How can governance, human capital, and communication practices enhance internal audit quality?

Stéphanie Thiéry (), Stéphane Lhuillery () and Marion Tellechea
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Stéphanie Thiéry: ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine
Stéphane Lhuillery: NEOMA - Neoma Business School, BETA - Bureau d'Économie Théorique et Appliquée - AgroParisTech - UNISTRA - Université de Strasbourg - Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement
Marion Tellechea: ICN Business School, CEREFIGE - Centre Européen de Recherche en Economie Financière et Gestion des Entreprises - UL - Université de Lorraine

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Abstract: This study responds to recent calls for a better understanding of the determinants of internal audit quality (IAQ). We use the Common Body of Knowledge (CBOK) dataset from the Institute of Internal Auditors Research Foundation to do two things: (1) to propose novel indexes for three determinants of IAQ, namely governance, human capital, and communication, and (2) to investigate whether these indexes enhance IAQ either independently or in combination. Although our econometric results suggest that internal audit departments should focus on improving human capital development and internal auditors' communication skills, they show also that strong governance practices increase IAQ. An interesting finding is that organizations decide among available determinants of IAQ in that better IAQ is the result of a choice to implement these practices without seeking synergies. Our results should encourage practitioners to investigate the logic underlying their decisions aimed at enhancing IAQ.

Keywords: Internal audit quality; Communication index; Governance index; Human capital index; Econometrics; Complementarity (search for similar items in EconPapers)
Date: 2023-09
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Published in Journal of International Accounting, Auditing and Taxation, 2023, 52, pp.100566. ⟨10.1016/j.intaccaudtax.2023.100566⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04296250

DOI: 10.1016/j.intaccaudtax.2023.100566

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