Factors Influencing Internal Audit Fund Sufficiency

Abstract

This study is motivated by the lack of internal audit (IA) fund research and examines the influence that the following elements have on IA fund sufficiency: IA quality factors (experience, certification and training), the independence and objectivity of Chief Audit Executives (rotation, reporting line and appointment), IA characteristics (IA department size and age), budget changes, and IA risk assessment activities. This study identifies 2,205 Chief Audit Executives and uses logistic regression to examine the impact of internal audit quality, independence, characteristics and activity on IA fund sufficiency. The results show that IA quality variables, independence and objectivity variables, IA size, age and budget changes all contribute to predicting fund sufficiency for the model IA department. The results also demonstrate that the risk assessment variable does not contribute to the model. The value of this study is that it provides empirical evidence regarding identifying factors that influence internal audit fund sufficiency. This study’s evidence has implications for policymakers and practitioners, as the actual issue of IA fund sufficiency has yet to be examined.