The Effects of Internal Audit Outsourcing on Perceived External Audit Independence

1999 ◽  
Vol 18 (Supplement) ◽  
pp. 27-35 ◽  
Author(s):  
Larry E. Rittenberg
Keyword(s):  
Internal Audit ◽  
External Audit ◽  
Audit Independence

Does Incentive-Based Compensation for Chief Internal Auditors Impact Objectivity? An External Audit Risk Perspective

2016 ◽  
Vol 36 (2) ◽  
pp. 21-43 ◽  
Author(s):  
Lucy Huajing Chen ◽  
Hyeesoo H. (Sally) Chung ◽  
Gary F. Peters ◽  
Jinyoung P. (Jeannie) Wynn
Keyword(s):  
Financial Reporting ◽  
Internal Audit ◽  
Positive Association ◽  
Audit Fees ◽  
Data Availability ◽  
Company Performance ◽  
Potential Threat ◽  
External Audit ◽  
Internal Auditors ◽  
Survey Responses

SUMMARY This paper considers the potential impact of internal audit incentive-based compensation (IBC) linked to company performance on the external auditor's assessment of internal audit objectivity. We posit that external auditors will view IBC as a potential threat to internal audit objectivity, thus reducing the extent of reliance on the work of internal auditors and increasing the assessment of control risk. The increase in risk and external auditor effort should result in higher audit fees. We hypothesize that the form of incentive-based compensation, namely stock-based versus cash bonuses, moderates the association between IBC and external audit fee. Finally, we consider whether underlying financial reporting risk mitigates the external auditor's potential sensitivity to IBC. We find a positive association between external audit fees and internal audit compensation based upon company performance. The association is acute to IBC paid in stock or stock options as opposed to cash bonuses. We also find evidence consistent with the IBC associations being mitigated by the company's financial reporting risks. Data Availability: Individual survey responses are confidential. All other data are derived from publicly available sources.

EFFECTS OF INTERNAL AUDIT INDEPENDENCE ON FIRM PERFORMANCE OF FOOD EXPORT FIRMS IN THAILAND

2013 ◽  
Vol 13 (3) ◽  
pp. 75-88
Author(s):  
Kongkiat Sahayrak ◽  
Phapruke Ussahawanitchakit
Keyword(s):  
Firm Performance ◽  
Internal Audit ◽  
Audit Independence

Standardization in service audit

Servis plus ◽  
10.12737/6464 ◽  
2014 ◽  
Vol 8 (4) ◽  
pp. 30-37 ◽  
Author(s):  
Ольга Вапнярская ◽  
Olga Vapnyarskaya
Keyword(s):  
Comparative Analysis ◽  
Internal Audit ◽  
External Audit ◽  
Audit System ◽  
Analogue Method ◽  
The Subject ◽  
Service Standards ◽  
Audit Program ◽  
Product Lifespan

The authors of the article studied opportunities and prospects of development of the enterprise service standards complex and defined the components of this complex. It appears that the service standards complex is necessary also for service audit. In the article the service audit is considered as a part of internal audit system and as a part of voluntary external audit. Due to this, it is necessary to ensure the continuity of practice of these types of audit with reference to the developed methodology of service audit. It is expected that the service audit is directed at the assessment of completeness of the service provided by the company and its conformity with needs of consumers. The proposal of the service audit conception presupposes the necessity to define what objects are to be standardized, what set of standards are to be created in order to conduct service audit and achieve representative results. Therefore, the authors presented the results of comparative analysis of development of inner audit methodology with regard to its procedures and principles standardization. The article comprises the main principles of service audit standardization that includes analogue method. Particularly, it was proved that it was expedient to single out the service standards complex and the complex of principles (standards) of service audit conduction. According to the authors, the first group includes service standards of various stages of the proposed product lifespan. The complex of principles (standards) of service audit constitutes the standards that allow to define the object and the subject of service audit, auditor requirements, the procedure of preparation and implementation of a service audit program, requirements for service audit results report etc.

The Contribution of Internal Audit as a Determinant of External Audit Fees and Factors Influencing This Contribution

2001 ◽  
Vol 39 (3) ◽  
pp. 513-534 ◽  
Author(s):  
William L. Felix, Jr. ◽  
Audrey A. Gramling ◽  
Mario j. Maletta
Keyword(s):  
Internal Audit ◽  
Audit Fees ◽  
External Audit ◽  
Factors Influencing

scholarly journals Relation between external audit fees, audit committee characteristics and internal audit

2006 ◽  
Vol 46 (3) ◽  
pp. 387-404 ◽  
Author(s):  
Jenny Goodwin-Stewart ◽  
Pamela Kent
Keyword(s):  
Audit Committee ◽  
Internal Audit ◽  
Audit Fees ◽  
External Audit

Voluntary Demand for Internal and External Auditing by Family Businesses

2000 ◽  
Vol 19 (s-1) ◽  
pp. 37-51 ◽  
Author(s):  
Peter Carey ◽  
Roger Simnett ◽  
George Tanewski
Keyword(s):  
Internal Audit ◽  
Business Environment ◽  
Family Businesses ◽  
Firm Characteristics ◽  
External Audit ◽  
The Family ◽  
The Board Of Directors ◽  
The Cost ◽  
And Control ◽  
The Impact

This study investigates voluntary demand for auditing by family businesses, a significant but relatively unexplored segment of the economy. The paper considers demand for both internal and external auditing by using survey data to investigate the impact of firm characteristics linked to the cost vs. benefit of engaging an auditor. Variables examined are firm size, debt, and two agency proxies that measure separation of ownership and control, namely, the proportion of nonfamily management in the firm, and the proportion of nonfamily representation on the board of directors. The paper also considers the association between internal and external auditing. Descriptive results on voluntary demand for auditing by 186 family businesses revealed that internal audit was more prevalent than external audit, and outsourcing was a common method for providing internal audit. Results from logistic regression analyses provide support for the hypothesized impact of the two agency proxies and firm debt on demand for external audit, but do not explain the demand for internal audit. For firms that voluntarily engaged an auditor (internal and/or external audit), the negative and significant correlation between internal and external audit suggest that in the family business environment they are more commonly viewed as substitute rather than complementary responses.

scholarly journals The concept and the appearance of internal audit committees

2018 ◽  
Vol 27 (2018) ◽  
pp. 111-114
Author(s):  
Cristian Dragan
Keyword(s):  
Corporate Governance ◽  
Internal Control ◽  
Boards Of Directors ◽  
Audit Committee ◽  
Internal Audit ◽  
Audit Committees ◽  
External Audit ◽  
General Management ◽  
Proper Functioning

The Audit Committee is a concept of Corporate Governance, whose main concerns are focused on organizing and ensuring the proper functioning of internal control, internal audit, and its relationship with external audit. Audit committees have emerged from the need to send recommendations to the general management or board, to understand them and provide needed assistance for their implementation. For these reasons, the boards of directors thoroughly oversee the qualifications of committee members, their autonomy towards managers, the information they receive from auditors, and what they report.

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