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    Corporate Managers’ Reliance on Internal Auditor R...
    research summary posted October 15, 2013 by Jennifer M Mueller-Phillips, last edited October 15, 2013, tagged 13.0 Governance, 13.07 Internal auditor role and involvement in controls and reporting 
    Corporate Managers’ Reliance on Internal Auditor Recommendations
    Practical Implications:

    One of the main implications of the study is that the internal audit function does add value to an organization because their recommendations can significantly impact managers’ operational decisions. The study also finds that in-house internal auditors can improve their influence on management by quantifying their recommendations.

    For more information on this study, please contact F. Greg Burton.


    Burton, F. G., S. A. Emett, C. A. Simon, and D. A. Wood. 2012. Corporate Managers’ Reliance on Internal Auditor Recommendations. Auditing: A Journal of Practice and Theory 31(2): 151-166.

    Internal audit; in-house; outsourcing; competence; objectivity
    Purpose of the Study:

    Internal auditors provide both assurance and consulting services to add value and improve the operations of an organization. In order to add value through consulting services, internal auditors must make credible recommendations and effectively communicate those recommendations to management. Therefore, the purpose of the study was to understand the factors that influence managers’ perceptions of and reliance on internal audit consulting recommendations. The factors that the authors studied included:

    • Whether internal auditor recommendations are consistent or not with managers’ initial preferences
    • Whether the internal audit function is performed in-house or outsourced
    • Whether the recommendations are quantified or non-quantified.
    Design/Method/ Approach:

    The authors conducted an experiment with business professionals that held either senior or mid-level manager positions in their companies. The participants had an average of 9.12 years of work experience. Participants were given a case study about a plastics company and were given the role of a supervising manager of the company. Managers made an initial operational decision and then were presented with information from internal audit and asked to make their final decision.


    The authors found the following results:

    • Managers change their initial positions more when presented with preference-inconsistent recommendations.
    • There are no differences in managers’ reliance on the non-quantified, preference-inconsistent recommendations of outsourced versus in-house internal auditors.
    • Managers rely more on the quantified recommendations of in-house internal auditors than the non-quantified recommendations of in-house internal auditors. The authors did not find this same effect for outsourced internal auditors.
    Internal auditor role and involvement in controls and reporting