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Reliance of external auditors on internal audit work : a corporate governance perspective

Mihret, Dessalegn Getie and Admassu, Mengistu Amare 2011, Reliance of external auditors on internal audit work : a corporate governance perspective, International business research, vol. 4, no. 2, pp. 67-79, doi: 10.5539/ibr.v4n2p67.

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Title Reliance of external auditors on internal audit work : a corporate governance perspective
Author(s) Mihret, Dessalegn GetieORCID iD for Mihret, Dessalegn Getie orcid.org/0000-0003-1265-6333
Admassu, Mengistu Amare
Journal name International business research
Volume number 4
Issue number 2
Start page 67
End page 79
Total pages 13
Publisher Canadian Center of Science and Education
Place of publication Toronto, Ont.
Publication date 2011
ISSN 1913-9004
1913-9012
Keyword(s) external audit
internal audit
corporate governance
external audit market
Ethiopia
Summary The literature suggests an increasing need for interactions among board of directors, management, internal audit and external audit as the four components of corporate governance and presents internal audit as a resource for the other components. External auditing standards that originated in the Western world, which are also being applied in developing countries, recommend external auditor’s reliance on internal audit to achieve audit efficiency. Nevertheless, whether this efficiency motive explains such reliance in corporate governance settings that differ from the West has not been sufficiently explored as yet. This study examines external auditor reliance on internal audit work using questionnaire survey of 119 external auditors in Ethiopia. Mann-Whitney U test results suggest that external auditors’ reliance on internal audit work is not significantly associated with the competitiveness of external audit sub-markets in Ethiopia. Results of multiple discriminant analysis indicate internal audit work performance is the most important factor that determines the extent of external auditors’ reliance on internal audit work. Overall, findings suggest that organizations can enhance corporate governance effectiveness by strengthening internal audit and fostering internal-external auditor coordination.
Language eng
DOI 10.5539/ibr.v4n2p67
Field of Research 150102 Auditing and Accountability
Socio Economic Objective 910402 Management
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2011, Canadian Center of Science and Education
Free to Read? Yes
Persistent URL http://hdl.handle.net/10536/DRO/DU:30065225

Document type: Journal Article
Collections: School of Accounting, Economics and Finance
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Every reasonable effort has been made to ensure that permission has been obtained for items included in DRO. If you believe that your rights have been infringed by this repository, please contact drosupport@deakin.edu.au.