| The internal audit profession has experienced significant growth in size, status and recognition over the last 50 years. From 1975 to 1990, the number of members of the Institute of Internal Auditors has grown from 11,000 to 47,000. College and university internal audit functions have also grown significantly. Since the inception of the Association of College and University Auditors in 1958, membership has increased from thirteen to more than 500 member institutions. Although an extensive amount of empirical research has examined the demand for external audit services, no empirical studies have examined the demand for the internal audit function.; In the current study, a model is developed that describes the demand for internal audit in colleges and universities, with internal audit staff size the proxy for demand. Characteristics affecting the demand for internal audits are measured with ten variables grouped into three categories. The categories include organizational characteristics of size and complexity; accountability issues related to federal support of research and student aid, medical education programs, NCAA membership and being a public institution; auditor effectiveness related to internal auditor objectivity, competence and performance.; A principal component analysis reduces the ten variables to five components. The first component, wealth, comprises variables measuring NCAA membership and complexity of the institution. The second component, federal regulated, contains variables for federally supported research and student aid programs and for medical education programs. The third component, size, includes variables measuring size and designation as a public or private institution. The fourth component, authority, includes variables for objectivity of internal audit and percent of audit recommendations implemented by administration. The audit staffs' years of service and percent of audit staff with professional certifications create the fifth component, competence. In a principal component regression, the wealth, federal regulated, size, and authority components are significant determinants of the demand for internal audit services in colleges and universities. |
