Are You Getting Your Money’s Worth from Internal Auditing?

It is argued that internal auditing functions are more valuable when placed higher, rather than lower, in organisational structures. An informal survey suggests that many internal auditing departments in the US, New Zealand and elsewhere in the world continue to be narrowly focused on almost exclusively financial matters at relatively low levels within organisational hierarchies. Two internal auditing departments in similar private sector retail organisations are studied, one in which the department manager reports to the chief executive officer and the other in which he reports to a financial executive. Results show that, if supported by additional research evidence, internal auditing at a relatively low organisational level is likely to be far less productive than making a more substantial investment in these activities at a higher organisational level.