Risk management and ethical environment : effects on internal audit and accounting control procedures

Rae, Kirsty, Subramaniam, Nava and Sands, John 2008, Risk management and ethical environment : effects on internal audit and accounting control procedures, Journal of applied management accounting research, vol. 6, no. 1, pp. 11-31.

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Title Risk management and ethical environment : effects on internal audit and accounting control procedures
Author(s) Rae, Kirsty
Subramaniam, Nava
Sands, John
Journal name Journal of applied management accounting research
Volume number 6
Issue number 1
Start page 11
End page 31
Total pages 21
Publisher Institute of Certified Management Accountants
Place of publication Clayton, Vic.
Publication date 2008
ISSN 1443-9905
1443-9913
Keyword(s) internal audit
internal control
risk management
ethical environment
accounting control procedures
Summary This study examines the impact of the scope of risk management and ethical environment on internal audit activities and the quality of accounting control procedures (ACPQ). The conceptual framework for the study is guided by COSO’s frameworks on internal controls and enterprise risk management and data from a questionnaire survey of 64 Australian firms are analysed using a structural equation model. The results of the study support that (1) internal audit activities have a significant intervening effect on the relationship between the scope of risk management and ACPQ, and (2) a direct and positive relationship exists between ethical environment and ACPQ. Our findings suggest that widening the scope of risk management activities do not directly improve ACPQ, but that it leads to more extensive internal audit activities and in turn such activities promote better ACPQ. Further, the results indicate that fostering a more ethical environment directly leads to higher ACPQ. These results have implications for the design of internal controls, namely with respect to the role of internal audit activities and ethical environment in enhancing ACPQ.
Language eng
Field of Research 150102 Auditing and Accountability
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Persistent URL http://hdl.handle.net/10536/DRO/DU:30017469

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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