The Relationship between Internal Audit and Senior Management: A Qualitative Analysis of Expectations and Perceptions

Abstract

This study, based upon Belgian case studies, provides a qualitative assessment of the relationship between internal audit and senior management, analysing the expectations and perceptions of both parties. We found that senior management's expectations have a significant influence on internal audit and that internal audit, generally, is able to meet most of these expectations. Senior management wants internal audit to compensate for the loss of control they experience resulting from increased organisational complexity. Senior management expects internal audit to fulfil a supporting role in the monitoring and improvement of risk management and internal control, and wants them to monitor the corporate culture. Furthermore, they expect internal audit to be a training ground for future managers. On the other hand, internal audit expects senior management to take the first steps in the formalisation of the risk management system. They are looking for senior management support, as this benefits their overall acceptance. SUMMARYThis study aims to contribute to the literature by investigating the relationship between internal audit and senior management (CEOs and CFOs). More specifically, we provide a qualitative analysis of their expectations and perceptions with regard to each other. In addition, we take into account the influence of the audit committee. Our conclusions are based upon five case studies within Belgian companies.We found that, on the one hand, senior management's expectations have a significant influence on internal audit. Internal audit, on the other hand, is able to meet most of these expectations leading to the management support they need.

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