Optimizing Internal Control Systems in Public Sector: The Influence of Management Support and Internal Audit Effectiveness

The effectiveness of internal control systems (ICS) in the Malaysian public sector is crucial for safeguarding assets, ensuring reliable financial reporting, and promoting compliance with regulations. This study examines the direct and moderating effects of management support and internal audit effectiveness on the strength of ICS in Malaysian public sector organizations. Despite extensive theoretical support for the importance of both factors, empirical evidence on their interaction in this context remains limited. Using a quantitative approach, data were collected via a survey from 60 valid respondents across seven ministries, seven statutory bodies, and 20 government agencies. Structural equation modelling (SEM) was employed to analyse the relationships between management support, internal audit effectiveness, and ICS. The findings reveal that management support has a positive and significant direct relationship with ICS. Additionally, the effectiveness of internal audits enhances this relationship, suggesting a moderating effect. Specifically, the impact of management support on ICS is amplified when internal audit functions are more effective. This study contributes to the understanding of how management and audit functions jointly influence ICS strength in the public sector. The results provide practical implications for policymakers, highlighting the importance of strengthening both leadership commitment and audit practices to improve the internal control frameworks in public sector organizations. This study also adds to the existing literature by providing empirical evidence on the interaction between management support and internal audit effectiveness in a unique governance context

internal control; management support; internal audit; public sector, Resource-Based View (RBV) theory

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