Editorial: Internal Audit Research at the Crossroads: Time to Turn a Page?

• Published date: 01 July 2014
• DOI: http://doi.org/10.1111/ijau.12024
• Date: 01 July 2014
• Author: Gerrit Sarens

Editorial: Internal Audit Research at the Crossroads: Time to Turn a Page?

Gerrit Sarens

Louvain School of Management, Université Catholique de Louvain

This editorial follows up on an editorial for a special issue

of the International Journal of Auditing (IJA) on internal

auditing (IA) in 2009 (Sarens, 2009). That editorial was

published at the end of a period during which the IA

profession had been boosted, mainly by the increased

attention for ‘good governance’ and the resulting

regulations and guidelines, for example, the

Sarbanes-Oxley Act in the United States. Various

corporate governance codes in Europe also had an

impact.As several authors wrote at that time, IA seemed

to have had established its position within the corporate

governance field (e.g., Paape, Scheffe & Snoep, 2003;

Gramling et al., 2004; Leung, Cooper & Robertson, 2004;

Carcello, Hermanson & Raghunandan, 2005). More

specifically, IA’s role in monitoring and improving risk

management and internal control processes had turned

out to make an important contribution to corporate

governance (Sarens & De Beelde, 2006).

This was also the time period when we saw a

significant increase in the number of academic papers on

IA. Gramling et al.’s (2004) paper, giving an overview of

most IA studies up to 2003, became one of the most cited

papers in IA. That period was also when I joined the – at

that time relatively small – IA research community

together with a handful of other researchers (e.g., Marika

Arena – to name just one – with whom I am editing

another special issue on IA that is forthcoming in early

20151). At thattime, no one questioned the added value of

IA, as the need to have an IA function or departmentwas

quite obvious (mainly for compliance reasons).

Then came the financial crisis in 2008 and more and

more IA stakeholders started to ask questions such as:

‘where were the internal auditors?’, ‘Why didn’t they see

this crisis coming?’, ‘Why didn’t the so-called experts in

risk management and internal control warn us?’. As

discussed by Lenz and Sarens (2012), the post-crisis

period was characterized by a lot of disappointment on

behalf of audit committee members and senior managers.

Irrespective of the answer to these questions, the

consequence is that since then, the added value of IA is

again being questioned. In practice, this leads to reduced

recognition and respect for a lot of IA departments, often

reflected in important budget cuts. At the time I was

writing my first editorial, we saw the first indications of

these critiques to the IA profession. Therefore,I have tried

with this editorial to launch a new research stream

focusing on IA effectiveness, thereby stimulating

researchers to take a more critical perspective on what

might have gone wrong and how this can be avoided in

the future. I am very happy to see that several papers and

PhD dissertations in the period 2009–2013 have referred

to my editorial of 2009 and have tried to contribute to this

research stream2(e.g. Arena & Azzone, 2009; Mihret,

2010; Anderson et al., 2012; Héroux & Fortin, 2012;

Nuijten, 2012; Endaya & Hanefah, 2013; Lenz, Sarens &

D’Silva, 2013; Trotman, 2013).

Now, five years after my first editorial, it may be time

to turn the IA effectiveness page. How can we avoid that

we keep on looking at the past (what went wrong?),

thereby increasing the chance that we miss (again) some

important changes in business life and corporate

governance? Let’s be honest, it is inherent to academic

research, that we tend to look mainly at the past, thereby

often forgetting that todayis already the past. IA research

should become much more future oriented, much more

in touch with the important changes in business life

(think of the changing paradigms in business that we

cannot ignore) and try to find out how the IA profession

can adapt, anticipate and act to these changes in a

proactive way. This may avoid another crisis for the IA

profession in the future. Was this part of the problem of

the IA profession? That we got stuck in old business

paradigms? SOX had created an enormous compliance

paradigm in which a lot of internal auditors were stuck.

After a while, compliance audits became a comfort zone,

while the business environment around them was

changing significantly.

IJA has always been one of the leading journals to

publish IA papers from all over the world and has the

intention to position itself even more as the preferred

outlet for high-quality and innovative paperson IA. Being

an editor of IJA since January 1, 2014, I consider this as

one of my most important personal missions for the

upcoming years.

NOTES

1. The call for papers can be found on the IJA website.

2. Note that this list is not exhaustive.

REFERENCES

Anderson, U. L., Christ, M. H., Johnstone, K. M. &

Rittenberg, L. E. (2012), ‘A post-SOX examination of

factors associatedwith the size of internal audit functions’,

Accounting Horizons, Vol. 26, No. 2, pp. 167–91.

Arena, M. & Azzone, G. (2009), ‘Identifying organizational

drivers of internal auditeffectiveness’, International Journal

of Auditing, Vol. 13, No. 1, pp. 43–60.

Carcello, J. V., Hermanson, D. R. & Raghunandan, K. (2005),

‘Changes in internal auditing duringthe time of the major

US accounting scandals’, International Journal of Auditing,

Vol. 9, No. 2, pp. 117–27.

Endaya, K. A. & Hanefah, M. M. (2013), ‘Internal audit

effectiveness: An approach proposition to develop the

theoretical framework’, Research Journal of Finance and

Accounting, Vol. 4, No. 10, pp. 92–102.

Gramling, A. A., Maletta,M. J., Schneider, A. & Church, B. K.

(2004), ‘The role of the internal audit function in corporate

governance: A synthesis of the extant internal auditing

literature and directions for future research’, Journal of

Accounting Literature, Vol. 23, pp. 194–244.

Héroux, S. & Fortin, A. (2012), ‘The internal audit function

in information technology governance: A holistic

perspective’, Journal of Information Systems, Vol. 27, No. 1,

pp. 189–217.

Lenz, R. & Sarens, G. (2012), ‘Reflections on the internal

auditing as a profession: What might have gone wrong?’,

Managerial Auditing Journal, Vol. 27, No. 6, pp. 532–49.

International Journal of Auditing doi:10.1111/ijau.12024

Int. J. Audit. 18: 103–104 (2014)

© 2014 John Wiley & Sons Ltd ISSN 1090-6738