An Empirical Study on the Determinants of Internal Audit Outsourcing Decisions Among Large Enterprises

Posted: Jan 08, 2020

• Beatrice Long
• Tristan Wallace
• Micah Allen

Abstract

The landscape of internal audit functions within large enterprises has undergone significant transformation over the past two decades, with outsourcing emerging as a strategic consideration for organizations seeking to balance control, expertise, and cost efficiency. While previous research has examined internal audit outsourcing through primarily economic lenses, this study introduces a more comprehensive framework that integrates regulatory, technological, and strategic dimensions. The increasing complexity of regulatory environments, particularly following the implementation of legislation such as the Sarbanes-Oxley Act, has fundamentally altered the calculus behind internal audit sourcing decisions. Simultaneously, the rapid advancement of audit technologies and the emergence of new risk domains including cybersecurity and artificial intelligence governance have created both pressures and opportunities that influence organizational approaches to internal audit resourcing. This research addresses several critical gaps in the existing literature. First, while numerous studies have examined the cost-benefit analysis of internal audit outsourcing, few have systematically investigated how regulatory