The internal audit role during mergers & acquisitions : the European Union experience
Mergers and acquisitions represent a dynamic process of corporate culture and strategy. Empirical evidence indicates a high rate of failure of M&A's to create value for the shareholders of the firms. On the other hand, internal audit has evolved dramatically during the last years from its traditional role of control orientation to a more proactive, risk based and consultancy role. But despite this evolution, empirical evidence showed that internal audit function has no effective contribution during the M&A activity. This study analyzes the present level of involvement of internal audit function during the M&A activity and compare it with the preferred and ideal (normative) level. This comparison leads to the identification of possible gaps between these three different models. This gap analysis identifies the possible reasons of this low level of involvement, as well as, possible means and actions in order to participate more actively to the specialized M&A projects. Finally, we formulated and validated a best practices model of a more expanded level of internal audit involvement at the different stages of M&A's, as well as, a list of potential prerequisites and actions for this expansion.