A critical analysis of the independence of the internal audit function: Evidence from Australia

Joe Christopher, Gerrit Sarens*, Philomena Leung

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

82 Citations (Scopus)


Purpose: This study aims to critically analyse the independence of the internal audit function through its relationship with management and the audit committee. Design/methodology/approach: Results are based on a critical comparison of responses from questionnaires sent out to Australian chief audit executives (CAEs) versus existing literature and best practice guidelines. Findings: With respect to the internal audit function's relationship with management, threats identified include: using the internal audit function as a stepping stone to other positions; having the chief executive officer (CEO) or chief finance officer (CFO) approve the internal audit function's budget and provide input for the internal audit plan; and considering the internal auditor to be a "partner", especially when combined with other indirect threats. With respect to the relationship with the audit committee, significant threats identified include CAEs not reporting functionally to the audit committee; the audit committee not having sole responsibility for appointing, dismissing and evaluating the CAE; and not having all audit committee members or at least one member qualified in accounting. Originality/value: This study introduces independence threat scores, thereby generating analysis of the internal audit function's independence taking into account a combination of threats.

Original languageEnglish
Pages (from-to)200-220
Number of pages21
JournalAccounting, Auditing and Accountability Journal
Issue number2
Publication statusPublished - 26 Jan 2009
Externally publishedYes


  • Audit committees
  • Australia
  • Corporate governance
  • Internal auditing
  • Managers


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