Internalizing the External Audit: A Transaction Cost Approach
Posted: 11 Mar 2001
Date Written: June 2000
Recent pronouncements by professional accounting bodies in both the United States and Canada, and concerns about lowering audit fees, both fuel and reflect a strong interest in the participation of internal auditors in the external audit. This paper presents the results of a partial least squares analysis of survey data collected from directors of internal audit departments of Canadian organizations. The results indicate that some transaction cost variables, particularly transaction-specific investment, are significantly associated with internal audit participation in the external audit.
JEL Classification: M49
Suggested Citation: Suggested Citation