A synthesis of empirical internal audit effectiveness literature pointing to new research opportunities

The purpose of this paper is to provide a synopsis of what academic literature says about internal audit (IA) effectiveness ten years after Bailey et al. (2003) presented research opportunities in IA. A new set of research questions that may help to bring the best out of IA is proposed.

Empirical studies based on internal auditors’ self-assessments (“inside-out”) and empirical studies based on other stakeholders’ perspectives (“outside-in”) are reviewed through an “effectiveness lens”. The “outside-in” perspective is regarded as particularly valuable.

First, common themes in the empirical literature are identified. Second, the main threads into a model comprising macro and micro factors that influence IA effectiveness are synthesized. Third, promising future research paths that may enhance IA's value proposition were derived.

The “outside-in” perspective indicates a disposition to stakeholders’ disappointment in IA: IA is either running a risk of marginalization (IIA, 2013; PWC, 2013) or has to embrace the challenge to emerge as a recognized and stronger profession. The suggested research agenda identifies empirical research threads that can help IA practitioners to make a difference for their organization, be recognized, respected and trusted and help the IA profession in its pursuit of creating a unique identity. This paper wishes to motivate researchers to explore innovative research strategies and probe new theories, as well as benefit from cross-fertilization with other research streams.

This paper summarizes the state of research on IA effectiveness and proposes a guide for future IA research. It provides pointed questions that may further advance the understanding of what constitutes IA and how IA can enhance its value proposition.