External auditors’ reliance on internal audit: the impact of sourcing arrangements and consulting activities

Munro, Lois; Stewart, Jenny

doi:10.1111/j.1467-629x.2009.00322.x

Cited by 52 publications

(72 citation statements)

References 13 publications

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“…The other experiment examined the impact of sourcing arrangements (in-house versus outsourced internal audit activities) and internal audit's consulting role on external auditors' reliance decisions. The results of this experiment are reported in Munro and Stewart (2010).…”

Section: Notesmentioning

confidence: 99%

External auditors' reliance on internal auditing: further evidence

Munro

Stewart

2011

Managerial Auditing Journal

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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.

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Section: Notesmentioning

confidence: 99%

External auditors' reliance on internal auditing: further evidence

Munro

Stewart

2011

Managerial Auditing Journal

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“…Les résultats obtenus par Desai, Gerard et Tripathy (2011) ont montré que les auditeurs externes considèrent que, dans l'ensemble, la compétence de l'audit interne est jugée plus grande si cette fonction fait appel à des consultants externes pour réaliser les travaux en partie ou en totalité, car ces derniers sont considérés comme des experts. Cependant, l'étude menée par Munro et Stewart (2010) indique le contraire. En fait, selon cette recherche, les auditeurs externes se réfèrent davantage aux travaux de la fonction d'audit interne s'ils sont réalisés par les auditeurs internes.…”

Section: Les Critères De Compétence Des Auditeurs Internesunclassified

Comment apprécier la compétence d’un auditeur interne ? L’opinion des membres du comité d’audit

Roussy

2013

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This article strives to identify how the members of an audit committee assess the competency of an internal auditor in the context of Quebec's public sector. As part of this research, individual interviews were conducted with 14 members of audit committees. The findings show that committee members seek particular values in internal auditors before deeming them to be competent. These results are useful and original, as they bring out values other than traditional "independence" and do not emphasize the competency criteria that are highlighted in existing publications. This article contributes to the literature concerning relations between internal auditor and the audit committee, for it examines their expectations toward one another.Pour citer cet article : Roussy, M. (2012). « Comment apprécier la compétence d'un auditeur interne ? L'opinion des membres du comité d 'audit », Télescope, vol. 18, n° 3,

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“…This trend is justified in several ways, such as cost savings (Glover, Prawitt, & Wood, 2008;Mubako, 2019), recent regulatory initiatives related to the work of the internal auditor (Abdolmohammadi, 2013), maintaining IAF objectivity (Ahlawat & Lowe, 2004), and access to specialized internal auditing resources (Mubako, 2019). Although the IAF can be provided by both public accounting and specialist firms (Stewart & Subramaniam, 2010) and quality differences are anticipated (Munro & Stewart, 2010), little is known about how the type of external provider is associated with aspects of the audit and financial reporting. To the best of our knowledge, Prawitt et al (2012) is the only study that provides insight into this issue.…”

Section: Introductionmentioning

confidence: 99%

“…This is consistent with prior external audit and IAF literature that suggested Big4 audit firms are able to provide a higher quality audit than other types of auditor. (e.g., Caplan & Kirschenheiter, 2000;DeAngelo, 1981;Francis, Maydew, & Sparks, 1999;Francis & Yu, 2009;Munro & Stewart, 2010). We use audit fees and audit report lag to identify audit efficiency, and use 711 observations from companies listed on the Omani capital market to test our hypotheses.…”

Section: Introductionmentioning

confidence: 99%

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

Baatwah

Al-Ebel

Amrah³

2019

Int J Auditing

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The main aim of this study is to provide empirical evidence examining how outsourced internal audit function (IAF) providers are associated with audit efficiency, and how such providers interact with high‐quality external auditors. We use a sample of 711 observations for companies listed on the Muscat Security Market during the period 2005–2014. Based on pooled regression, we find that audit efficiency is significantly improved when the IAF provider is from a Big4 audit firm, whereas a non‐Big4 audit firm IAF provider is associated with reduced audit efficiency. Furthermore, we find evidence suggesting significant interaction between the external auditor and IAF in relation to audit efficiency if the outsourced IAF provider is from a Big4 audit firm. In additional analysis, we construct a new measure for audit efficiency, dividing the IAF providers into Big4, second tier, and other non‐Big4, and consider the time of connection between such providers and their clients. We still observe that Big4, as an outsourced IAF provider, is more significantly associated with audit efficiency than other types of IAF provider. This paper is important because there is currently little evidence concerning the type of outsourced IAF provider; it contains useful information for auditors, companies, and regulators.

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External auditors’ reliance on internal audit: the impact of sourcing arrangements and consulting activities

Cited by 52 publications

References 13 publications

External auditors' reliance on internal auditing: further evidence

External auditors' reliance on internal auditing: further evidence

Comment apprécier la compétence d’un auditeur interne ? L’opinion des membres du comité d’audit

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

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