External auditor reliance on the work of the internal audit function in Jordanian listed companies

Abstract

This study investigates the factors that influence external auditor (EA) reliance on the work of the internal audit function (IAF) in Jordanian listed companies (JLCs). It evaluates the effect of internal auditor objectivity, competence and work performance as perceived by senior Jordanian EAs. The study employs a mixed method comprising a survey‐based factorial experiment in addition to semi‐structured interviews. The results, based on 35 fully‐crossed factorial experiments and nine interviews with senior EAs and external audit managers, show that IAF objectivity has the greatest influence on the EA's decision to rely on the work of the IAF, followed closely by IAF competence and IAF work performance. Further, there was a significant interactive effect between objectivity and competence, indicating that the EAs do not consider the influence of individual factors in isolation. In interviews, the EAs put forward many reasons for the importance of all three of the independent variables. Our results have direct implications for organizations as well as for professional bodies and regulatory authorities charged with encouraging the development of IAFs.

Is the type of outsourced internal audit function provider associated with audit efficiency? Empirical evidence from Oman

“…Further, this evidence is based on developed countries, in which the generalizability of the results to developing countries needs careful review by respective policymakers. We recognize that very few studies (e.g., Al-Sukker et al, 2018;Johl et al, 2013;Mat Zain et al, 2015) replicate the devolved market studies and report that IAF quality constitutes an important control mechanism in developing markets. However, this emerging literature focuses on the quality of IAF assuming an in-house arrangement.…”

“…Others could outsource this function to a third party (CMA, 2002). However, some emerging countries, including Egypt and Jordan, still do not require public companies to establish an internal audit department (Al-Sukker et al, 2018;Ebaid, 2011). Others, such as China and Malaysia, do require the establishment of an IAF for all listed companies, but they have the right to choose in-house or outsourced arrangements (Abdullah et al, 2018;Johl et al, 2013;Leung & Cooper, 2009;Mat Zain et al, 2015).…”

“…Sarens and Abdolmohammadi () reported that emerging countries prefer to apply US IAF best practices than those of other developed countries. Accordingly, empirical research has emerged to cover some aspects of IAF in, for example, Malaysia (e.g., Abdullah, Ismail, & Smith, ; Johl et al, ; Mat Zain, Zaman, & Mohamed, ), China and Taiwan (Leung & Cooper, ), Egypt (e.g., Ebaid, ), Jordan (e.g., Al‐Sukker, Ross, Abdel‐Qader, & Al‐Akra, ), and Saudi Arabia (e.g., Alzeban, ; Alzeban & Gwilliam, ). However, although outsourcing IAF is the predominant practice in these countries, the evidence from this literature is based on the traditional form of IAF; that is, in‐house.…”

Internal Audit Function Sebagai Penyedia “Kenyamanan” Komite Audit

“…Dengan adanya pengelolaan risiko tersebut diharapkan didukung dengan adanya pengawasan secara detail. Al-Sukker et al (2018) dan Raiborn et al (2017) berargumentasi bahwa peran audit internal telah bergeser dari fungsi pengawasan tradisonal ke penambahan nilai bagi organisasi melalui penyediaan kemampuan yang lebih luas seperti memberi jaminan dan kegiatan konsultasi yang berkaitan dengan pemantauan, evaluasi, dan peningkatan pengelolaan dalam manajemen risiko, internal kontrol, serta mempernaiki sistem tata kelola perusahaan. Oleh karena itu, dapat disimpulkan bahwa IAF telah memperluas kegiatan tradisional dari penjaminan kepatuhan dan pengaman aset ke penjamin nilai tambah dan layanan konsultasi bagi suatu organisasi.…”

Study on Efficiency Evaluation of Safety Investment of Coal-Mining Enterprises Based on Audit Data

“…It must not only reflect the actual safety situation of coal enterprises, but also achieve the effects of prevention and prediction. This new and improved audit report should not only provide internal audit information [3] [4], but also provide relevant external information; it should provide not only internal financial audit information, but also relevant internal control information [3] [4]; not only currency information but also non-currency information. In short, the new audit report is the "work result" of the improved audit work.…”