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A synthesis of empirical internal audit effectiveness literature pointing to new research opportunities

278 citations0/0 files storedManagerial Auditing Journal

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Auditing, Earnings Management, Governance Accounting and Organizational Management Corporate Governance and Financial Management

Abstract

Purpose – The purpose of this paper is to provide a synopsis of what academic literature says about internal audit (IA) effectiveness ten years after Bailey et al. (2003) presented research opportunities in IA. A new set of research questions that may help to bring the best out of IA is proposed. Design/methodology/approach – Empirical studies based on internal auditors’ self-assessments (“inside-out”) and empirical studies based on other stakeholders’ perspectives (“outside-in”) are reviewed through an “effectiveness lens”. The “outside-in” perspective is regarded as particularly valuable. Findings – First, common themes in the empirical literature are identified. Second, the main threads into a model comprising macro and micro factors that influence IA effectiveness are synthesized. Third, promising future research paths that may enhance IA's value proposition were derived. Practical implications – The “outside-in” perspective indicates a disposition to stakeholders’ disappointment in IA: IA is either running a risk of marginalization (IIA, 2013; PWC, 2013) or has to embrace the challenge to emerge as a recognized and stronger profession. The suggested research agenda identifies empirical research threads that can help IA practitioners to make a difference for their organization, be recognized, respected and trusted and help the IA profession in its pursuit of creating a unique identity. This paper wishes to motivate researchers to explore innovative research strategies and probe new theories, as well as benefit from cross-fertilization with other research streams. Originality/value – This paper summarizes the state of research on IA effectiveness and proposes a guide for future IA research. It provides pointed questions that may further advance the understanding of what constitutes IA and how IA can enhance its value proposition.

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References

1983The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields 2004The iron cage revisited institutional isomorphism and collective rationality in organizational fields 1985A Conceptual Model of Service Quality and Its Implications for Future Research 1999The Audit Society: Rituals of Verification 2009The Audit Committee Oversight Process*2009Internal Audit Quality and Earnings Management 2003Risk management: The reinvention of internal control and the changing role of internal audit 2010Corporate Governance in the Post‐Sarbanes‐Oxley Era: Auditors’ Experiences*

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2019Internal audit effectiveness: operationalization and influencing factors 2020Mapping of internal audit research: a post-Enron structured literature review 2018The impact of internal audit function characteristics on internal control quality 2016Internal auditor characteristics, internal audit effectiveness, and moderating effect of senior management 2018New Perspectives in Internal Audit Research: A Structured Literature Review

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