Is the objectivity of internal audit compromised when the internal audit function is a management training ground?

Anna M. Rose, Jacob M. Rose, Carolyn S. Norman

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20 Citations (Scopus)


We conduct an experiment with 74 internal auditors to examine the effects of using the internal audit function as a training ground for future senior managers. Specifically, we investigate internal auditors' willingness to resist current management's aggressive revenue recognition policies, assuming that internal auditors expect to move into senior management positions in the future. We also examine whether increasing the power of the board of directors can reduce threats to internal auditors' objectivity. This is the first study to empirically examine whether training grounds influence internal auditors objectivity. Results of our study indicate that internal auditors are less objective (i.e. they are more likely to side with management's aggressive revenue recognition policies) when they expect to move into senior management positions, relative to when internal auditing is not used as a training ground. We also find that empowering the audit committee further decreases the objectivity of internal auditors. These results suggest that board power can have unintended consequences on the behaviour of internal auditors and that board empowerment does not guarantee improved governance or improved oversight of financial reporting.

Original languageEnglish
Pages (from-to)1001-1019
Number of pages19
JournalAccounting & Finance
Issue number4
Publication statusPublished - Dec 2013
Externally publishedYes


  • Board of directors
  • Governance
  • Internal audit
  • Management training ground

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