The purpose of this study is to examine which factors explain the use of an in-house internal audit function (IAF) in a voluntary setting.

    Design/methodology/approach

    Based on the foundations of agency and resource-based theory, this study examines a unique data set from the New Zealand setting, which combines information obtained from The Institute of Internal Auditors of New Zealand with empirical firm data collected from publicly available sources. Multivariate analysis is performed to test the prediction that in-house IAF use is associated with factors such as strong corporate governance, firm size, risk, complexity and firm ownership structure.

    Findings

    There is strong evidence that larger organisations are more likely to use an in-house IAF. The authors also find that listed firms and organisations that use a Big Four auditor are less likely to use in-house-based IAF. The authors learn that the IAF investment decision is dominantly influenced by a firm’s ability to fund an in-house IAF as compared to the IAF being used as a resource to improve firm performance to achieve sustained competitive advantage. This implies that IAFs need to ensure cost efficiency and eliminate unnecessary overheads and demonstrate and make visible the benefits the function offers to the host organisation.

    Originality/value

    The unique New Zealand setting, where the establishment and use of an IAF are voluntary, provides an environment to study factors that promote demand for internal audit services. Research implications are applicable to most parts of the world, including the UK, EU nations and the Asia-Pacific region, where IAF use is voluntary.


    Access

    Check access

    Check availability in my library

    Order at Subito €


    Export, share and cite



    Title :

    Use of in-house internal audit functions in New Zealand


    Contributors:
    Prasad, Nishaal (author) / Hay, David (author) / Chen, Li (author)

    Published in:

    Publication date :

    2023-05-08


    Size :

    24 pages




    Type of media :

    Article (Journal)


    Type of material :

    Electronic Resource


    Language :

    English




    The Impact of Emerging Technologies on Internal Audit Functions

    Smith, Rozanne Janet / Maredi, Evelinah / Mthimunye, Phumzi | Springer Verlag | 2025


    Internal audit use, earnings quality and external audit fees

    Prasad, Nishaal / Hay, David / Chen, Li | Emerald Group Publishing | 2021


    Conducting an Internal Safety Audit

    Geis, C. / Flight Safety Foundation | British Library Conference Proceedings | 1993


    Road Safety Audit: Progress in New Zealand and Australia

    Appleton, I. / Transit New Zealand / Bitumen Contractors' Association | British Library Conference Proceedings | 1994


    Road Safety Audit - Its Progress in Australia and New Zealand

    Jordan, P. / Appleton, I. / Institute of Transportation Engineers | British Library Conference Proceedings | 1994