Managers' Intentions to Share Knowledge to Internal Auditors: The Effects of Procedural Fairness and Internal Auditor Type

Abstract

Knowledge sharing to internal auditors by managers helps internal auditors learn about critical information and improve operational effectiveness, internal controls, and the internal audit function. We examine the interactive effects of procedural fairness at the start of an internal audit, and auditor type (in-house or outsourced) on managers' intentions to share tacit knowledge during an audit, and intentions to share subsequent knowledge of a material control weakness. Our results indicate procedural fairness is an intervention that can increase managers' intentions to share knowledge, yet it depends on internal auditor type and differs by the type of knowledge shared. A high level of procedural fairness increases intentions to share tacit knowledge to outsourced internal auditors only. However, a high level of procedural fairness increases intentions to share subsequent knowledge of a material control weakness to in-house internal auditors only. We offer contributions to the accounting literature and implications for practice. Data Availability: Data available upon request from authors.