Auditors’ Internal Control Over Financial Reporting Decisions: Analysis, Synthesis, and Research Directions

42 Pages Posted: 2 Apr 2012

See all articles by Stephen Kwaku Asare

Stephen Kwaku Asare

University of Florida - Fisher School of Accounting

Brian Fitzgerald

Northeastern University - Accounting Group

Lynford E. Graham

Bentley University

Jennifer R. Joe

University of Delaware - Accounting & MIS

Eric Michael Negangard

University of Virginia; University of Virginia

Christopher J. Wolfe

Texas A&M University - Department of Accounting

Date Written: April 1, 2012

Abstract

We synthesize the literature on auditors’ evaluation of, and reporting on, internal control over financial reporting (ICOFR), as required by the Sarbanes-Oxley Act. The purpose of the synthesis is (1) to provide information on how and how well auditors perform the task, which serves as feedback to the Public Company Accounting Oversight Board on implementation issues and problems related to auditors’ application of the professional standards on ICOFR; and (2) to identify gaps in the current literature and fruitful areas of future research. Consistent with Auditing Standard No. 5, we delineate five phases of the ICOFR audit: (i) planning; (ii) scoping; (iii) testing; (iv) evaluation; and (v) reporting. We structure our synthesis using a framework that classifies the determinants of performance in each phase into five broad areas: (a) the auditor’s attributes, (b) the client’s attributes, (c) the interaction between the auditor and the client, (d) task attributes, and (e) environmental attributes. Key contributions include providing an ICOFR tasks taxonomy, proposing a model of the determinants of performance for each task, evaluating auditors’ performance of the tasks in our taxonomy, highlighting findings and gaps of importance to regulators, and providing a road map for future research.

Keywords: Auditor judgment and decision making, internal controls, Sarbanes-Oxley Act, literature synthesis

Suggested Citation

Asare, Stephen Kwaku and Fitzgerald, Brian and Graham, Lynford E. and Joe, Jennifer R. and Negangard, Eric Michael and Wolfe, Christopher J., Auditors’ Internal Control Over Financial Reporting Decisions: Analysis, Synthesis, and Research Directions (April 1, 2012). Available at SSRN: https://ssrn.com/abstract=2032822 or http://dx.doi.org/10.2139/ssrn.2032822

Stephen Kwaku Asare (Contact Author)

University of Florida - Fisher School of Accounting ( email )

Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States

HOME PAGE: http://warrington.ufl.edu/fsoa/

Brian Fitzgerald

Northeastern University - Accounting Group ( email )

360 Huntington Ave.
Boston, MA 02115
United States

Lynford E. Graham

Bentley University ( email )

175 Forest Street
Waltham, MA 02145
United States

Jennifer R. Joe

University of Delaware - Accounting & MIS ( email )

Alfred Lerner College of Business and Economics
Newark, DE 19716
United States

Eric Michael Negangard

University of Virginia ( email )

McIntire School of Commerce Rouss and Robertson Ha
Charlottesville, VA 22904
United States
4349247002 (Phone)

HOME PAGE: http://https://www.commerce.virginia.edu/faculty/negangard

University of Virginia ( email )

McIntire School of Commerce Rouss and Robertson Ha
Charlottesville, VA 22904
United States
4349247002 (Phone)

HOME PAGE: http://https://www.commerce.virginia.edu/faculty/negangard

Christopher J. Wolfe

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

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