Internal audit function quality and financial reporting: results of a survey on German listed companies

Gros, Marius; Koch, Sebastian; Wallek, Christoph

doi:10.1007/s10997-016-9342-8

Cited by 31 publications

(62 citation statements)

References 33 publications

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“…Previous studies document the significant role of IAF over the audit and financial reporting process and recognize differences according to the type of provider (Desai et al, 2011;Glover et al, 2008;Gros et al, 2017;Prawitt et al, 2009;Prawitt et al, 2012). We extend this research by examining whether the type of external IAF provider is associated with audit efficiency and how the type of IAF provider interacts with the external auditor, such as Big4 audit firms, using a unique dataset of companies listed on the Omani capital market.…”

Section: Discussionmentioning

confidence: 85%

“…We control for client complexity, including company size ( SIZE ), inventory ( INV ), and current ratio ( CURT ). Research argues that client complexity is associated with higher audit effort and, consequently, higher audit fees and longer audit report lag (Gros et al, ; Knechel & Sharma, ). We also include performance ( ROA ), prior losses ( LOSS ), debt ( DBT ), concentrated ownership ( COWSHP ), and growth ( GRW ) to control for the client's financial condition and client‐specific risk.…”

Section: Methodsmentioning

confidence: 99%

“…These results have motivated recent studies to focus on how the quality of the IAF enhances its monitoring role. For example, both experimental and archival literature asserts that a high-quality IAF is associated with earnings quality (Abbott et al, 2016;Gros et al, 2017;Johl et al, 2013;Prawitt et al, 2009), lower risk of fraudulent financial reporting (Prawitt et al, 2012), less likelihood of management misconduct (Ege, 2015), the ability to detect and self-report fraud (Coram, Ferguson, & Moroney, 2008), timely audit reports (Gros et al, 2017;Pizzini et al, 2015), and lower audit fees (Gros et al, 2017;Mat Zain et al, 2015). However, recent evidence on IAF quality largely uses data from in-house IAFs and overlooks the quality of external providers.…”

Section: Prior Research and Hypothesis Developmentmentioning

confidence: 99%

“…5 allows the external auditor to rely on relevant work performed independently by internal auditing, as long as the IAF is deemed to be of acceptable quality. However, a full understanding concerning the role of the IAF in terms of audit efficiency and audit quality is not yet available, as the empirical evidence concerning this role is an emerging literature (e.g., Abbott, Daugherty, Parker, & Peters, 2016;Gros, Koch, & Wallek, 2017;Johl, Johl, Subramaniam, & Cooper, 2013;Prawitt, Sharp, & Wood, 2012;Prawitt, Smith, & Wood, 2009).…”

Section: Introductionmentioning

confidence: 99%

“…Our paper makes a number of important contributions with regard to IAF and audit efficiency. First, a number of studies have investigated the association between the IAF and audit efficiency proxies using proprietary data about the IAF from developed countries (Abbott, Parker, & Peters, 2012;Gros et al, 2017;Hogan & Wilkins, 2008;Pizzini, Lin, & Ziegenfuss, 2015;Singh, Woodliff, Sultana, & Newby, 2014). To our knowledge, this study is the first to investigate the relationship between the IAF and audit efficiency using data from GCC markets such as Oman.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

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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Section: Discussionmentioning

confidence: 85%

Section: Methodsmentioning

confidence: 99%

Section: Prior Research and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

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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ESG performance in the time of COVID-19 pandemic: cross-country evidence

Amosh

Khatib

2023

Environ Sci Pollut Res

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The purpose of this paper is to compare the performance of environmental, social, and governance (ESG) in developing and developed countries prior to and during the COVID-19 pandemic; the study also seeks to reveal the impact of the COVID-19 on the performance of ESG during the pandemic period. Based on a large international panel dataset of 12,325 company-year observations covering 2016–2021, panel regression analysis examined the study hypotheses and achieved the study objectives. The findings indicate that companies have taken precautions against the threats of the COVID-19 pandemic by ensuring compliance with ESG performance to prove their ethical behavior during a crisis. Our findings call into question the notion that companies in developed countries outperform companies in developing countries in terms of ESG performance. As a result, companies in emerging markets outperform companies in developed markets regarding environmental performance, while developed markets focus on social performance. Besides, the ESG performance is positively and significantly affected by the COVID-19, which indicates that during crises, it is important for companies to comply with ethical behavior and the most acceptable in societies. Also, the pandemic has a positive impact on both environmental and social performance, while it has a negative impact on governance performance alone. A considerable body of the literature has addressed the effect of the COVID-19 pandemic on various aspects of a company’s financial and non-financial practices. However, limited effort was given to ESG performance. The current study fills this gap by evaluating the direct effect of the COVID-19 crisis on the ESG performance in developing and developed countries. It also provides insight into the ESG performance and corporate behavior and obligations.

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Management legitimacy of public universities supported by the quality of their internal audits

Mutti

Macagnan

2022

SN Bus Econ

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Internal audit function quality and financial reporting: results of a survey on German listed companies

Cited by 31 publications

References 33 publications

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

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

ESG performance in the time of COVID-19 pandemic: cross-country evidence

Management legitimacy of public universities supported by the quality of their internal audits

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