Informal Interactions between Audit Committees and Internal Audit Functions: Exploratory Evidence and Directions for Future Research
30 Pages Posted: 19 May 2013
Date Written: May 19, 2013
Abstract
This paper provides evidence on the prominence of informal interactions between audit committees and internal audit functions and exploratory evidence on factors associated informal interactions. The findings, based on a questionnaire survey of chief audit executives (CAEs) in the UK, suggest that in addition to formal pre-scheduled meetings, audit committees rely on informal interactions with internal audit functions to undertake their monitoring role. The evidence also shows that informal interactions have a positive significant association with both audit committee independence and the knowledge and experience of the audit committee chair. Emphasizing the need for further research to better understand the nature and quality of audit committees’ informal interactions the paper encourages further research focusing in particular on: (i) the effect of both audit committee and internal audit/CAE knowledge and objectivity on informal interactions; (ii) the nature, quality and variations in informal interactions; (iii) the antecedents and consequences of informal interactions; and (iv) the institutional and organizational contexts within which audit committees operate and within which informal interactions take place.
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