The use of internal audit by Australian companies

Stewart, J. and Kent, P. F. (2006) The use of internal audit by Australian companies. Managerial Auditing Journal, 21 1: 81-101. doi:10.1108/02686900610634775

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Author Stewart, J.
Kent, P. F.
Title The use of internal audit by Australian companies
Journal name Managerial Auditing Journal   Check publisher's open access policy
ISSN 0268-6902
Publication date 2006
Sub-type Article (original research)
DOI 10.1108/02686900610634775
Open Access Status File (Author Post-print)
Volume 21
Issue 1
Start page 81
End page 101
Total pages 21
Editor S. Linacre
Place of publication United Kingdom
Publisher Emerald Group
Collection year 2006
Subject C1
350100 Accounting, Auditing and Accountability
729999 Economic issues not elsewhere classified
Abstract Purpose – The purpose of this study is to explore the voluntary use of internal audit by Australian publicly listed companies and to identify factors that lead listed companies to have an internal audit function. Design/methodology/approach – Drawing on the Institute of Internal Auditors' definition of internal auditing, the paper predicts that internal audit use is associated with factors related to risk management, strong internal controls and strong corporate governance. To test the predictions, the study combines data from a survey of listed companies with information from corporate annual reports. The paper also provides descriptive information on the use of internal audit. Findings – The results indicate that only one-third of the sample companies use internal audit. While size appears to be the dominant driver, there is also a strong association between internal audit and the level of commitment to risk management. However, the study finds only weak support for an association between the use of internal audit and strong corporate governance. Research limitations/implications – A limitation of our study is that some of the variables in the model may not be good proxies for the factors being measured. Refinement of the model and the variables used provides an opportunity for future research. Practical implications – The limited use of internal audit by Australian companies has important implications for sound corporate governance. Originality/value – This is the first study that identifies factors associated with the use of internal audit by Australian listed companies.
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collections: 2007 Higher Education Research Data Collection
UQ Business School Publications
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Citation counts: Scopus Citation Count Cited 41 times in Scopus Article | Citations
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Created: Wed, 15 Aug 2007, 06:43:33 EST