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Auditor independence, audit committee quality and internal control weaknesses

Author

Listed:
  • Sorinel Domnisoru
  • Sorin-Sandu Vinatoru

    (University of Craiova, Faculty of Economics and Business Administration, Romania)

Abstract

In this paper we investigate the relation between auditor independence, audit committee quality and the disclosure of internal control weaknesses. We begin with a sample of firms with internal control weaknesses and, based on industry, size, and performance, match these firms to a sample of control firms without internal control weaknesses. Our conditional logit analyses indicate that a relation exists between audit committee quality, auditor independence, and internal control weaknesses. Firms are more likely to be identified with an internal control weakness, if their audit committees have less financial expertise or, more specifically, have less accounting financial expertise and non-accounting financial expertise. They are also more likely to be identified with an internal control weakness, if their auditors are more independent. In addition, firms with recent auditor changes are more likely to have internal control weaknesses.

Suggested Citation

  • Sorinel Domnisoru & Sorin-Sandu Vinatoru, 2008. "Auditor independence, audit committee quality and internal control weaknesses," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(11), pages 7-12, November.
  • Handle: RePEc:aio:rteyej:v:1:y:2008:i:11:p:7-12
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    File URL: http://feaa.ucv.ro/RTE/011-01.pdf
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    More about this item

    Keywords

    internal control weakness; audit committee financial expertise; auditor independence;

    JEL classification:

    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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