Jenny Goodwin
University of Queensland
Pamela Kent
University of Queensland
Abstract: The objective of this study is to explore the use of internal audit by Australian listed companies and to identify factors that lead companies to voluntarily use internal audit. Drawing on the new Institute of Internal AuditorsÂ’ definition of internal auditing, we develop hypotheses which suggest that the use of internal audit is associated with factors that increase the need for risk management, strong internal controls and strong corporate governance. We test these hypotheses using data from a questionnaire survey combined with information from annual reports. Our results indicate that only one third of our sample companies use internal audit. While our results are mixed, we find some support for all of our hypotheses.
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