Abstract:
During the last five decades, the world has witnessed a dramatic proliferation of multinational companies
(MNCs) that has evoked strong interest amongst academic researchers. Despite the acknowledged need to
expand internal auditing activities to cover MNCs’ diversified operations in multiple countries, only limited
research has been performed from an internal auditing perspective. Drawing on institutional theory, this paper
aims to add to the existing internal auditing literature by reviewing various international business management
frameworks, in order to suggest an appropriate approach for the establishment and management of the
internal auditing functions of MNCs. The study looks at the evolution of internal auditing functions in MNCs,
examines organizational models described in international business management literature, and concludes
that a geocentric approach is appropriate when structuring the internal audit function in a MNC. The argument
is presented that geocentricity (which implies careful customization to address local context, while operating
within established uniform standards) seems to be an appropriate approach for the organization of the internal
auditing function of a MNC.