Research Paper

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MAJ 19,5

A comparison of internal audit in the private and public sectors
Jenny Goodwin
School of Accountancy, Queensland University of Technology, Brisbane, Australia
Keywords Internal auditing, Public sector organizations, Private sector organizations Abstract This paper explores similarities and differences between public sector internal auditing and its counterpart in the private sector. Features examined include organizational status, outsourcing, using internal audit as a “tour of duty” function, activities and relationships with the external auditor. The study is based on a survey of chief internal auditors in organizations in Australia and New Zealand. Results suggest that there are differences in status between internal audit in the two sectors, with public sector internal auditors less likely to report to the chief financial officer. While a similar amount of work is outsourced, public sector organizations are more likely than those in the private sector to outsource to the external auditor. There is little difference between internal audit activities and interactions with external audit in the two sectors. However, private sector internal audit is perceived to lead to a greater reduction in audit fees compared to that in the public sector.

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The objective of this paper is to compare features of the internal audit function between organizations in the private sector and those in the public sector. Aspects examined include organizational status, using internal audit as a “tour of duty” function, outsourcing, internal audit activities including involvement in risk management, and interactions with external auditors. The data were collected by a questionnaire survey sent to chief internal auditors who were members of the Institute

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