The Effects of Internal Audit Outsourcing on Perceived External Auditor Independence

1999 ◽  
Vol 18 (s-1) ◽  
pp. 37-40 ◽  
Author(s):  
Cindy Ditner
Keyword(s):  
Internal Audit ◽  
Auditor Independence ◽  
External Auditor

The Effects of Internal Audit Outsourcing on Perceived External Auditor Independence

1999 ◽  
Vol 18 (Supplement) ◽  
pp. 7-26 ◽  
Author(s):  
D. Jordan Lowe ◽  
Marshall A. Geiger ◽  
Kurt Pany
Keyword(s):  
Internal Audit ◽  
Auditor Independence ◽  
External Auditor

Corporate Governance, Audit Quality, and the Sarbanes-Oxley Act: Evidence from Internal Audit Outsourcing

2007 ◽  
Vol 82 (4) ◽  
pp. 803-835 ◽  
Author(s):  
Lawrence J. Abbott ◽  
Susan Parker ◽  
Gary F. Peters ◽  
Dasaratha V. Rama
Keyword(s):  
Audit Quality ◽  
Internal Audit ◽  
Auditor Independence ◽  
Audit Committees ◽  
Internal Auditing ◽  
External Audit ◽  
Internal Auditor ◽  
Sarbanes Oxley ◽  
External Auditor ◽  
Audit Activity

This study extends current literature related to nonaudit services by investigating internal audit outsourcing to the external auditor. We posit that certain types of internal audit outsourcing (i.e., those which are nonroutine, and thus tend to be nonrecurring in nature) are unlikely to lead to economic bonding, while offering significant potential for improvements in audit coverage and scope when provided by the external auditor. Alternatively, outsourcing routine internal audit tasks is more likely to lead to economic bonding, as well as potentially threatening internal auditor independence. Our results are consistent with firms with independent, active, and expert audit committees being less likely to outsource routine internal auditing activities to the external auditor. However, the outsourcing of nonroutine internal audit activities such as special projects and EDP consulting are not negatively related to effective audit committees. Additionally, outsourcing of either type of internal audit activity to an outside service provider other than the external auditor is not related to effective audit committees. Collectively, we interpret these findings as supportive of an effective audit committee's ability to monitor the sourcing of the firm's total (i.e., internal and external) audit coverage, while simultaneously exhibiting concern for external auditor independence.

The Effects of Internal Audit Outsourcing on Perceived External Auditor Independence

1999 ◽  
Vol 18 (s-1) ◽  
pp. 7-26 ◽  
Author(s):  
D. Jordan Lowe ◽  
Marshall A. Geiger ◽  
Kurt Pany
Keyword(s):  
Negative Impact ◽  
Positive Impact ◽  
Internal Audit ◽  
Auditor Independence ◽  
Financial Statement ◽  
Current Position ◽  
Financial Statement Audit ◽  
Study Support ◽  
External Auditor ◽  
Management Functions

The accounting profession is currently attempting to redefine its role and is expanding the types of services provided. With this expansion, however, comes a concern regarding the potential lack of independence between the auditor and the client requesting these services. This exploratory study examines whether the outsourcing of the internal audit function to the company's external auditor affects financial statement users' perceptions of auditor independence oand financial statement reliability, as well as loan decisions. The overall objective of this study is to assess reactions to various internal-audit outsourcing arrangements, and in doing so, to evaluate the accounting profession's current position regarding the acceptability of performing this type of “extended audit service” to audit clients. Results indicate significant differences across the various outsourcing groups involving the company's external auditor and the nonoutsourced group. Specifically, auditor performance of management functions had a significantly negative impact on users' perceptions of auditor independence and financial statement reliability, and resulted in the lowest percentage of loan approvals. However, the separation of audit-firm staff performing the outsourced internal audit from those performing the financial statement audit had a significantly positive impact on financial statement users' perceptions and loan approvals. The findings of this study support the AICPA's current position on internal audit outsourcing and also suggest that a requirement be established that provides a distinct separation of staff between a CPA firm's internal and external audit teams.

The Effects of Internal Audit Outsourcing on Perceived External Auditor Independence

1999 ◽  
Vol 18 (s-1) ◽  
pp. 41-44 ◽  
Author(s):  
D. Jordan Lowe ◽  
Marshall A. Geiger ◽  
Kurt Pany
Keyword(s):  
Internal Audit ◽  
Auditor Independence ◽  
External Auditor

The Effect of Internal Audit Outsourcing on Financial Analysts' Perceptions of External Auditor Independence

2001 ◽  
Vol 20 (2) ◽  
pp. 115-129 ◽  
Author(s):  
Susan L. Swanger ◽  
Eugene G. Chewning
Keyword(s):  
Phase 1 ◽  
Financial Analysts ◽  
Internal Audit ◽  
Auditor Independence ◽  
Internal Auditing ◽  
External Audit ◽  
Two Phase ◽  
Phase Study ◽  
External Auditor ◽  
Cpa Firm

The practice of outsourcing the internal audit function to the external audit firm has raised fears by many parties such as the SEC of possible independence impairment. The fear stems from the increased economic bond that exists when additional services are provided to an audit client, as well as the long-held view that internal auditing is a management function and, as such, is incompatible with the external audit function. This paper reports the results of a two-phase study of the perceptions of financial analysts regarding external auditor independence when a CPA firm performs both external and internal auditing services. In phase 1, analysts' perceptions of auditor independence are greater when the client employs its own internal audit staff or outsources to a different CPA firm than when the external auditor also performs internal audit functions. Phase 2 results show that analysts' perceptions of auditor independence are higher when the internal audit services are provided by the staff of a different division of the CPA firm compared to a nostaff separation treatment. Perceptions do not differ between full and partial outsourcing treatments, which conflicts with the recent SEC rule limiting the extent of outsourcing arrangements.

The Effects of Internal Audit Outsourcing on Perceived External Auditor Independence

1999 ◽  
Vol 18 (Supplement) ◽  
pp. 41-44 ◽  
Author(s):  
D. Jordan Lowe ◽  
Marshall A. Geiger ◽  
Kurt Pany
Keyword(s):  
Internal Audit ◽  
Auditor Independence ◽  
External Auditor

scholarly journals A versenyképesség és a társaságok belső ellenőrzése (Competitiveness and corporate internal audit)

2012 ◽  
pp. 19-33
Author(s):  
Mária Bordáné Rabóczki
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Supervisory Board ◽  
Internal Audit ◽  
Senior Management ◽  
Internal Auditors ◽  
Mutual Dependency ◽  
Internal Audit Function ◽  
External Auditor ◽  
The Impact

A cikk a belső ellenőrzésnek a hatékony társaságirányításhoz való hozzájárulását és ennek a versenyképességre gyakorolt hatását vizsgálja. A belső ellenőrzés és a társaságirányítás kölcsönös összefüggésben áll egymással. Nemcsak a belső ellenőrzés hat a társaságirányításra, hanem a releváns társaságirányítási struktúrák, emberi kapcsolatok és magatartásformák jelentős hatást gyakorolnak a belső ellenőrzés színvonalára és hatékonyságára. A cikk ezért különös figyelmet szentel a belső ellenőröknek az igazgatósággal, az auditbizottsággal/felügyelőbizottsággal, a menedzsmenttel és a könyvvizsgálóval való kapcsolatainak vizsgálatára. Rávilágít a belső ellenőrzés legfőbb funkciójára, amely objektív bizonyosságot nyújt az igazgatóság és a felső vezetők számára a kockázatok azonosítására, kezelésére és elfogadható szintre történő csökkentésére szolgáló kontrollfolyamatok megfelelőségéről és hatékonyságáról. A bemutatott belső ellenőrzési modell azt a szemléletet közvetíti, hogy a belső ellenőrzés által nyújtott objektív bizonyosság megszerzése nemcsak a jogszabályoknak vagy az ajánlásoknak való megfelelés, hanem a társaságok versenyképessége szempontjából is kiemelkedő jelentőségű. _________ The purpose of this paper is to consider the contribution of internal audit to the sound corporate governance and the impact of that on the competitiveness of the companies. There is a mutual dependency between internal audit and corporate governance. Not only the internal audit has impact on the corporate governance but the relevant governance structures, relationships and behaviour influence the level and effectiveness of the internal audit. Therefore the present paper is highly concerned with the internal auditors` relationships with the board, audit committee/supervisory board, senior management and the external auditor. It highlights the internal audit function, that provides objective assurance to the board and senior management about the adequacy and effectiveness of the processes by which risks are identified, managed, controlled and mitigated to acceptable levels. The internal audit model demonstrated represents an approach, according to that getting objective assurance provided by internal audit is important not only to be in line with laws and recommendations but to facilitate the corporate competitiveness.

Experimental evidence on external auditor reliance on the internal audit

2018 ◽  
Vol 13 (5) ◽  
pp. 1143-1176 ◽  
Author(s):  
Reiner Quick ◽  
Philipp Henrizi
Keyword(s):  
Experimental Evidence ◽  
Internal Audit ◽  
External Auditor
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