The relationship between internal audit and information security: An exploratory investigation

The internal audit and information security functions should work together synergistically: the information security staff designs, implements, and operates various procedures and technologies to protect the organization's information resources, and internal audit provides periodic feedback concerning effectiveness of those activities along with suggestions for improvement. Anecdotal reports in the professional literature, however, suggest that the two functions do not always have a harmonious relationship. This paper presents the first stage of a research program designed to investigate the nature of the relationship between the information security and internal audit functions. It reports the results of a series of semi-structured interviews with both internal auditors and information systems professionals. We develop an exploratory model of the factors that influence the nature of the relationship between the internal audit and information security functions, describe the potential benefits organizations can derive from that relationship, and present propositions to guide future research.     

略论内部控制审核与会计报表审计的关系

2001年6月,财政部发布《内部会计控制规范》,要求各单位建立适合本单位业务特点和管理要求的内部会计控制制度,并提出,单位可以聘请中介机构或相关专业人员对本单位内部会计控制的建立健全及实施进行评价,接受委托的中介机构或相关专业人员应当对委托单位内部会计控制中的重大缺陷提出书面报告.     

Relation between external audit fees, audit committee characteristics and internal audit

This study examines whether the existence of an audit committee, audit committee characteristics and the use of internal audit are associated with higher external audit fees. Higher audit fees imply increased audit testing and higher audit quality. We find that the existence of an audit committee, more frequent committee meetings and increased use of internal audit are related to higher audit fees. The expertise of audit committee members is associated with higher audit fees when meeting frequency and independence are low. These findings are consistent with an increased demand for higher quality auditing by audit committees, and by firms that make greater use of internal audit.     

The empirical relationship between ownership characteristics and audit fees

The present study examines the empirical relationship between ownership characteristics and audit fees. The basic premise is that the level of ownership sophistication and the extent to which ownership is large and substantial impact the effectiveness of stockholder monitoring on corporate affairs including the financial reporting process. Furthermore, high managerial ownership firms may experience a decline in agency problems in financial reporting due to a decrease in managerial propensity to misreport financial results. By employing a cross-sectional least squares regression analysis for a sample of 358 New York Stock Exchange-listed firms audited by the Big Five auditors, we find evidence of a significantly positive relationship between diffused institutional stock ownership (i.e., having less than 5% individual shareholding) and audit fees, and a significantly negative relationship between institutional blockholder ownership (i.e., having 5% or more individual shareholding) and audit fees. Finally, we document that managerial stock ownership is negatively associated with audit fees. We do not, however, find evidence of any relationship between noninstitutional blockholder ownership (with at least 5% individual stock ownership) and audit fees. The study's main results hold in various specification tests including when the effects of board-related and audit committee variables are factored in the analysis. Based on the observed relationship between the ownership variables and audit fees, we suggest that the ownership characteristics of a firm as a part of its governance mechanism constitute an important determinant of audit fees.

The (mis)fit between the profile of internal auditors and internal audit activities

This study investigates whether there is a fit between the profile of internal auditors and the activities of the internal audit department (IAD). It also seeks to discover which type of internal auditors fit which type of internal audit (IA) activities. This is commonly referred to as the person-job (P-J) fit. Furthermore, this study investigates whether this (mis)fit is associated with the outsourcing/co-sourcing of IA activities and turnover within the IAD. Bringing strategic human resource management (SHRM) into IA can be considered as the key contribution of this paper. The results of this study are based on a questionnaire completed by 280 members of the Institute of Internal Auditors in Belgium. The results show that there is a fit between some characteristics of internal auditors working in an IAD and the activities of the IAD. The results also show that certain internal auditor characteristics fit with certain types of IA activities. However, the degree of fit varies. Furthermore, it was found that IADs that co-source/outsource were significantly more associated with a misfit between the profile of the internal auditors and the activities of the IAD, whereas a misfit was not significantly associated with a high turnover of internal auditors.     

A graphical approach to teaching the relationship between the evaluation of internal accounting controls and substantive audit testing

This note reviews auditing theory and professional standards describing the relationship between internal accounting control systems and substantive audit testing. It presents three graphical models that may be used to illustrate to students the basic theoretical relationships and to clarify some points in the professional literature that may be confusing to students and practitioners. We have found these graphical models to be a useful teaching tool. They permit students to extend beyond mere verbalizations to a visualization of the theoretical concepts involved. The final model enhances the students ability to analyze and learn major concepts.     

The changing relationship between audit firm size and going concern reporting

As a result of gradual shifts in the market for audit services, we expect financially stressed public companies to be increasingly audited by regional firms, who, in turn, will be increasingly likely to issue going concern reports to their financially stressed public companies. Our expectations challenge the view that larger audit firms, in order to avoid exposure to litigation, report more conservatively. To address these issues, we examine the 22 years between 1989 and 2010, which we classify into four ERAs (e.g., 1989–1994, 1995–2001, 2002–2005, and 2006–2010). We initially document that over time, financially stressed public companies are shifting to regional audit firms, partly due to the actions of larger audit firms shedding these clients, which represent ex-ante conservatism. In contrast, audit firm reporting represents ex-post conservatism. We next show that over time, for their financially stressed public clients, regional audit firms are increasingly more likely to issue going concern reports, and BigN audit firms are increasingly less likely to issue going concern reports. We also show that in more recent ERAs, regional audit firms have been more likely than BigN and national audit firms to issue a going concern report to their financially stressed pubic clients. Overall, our evidence suggests that more recently, larger audit firms, relative to regional audit firms, acted more proactively to lessen their litigation risks through increasing centralization of client selection and acceptance processes. However, our evidence suggests that more recently, to lessen their litigation risks, regional audit firms, relative to BigN and national audit firms, acted more conservatively by issuing more going concern reports to their financially stressed public clients.     

The effect of large audit firm mergers on audit pricing in the UK

This paper examines the effects on UK audit market concentration and pricing of mergers between the large audit firms and the demise of Andersen. Based on data over the period 1985–2002, it appears that mergers contributed to a rise in concentration ratios to levels that suggest concern about the potential for monopoly pricing. The high concentration ratios have not improved the level of price competition in the UK audit market. Our pooled models suggest that concentration ratios are associated with higher audit fees. The evidence suggests that the effects of mergers between big firms on brand name fee premium and on price competition vary depending on the particular circumstances. The brand name premium is strongest for the largest quartile of companies prior to the mergers. After the Big Six mergers, the premium increases for average‐sized companies but falls for the smallest and largest companies. Following the PricewaterhouseCoopers merger, the premium increases for below median‐sized clients but decreases for above‐median sized clients. For the Deloitte‐Andersen transaction, the premium falls for the smallest and largest companies but increases for those in the second quartile. Our results provide evidence that auditees are likely to pay higher fees if their auditor merges with a larger counterpart. We attribute merger‐related fee hikes to product differentiation, rather than anti‐competitive pricing.     

我国内部审计的独立性问题

内部审计的独立性是审计理论和实务必须认识和解决的问题。受托经济责任需要内部审计拥有独立性．但当前的管理体制、机构和人员设置状况，法律环境、人员素质和工作质量等制约了内部审计的独立性。在国家对内部审计管理体制进行改革的形势下，笔者提出了强化内部审计独立性的措施建议。     

The association between audit committee effectiveness and audit risk

Audit committees (ACs) are expected to play a key role in improving financial statement integrity and as a consequence reduce audit risk. Companies reporting conformity with regulations can have an AC that appears effective but is not actually effective in substance. We surveyed audit partners and managers to identify their indicators of actual AC effectiveness (auditor‐chosen list). We hypothesize a negative association between AC effectiveness and audit risk, only when an auditor‐chosen list, rather than extent of conformity with regulations, is used to measure effectiveness. Results support our expectations.     

商业银行内部审计电子化解决方案与审计模式改进

内部审计是商业银行内部控制体系的重要组成部分。随着商业银行业务规模的快速增长、业务复杂程度的不断提高以及信息技术应用的广泛深入,内部审计的难度和强度大大增加。如何提高商业银行内部审计实效成为一个亟待解决的问题。为此,建设银行进行了积极的探索,初步建立了以“非现场审计系统”为核心的审计电子化平台,并在实际应用中取得了良好的效果。 一、审计电子化是 现代商业银行内部审计的必然选择 商业银行内部审计的职能是对组织内各个部门、岗位和各项业务实施全面的监控和评价。随着审计环境的变化,这一职能的有效履行正面临…     

The relationship between investment and large exchange rate depreciations in dollarized economies

We use a simple financial friction in an economy with high degree of liability dollarization - and currency mismatch - to show that the negative balance-sheet effect of an exchange rate depreciation may be observable only if the magnitude of the depreciation is large enough. This result justifies the difficulty to find strong empirical evidence for balance-sheet effects and suggests the convenience of including a “large depreciation” term in empirical analyses. We review some of the related empirical literature and provide some new evidence of this large depreciation effect.     

Effect of regulatory oversight on the association between internal governance characteristics and audit fees

We examine the relationship between internal governance, external audit monitoring and regulatory oversight for a sample comprising industrial companies and financial/utility companies subject to additional industry‐specific regulation. Our results indicate that the association between audit fees and board/audit committee independence and size are weaker for regulated companies. These observations are consistent with the notion that regulatory oversight partially substitutes the external audit as a monitoring mechanism. However, boards/audit committees with more multiple directorships demand a more extensive audit in the presence of regulatory oversight to protect their reputation capital. Our study enhances our understanding of the complex relationships among the major corporate governance elements.     

上市公司内部控制、公司治理和内部审计的互动关系

一、内部控制、公司治理和内部审计的内涵(一)内部控制内部控制是现代企业必不可少的一种有效管理手段。作为企业的一种自律行为,内部控制制度是为防范风险、完成各项既定工作目标,对企业内部各职能部门及人员的业务活动进行风险控制、制度管理、相互制约     

内部审计外部化及其论争

内部审计是一种范围性概念,即指企事业单位内部的审计业务,而不是主体性概念,即由内部审计人员从事的审计业务.内部审计外部化则是指内部审计业务由企业外部的民间审计组织全部或部分承担,是审计主体的外部化,不是内部审计定义的变化.     

银行内部审计的外包与控制

1 银行内部审计外包的必要性 银行业务外包是一种商业战略,是指银行把内部业务的一部分承包给外部专门机构.随着信息化和全球化进程的不断发展,把内部审计业务等一些银行非核心业务外包出去已成为一种趋势.就银行方面而言,实行内部审计业务外包策略的主要好处不仅能节约内部审计成本,而且还可以提高内部审计工作的质量和效率.     

浅谈审计委托模式的改进

目前,审计委托权由公司经营者行使是造成注册会计师无法保持应有的独立性,从而导致独立审计失败的重要原因之一。而我国国有控股公司内部治理结构上的缺陷又是造成审计委托权实际上由被审计人的经理层行使从而导致审计失败的根本原因。本文提出:要真正做到由完全独立于公司经营者的机构行使审计委托权,维护注册会计师的独立性,有必要从公司外部引进独立的第四方作为审计委托人,也可从制度上防范和减少审计失败,提高注册会计师的社会公信力。     

Internal audit,alternative internal audit structures and the level of misappropriation of assets fraud

In recent years, the importance of good corporate governance has received significant public and regulatory attention. A crucial part of an entity's corporate governance is its internal audit function. At the same time, there has been significant public concern about the level of fraud within organizations. The purpose of this study is to assess whether organizations with an internal audit function are more likely to detect and self‐report fraud than those without. In this study, we use a unique self‐reported measure of misappropriation of assets fraud for the first time. The fraud data are from the 2004 KPMG Fraud Survey, which reported fraud from 491 organizations in the private and public sector across Australia and New Zealand. The internal audit data are from a separate mail survey sent to the respondents of the KPMG Fraud Survey. We find that organizations with an internal audit function are more likely than those without such a function to detect and self‐report fraud. Furthermore, organizations that rely solely on outsourcing for their internal audit function are less likely to detect and self‐report fraud than those that undertake at least part of their internal audit function themselves. These findings suggest that internal audit adds value through improving the control and monitoring environment within organizations to detect and self‐report fraud. These results also suggest that keeping the internal audit function within the organization is more effective than completely outsourcing that function.     

论企业内部市场化条件下的管理审计

企业内部市场化是管理制度创新的产物,它围绕提高管理效益和效率,将企业行为由总体转向个体、内部交易由计划转向市场、经营管理制度由静态转向动态,适应了不断变化的客观环境需要.管理审计作为管理的延伸,在企业内部市场化条件下,将更多地发挥全面协调、管理控制的积极作用,成为现代企业管理科学的一项重要力量.本文介绍的管理审计主要指内向型管理审计,它以服务企业内部审计为其主要职责,是一种适应企业内部市场化发展需要的以内部管理鉴证为主要职责的综合性管理审计.     

The association between audit committees,compensation incentives,and corporate audit fees

This study uses audit fee data from the 2001–2003 reporting periods to examine the relationship between measures of audit committee effectiveness and compensation incentives with corporate audit fees. Our results suggest that audit committee size, committee member expertise, and committee member independence are positively associated to audit fee levels, consistent with the notion that audit committees serve as a complement to external auditors in monitoring management. In contrast, CEO long-term pay and insider ownership are inversely related to audit fee levels, substituting for external audit effort in motivating management. Notwithstanding results on the full sample of firm-years, we uncover significant differences in the determinants of audit fees between the years examined. An important implication of these results is that explaining the intra-firm variation in audit fees over time is clearly necessary in order to understand the antecedents and consequences of audit fees.