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Internal audit attributes and external audit's reliance on internal audit : implications for audit fees

Mohamed, Zulkifflee, Zain, Mazlina Mat, Subramaniam, Nava and Yusoff, Wan Fadzilah Wan 2012, Internal audit attributes and external audit's reliance on internal audit : implications for audit fees, International journal of auditing, vol. 16, no. 3, pp. 268-285.

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Title Internal audit attributes and external audit's reliance on internal audit : implications for audit fees
Author(s) Mohamed, Zulkifflee
Zain, Mazlina Mat
Subramaniam, Nava
Yusoff, Wan Fadzilah Wan
Journal name International journal of auditing
Volume number 16
Issue number 3
Start page 268
End page 285
Total pages 18
Publisher Blackwell
Place of publication West Sussex, England
Publication date 2012-11
ISSN 1099-1123
Keyword(s) internal audit function
internal audit contribution and external audit fees
internal audit competency
Summary This study aims to examine two aspects of internal audit quality, namely internal audit competency and internal audit contribution to financial statement audits. Consistent with the substitution view, this study predicts a negative relationship between the competency aspects of internal audit (the tenure of the existence of internal audit in the organization, internal audit staff expertise in IT and computer skills, training hours, internal audit staff professional certifications in accounting and auditing, and internal audit staff experience in auditing) and audit fees. Second, this study tests whether the contribution of internal auditors to financial statement audit reduces audit fees. The data analysis is based on a cross-sectional regression model with observations of 73 public-listed firms in Malaysia, which include publicly available data matched with survey responses from their internal and external auditors. The results of the study suggest that the competency of internal audit, namely the tenure of the existence of internal audit in the organization, training, internal audit staff prior experience in auditing and accounting, and certifications are associated with lower audit fees. Our findings for both aspects of internal audit quality (competency and internal audit contribution) lend support to the substitution view for explaining the links between internal audit quality and audit fees.
Language eng
Field of Research 150102 Auditing and Accountability
Socio Economic Objective 900201 Administration and Business Support Services
HERDC Research category C1 Refereed article in a scholarly journal
ERA Research output type C Journal article
HERDC collection year 2012
Persistent URL http://hdl.handle.net/10536/DRO/DU:30049759

Document type: Journal Article
Collections: Faculty of Business and Law
School of Accounting, Economics and Finance
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Created: Thu, 06 Dec 2012, 15:37:49 EST by Beatrice Fitzgerald