A critical analysis of the independence of the internal audit function : evidence from Australia

Christopher, Joe, Sarens, Gerrit and Leung, Philomena 2009, A critical analysis of the independence of the internal audit function : evidence from Australia, Accounting, auditing and accountability journal, vol. 22, no. 2, pp. 200-220, doi: 10.1108/09513570910933942.

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Title A critical analysis of the independence of the internal audit function : evidence from Australia
Author(s) Christopher, Joe
Sarens, Gerrit
Leung, Philomena
Journal name Accounting, auditing and accountability journal
Volume number 22
Issue number 2
Start page 200
End page 220
Publisher Emerald Group Publishing Ltd.
Place of publication Bingley, England
Publication date 2009
ISSN 1368-0668
Keyword(s) audit committees
corporate governance
Internal auditing
Summary Purpose – This study aims to critically analyse the independence of the internal audit function through its relationship with management and the audit committee.

Design/methodology/approach – Results are based on a critical comparison of responses from questionnaires sent out to Australian chief audit executives (CAEs) versus existing literature and best practice guidelines.

Findings – With respect to the internal audit function's relationship with management, threats identified include: using the internal audit function as a stepping stone to other positions; having the chief executive officer (CEO) or chief finance officer (CFO) approve the internal audit function's budget and provide input for the internal audit plan; and considering the internal auditor to be a “partner”, especially when combined with other indirect threats. With respect to the relationship with the audit committee, significant threats identified include CAEs not reporting functionally to the audit committee; the audit committee not having sole responsibility for appointing, dismissing and evaluating the CAE; and not having all audit committee members or at least one member qualified in accounting.

Originality/value – This study introduces independence threat scores, thereby generating analysis of the internal audit function's independence taking into account a combination of threats.
Language eng
DOI 10.1108/09513570910933942
Field of Research 150199 Accounting, Auditing and Accountability not elsewhere classified
Socio Economic Objective 970115 Expanding Knowledge in Commerce, Management, Tourism and Services
HERDC Research category C1 Refereed article in a scholarly journal
Copyright notice ©2009, Emerald Group Publishing Limited
Persistent URL http://hdl.handle.net/10536/DRO/DU:30023741

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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