GAUGING THE INTERNAL AUDITORS RESPONSIBILITY - THE CASE OF A TENDER OFFER

Current Institute of Internal Auditors (IIA) Standards for the Profess ional Practice of Internal Auditing clearly identify the organization as the chief overall beneficiary of the internal auditor's work. Such a broad definition allows for significant differences in internal audi tors' perceived responsibilities to competing ''organization'' benefic iaries. Ambiguity among internal auditors as to the chief beneficiary of their work could result in problems for internal auditors, particul arly when potential beneficiaries have conflicting interests. In this study, the case of a tender offer was presented to practicing internal auditors to determine if they would reach a consensus on the principa l beneficiary when making a tender offer recommendation to management. An instrument was developed asking internal auditors to make tender o ffer recommendations to management on an 8-point Likert scale. The ins trument informed the subject how each of four different interest group s (shareholders, the going concern, employees, and management) would s tand to benefit from the tender offer and asked the respondent to make a recommendation to management based on how these different interest groups benefitted. The instrument was sent at random to 805 practicing internal auditors who were IIA members. A total of 113 were returned which were usable for this study. The participants in this study exhib ited allegiance to each of the four interest groups, with no one group dominating the other in importance. Thus, there was no consensus as t o which group the auditors should place in the priority position. This finding indicates that existing standards result in considerable ambi guity in defining the role of internal auditors. These results demonst rate the need for the IIA to provide additional standards for this and other areas of internal audit consultation in order to prevent intern al auditors from being subjected to pressure to adopt a perspective of the organization which is consistent with the perspective of a specif ic organizational interest group. These results are limited to the ext ent that tender offers are a very unique case, the results of which ma y not be applicable to other cases demanding the expertise of the inte rnal auditor.