A critical analysis of the independence of the internal audit function: evidence from Australia
(2009) Accounting, Auditing and Accountability Journal — Vol. 22, n° 2, p. 200-220 (2009)
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- Authors
- Abstract
- 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.
- Affiliations
Louvain School of Management Accounting & Finance Curtin University of Technology Daikin University
Citations
Christopher, J., Leung, P., & Sarens, G. (2009). A critical analysis of the independence of the internal audit function: evidence from Australia. Accounting, Auditing and Accountability Journal, 22(2), 200-220. https://doi.org/10.1108/09513570910933942 (Original work published 2009)