The External Auditor′s Consideration of the Internal Audit Function

Reinstein, Alan; Lander, Gerald H.; Gavin, Thomas A.

doi:10.1108/02686909410067570

Cited by 13 publications

(7 citation statements)

References 0 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Previous research on auditors' assessment of the criteria of IA competence includes: IA training programs, with an emphasis on professional certifications (Brown, 1983), and IA experience (Messier & Schneider, 1988). Other research has surveyed the IA, external auditor, CFO and audit committee, and found the Certified Internal Auditor designation (Myers & Gramling, 1997) or educational background of the IA (Reinstein, Lander, & Gavin, 1994) as the most important criterion of competence. The results of prior research suggest that the external auditor places greater reliance on IA with accounting/auditing qualifications and also finds that firms with IA are more likely to detect or deter financial statement fraud (e.g.…”

Section: Internal Audit Characteristicsmentioning

confidence: 98%

“…Having unlimited access to IA's working papers facilitates external auditors' assessment of whether IA work is performed by competent persons. Reinstein et al (1994) find that external auditors access working papers to evaluate IA suggestions. Further, Felix et al (2001) find the availability and cooperation of the IA with the external auditor is associated with IA contribution to the financial statement audit.…”

Section: Internal Audit Activitiesmentioning

confidence: 99%

See 1 more Smart Citation

Internal audit department characteristics/activities and audit fees: Some evidence from Hong Kong firms

Hutchinson

2010

Journal of International Accounting, Auditing and Taxation

View full text Add to dashboard Cite

a b s t r a c tThis study provides preliminary support for the notion that internal audit function assists in reducing external audit effort and fees. Data on internal audit characteristics and activities are obtained from survey respondents of Hong Kong companies and audit fee model data are acquired from their annual reports. The results of this study suggest that the external auditor of firms in Hong Kong rely on the internal audit function and subsequently charge a lower fee. Lower external audit fees are associated with a larger internal audit department and certain activities carried out by the internal audit. Specifically, lower external audit fees are associated with more internal audit effort spent on activities relating to financial statements, systems development and maintenance, operating efficiency and effectiveness, fraud investigations and unlimited access to internal auditors' working papers. The results of this study suggest that the contribution of the internal audit may substitute for some substantive external auditing processes and lower monitoring costs.

show abstract

Section: Internal Audit Characteristicsmentioning

confidence: 98%

Section: Internal Audit Activitiesmentioning

confidence: 99%

Internal audit department characteristics/activities and audit fees: Some evidence from Hong Kong firms

Hutchinson

2010

Journal of International Accounting, Auditing and Taxation

View full text Add to dashboard Cite

show abstract

“…However, SAS 9 was criticized on the ground that it did not provide specific guidance for the accomplishment of this evaluation, leaving the degree of reliance up to the judgment of the individual auditors (Reckers and Lee, 1997). Thus, SAS 65 was issued in 1991 to clarify the working relationship that must exist between the external and internal auditors, and to provide increased guidance for external auditors on how to evaluate and test the internal auditor's objectivity, competence and work performance (Reinstein et al, 1994).…”

Section: Introductionmentioning

confidence: 99%

External auditors' reliance on internal auditors and its impact on audit fees

Suwaidan

Qasim

2010

Managerial Auditing Journal

View full text Add to dashboard Cite

Purpose -The purpose of this paper is to investigate the perceptions of a sample of Jordanian external auditors for the importance given by them to a number of factors which may influence their reliance on an internal auditor during their external audit. The paper also examines the relationship, if any, between the degree of reliance on the internal and external audit fees. Design/methodology/approach -A sample of 100 external auditors is employed to investigate the perceptions of external auditors as to the importance given by them to a number of factors which may influence their reliance on an internal auditor during their external audit. Also, a cross-sectional multiple regression analysis is conducted to examine the impact of this reliance on audit fees. Findings -The results of the paper indicate that external auditors in Jordan consider the objectivity, competence and work performance of internal auditors as very important factors affecting their reliance decisions. It is found that "objectivity" had the highest mean score (4.353), followed by "competence" (4.188) and "work performance" (4.156). The results of the multiple regression analysis indicated that the size of the audited company is the most important variable in explaining the variation in audit fees paid by the sample companies. As for the reliance variable, it is found insignificant. Originality/value -It is believed that no previous research has examined these issues on the basis of Jordanian data. Thus, the current paper aims to extend the literature on these topics on a developing country with different characteristics. The results of this paper will be of concern to companies in their attempt to reduce external audit fees. Audit firms may also benefit from the paper in terms of reducing the efforts of external auditors due to the understanding and cooperation between external and internal auditors.

show abstract

“…Zaman and Sarens (2013) found that even informal interactions between IAs and the AC enhance good corporate governance, and they (the authors) call for more research related to interactions amongst corporate governance partners. Reinstein et al (1994) pointed out that frequent meetings with IAs will alert the EAs to any operational and financial changes, as well as emerging issues pertaining to the clients, and at the same time, allow both sides an insight into the other's auditing techniques.…”

Section: Background and Motivationmentioning

confidence: 99%

Interaction between internal and external auditors – insights from a developing country

Mubako

Muzorewa

2019

MEDAR

View full text Add to dashboard Cite

Purpose The purpose of this study is to examine the nature and extent of interaction and the relationship between internal auditors (IAs) and external auditors (EAs) from the perspective of the IAs in a developing country, Zimbabwe. Design/methodology/approach This study was carried out by soliciting the opinions of chief audit executives (CAEs) in Zimbabwe through an online survey that was distributed via e-mail. Findings The study finds that the interaction between the IAs and EAs is limited and that EAs may not be making full use of the internal audit function (IAF). Findings also suggest that the relationship between the auditors is, in some instances, strained and that the actions of management do not always facilitate the fostering of a good, productive relationship between the auditors. Originality/value Results of this study contribute to the understanding of the nature and extent of interaction between the IAF and EAs in an African setting. The study also solicits qualitative data about the relationship between IAs and EAs where previous research has largely focused on objective measures, failing to take into account factors such as attitudes and biases, which can affect this relationship. Finally, the results of this study bring to light important, previously under-explored issues, which provide opportunities for future research.

show abstract

The External Auditor′s Consideration of the Internal Audit Function

Cited by 13 publications

References 0 publications

Internal audit department characteristics/activities and audit fees: Some evidence from Hong Kong firms

Internal audit department characteristics/activities and audit fees: Some evidence from Hong Kong firms

External auditors' reliance on internal auditors and its impact on audit fees

Interaction between internal and external auditors – insights from a developing country

Contact Info

Product

Resources

About