Employing Internal Audit System towards Business Sustainability: Evaluating its Impact on the Triple Bottom Line Perspective in the Manufacturing Industry

Abstract

This study aims to formulate a model to show how Internal audit implementation affects the Triple Bottom Line Business Sustainability of Manufacturing Companies in the National Capital Region (NCR) Area. These factors are categorized into three: (1) Financial Performance, (2) Corporate Social Responsibility, and (3) Environmental Consciousness. Moreover, it indicated some additional factors that could affect, such as net worth, firm size, and years of operation. This study stems from the lack of clarity based on existing studies on the practical contribution of internal audits to firm performance. This study is a correlational design under the quantitative research design. This is also considered a moderation analysis design in which the moderating effect of internal audit cost and firm profile on the relationship between internal audit and firm performance were considered. Documentary analysis was employed through publicly listed companies' documents on their corporate website. The researcher used both descriptive and inferential statistics. Multivariate analysis was performed on the gathered data in which there are multiple dependent variables, which was explained by one independent variable – internal audit implementation. Key findings of this study show that internal audit has a significant effect on firm performance, t(301) = 2.5, p = 0.012. It shows that internal audit has been found to have an effect on firm performance, β = 0.139, p = 0.012. This supports the probability that firm performance increases around 0.139 per 1 level increase of internal audit. On the other hand, internal audit has a significant impact on corporate social responsibility, t(301) = 2.27, p = 0.023. It indicates that internal audit has an effect on corporate social responsibility, β = 0.127, p = 0.023. It means there is a probability that, for 1 level increase in internal audit, there is an accompanying 0.127 increase in corporate social responsibility. Lastly, the data gathered indicates that the effect of internal audit on environmental consciousness is non-significant, t(301) = 1.53, p = 0.127. The probability that environmental consciousness increases around 0.114 per 1 level increase of internal audit are supported.