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This study examines whether audit committee effectiveness characteristics are related to suspicious auditor switching. Using the agency and audit committee literature, we hypothesize that audit committee existence, the proportion of independent directors, member experience in accounting, auditing, and nance, number of committee meetings, and number of committee members should be inversely related to suspicious auditor switching.A sample of 60 matched U.S. rms was evaluated along the hypothesized dimensions after controlling for company size, industry, stock exchange, nancial health, and management stock ownership. Collectively, univariate and logistic regression results provide support for our predictions. The ndings indicate that suspicious switchers: (1) are less likely to have an audit committee, (2) have a smaller percentage of independent directors on the audit committee, (3) have fewer members with experience in accounting, auditing, or nance, (4) hold fewer audit committee meetings, and (5) have smaller audit committees than nonsuspicious switching companies. Exploratory analyses also reveal that audit committees for companies with suspicious switches had younger members, and fewer members with no stock ownership in the company served.

The charitable sector is vulnerable to fraud losses, with these losses negatively impacting the organization’s reputation, future funding, and ability to advance its mission. Research on nonprofit fraud is relatively scarce, due mainly to limited availability of data. We create a database that summarizes and describes basic facts (nature and timing of fraud, description of organization, magnitude of loss, and perpetrators) for 115 incidents of detected fraud occurring in U.S. nonprofit organizations. We find a disproportionately high incidence of nonprofit fraud in the Health and Human Services National Taxonomy of Exempt Entities Groups, a high percentage of females committing misappropriation frauds, and that the organizational role of the perpetrator is related to the size of the fraud loss. We also investigate whether organizations detecting a nonprofit fraud report this information, as required, on Internal Revenue Service Form 990, and find that many organizations do not comply.

SYNOPSIS: This paper considers the need for an internal audit report ͑IAR͒ to increase governance transparency for external stakeholders. While the internal audit function is an important and distinct governance mechanism, external stakeholders typically lack the direct relevant information about the function that is available to insiders from other governance mechanisms ͑e.g., management, audit committee, and external auditor͒. This information asymmetry is inconsistent with current objectives for governance, transparency, and accountability in the Sarbanes-Oxley era. We evaluate potential IAR disclosure benefits ͑e.g., increased transparency and accountability͒ and costs ͑e.g., increased information load, legal exposure, and reporting costs͒ using a literature review and the results of 18 semi-structured interviews with analysts, audit committee members, internal auditors, and policymakers. We also propose a model IAR that provides basic descriptive information about the internal audit function for stakeholders to evaluate when considering overall governance within an organization. Ultimately, we conclude that an IAR has potential to complement existing governance disclosures, increase stakeholder confidence in governance quality, and motivate internal audit diligence. However, further research is needed to guide specific report content and to evaluate benefits and costs in both voluntary and mandatory disclosure environments.

This study examines the survival of nonprofit organizations after the discovery of a fraud. Literature on nonprofit fraud claims that fraud has a destructive impact on nonprofit organizations. This study is the first to provide empirical evidence of the impact of fraud on a nonprofit organization's survival, and to analyze the significance of underlying organizational and fraud factors. An analysis of 115 nonprofit organizations experiencing a fraud shows that over one fourth of these organizations did not survive at least 3 years beyond the publication of the fraud, a rate considerably higher than the typical nonprofit failure rate. This article investigates the characteristics of surviving organizations and finds that older and larger organizations are more likely to survive, indicating the liabilities of newness and smallness hold in fraud survival situations. In cases where an executive‐level perpetrator committed the fraud, or where the organization victimized the public, the organization was less likely to survive. These findings suggest nonprofit organizations, particularly those that are new or small, could benefit by implementing governance policies and procedures that are consistent with those employed by more established organizations.

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