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Internal Audit Outsourcing Practice and Rationales: Sme Evidence from New Zealand Essay

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Internal Audit Outsourcing Practice and Rationales:
SME Evidence from New Zealand



Leihan Jiang (Harry)
University of Waikato
Hamilton New Zealand

And

Karen Van Peursem
Department of Accounting
University of Waikato
Hamilton New Zealand[1]





Classification:   M42 Auditing

Key words:
Internal audit
Outsourcing
SMEs
New Zealand
Practice
Internal Audit Outsourcing Practice and Rationales:
SME Evidence from New Zealand






ABSTRACT

This study examines company practices and rationales for decisions to outsource internal audit in New Zealand companies. The purpose is to assess whether practice and preference conforms to literature-based expectations and to assess what this might mean for audit quality and independence.   Senior managers from all 165 New Zealand Stock Exchange (NZX) listed companies’ were surveyed and a 38% response rate, with 63 useable responses, was obtained. Comparison to a 2000 UK study reveals a common failure to use internal audit for strategic purposes, but differences in other respects.   Conclusions highlight patterns revealed by statistical results and point to possible post-Enron effects, SME effects and conflicts between preference and practice.   Suggestions for further research conclude the paper.
INTRODUCTION

Fierce market competition has led many organizations to reconsider what they do best, and to concentrate on their core competencies. ‘Support’ activities such as building security and maintenance which do not directly contribute to revenue may therefore be outsourced.

Outsourcing is not a new phenomenon; however, carrying it out at some point may be unwise. Outsourcing, while common generally in the business environment, is controversial and not always advised for internal audit.   Both ‘independence’ and ‘competence’ as well as whether outsourcing cost-beneficial are some of the issues raised about it (Haylock, 2006; Selim and Yiannakas 2000; Acciani 1995).

Nonetheless, it is...

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MLA Citation

"Internal Audit Outsourcing Practice and Rationales: Sme Evidence from New Zealand". Anti Essays. 18 Jun. 2018

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APA Citation

Internal Audit Outsourcing Practice and Rationales: Sme Evidence from New Zealand. Anti Essays. Retrieved June 18, 2018, from the World Wide Web: https://www.antiessays.com/free-essays/Internal-Audit-Outsourcing-Practice-And-Rationales-532831.html