The objective of this study was to examine the external auditor's evaluation of the iflternal audit function. A hierarchy of the attributes that enter into this decision process was developed based on prior research and with the assistance of Big 8 audit managers. An experiment which used the Analytic Hierarchy Process was conducted with 22 audit supervisors and managers.Contrary to previous studies, the results indicated that the competence of the internal auditors was the most important factor, followed by the objectivity and work of the internal auditors. The AHP methodology allowed us to assess which specific attributes were most impoitaEt to the extemal auditor's assessment of these factors. However, the variability of the weights of these attributes indicates low agreement among the practitioners as to which attributes are most important.Resume. Les auteurs de la presente etude avaient pour objectif d'examiner revaluation de !a fonction dc verification inteme par le verificateur exteme. La hierarchie des attributs qui entreat en ligne de compte dans ce processus de decision a 6te dressee a partir de tiravaux de recherche anterieurs et avec la collaboration de chefs de groupe en verification des huit grands cabinets. Vingt-deux chefs d'equipe et chefs de groupe ont participe a une experience faisant appel au processus de hierarchie anaiytique.Contrairement aux resultats des etudes precedentes, les resultats de cette etude ont revele que la competence des verificateurs intemes 6tait le facteur primordial, snivi de F objectivite et du travail des v6rificateurs intemes. La methodologie du processus de hierarchie aaalytique a permis d'evaluer quels attributs precis etaient les plus importants dans revaluation de ces facteurs par les verificateurs extemes. Toutefois, Timportance des ecarts rdevfis dans la ponderation de ces attributs indique que I'unanimite est loin d'etre faite chez les praticiens quant a Fimportance relative des attributs.

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Purpose This paper aims to explore whether an internal auditor’s evaluation of internal control deficiencies are influenced by the party with primary influence over the internal audit function and by the type of internal control deficiency. Design/methodology/approach A behavioral experiment is conducted with internal auditors as participants in a 2 × 2 between-subjects factorial design. Findings Results indicate that internal auditors are less likely to evaluate a pervasive control deficiency related to “tone at the top” as a material weakness than a process-specific control deficiency. Furthermore, internal auditors are somewhat less likely to evaluate a process-specific internal control deficiency as a material weakness when management has primary influence over the internal audit function than when the audit committee has primary influence. It is also found that the best practice of internal audit oversight (i.e., primary oversight of internal auditors by the audit committee) may lead to potential internal under-reporting of instances where the audit committee represents a material weakness in internal control. Research limitations/implications Limitations of this research include lack of economic consequences (e.g. future pay and job loss) associated with the internal control decisions made by the participants; less concise information provided to the participants than would generally be available to them; and lack of generalizability of the findings beyond the specific company setting and internal control scenario portrayed in the case materials. Practical implications Not evaluating a pervasive control deficiency related to “tone at the top” as a material weakness seems to not fully align with relevant professional guidance and can possibly result in inaccurate internal information about the quality of internal controls. Furthermore, having an internal auditor’s evaluation of a process-specific internal control deficiency influenced by the party with primary influence over the internal audit function would not appear to align with relevant professional guidance. Finally, primary oversight by the audit committee of the internal auditors may lead to potential internal under-reporting of instances where the audit committee represents a material weakness in internal controls and, thus, possible communication of inaccurate internal control information. Originality/value This study is the first to address whether the party with primary influence over the internal audit function influences an internal auditor’s evaluation of internal control deficiencies.

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