How Assurance- and Advisory-Related Purposes of Internal Auditing Influence the Cooperation With the External Auditor Empirical Evidence From Two Perspectives: Internal and External Auditors
26 Pages Posted: 31 Mar 2018
Date Written: March 26, 2018
This study examines the extent to which external auditors (EAs) make use of the work of internal auditors. We explore this issue from a chief audit executive (CAE) and from an EAs perspective. Furthermore, we introduce a new category of internal audit function (IAF) reliance indicators, namely specific purposes the IAF has in the company. Thereby, we contribute to prior literature by addressing Bame-Aldred et al.’s (2013) recommendation to provide more evidence on the drivers of the extent of IAF reliance. Using ordered logistic regression models to analyze the data we gathered from CAEs, we find that EAs are more likely to use the IAF results if the IAF has an assurance-related purpose. For an IAF with an advisory-related purpose the findings are mixed. Based on univariate tests, from an EAs perspective, we find the strongest positive influence on the usage intensity of the IAF results if its focus is on risk management.
Keywords: internal auditing, external audit, assurance, consulting, reliance
JEL Classification: M40, M42, G34, G32, M4, G3
Suggested Citation: Suggested Citation