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Marc Eulerich ORCID logo, Rainer Lenz ORCID logo

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This study analyzes the integration of the internal audit function (IAF) into the organizational governance structure of nine different organizations and identifies best practices and organizational differences to improve the overall governance quality from the perspective of IAFs. The results of this qualitative study are based on 26 semi-structured interviews, which were conducted with Chief Auditing Executives and Internal Auditors of six listed companies and three organizations from the public/governmental sector. This study highlights factors to improve the relationship between the IAF and other assurance providers, such as the board of directors, the supervisory board in the two-tier-system, the audit committee, risk management or the external auditor. Based on the results, different common practices regarding potential ways of organizing and integrating the internal audit function into organizational governance are identified. The results contribute to the existing literature through a unique inside-view and extend the prior discussion about the benefits and challenges of internal auditors in different organizational (e.g. Roussy, 2015; Roussy & Perron, 2018). Nevertheless, the typical challenges of qualitative research can be found. All best practices provide an adequate benchmark, and support practitioners as well as scholars to better understand the current best practices of effectively working internal audit function. The study gives additional insights to the growing body of literature about the IAF and uses unique data from practitioners.

Keywords: Internal Audit, Internal Auditing Function, Corporate Governance, Organizational Governance, Best Practices

Authors’ individual contribution: Conceptualization - M.E.; Methodology - M.E.; Writing – M.E. and R.L.; Investigation – M.E.; Funding – M.E.; Resources - M.E.; Supervision – M.E.

Acknowledgement: The author appreciates the comments of the participants and anonymous reviewers at the 2015 AAA Auditing Section Midyear Meeting. This project was funded by the IIA and a national IIA chapter. Data access may be restricted.

JEL Classification: M40, M42, G34, G32, M4, G3

Received: 09.05.2019
Accepted: 21.07.2019
Published online: 23.07.2019

How to cite this paper: Eulerich, M., & Lenz, R. (2019). Internal auditing’s organization and relationship to other governance functions. Corporate Ownership & Control, 16(4), 87-102.