Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

This is a public Custom Hive  public

research summary

    The Effects of Using the Internal Audit Function as a...
    research summary posted July 27, 2015 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors 
    The Effects of Using the Internal Audit Function as a Management Training Ground or as a Consulting Services Provider in Enhancing the Recruitment of Internal Auditors.
    Practical Implications:

    The results suggest that the profession of internal auditing faces a challenge in attracting talent, since college-graduate job applicants with some work experience are deterred from applying to positions labeled as internal audit. These individuals believe that other professionals have negative perceptions of the internal audit profession. Furthermore, the only condition that improved the likelihood that experienced job candidates would apply for an internal audit position is when the job candidates expected to spend little time in internal auditing before moving into positions outside of the IAF and the position performed primarily consulting tasks a deviation from the traditional internal audit role of performing primarily assurance services. If the IAF cannot attract a sufficient number of high-quality applicants, then its ability to serve as an effective cornerstone of high-quality corporate governance will likely be compromised.


    Burton, F. G., Starliper, M. W., Summers, S. L., & Wood, D. A. 2015. The Effects of Using the Internal Audit Function as a Management Training Ground or as a Consulting Services Provider in Enhancing the Recruitment of Internal Auditors. Accounting Horizons 29 (1): 115-140.

    assurance services, consulting services, hiring decisions, internal audit, management training ground, recruiting
    Purpose of the Study:

    A critical component of high-quality corporate governance is having a high-quality internal audit function (IAF). The purpose of this research is first, to empirically examine the degree to which student job applicants are dissuaded from working in internal auditing positions, and second, to investigate how different job structure factors, namely using the IAF as a management training ground and/or using the IAF to perform consulting versus assurance work, affect the desirability of internal audit positions. Understanding how the type of work the IAF performs impacts job applicants is important for developing a respected and desirable profession.

    In addition to the type of work internal audit performs, a significant number of companies use the IAF as a management training ground (MTG)rotating employees, either new or experienced, into the IAF for a short stint before placing them into management positions outside the IAF. Although popular in practice, prior research shows this staffing model is associated with significant negative outcomes such as higher external audit fees, greater risk of misstated financial statements, and larger internal audit. Given these significant negative consequences, it is important to understand if positive factors exist to explain why so many companies use these rotational staffing arrangements. In this study, the authors specifically examine whether increased interest in internal audit positions is one of these positive factors of using the IAF as a MTG.

    Design/Method/ Approach:

    The authors conduct two experiments to test their hypotheses. All participants in the experiments were senior students or graduate accounting students. Experiment 1 was fully completed by 100 students, and Experiment 2 was fully completed by 169 students. Professors from six different universities emailed their students to encourage participation in the experiment. The sampled universities included both public and private institution across the United States. The evidence was collected prior to January 2014. 


    Responses show that participants are less likely to apply to job positions labeled as “internal audit” as opposed to those that have an “accounting” label. Additional analyses reveal that these results are driven by participants with business experience (regardless of the type and amount of experience). Twenty percent (Experiment 1) and 33 percent (Experiment 2) fewer participants with business experience would apply for a job described as internal auditing than a job described as accounting. For participants with no business experience, there was no difference in willingness to apply for the job based on the internal audit or accounting job labels.

    While participants believe internal auditors are highly respected, have excellent compensation and benefits, perform meaningful and satisfying work, have excellent promotion opportunities, and have excellent work-life balance, experienced participants believe that other business professionals have negative stereotypes of internal auditing. Altering internal audit job descriptions to include both consulting activities and management development only moderately increases applicant interest. Almost twice as many experienced participants are likely to apply to work in internal auditing when the IAF both performs consulting work and is used as a MTG, while inexperienced applicants are indifferent toward the manipulations.

    Auditing Procedures - Nature - Timing and Extent
    Reliance on Internal Auditors