The Relationship Between the Audit Committee and the Internal Audit Function: Evidence from Australia and New Zealand

This study examines the separate influence of independence and financial experience on audit committee relations with the internal audit function. Using data from Australia and New Zealand, the study focuses on audit committees and internal audit in both private and public sector entities. Data were collected by means of a questionnaire sent to chief internal auditors. The results suggest that independence and accounting experience have a complementary impact on audit committee relations with internal audit. Independence is more associated with issues of process while accounting experience is associated with the extent that the audit committee reviews the work of the internal audit function. There are also some differences based on country and sector. Overall, the findings have important implications for regulators in light of recent calls for audit committee members to have accounting expertise in addition to being independent.