IMPACT OF INTERNAL AUDIT ORGANIZATION AND AUDIT COMMITTEE EFFECTIVENESS ON THE USE OF INTERNAL AUDIT WORK IN EXTERNAL AUDIT

Marko Cular ()
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Marko Cular: University of Split

Economic Thought and Practice, 2019, vol. 28, issue 1, 3-22

Abstract: The aim of this paper is to explore the factors that influence external auditors’ decision on the degree of use of internal audit work to achieve greater degree of complementarity between corporate governance mechanisms and to increase their efficacy. The external auditors will use internal audit work to obtain audit evidence and to provide direct assistance. The basic features analysed in this paper are perception of internal audit function independence and individual objectivity by manipulating the type of internal audit organisation in the company. The efficient audit committee, as a moderator variable, is used to examine whether the perception of external auditors on the level of use of internal audit work changes. Experimental research method was used on a sample of 130 external auditors. The results indicate that efficient audit committee contributes to a higher level of use internal audit work by external auditors, regardless of the internal audit organisation.

Keywords: internal audit; external audit; audit committee; ISA 610; experiment (search for similar items in EconPapers)
JEL-codes: M42 (search for similar items in EconPapers)
Date: 2019
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