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The internal audit dilemma – the impact of executive directors versus audit committees on internal auditing work

Author

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  • Marc Eulerich
  • Jörg Henseler
  • Annette G. Köhler

Abstract

Purpose - The purpose of this study is to analyze how internal audit function (IAF) activities differ, depending on the impact of executive boards (EBs) and audit committees (ACs). Design/methodology/approach - This study is based on data collected from the Common Body of Knowledge (CBOK) study conducted by the Institute of Internal Auditors Research Foundation in 2010. Using 524 responses from US Chief audit executives the authors examine the direct and interaction effects of ACs and EBs on the probability to perform specific activities with a logistic regression model. Findings - This manuscript shows that ACs and EBs have different direct and interaction effects on the portfolio of activities performed by the IAF. Furthermore, a varying prevalence among activities was identified, which pinpoints to the maturity of IAFs. All findings contribute to the prior and recent discussion about the position of IAFs between the stakeholders’ AC and EB. Research limitations/implications - When the CBOK study was designed by the Institute of Internal Auditors, the investigators did not have the research questions in mind. The authors are therefore limited to those variables that have been collected as part of a larger questionnaire. Nevertheless, the new approach tries to open a new research direction, analyzing different activities performed by IAFs. Practical implications - The identified portfolio of IAF activities can help practitioners to double-check their own work and to evaluate the impact of the EB and the AC on their activities. Originality/value - This study provides the first empirical evidence of the influence of ACs and EBs on IAF activities.

Suggested Citation

  • Marc Eulerich & Jörg Henseler & Annette G. Köhler, 2017. "The internal audit dilemma – the impact of executive directors versus audit committees on internal auditing work," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 32(9), pages 854-878, November.
    • Handle: RePEc:eme:majpps:maj-08-2016-1435
    DOI: 10.1108/MAJ-08-2016-1435
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    Citations

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    Cited by:

    1. Stéphane Lhuillery & Marion Tellechea & Stéphanie Thiery, 2021. "Open innovation in managerial innovation: the case of internal audit," Working Papers of BETA 2021-19, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Marc Eulerich & Christian Lohmann, 2022. "Information Asymmetries and Intra-Company Monitoring: an Empirical Analysis of Nonlinear Relationships Between Company Characteristics and the Size of the Internal Audit Function," Schmalenbach Journal of Business Research, Springer, vol. 74(1), pages 103-127, March.
    3. Osama Samih Shaban & Abdallah Izzat Barakat, 2023. "Evaluation of Internal Audit Standards as a Foundation for Carrying out and Promoting a Wide Variety of Value-Added Tasks-Evidence from Emerging Market," JRFM, MDPI, vol. 16(3), pages 1-13, March.
    4. Rakipi, Romina & De Santis, Federica & D'Onza, Giuseppe, 2021. "Correlates of the internal audit function’s use of data analytics in the big data era: Global evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    5. Murad Harasheh & Roberta Provasi, 2023. "A need for assurance: Do internal control systems integrate environmental, social, and governance factors?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(1), pages 384-401, January.
    6. Thiéry, Stéphanie & Lhuillery, Stephane & Tellechea, Marion, 2023. "How can governance, human capital, and communication practices enhance internal audit quality?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 52(C).

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