The increasing importance of the internal audit function in the USA is evidenced by the attention focused on this function by professional standard setting bodies (Institute of Internal Auditors, 1989; American Institute of Certified Public Accountants, 1991) and an investigatory commission (National Commission on Fraudulent Financial Reporting, 1987). Previous research in both accounting (Jiambalvo and Pratt, 1982; Pratt and Jiambalvo, 1981) and organisational behaviour (see Yukl, 1989 for a review) has identified specific leader behaviours that result in improved performance and satisfaction. Using a recently developed taxonomy unavailable at the time these previous studies were conducted, this study explores the effect of leader (senior internal auditor) behaviours on subunit (internal audit team) performance and subordinate (internal audit staff) satisfaction. The results of this study indicate that audit efficiency is influenced by both task behaviours (e.g. administering discipline) and relationship oriented behaviours (e.g., facilitating cooperation and teamwork and providing praise and recognition); in contrast, audit effectiveness is influenced primarily by task-oriented behaviour. Staff satisfaction is influenced by both types of behaviour. These associations have implications for the training of internal auditors and assignment of internal auditors to projects. Also, increases in staff satisfaction should result in lower turnover, providing a cost saving to the organisation through reduced training, staffing and recruiting costs.