What Drives the Extent to Which External Auditors Use the Work of Internal Auditors? Empirical evidence from the perspective of CAEs

• In Event: Continental Breakfast and Research & Education Forum
  In Paper Session: Table 10: External and Internal Auditor Choice

Abstract

This study examines the extent to which external auditors make use of the work of internal auditors. Prior research has focused primarily on environmental factors as well as on the quality factors of the internal audit function (IAF) and their influence on the reliance of external auditors (EAs) on IAF. This study, however, focuses on the determinants likely to be associated with the extent of the reliance decision. Using survey data from the German Institute of Internal Auditors, we find that numerous other variables of an IAF, such as the objectives of an IAF or the purposes for which IAF results are used, also drive the extent to which the EA relies on the IAF. Overall, we contribute to the literature by following Bame-Aldred et al.’s (2013) recommendation to provide more evidence on the drivers of the extent of IAF reliance.

Authors

• Marc Eulerich, University Duisburg-Essen

• Nicole V.S. Ratzinger-Sakel, Universitat Ulm