Paper Title :Empirical Evidence on The Relationship between Internal Audit Factors and The Quality of External Audit
Author :Nashat Almasria, John Clark, Sanawar Choudhury
Article Citation :Nashat Almasria ,John Clark ,Sanawar Choudhury ,
(2018 ) " Empirical Evidence on The Relationship between Internal Audit Factors and The Quality of External Audit " ,
International Journal of Management and Applied Science (IJMAS) ,
pp. 72-80,
Volume-4,Issue-2
Abstract : The corporate governance literature indicates efforts to investigate the relationship between internal Corporate
Governance Mechanisms (CGM) and Audit Quality (AQ). However, empirical findings prior to this study are inconclusive
and not comprehensive enough to address all CGMs in terms of its effect on AQ; hence, this study extends the scope of
previous empirical evidence by investigating the impact of internal audit factors as one of the main CGMson AQ, since the
previous studies have not investigated the role of these mechanisms in improving AQ. Mainly, this study aims to investigate
and understand the point view of the Jordanian external auditors concerning the impact of internal audit competency,
objectivity and work performance on AQ. As a result, this research contributes to the existing literature both in theoretical
and practical fronts by developing a theoretical and conceptual framework that aimed to establish a relationship between
internal audit factors and AQ. Further, this study test how agency theory can be served as a framework for explaining which
mechanisms are important for improving AQ. Professional standards and previous empirical results highlighted that the
client’s internal audit can contribute to the external audit service in different ways either direct or indirect way. This research
used questionnaire survey to understand the perceptions of external auditors as to the importance specified by them to
several internal audit factors which may influence AQ. Respondents were given statements referring to possible attributes of
an audit which could enhance and reflect AQ, and were asked to indicate their personal view of the importance of each
indicator for AQ. Pilot study was conducted to test the reliability and validity of the research instrument. As a descriptive,
correlation and regression findings illustrate that work performance of internal audit is the most important factor that effect
on AQ, followed by objectivity and competency respectively. The results also indicate the external auditors consider the AQ
indicators are important to achieve high AQ for instance, the audit is conducted in accordance with international standards
and the audit’s evidence are important to achieve high AQ. This study recommends that companies should improve the work
performance; competency and objectivity of the internal audit to ensure the internal mechanisms are effective to improve the
quality of audit service and quality of financial report because internal audit is an essential mechanism of the corporate
governance system within the company.
Keywords- Corporate Governance, Audit Quality, internal audit.
Type : Research paper
Published : Volume-4,Issue-2
DOIONLINE NO - IJMAS-IRAJ-DOIONLINE-10941
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Copyright: © Institute of Research and Journals
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Published on 2018-04-05 |
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