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Outsourcing of Internal Audit Services in Australian Firms: Some Preliminary Evidence

  • Divesh S. Sharma

    (Faculty of Business, Auckland University of Technology, New Zealand)

  • Nava Subramaniam


    (Department of Accounting, Finance and Economics, Griffith Business School Griffith University, Australia)

Although internal auditing (IA) services have been traditionally performed in-house, organizations are increasingly outsourcing such services. Using a Transaction Cost Economics (TCE) perspective, this study examined the influence of several organizational-level variables on the decision to outsource or in-house their internal audit functions. The study also identified the type of IA services that were likely to be out-sourced rather than in-housed, the extent to which incumbent external financial statement auditors participated in outsourced arrangements and the level of interaction between the internal audit provider and audit committees. The results have implications for auditor independence, corporate governance and organizational performance.

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Article provided by Penerbit Universiti Sains Malaysia in its journal Asian Academy of Management Journal of Accounting and Finance.

Volume (Year): 1 (2005)
Issue (Month): 1 ()
Pages: 33-52

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Handle: RePEc:usm:journl:aamjaf00101_33-52
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  1. Govindarajan, V., 1984. "Appropriateness of accounting data in performance evaluation: An empirical examination of environmental uncertainty as an intervening variable," Accounting, Organizations and Society, Elsevier, vol. 9(2), pages 125-135, June.
  2. Colbert, Gary J. & Spicer, Barry H., 1995. "A multi-case investigation of a theory of the transfer pricing process," Accounting, Organizations and Society, Elsevier, vol. 20(6), pages 423-456, August.
  3. Mia, Lokman, 1989. "The impact of participation in budgeting and job difficulty on managerial performance and work motivation: A research note," Accounting, Organizations and Society, Elsevier, vol. 14(4), pages 347-357, July.
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