CrossRef]
32. Dobrowolski, Z. (2021a). Energy and local safety: How the administration limits energy security. Energies, 14(16), 4841. [Google Scholar] [CrossRef]
33. Dobrowolski, Z. (2021b). Audyt. Funkcje. FormuLowanie ustaleń. Ryzyka [Auditing. Functions. Findings. Risk]. Warszawa: Wolter Kluwer. [Google Scholar]
34. Dobrowolski, Z. (2022). Management Control. Methods. Techniques. Concepts. Warszawa: Wolter Kluwer.
35. Dobrowolski, Z., Sulkowski, L. Przytula, S. & Rasticová, M. (2022). Do nepotism and cronyism have payoff boundaries? A cross-country investigation. Problems and Perspectives in Management, 20(2), 236-247. [Google Scholar] [CrossRef]
36. Emiliani, M. L. (2001). Redefining the focus of investment analysts. The TQM Magazine, 13(1), 34-51. [Google Scholar] [CrossRef]
37. Emiliani, M. L. (2008). Standardized work for executive leadership. Leadership & Organization Development Journal, 29(1), 24-46. [Google Scholar] [CrossRef]
38. Fadzil, H. F., Haron, H. & Jantan, M. (2005). Internal auditing practices and internal control system. Managerial Auditing Journal, 28(8), 844-866. [Google Scholar] [CrossRef]
39. Faifua, D. (2014). The key informant technique in qualitative research. SAGE Research Methods Cases Part 1. SAGE Publications, Ltd. [Google Scholar] [CrossRef]
40. Friedman, M. (1974). Explanation and Scientific Understanding. Journal of Philosophy, 71(1), 5–19. [Google Scholar] [CrossRef]
41. Gapp, R., Fisher, R. & Kobayashi, K. (2008). Implementing 5S within a Japanese context: an integrated management system. Management Decision, 46(4), 565-579. [Google Scholar] [CrossRef]
42. García-Meca, E., Ramón-Llorens, M.C. & Martínez-Ferrero, J. (2021). Are narcissistic CEOs more tax aggressive? The moderating role of internal audit committees. Journal of Business Research, 129, 223-235. [Google Scholar] [CrossRef]
43. Glaser, B.G. & Strauss, A. L. (1999). The Discovery of Grounded Theory. Strategies for Qualitative Research. New York: Routledge. [Google Scholar]
44. Godfrey-Smith, P. (2009). Models and fictions in science. Philosophical Studies, 143, 101–116. [Google Scholar] [CrossRef]
45. Greene, J. C.; Caracelli, V. J. & Graham, W. F. (1989). Toward a Conceptual Framework for Mixed-Method Evaluation Designs. Educational Evaluation and Policy Analysis, 11(3), 255–274. [Google Scholar] [CrossRef]
46. Guest, O. & Martin, A.E. (2021). How Computational Modeling Can Force Theory Building in Psychological Science. Perspectives on Psychological Science, 16(4), 789-802. [Google Scholar] [CrossRef]
47. Hass, S., Abdolmohammadi, M. J. & Burnaby, P. (2006). The Americas literature review on internal auditing. Managerial Auditing Journal, 21(8), 835-844. [Google Scholar] [CrossRef]
48. Hines, P. & Rich, N. (1997). The seven value stream mapping tools. International Journal of Operations & Production Management, 17(1), 46-64. [Google Scholar] [CrossRef]
49. Ho, S. K. M. (2010). Integrated lean TQM model for sustainable development. The TQM Journal, 22(6), 583-593. [Google Scholar] [CrossRef]
50. ). The board as an example of Japanese corporate governance system hybridization: An outline of the problem. Economics and Sociology, 13(3), 171-202. [Google Scholar] [CrossRef]
51. Kadarova, J. & Demecko, M. (2016). New Approaches in Lean Management. Procedia Economics and Finance, 39, 11-16. [Google Scholar] [CrossRef]
52. Karim, K. E. & Siegel, P. H. (1998). A signal detection theory approach to analyzing the efficiency and effectiveness of auditing to detect management fraud. Managerial Auditing Journal, 13(6), 367-375. [Google Scholar] [CrossRef]
53. Kaziliunas, A. (2008). Problems of auditing using quality management systems for sustainable development of organizations. Ukio Technologinis ir Ekonominis Vystymas, 14(1), 64-75. [Google Scholar] [CrossRef]
54. Kimura, O. & Terada, H. (1981). Design and analysis of Pull System, a method of multi-stage production control. International Journal of Production Research, 19(3), 241-253. [Google Scholar] [CrossRef]
55. Possibilities of Integration of Strategic and Project Management in The Supporting System of Small and Medium-Sized Businesses at Local and Regional Levels. Proceedings of the 35th International Business Information Management Association (IBIMA), p. 9253-9265.
56. Lenning, J. (2018). Auditing of explorative processes. Total Quality Management & Business Excellence, 29(9-10), 1185-1199. [Google Scholar] [CrossRef]
57. Martínez-Jurado, P. J. & Moyano-Fuentes, J. (2014). Lean Management, Supply Chain Management and Sustainability: A Literature Review. Journal of Cleaner Production, 85, 134-150. [Google Scholar] [CrossRef]
58. Minichiello, V., Aroni, R., Timewell, E., & Alexander, L. (1990). In-depth Interviewing: Researching people. Hong Kong: Longman Cheshire Pty Limited.
59. Social Protection of Employees as A Tool of Social Responsibility and Increase of Business Efficiency. Proceedings of the 35th International Business Information Management Association (IBIMA), p. 9459-9469. [Google Scholar]
60. Mosher, F. C. (1979). The GAO: The Quest for Accountability in American Government, Boulder, Colorado: Westview Press. [Google Scholar]
61. Netland, T. H. & Aspelund, A. (2014). Multi-plant improvement programmes: A literature review and research agenda. International Journal of Operations & Production Management, 34(3), 390-418. [Google Scholar] [CrossRef]
62. Patton, M. Q. (2002). Qualitative Research and Evaluation Methods. Thousand Oaks, CA: Sage. [Google Scholar]
63. Pereira, A., Abreu, M. F., Silva, D., Alves, A. C., Oliveira, J. A., Lopes, I. & Figueiredo, M. C. (2016). Reconfigurable Standardized Work in a Lean Company – A Case Study. Procedia CIRP, 52, 239-244. [Google Scholar] [CrossRef]
64. Pizzi, S., Venturelli, A., Variale, M. & Macario, G.P. (2021). Assessing the impacts of digital transformation on internal auditing: A bibliometric analysis. Technology in Society, 67, 101738. [Google Scholar] [CrossRef]
65. Punch, K. F. (1998). Introduction to Social Research: Quantitative and Qualitative Approaches. Thousand Oaks: Sage. [Google Scholar]
66. Randhawa, J. S. & Ahuja, I. S. (2017). 5S – a quality improvement tool for sustainable performance: literature review and directions. International Journal of Quality & Reliability Management, 34(3), 334-361. [Google Scholar] [CrossRef]
67. Robertson, M. H .B., & Boyle, J. S. (1984). Ethnography: Contributions to nursing research. Journal of Advanced Nursing, 9, 43-49. [Google Scholar] [CrossRef]
68. Rosenblueth, A. & Wiener, N. (1945). The Role of Models in Science. Philosophy of Science, 12(4), 316-321. Retrieved from [Link]
69. Shah, R. & Ward, P.T. (2003). Lean manufacturing: context, practice bundles, and performance. Journal of Operations Management, 21(2), 129-149. [Google Scholar] [CrossRef]
70. Singh, B., Garg, S. K. & Sharma, S. K. (2011). Value stream mapping: literature review and implications for Indian industry. International Journal of Advanced Manufacturing Technology, 53, 799–809. [Google Scholar] [CrossRef]
71. Singh, S. & Kumar, K. (2021). A study of lean construction and visual management tools through cluster analysis. Ain Shams Engineering Journal, 12(1), 1153-1162. [Google Scholar] [CrossRef]
72. Snyder, H. (2019). Literature review as a research methodology: An overview and guidelines. Journal of Business Research, 104, 333-339. [Google Scholar] [CrossRef]
73. Sulkowski, L. & Dobrowolski, Z. (2021). The role of supreme audit institutions in energy accountability in EU countries. Energy Policy, 156, 112413. [Google Scholar] [CrossRef]
74. Sulkowski, L. (2012). Meta-paradigmatic cognitive perspective in management studies. Argumenta Oeconomica, 2(29), 33-51. [CrossRef]
75. Taggart, P. & Kienhöfer, F. (2013). The effectiveness of lean manufacturing audits in measuring operational performance improvements. South African Journal of Industrial Engineering, 24(2), 140-154. Retrieved from [Link]
76. Tezel, A., Koskela, L. & Tzortzopoulos, P. (2016). Visual management in production management: a literature synthesis. Journal of Manufacturing Technology Management, 27(6), 766-799. [Google Scholar] [CrossRef]
77. The Institute of Internal Auditors. (2016). International Standards for the Professional Practice of Internal Auditing. Retrieved from [Link]
78. Torbjørn H., Schloetzer, N. J. D. & Ferdows, K. (2015). Implementing corporate lean programs: The effect of management control practices. Journal of Operations Management, 36, 90-102. [Google Scholar] [CrossRef]
79. Wildemuth, B. M. (Ed.). (2016). Applications of Social Research Methods to Questions in Information and Library Science, 2nd Edition. Santa Barbara, USA: ABC-CLIO. [Google Scholar]
80. Womack, J. P. & Jones, D. T. (1996). Lean Thinking. New York: Simon & Schuster.
81. Xiao, Y. & Watson, M. (2017). Guidance on Conducting a Systematic Literature Review. Journal of Planning Education and Research, 39(1), 93-112. [Google Scholar] [CrossRef]