What Factors Influence the Internal Audit Function and Its Role in Corporate Governance?

• In Event: Continental Breakfast and Research & Education Forum
  In Roundtable Session: Table 12: Job-Specific Auditing Issues

Abstract

We investigate several variables that are theoretically associated with the internal audit function (IAF) having an active role in corporate governance with reference to a worldwide model and distinguishing the two leadership systems in the United States (U.S.) and Germany. Using responses from 572 U.S. and 87 German Chief Audit Executives (CAEs) in the CBOK (2010) database, in total 1,957 worldwide IAFs, for our investigation, we find the following: an IAF having an active role in corporate governance is significantly and positively associated with adherence to a governance code, an internal control framework, CAE’s additional education, quality assurance and improvement program (QAIP) and the implementation of a risk-based audit plan in the worldwide investigation. Regarding Germany, QAIP, input from the Audit Committee, as well as reporting to the Audit Committee is positively related to the IAF having an active role in corporate governance. In the U.S. model only the presence of a QAIP is positively associated with the IAF having an active role in corporate governance, regarding our main testing variables.

Authors

• Marc Eulerich, University Duisburg-Essen

• Sarah Zipfel, University Duisburg-Essen