What happens when internal auditors experience that managers turn a deaf ear in information system projects?

This paper studies the deaf effect of managers on internal auditors’ risk warnings that continuing a project is no longer viable. It examines: (1) the symptoms of the deaf effect in escalating information system (IS) projects as reported by the internal auditors, and (2) how the internal auditors saw their relationship to management evolve when such deaf effect occurred. The findings are based on a multi-case study approach and contribute to the literature on both escalating IS projects and internal audit effectiveness. First, we cluster the symptoms of the deaf effect for managers who (1) don’t hear, (2) ignore, or (3) overrule a report of bad news and continue a failing course of action. Deaf effect symptoms could serve as an early warning on project escalation. Second, we illustrate four scenarios on how the relationship between the internal auditor and the manager developed in deaf effect situations as reported by internal auditors. We identify two scenarios in which the relationship between internal auditors and managers showed robust and two scenarios in which the relationship started drifting. Our study illustrates the importance that internal auditors have clear and outspoken expectations about their relationship to management. Several studies show that internal auditors and management still struggle to build effective relationships. Our application of the deaf effect concept provides insights into these relational problems and thus could help internal auditors improve their effectiveness.