Cultural Dimension as an Explanatory Variable in Use and Compliance with Internal Auditing Standards in Nineteen Countries

Abstract

Chief audit executives (CAEs) and internal audit managers (IAMs) are responsible for the use and compliance with the International Standards for the Professional Practice of Internal Auditing (Standards) issued by The Institute of Internal Auditors (The IIA, 2008). However, significant deviations in use and compliance with Standards have been reported in the literature. Using a large sample of CAEs and IAMs from 19 countries in five distinct cultural clusters (per House et al. 2004) we investigate cultural dimension as an explanatory variable for variations in the use and compliance with Standards. As expected, we find differences between the five cultural clusters in the use and compliance with the Standards. Furthermore, we hypothesize and find that cultural dimension of uncertainty avoidance is inversely related to use, while assertiveness and human orientation are positively related to compliance with Standards. In addition we investigate several control variables and find positive effects for the length of IIA membership, professional certification in internal auditing, and hours of CPE training on both use and compliance. Education degree (graduate vs. undergraduate), major (accounting/auditing/internal auditing vs. others), and position (CAE versus IAM) are not significant in use or compliance models. Our results suggest the importance of certification, IIA membership and continuing professional education to use and compliance with Standards. The results also suggest that reduction of uncertainty in Standards can enhance use, while improvements in IIA members' assertiveness and human orientation can improve compliance with Standards.