The Association between Combined Assurance and Internal Audit Effectiveness

• In Event: Continental Breakfast & Research and Education Forum
  In Paper Session: Table 2: Internal Control and/or Internal Audit

Abstract

The aim of this study is to examine the association between combined assurance among internal control functions and the perceived internal audit effectiveness. In the last years regulation has increased the number of internal control functions. We investigate how companies have coordinated them with combined assurance through variables that are expression of “one language, one voice and one view” (Huibers, 2015) and of coordination strategies (Gittell, 2006; Srikanth and Puranam, 2011). Following these frameworks, combined assurance could avoid unnecessary duplication of efforts and gaps in risks coverage through the use of the same taxonomy to define controls (one language), the collection and reporting of results together (one voice), the possess of a common risk vision (one view). All could be reached with coordination strategies based on tacit shared goal, shared knowledge and development of relationships. However, on the other hand, combined assurance could impair independence when responsibilities are not clear and the combination of the works of the different functions does not let Internal Audit to act as controller of the other function. We use private data collected with questionnaires sent to chief audit executive of Italian companies to evaluate the combined assurance between Internal Audit and other internal control functions (e.g. responsible for internal control over financial reporting, for compliance, for risk management). We find that combined assurance is positively associated with internal audit effectiveness, confirming its usefulness without impairing internal audit independence. We also propose new ways to analyses combined assurance through combined education, meeting, plan and remediation. We find that the most effective way is combined remediation.

Authors

• Tatiana Mazza, Free University of Bozen

• Stefano Azzali, University of Parma