Conflict-Handling During Multinational Audits: The Internal Auditor-Auditee Relationship

Abstract

As companies expand their operations across national borders, international internal audit assignments are becoming commonplace. However, the internal audit functions of multinational companies face unique issues since their work quality is influenced by interactions with employees from various locations and culturally diverse backgrounds. The aim of this paper is to analyze these interactions. For this purpose, fourteen qualitative in-depth interviews with internal audit practitioners working for globally operating companies are conducted. Qualitative content analysis is used to structure and analyze the interview data and results are presented within a conceptual framework based on Resource Dependence Theory and insights from conflict theory. The study examines the conflict-handling strategies that are employed during the distinct stages of crossnational internal audit assignments and sheds light on how internal auditors achieve their audit related goals while interacting with auditees of different cultural and linguistic backgrounds. Findings indicate that internal auditors are partly reliant on the knowledge and cooperation of auditees, and conflicts need to be handled in a manner which allows the internal audit function to obtain the necessary resources. Overall, results show that country and culture-specific differences can cause or complicate conflict situations and auditors are tasked with finding the difficult balance between trust and scepticism towards auditees when conducting cross-corporate audit assignments. This paper contributes to the scarce literature on the relationships between internal auditors and auditees and expands the current understanding of internal audit work in an international context.