Increasing the Effectiveness of Internal Audit: Learn More From What You Ask

• In Event: Research Papers Dialogue Session—FARS and Auditing

Abstract

We examine multiple accounts at risk for misappropriation,
developing models of abnormal spending. First, we find that the
company’s audit score is weakly associated with abnormal spending.
We then provide evidence on the development of better audit
measures that help the firm learn more from the data gathered.
Increasing audit effectiveness provides multiple benefits to the firm,
by (1) targeting locations at greater risk of misappropriation; (2)
reducing the audit workflow, ensuring that time is not lost on
uninformative checks; and, (3) improving audit scoring to reduce
noise, thereby increasing the ability to extract useful information.

Authors

• Thomas G Calderon, University of Akron

• James W Hesford, Ecole hôtelière de Lausanne

• Nicolas Mangin, Ecole hôtelière de Lausanne

• Mina Pizzini, Texas State University