Perception of Internal Auditor Independence and the Effect on the Perceived Reliability of Internal Audit Reports in India

Abstract

This paper is about Internal Audit Independence. The objective of the study is to critically examine the independence of the Internal Auditors in the Indian Market. This study is concerned about the perception of the internal auditor’s independence because it is the perceptions, rather than reality, which determine the credibility of the internal audit reports. Hence, it is important to establish what factors are perceived to impair the internal auditor independence. If the internal auditors are perceived to lack independence, does this have any impact on users’ assessment of the reliability of the internal audit reports. This study aims to address these issues. The need for internal auditor independence has been recognized by the Institute of Internal Auditors (IIA), Indian Companies Act, The Institute of Chartered Accountants of India (ICAI), Securities and Exchange Board of India (SEBI) along with the professional accounting bodies worldwide. They have issued guidelines relating to the conduct of the internal auditors in order that independence is maintained. .The study has examined various guidelines issued by regulatory bodies.