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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.

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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 0951-3574
1758-4205
Keyword(s) audit committees
Australia
corporate governance
Internal auditing
managers
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
Field of Research 150199 Accounting, Auditing and Accountability not elsewhere classified
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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Created: Wed, 17 Feb 2010, 10:51:45 EST by Katrina Fleming