This study examines the influence of digitalization on internal audit efficacy in the Malaysian public sector. Specifically, the study focuses on four main factors, namely technological infrastructure, organisational structure, organisational strategy, and auditors’ skills and knowledge. Grounded in socio-technical theory, this research highlights the interaction between technical and social sub-systems in shaping the effectiveness of internal audit functions. Data were collected using a structured questionnaire distributed to internal auditors across Malaysian ministries, with a total of 132 usable responses obtained. The data were analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) to test the proposed relationships. The findings indicate that technological infrastructure and organisational strategy have a significant positive influence on internal audit efficacy. However, organisational structure and auditors’ skills and knowledge show non-significant relationships with internal audit efficacy in the current public sector context. These results suggest that while digital tools and strategic alignment are important in enhancing audit performance, existing structural arrangements and skill development initiatives may not yet fully support digital transformation efforts. This study provides empirical evidence from the Malaysian public sector and contributes to the limited literature on digitalization and internal audit efficacy. The findings offer useful insights for policymakers and public sector managers in strengthening internal audit functions through appropriate digital investments and strategic planning, although further improvements are still needed in organisational and human resource aspects. This research also contributes to the academic discourse by integrating socio-technical theory to explore the impact of digitalization on internal audit efficacy in the public sector. It provides empirical evidence on the importance of digital tools and auditor competencies, offering practical recommendations for enhancing internal audit functions in the digital age.

Keywords: Digitalization, Internal Audit Efficacy, Sub-System Technology, Sub-System Social, Public Sector