Whistleblowing to internal auditors

Whistleblowing can play an important role in the internal control environment of an organization, and internal auditors are its natural outlets. This study examines whistleblowing complaints received by internal auditors based on survey responses from 129 chief internal auditors of US manufacturing companies. Within the past two years, 71 percent of chief internal auditors received whistleblowing complaints, 65 percent of which were found to be true upon investigation. The receipt of whistleblowing complaints was positively associated with involvement of internal auditing in monitoring compliance with the corporate code of conduct, and with audit committee support of internal auditing as evidenced by audit committee involvement in decisions to dismiss the chief internal auditor. These results are consistent with recent calls by the Committee of Sponsoring Organizations and others for public companies to maintain and enforce a code of conduct, and by the Blue Ribbon Committee and others about the need for audit committees to deal proactively with internal and external auditors.