Internal audit function: Current status and perception of outsourcing

Organisations are constantly striving to maximise shareholder wealth by improving effectiveness and efficiency of operations. There has been an emerging trend since the early 1980’s to outsource functions which were considered non-core and have now moved into the internal audit sphere, a function which was previously maintained in-house. This paper explores similarities and differences between public and private sector internal auditing in South Africa and the perceptions of the Internal Audit Function (IAF) in both these sectors. The sample selected varied in terms of education and experience of participants that were mainly Chief Audit Executives (CAEs) and Internal Audit Managers (IAMs). Results from statistical analysis suggest that there was no significant difference in the consideration of outsourcing of internal audit function by sector. The private sector was significantly more likely to consider internal audit a core activity when compared to the public sector while the public sector was more uncertain. The value of this research study contributes to the existing body of knowledge by means of bridging the gap between the theory and practice from a developing economy and emerging market perspective, by highlighting the status and perceptions of the IAF.   Key words: Chief audit executive, internal audit, internal audit manager, outsourcing, perceptions, private sector, public sector, status, service providers, South Africa.