Date of Creation
4-1-2020
Degree Type
Departmental Honors Thesis - Restricted Access
Abstract
The purpose of this paper is to examine/determine what specific characteristics of internal audit functions (IAFs) within U.S. colleges and universities are more influential than others with regards to defined outcome variables of an effective IAF. Design/methodology/approach – Using a combination of publicly-available and hand-collected data, this paper uses the T- Nearest Neighbor algorithm to pair schools together by examining a predefined set of institution characteristics (excluding characteristics of the IAF) which are most similar among these schools creating a matching propensity. This matching propensity strengthens results regarding the determinants of effective IAF characteristics within U.S. institutions of higher education. Findings – The existence of an IAF Charter, IAF size, and Chief Audit Executive (CAE) experience are all positively correlated with greater amounts of federal grants obtained and retained within U.S colleges and universities. The existence of an IAF Charter is correlated with fewer Reportable Conditions. The size of an IAF is also correlated with fewer Material Weaknesses. Originality/value – To the authors knowledge, this will be the first study to implement the t-NN algorithm in determining what specific variables determine IAF effectiveness. This study contributes to the existing literature on IAF quality in public sector organizations (specifically in U.S. institutions of higher learning; i.e., colleges and universities), while also encouraging future research of the effects of an IAF on specific industries that may enhance IA’s value proposition. Findings should be of use to college/university administrators looking to improve financial reporting transparency and effectively compete for research/federal grant dollars. In addition, the results should be of interest to public sector organizations and college/university leadership as they attempt to improve, understand, or implement an effective IAF.
Recommended Citation
Karalolos, Victor, "Analyzing Internal Audit Effectiveness within U.S. Colleges and Universities: Using Nearest Neighbor Matching (NN)" (2020). Economics and Accounting Honors Theses. 28.
https://crossworks.holycross.edu/econ_honor/28