The Impact of Internal Audit Function Quality and Contribution on Audit Delays

52 Pages Posted: 9 Sep 2010 Last revised: 8 Oct 2012

Mina Pizzini

Texas State University, San Marcos - College of Business Administration; Naval Postgraduate School

Shu Lin

California State University, Fresno - Craig School of Business

Douglas E. Ziegenfuss

Old Dominion University - College of Business & Public Administration

Date Written: September 26, 2012

Abstract

This study investigates whether measures of internal audit function (IAF) quality and the IAF’s contribution to the financial statement audit affect audit delay. We conduct empirical tests using 292 observations from 216 firms that responded to the Institute of Internal Auditor’s Global Auditing Information Network survey. Results indicate that audit delay is decreasing in IAF quality, and that this decrease is primarily driven by the competence of the IAF and the quality of their fieldwork. Audit delay is also at least four days shorter when the IAF contributes to the external audit by independently performing relevant work, but not when IAF personnel directly assist the external auditor. We further examine factors that affect the external auditor’s decision to use IAF work. The likelihood that external auditors use independently performed IAF work is increasing in IAF quality, internal auditor availability, and audit committee effectiveness, and decreasing in external auditor availability. The likelihood that IAF personnel directly assist external auditors is decreasing in IAF quality and increasing in audit committee effectiveness.

Keywords: internal audit, audit delay

Suggested Citation

Pizzini, Mina and Lin, Shu and Ziegenfuss, Douglas E., The Impact of Internal Audit Function Quality and Contribution on Audit Delays (September 26, 2012). Available at SSRN: https://ssrn.com/abstract=1673490 or http://dx.doi.org/10.2139/ssrn.1673490

Mina Pizzini (Contact Author)

Texas State University, San Marcos - College of Business Administration ( email )

San Marcos, TX 78666
United States

Naval Postgraduate School ( email )

555 Dyer Road
Monterey, CA 93943
United States

Shu Lin

California State University, Fresno - Craig School of Business ( email )

Fresno, CA 93740
United States
559-278-5121 (Phone)
559-278-6931 (Fax)

Douglas E. Ziegenfuss

Old Dominion University - College of Business & Public Administration ( email )

Norfolk, VA 23529
United States

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