DO INTERNAL AUDITORS IMPROVE FIRMS’ WORKING CAPITAL MANAGEMENT?

This paper investigates the relationship between internal audit and working capital management (WCM) of Malaysian public-listed firms. Good WCM is vital as it drives profitability. Anecdotal evidence suggests that inventory conversion period most challenging part for In 2017, around RM71 billion in cash was locked up thus suggesting firms are struggling with WCM. Based on this issue, we therefore motivated to examine association role publicly listed Malaysia. Specifically, would like whether cost relates better firms’ We proxy by cycle (CCC) ratio. With a sample 309 firm-year observations, observed negative significant CCC. The findings suggest an increase improves operational efficiency effectiveness, hence improving firms' CCC ratios. Furthermore, find consistent results influence auditor two three components CCC, namely receivables collection periods. Finally, our additional analysis demonstrates auditing critical performance. By adding WCM, study contributes further understanding agency theory. senior incurred function investment helps improve efficiency. Keywords: Cash cycle; investment; firms; Malaysia