Many Australian listed companies are neglecting basic governance standards by failing to establish independent internal audit standards, a new survey has found.

The survey by audit firm Protiviti and the Institute of Internal Auditors found company managers often exercise too much control over internal audit functions.

Internal auditors often answer to management rather than the board, and in 15% of cases companies give the CFO authority to sack internal auditors, the survey found.

Some 23% of respondents to the survey admit the CFO sets the internal audit scope and budget.

Among the more positive findings, 62% of firms said they ensure auditors report to the chair of the Audit Committee to avoid conflicts of interest while in 10% of cases auditors report to the board rather than the CFO.

Protiviti MD Gary Anderson described the results as “alarming”.

“Auditors should not be in the position of having to bite the hand that feeds them to do their job,” he said.