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The contingent effects of board independence and audit committee effectiveness on internal audit reliance: a pre-SOX perspective

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  • Ganesh Krishnamoorthy
  • Mario Maletta

Abstract

The period leading up to the Sarbanes-Oxley Act (SOX) witnessed criticism levelled against the auditors regarding audit failures, but limited research exists exploring the positive effects of auditor judgements during the pre-SOX period. This paper explores one such context by examining whether external auditors' judgements relating to internal audit were affected by the audit committee governance strength and accounting expertise, and the level of board independence. Results indicate that the greater the governance strength and accounting expertise of the audit committee, the greater the assessed quality of internal audit, and the greater the overall level of coordination between internal and external audit. Findings also indicate that the positive effects of audit committee characteristics on the external audit process may be attenuated by board independence. Collectively, findings reveal the contingent effects of board independence and audit committee governance and accounting expertise on the relationship between internal and external auditors.

Suggested Citation

  • Ganesh Krishnamoorthy & Mario Maletta, 2016. "The contingent effects of board independence and audit committee effectiveness on internal audit reliance: a pre-SOX perspective," International Journal of Accounting and Finance, Inderscience Enterprises Ltd, vol. 6(1), pages 62-85.
    • Handle: RePEc:ids:intjaf:v:6:y:2016:i:1:p:62-85
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    References listed on IDEAS

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    1. William L. Felix, Jr. & Audrey A. Gramling & Mario j. Maletta, 2001. "The Contribution of Internal Audit as a Determinant of External Audit Fees and Factors Influencing This Contribution," Journal of Accounting Research, Wiley Blackwell, vol. 39(3), pages 513-534, December.
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    Cited by:

    1. Amad Rashid & Basariah Salim & Halimah Nasibah Ahmad, 2021. "Internal Audit Effectiveness and Audit Committee Characteristics:Empirical Evidence from Pakistan," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 3(1), pages 1-13, june.

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