Self-perception of the internal audit function within the corporate governance system: empirical evidence for the European Union

Marc Eulerich, Jochen Theis, Patrick Velte, Markus Stieglbauer

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Internal audit (IA) is theoretically considered a key element of modern corporate governance. Surprisingly, the existing knowledge on IA and its relation to the internal corporate governance structure is miscellaneous and rare. Consequently, empirical findings on the internal audit function (IAF) within companies' corporate governance framework in the European Union (EU) are scarce. Due to this, the objective of the empirical analysis is to draw conclusions on the structural and process organization of the IAF within the overall corporate governance structure and the IAF's cooperation with the audit committee (AC). Based on data from 3,294 responses from the 2010 Common Body of Knowledge (CBOK) study on 26 EU-member states conducting structural equation modeling the authors find that IA is an important mechanism of corporate governance structures. IA creates "value added" for the company either within the meaning of revealing problems and grievances or in the sense of precautionary measures. It is a powerful element for management supervision in the one- and two-tier system.

Original languageEnglish
JournalProblems and Perspectives in Management
Volume11
Issue number2
Pages (from-to)57-72
ISSN1727-7051
Publication statusPublished - 2013
Externally publishedYes

Keywords

  • Audit committee
  • Corporate governance
  • Internal auditing
  • Risk management
  • Structural equation model

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