How can governance, human capital, and communication practices enhance internal audit quality?

This study responds to recent calls for a better understanding of the determinants of internal audit quality (IAQ). We use the Common Body of Knowledge (CBOK) dataset from the Institute of Internal Auditors Research Foundation to do two things: (1) to propose novel indexes for three determinants of IAQ, namely governance, human capital, and communication, and (2) to investigate whether these indexes enhance IAQ either independently or in combination. Although our econometric results suggest that internal audit departments should focus on improving human capital development and internal auditors' communication skills, they show also that strong governance practices increase IAQ. An interesting finding is that organizations decide among available determinants of IAQ in that better IAQ is the result of a choice to implement these practices without seeking synergies. Our results should encourage practitioners to investigate the logic underlying their decisions aimed at enhancing IAQ.