Abstract

http://ssrn.com/abstract=1760542
 
 

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Illuminating the Limits of Auditor Accountability for Fraud Detection Through a Historical Study of Internal Control Evaluation


Stephanie D. Moussalli


Rhodes College

O. Ronald Gray


University of West Florida

Gokhan Karahan


affiliation not provided to SSRN

June 6, 2011

Journal of Business, Industry and Economics, Volume 17, Spring 2012

Abstract:     
Messner (2009) and Roberts (2009) argue that there are limits of accountability and transparency for accountants. We study the 20th-century development of independent auditors’ evaluation of internal controls as a U.S. example of attempted limits on auditors’ fraud detection responsibilities. While internal controls provide market value, their evaluation during an audit has value largely to auditors themselves, who shift some of the costs of the audit and much of the responsibility for fraud detection to management. A content analysis of the Montgomery’s Auditing series from 1912 to 1998 demonstrates that the percent of text devoted to both internal control techniques and their evaluation was a positive function of time, while the attention given to fraud detection techniques moved in the opposite direction. Our data do not support the literature that explains internal controls evaluation by auditors as an efficiency measure or reaction to competitive price pressures.

Number of Pages in PDF File: 19

Keywords: Internal Controls, Auditing, Montgomery's Auditing, Auditor Accountability, History of Auditing, Fraud Detection

JEL Classification: K22, L84, M40, M41, M49, N22, N42

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Date posted: February 13, 2011 ; Last revised: August 3, 2012

Suggested Citation

Moussalli, Stephanie D. and Gray, O. Ronald and Karahan, Gokhan, Illuminating the Limits of Auditor Accountability for Fraud Detection Through a Historical Study of Internal Control Evaluation (June 6, 2011). Journal of Business, Industry and Economics, Volume 17, Spring 2012. Available at SSRN: http://ssrn.com/abstract=1760542 or http://dx.doi.org/10.2139/ssrn.1760542

Contact Information

Stephanie D. Moussalli (Contact Author)
Rhodes College ( email )
2000 N. Parkway
Memphis, TN 38112
United States
O. Ronald Gray
University of West Florida ( email )
11000 University Parkway
Pensacola, FL 32514-5750
United States
Gokhan Karahan
affiliation not provided to SSRN ( email )
Feedback to SSRN


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