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Internal audit function characteristics and external auditors' co‐sourcing in different institutional contexts
Author(s) -
Jokipii Annukka,
Di Meo Fabrizio
Publication year - 2019
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/ijau.12162
Subject(s) - internal audit , business , accounting , audit , context (archaeology) , strategic sourcing , autonomy , joint audit , function (biology) , marketing , strategic planning , paleontology , strategic financial management , evolutionary biology , political science , law , biology
We examine the association between several characteristics of an internal audit function (IAF) and fees paid to external auditors to support internal audit activities (co‐sourcing). We also analyze how this relation is influenced by the mandatory or voluntary implementation of IAFs. By using data from the Common Body of Knowledge (CBOK) study, which was conducted by the Institute of Internal Auditors Research Foundation in 2015, we find that more consulting‐oriented IAFs and more autonomous IAFs are likely to pay higher co‐sourcing fees, whereas IAFs with greater expertise are likely to pay lower co‐sourcing fees. Although results related to consulting activities hold regardless of the institutional context, the negative association between IAF expertise and co‐sourcing fees paid to support internal audit activities only holds in mandatory IAF environments, and the positive association between IAF autonomy and co‐sourcing fees paid only holds where IAF is voluntary.