A study of the interactions between internal audit function and external auditors in Italy.
Open Access
- 9 February 2019
- journal article
- Published by Virtus Interpress in Corporate Ownership and Control
- Vol. 16 (2), 38-47
- https://doi.org/10.22495/cocv16i2art4
Abstract
This paper shows the results of a research study whose main objectives have been to understand the way and the extent of dependence and consideration which the directors of internal audit departments and the partners in external audit firms have of each other. We relied on the exploratory research methods that examine the level of operative co-operation and activity co-ordination between Internal audit functions and auditing firms through questionnaires and interviews. The findings suggest that mutual collaboration increases the reliability of controls and that, at least in part, avoids duplication of work, although there is no full agreement on the usefulness of the internal audit outcome for the external auditor activities. These findings are particularly relevant given the growing emphasis on the role of Internal Audit as an important corporate governance mechanism and on the new challenges faced by external auditors in the form of greater audit requirements. Overall, our findings have practical implications for both (i) external auditors who are evaluating the role of internal audit functions and its usefulness and (ii) CAEs who could on their turn increase the efficiency and effectiveness of internal audit functions. This article also provides a contribution to the literature examining public companies internal and external audit interrelationships as well as the literature on audit effectiveness and performance.Keywords
This publication has 48 references indexed in Scilit:
- Internal Audit Quality and Financial Reporting Quality: The Joint Importance of Independence and CompetenceJournal of Accounting Research, 2015
- Internal Audit Assistance and External Audit TimelinessAUDITING: A Journal of Practice & Theory, 2012
- The unintended consequences of PCAOB auditing Standard Nos. 2 and 3 on the reliability of preliminary earnings releasesJournal of Accounting and Economics, 2011
- The European literature review on internal auditingManagerial Auditing Journal, 2006
- A review of prior common body of knowledge (CBOK) studies in internal auditing and an overview of the global CBOK 2006Managerial Auditing Journal, 2006
- A Within Firm Analysis of Current and Expected Future Audit Lag DeterminantsJournal of Information Systems, 2006
- Changes in Internal Auditing During the Time of the Major US Accounting ScandalsInternational Journal of Auditing, 2005
- An examination of the relationship between internal and external audit in the Saudi Arabian corporate sectorManagerial Auditing Journal, 2004
- Factors Affecting Internal Auditors' Consideration of Fraudulent Financial Reporting during Analytical ProceduresAUDITING: A Journal of Practice & Theory, 2001
- Fraudulent Financial Reporting: Consideration of Industry Traits and Corporate Governance MechanismsAccounting Horizons, 2000