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

Marc Eulerich, Jörg Henseler, Annette Koehler

Research output: Contribution to journalArticleAcademicpeer-review

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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.
Original languageEnglish
Pages (from-to)854-878
Number of pages25
JournalManagerial Auditing Journal
Volume32
Issue number9
DOIs
Publication statusPublished - Dec 2017

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Internal auditing
Audit committee
Internal audit
Internal audit function
Auditors
Direct effect
Body of knowledge
Interaction effects
Maturity
Empirical evidence
Board committees
Design methodology
Stakeholders
Logistic regression model
Questionnaire
Research directions
Audit

Cite this

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abstract = "PurposeThe 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/approachThis 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.FindingsThis 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/implicationsWhen 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 implicationsThe 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/valueThis study provides the first empirical evidence of the influence of ACs and EBs on IAF activities.",
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The internal audit dilemma : The impact of executive directors versus audit committees on internal auditing work. / Eulerich, Marc; Henseler, Jörg ; Koehler, Annette.

In: Managerial Auditing Journal, Vol. 32, No. 9, 12.2017, p. 854-878.

Research output: Contribution to journalArticleAcademicpeer-review

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AB - PurposeThe 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/approachThis 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.FindingsThis 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/implicationsWhen 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 implicationsThe 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/valueThis study provides the first empirical evidence of the influence of ACs and EBs on IAF activities.

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