Evaluating the Effectiveness of Internal Audit Reporting Structures on Organizational Decision-Making and Risk Management

Posted: Jul 08, 2022

• Maisie Flores
• Caleb Ortiz
• Bella Knight

Abstract

This research investigates the complex relationship between internal audit reporting structures and their impact on organizational decision-making processes and risk management effectiveness. Traditional studies have primarily focused on compliance aspects of internal auditing, leaving a significant gap in understanding how reporting hierarchies influence strategic outcomes. Our study employs a novel mixed-methods approach combining quantitative analysis of organizational performance metrics with qualitative assessment of decision-making quality across diverse industries. We developed a comprehensive framework that evaluates reporting structures along three dimensions: hierarchical independence, information flow efficiency, and strategic alignment. The research involved longitudinal analysis of 47 organizations over a three-year period, supplemented by in-depth interviews with 89 executives and internal audit professionals. Our findings reveal that organizations with hybrid reporting structures—combining direct access to board-level committees with operational reporting to management—demonstrated 32