Internal audit outsourcing in small organizations: An exploratory study
Few papers have studied internal audit outsourcing in general, and significantly fewer have limited their analysis to small organizations. This study examines the association between small organizations’ propensity to outsource internal audit activities and (1) audit committee involvement, (2) organizational financial health, and (3) need for expertise. Prior studies find mixed evidence when analyzing both large and small organizations concurrently. This study utilizes the Institute of Internal Auditors Research Foundation 2015 Common Body of Knowledge (CBOK) survey results data from chief audit executives (CAEs) of small organizations (<500 employees) based in seven Anglo-culture countries. We find significant associations between both audit committee involvement and organization financial health and internal audit outsourcing in small organizations.