Internal audit: A case study of impact and quality of an internal control audit

Traditionally, when companies needed assistance regarding internal controls, they turned to an external auditor (EA). However, now, due to an ongoing tightening of legal requirements and practices regarding the independence of EAs, this assistance has been restricted. As an alternative, companies ar...

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Bibliographic Details
Published inInternational journal of auditing Vol. 26; no. 3; pp. 339 - 353
Main Author Christensen, Leif
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.07.2022
Subjects
audit negotiation
audit quality
audit report
Audits
Case studies
internal audit
internal control
Problem solving
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Summary:Traditionally, when companies needed assistance regarding internal controls, they turned to an external auditor (EA). However, now, due to an ongoing tightening of legal requirements and practices regarding the independence of EAs, this assistance has been restricted. As an alternative, companies are increasingly requesting internal audits to deliver this support. Even though internal audit function (IAF) are an important player in internal control, however, there is little academic knowledge about their impact. Based on a single‐case study in a large financial institution, this paper explores to what extent and how IAF affect internal controls. Furthermore, it assesses whether IAF add value to the company. The results suggest that the management letter process, including a step‐by‐step settlement of interactions, leads to a joint problem solving, an acceptance of all IAF's recommendations and a value‐adding outcome improving the level of internal controls.
ISSN:1090-6738
1099-1123
DOI:10.1111/ijau.12280