This article examines the impact of audit committee existence, the frequency of audit committee meetings and the auditor's attendance at meetings on aspects of the external audit. Using an experimental design, we find that the audit committee, the frequency of committee meetings and the auditor's attendance at meetings are significantly associated with a reduction in perceived audit risk. The impact on audit efficiency and audit testing is perceived to be minimal. Manager and partner hours are greater when meetings are more frequent and the partner attends all meetings. The audit committee is expected to provide assistance in resolving conflicts with management and to lead to some improvement in overall audit quality. In neither case is this affected by meeting frequency or the auditor's attendance at meetings. Participants expect the existence of an audit committee to lead to an increase in audit fees, particularly when meetings are more frequent and the auditor is required to attend meetings. Reasons given for any fee increase relate to the additional preparation for and attendance at meetings. SUMMARYThis article uses an experimental design to examine the impact of audit committee existence, the frequency of audit committee meetings and the auditor's attendance at meetings on aspects of the external audit. We developed a hypothetical scenario involving a company with a newly formed audit committee and we varied the number of times the audit committee met each year and the audit partner's attendance at the meetings. In the first version of the instrument, participants were advised that the committee met twice a year and the partner was required to attend both meetings. In the second version, the audit committee met six times a year, and the partner was required to attend only the first and last meetings of the year. In the third version, the audit committee met six times a year, and the partner was required to attend all meetings. We chose this design in order to measure the expected impact of these factors on audit risk, audit efficiency, audit testing, auditor-client conflict resolution, audit quality and audit fees.Our results indicate that audit committee existence, the frequency of audit committee meetings and the auditor's attendance at meetings are significantly associated with a reduction in the perceived level of audit risk. The impact of the audit committee on audit efficiency is perceived to be minimal. There is also no perceived impact on audit testing. Manager and partner hours are expected to increase when an audit committee is in place, particularly when meetings are more frequent and the auditor is required to attend all meetings. The audit committee is also expected to provide assistance in resolving conflicts with management and improving the overall level of audit quality, but there are no significant differences based on meeting frequency or auditor attendance at meetings. Participants expect the existence of an audit committee and the frequency of committee meetings to lead to an increase i...

Purpose-Utilising a finer-grained approach, this paper examines the 'quality' of narrative risk management disclosures (RMD) from a 'quantity' and 'richness' (width and depth) perspective. Evidence is then provided on the relationships between RMD quality and the corporate determinants driving that quality. Design/methodology/approach-Within a multidimensional quality disclosure framework, annual report narrative RMD from the top 100 Australian Securities Exchange (ASX) listed companies precisely 'matched' for the 2010 and 2012 years were examined using semantic content analysis. The relationship between the dimensions and sub-dimensions of RMD 'quantity' and 'richness', and various corporate characteristics were explored using ordinary least squares (OLS) regression analysis. Findings-The results indicate that RMD are considerably lacking in quality, from the 'quantity', 'width' and particularly the 'depth' dimension and sub-dimensions for both years. Many companies provide 'boiler plate' RMD over consecutive years and many do not comply with the intent of the ASX Corporate Governance Principles and Recommendations (CGPR) under the 'if not, why not' regime (ASX CGC 2010). Company size and cross listing were found to be the primary determinants of higher quality RMD and to a lesser extent firm risk. Some evidence was found that 'quality' RMD were less likely where companies are more highly leveraged and when their shareholders are more concentrated. Research limitations/implications-Although two coders independently coded the RMD and specific decision rules were followed, the subjectivity inherent in conducting semantic content analysis into the dimensions and sub-dimensions of the framework cannot be completely eliminated. However, by adopting a finer-grained approach this study contributes to the global literature on the quality of RMD. Previous studies are extended by analysing and testing the individual dimensions and sub-dimensions of 'quantity' and 'richness' which provides new empirical evidence and a more comprehensive portrayal of RMD quality and a greater understanding why some companies are more likely to disclose higher quality RMD than others. Practical implications-These results provide useful and predominantly new empirical evidence on the quality of RMD for practitioners, regulators and researchers. As many companies are not complying with the 'intent' of the 'if not, why not' approach, these results support the argument for mandated narrative RMD regulations at an international level. Originality/value-The multidimensional framework of RMD 'quantity' and 'richness' provides a bases for examining not only how much is disclosed, but what is disclosed and how. In adopting a finer-grained approach, this study analyses and tests the individual dimensions and sub-dimensions of the framework. This provides a deeper understanding of the overall quality of RMD and the determinants driving RMD quality for the sample companies.

This study examines the impact of internal audit outsourcing and involvement in consulting on external auditors' reliance on the work of internal audit. We test whether these factors influence reliance on internal audit work already undertaken and the use of internal auditors as assistants, distinguishing between control evaluation and substantive testing. Involvement in consulting impacts reliance on work undertaken and the use of internal auditors as assistants for control evaluation. External auditors make greater use of internal auditors as assistants for substantive testing when internal audit is provided in-house. Overall, external auditors use internal audit more for control evaluation tasks.

Purpose This paper aims to examine the relationship between risk management committees (RMCs) and risk management disclosure (RMD) quality. Specifically, the existence of stand-alone RMCs and a number of RMC characteristics, including RMC size, RMC independence, number of RMC meetings and RMC members’ human capital is investigated. Design/methodology/approach The sample comprises top 100 Australian Securities Exchange (ASX)-listed companies during the period between 2010 and 2012, when RMD began to be guided by detailed recommendations in Australia. Following the RMD framework used by Jia et al. (2016), RMD quality is measured based on its quantity, relevance, width and depth. Ordinary least squares (OLS) regressions were used to test the relationship between stand-alone RMC, RMC characteristics and RMD quality. Findings The results show that the existence of a stand-alone RMC, the human capital of RMC and RMC size are positively associated with RMD quality. In contrast, RMC independence and the number of RMC meetings are not found to have a significant association with RMD quality. Originality/value This study contributes to the current RMD literature by investigating whether a stand-alone RMC and different RMC characteristics are associated with RMD quality. The results of this study provide useful and new empirical evidence about the relationship between RMCs and RMD quality for researchers, companies, and regulators.

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is to explore whether internal audit's reporting relationship with the audit committee and the client's business risk environment impact external auditors' reliance on the work of internal audit. Design/methodology/approach -An experiment is conducted using a 2 £ 2 between-subjects design where we manipulate the above two factors at strong and weak levels. Participants are 66 audit partners, managers and seniors, all experienced with clients having internal audit functions. Findings -The results indicate that both factors affect external auditors' reliance on work already undertaken by internal audit and their use of internal auditors (IA) as assistants. The results also indicate that external auditors are more likely to use internal audit for control evaluation tasks than for substantive tests of balances. The study does not find any significant interaction effects between the two factors. Originality/value -No prior studies have examined the influence of reporting relationship and client business risk on external auditors' reliance decisions in the current governance environment. Further, the paper examines the impact of these factors on reliance on work already undertaken by internal audit and on using IA as assistants, with respect to both control evaluation work and substantive testing of balances.