External Auditors’ Perceptions of and Willingness to Work in Outsourced and In-House Internal Audit Functions

• In Event: Internal Control

Abstract

The internal audit function (IAF) can play an important role in helping improve an organization’s corporate governance and risk management; however, IAFs face challenges in finding sufficient numbers of high quality job applicants to fill their ranks. In this paper, we examine the degree to which experienced external auditors are biased against working in internal audit, have negative stereotypes of internal auditing as a career, and recommend that mediocre (relative to high performing) students apply for internal audit positions. The results of two experiments suggest that practicing external auditors are twice as likely to apply for positions that are labeled as accounting positions rather than as either in-house or outsourced internal audit positions. The results also suggest that external auditors believe there are negative perceptions of internal auditors—especially in-house internal auditors relative to outsourced internal auditors—and are more likely to recommend that mediocre students apply to work in internal auditing. Taken together, the results suggest internal auditing faces significant hiring challenges—which can have important ramifications for the important role internal auditing serves in the business world.

Authors

• Geoffrey D. Bartlett, Drake University

• Joleen Kremin, Portland State University

• Kristen Kelli Saunders, University of South Carolina

• David A. Wood, Brigham Young University