We examine whether operations-related services (ORS) provided by the internal audit function (IAF) bring economic benefits to firms. Using a sample constructed by matching a global internal auditor survey with public firms' data in Compustat, we find that the IAF's involvement in ORS has a significant positive association with operating performance. By decomposing ORS into traditional assessment services (e.g., operational audit) and business-oriented facilitation services (e.g., strategy consulting), we document that assessment services are prevalent whereas facilitation services are less frequent. Both types of services have a positive association with operating performance. Moreover, we find that the positive relation between ORS and operating performance is only achieved for companies that follow a defender (as opposed to a prospector) business strategy and that extensively outsourcing internal audit activities reduces the positive effect of ORS on operating performance. Overall, our findings shed light on the value added by the IAF.
JEL Classifications: M41; M42.