Auditing Section Research Summaries Space

A Database of Auditing Research - Building Bridges with Practice

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  • Jennifer M Mueller-Phillips
    The Effects of Employer and Client Identification on...
    research summary posted September 12, 2013 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors 
    Title:
    The Effects of Employer and Client Identification on Internal and External Auditors' Evaluation of Control Deficiencies
    Practical Implications:

    The Primary implication of this study is that reliance on the work of internal auditors may improve audit quality. AS5 recommends reliance on the work of internal auditors for lower-risk areas because it is presumed to improve efficiency. This paper, however, suggests that quality will be improved as well. Therefore, auditors may want to evaluate policies regarding regarding using the work of internal auditors and do so more heavily in the future.
     

    For more information on this study, please contact C.M. Stefaniak.

    Citation:

    Stefaniak, C., R. Houston, and R. Cornell. 2012. The Effects of Employer and Client Identification on Internal and External Auditors' Evaluations of Internal Control Deficiencies. Auditing: A Journal of Practice and Theory. (31)1:39 –56.

  • Jennifer M Mueller-Phillips
    The Effects of Internal Audit Report Type and Reporting...
    research summary posted October 20, 2015 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors, 13.0 Governance, 13.07 Internal auditor role and involvement in controls and reporting 
    Title:
    The Effects of Internal Audit Report Type and Reporting Relationship on Internal Auditors' Risk Judgments.
    Practical Implications:

    This study’s results are important to regulators thinking about requiring issuance of an internal audit report and practitioners planning how to respond to such proposals. The authors suggest that the assurance internal audit report, which leads to more conservative risk assessment when internal auditors mainly report to the audit committee, may prove rather costly and unpopular among internal auditors. Meanwhile, the descriptive internal audit report, which prior research found to be useful to investors, does not make internal auditors more conservative, but it may prove less costly and more popular among internal auditors. Ultimately, these findings suggest that regulators need to discuss any internal audit report proposals with key stakeholders, including internal auditors, before getting too far into the rule making process. 

    Citation:

    Boyle, D. M., F. T. DeZoort, and D. R. Hermanson. 2015. The Effects of Internal Audit Report Type and Reporting Relationship on Internal Auditors' Risk Judgments. Accounting Horizons 29 (3): 695-718.

  • Jennifer M Mueller-Phillips
    The Effects of Using the Internal Audit Function as a...
    research summary posted July 27, 2015 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors 
    Title:
    The Effects of Using the Internal Audit Function as a Management Training Ground or as a Consulting Services Provider in Enhancing the Recruitment of Internal Auditors.
    Practical Implications:

    The results suggest that the profession of internal auditing faces a challenge in attracting talent, since college-graduate job applicants with some work experience are deterred from applying to positions labeled as internal audit. These individuals believe that other professionals have negative perceptions of the internal audit profession. Furthermore, the only condition that improved the likelihood that experienced job candidates would apply for an internal audit position is when the job candidates expected to spend little time in internal auditing before moving into positions outside of the IAF and the position performed primarily consulting tasks a deviation from the traditional internal audit role of performing primarily assurance services. If the IAF cannot attract a sufficient number of high-quality applicants, then its ability to serve as an effective cornerstone of high-quality corporate governance will likely be compromised.

    Citation:

    Burton, F. G., Starliper, M. W., Summers, S. L., & Wood, D. A. 2015. The Effects of Using the Internal Audit Function as a Management Training Ground or as a Consulting Services Provider in Enhancing the Recruitment of Internal Auditors. Accounting Horizons 29 (1): 115-140.

  • Jennifer M Mueller-Phillips
    The Impact of Internal Audit Function Quality and...
    research summary posted July 24, 2015 by Jennifer M Mueller-Phillips, tagged 01.0 Standard Setting, 01.04 Impact of 404, 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors, 11.0 Audit Quality and Quality Control 
    Title:
    The Impact of Internal Audit Function Quality and Contribution on Audit Delay.
    Practical Implications:

    This research should be of interest to regulators who are concerned with the timeliness of financial reports, practitioners who are responsible for preparing and auditing financial statements, and standard setters who provide auditing guidance. In particular, the findings indicate that firms’ decisions regarding the structure of the IAF and their role in the financial statement audit can significantly affect audit completion times. Reducing audit delay from current levels back to pre- SOX 404 levels could potentially reverse the decline in the reliability of earnings announcements. The results are useful to external auditors in determining whether and how IAF work can be incorporated into the financial statement audit. This study also provides support for recent PCAOB guidance contending that external auditors can improve audit efficiency by making more extensive use of work performed by others.

    Citation:

     Pizzini, M., Lin, S., & Ziegenfuss, D. E. 2015. The Impact of Internal Audit Function Quality and Contribution on Audit Delay. Auditing: A Journal Of Practice & Theory 34 (1): 25-58.

  • Jennifer M Mueller-Phillips
    The Role of Account Subjectivity and Risk of Material...
    research summary posted July 18, 2016 by Jennifer M Mueller-Phillips, tagged 06.0 Risk and Risk Management, Including Fraud Risk, 06.05 Assessing Risk of Material Misstatement, 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors 
    Title:
    The Role of Account Subjectivity and Risk of Material Misstatement on Auditors’ Internal Audit Reliance Judgments
    Practical Implications:

    This paper suggests that the relationship between account subjectivity and usage of internal audit depends on the relative risk of misstatement.  This complex relationship has not been shown in academic literature, nor is it highlighted in audit standards.  More specifically, at lower levels of risk of misstatement, increases in subjectivity have no influence on the reliance of internal audit.  At moderate risk levels the extent of internal audit reliance increases with subjectivity of the account.  At high levels of misstatement internal audit reliance decreases with account subjectivity.  This study provides insight into the decision criteria for internal audit reliance and highlight where internal audit usage maybe more prevalent, as well as were further audit guidance may be beneficial.

    Citation:

    Bhattacharjee, S., M.J. Maletta, K.K. Moreno. 2016. The Role of Account Subjectivity and Risk of Material Misstatement on Auditors’ Internal Audit Reliance Judgments. Accounting Horizons 30 (2): 225-238.

  • Jennifer M Mueller-Phillips
    Welcome to the day-to-day of internal auditors: How do they...
    research summary posted July 30, 2015 by Jennifer M Mueller-Phillips, tagged 08.0 Auditing Procedures – Nature, Timing and Extent, 08.11 Reliance on Internal Auditors, 13.0 Governance, 13.07 Internal auditor role and involvement in controls and reporting 
    Title:
    Welcome to the day-to-day of internal auditors: How do they cope with conflict?
    Practical Implications:

    This study makes an original contribution to the development of new knowledge on internal auditing. It concludes that internal auditors tend to lack independence and audit committee members often exercise disturbingly weak power (on the internal audit function), as compared to the top managers. This points to the difficulty of applying an idealized conception of independence and purist governance principles to practice. That is, it encourages auditors to consider the appropriateness of internal auditing as a meaningful independent assurance device in operating the corporate governance "mosaic."

    Citation:

    Roussy, M. 2015. Welcome to the day-to-day of internal auditors: How do they cope with conflict? Auditing: A Journal of Practice and Theory 34 (2): 237-264.

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