IDEAS home Printed from https://ideas.repec.org/a/eee/aosoci/v35y2010i5p546-557.html
   My bibliography  Save this article

Internal audit reporting lines, fraud risk decomposition, and assessments of fraud risk

Author

Listed:
  • Norman, Carolyn Strand
  • Rose, Anna M.
  • Rose, Jacob M.

Abstract

The main purpose of this research is to examine the effects of internal audit reporting lines on fraud risk assessments made by internal auditors when the level of fraud risk varies. Significant emphasis has been placed on the importance of reporting lines in maintaining the autonomy of internal auditors, but the perceived benefits of requiring internal audit to report directly to the audit committee have not been validated or systematically investigated. Results of an experiment involving 172 experienced internal auditors and additional survey findings indicate that internal auditors perceive more personal threats when they report high levels of risk directly to the audit committee, relative to management. Perceived threats lead internal auditors to reduce assessed levels of fraud risk when reporting to the audit committee relative to when reporting to management. This finding runs counter to the anticipated benefits of requirements that the internal audit function report directly to the audit committee, and it reveals potential conflicts of interest and independence threats created by the audit committee itself. We also investigate the effects of fraud risk decomposition on risk assessments made by internal auditors. We find that fraud risk assessment decomposition does not have the same effects on internal auditors as it has on external auditors, and the effects of decomposition do not align with the expected benefits of decomposition.

Suggested Citation

  • Norman, Carolyn Strand & Rose, Anna M. & Rose, Jacob M., 2010. "Internal audit reporting lines, fraud risk decomposition, and assessments of fraud risk," Accounting, Organizations and Society, Elsevier, vol. 35(5), pages 546-557, July.
  • Handle: RePEc:eee:aosoci:v:35:y:2010:i:5:p:546-557
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0361-3682(09)00105-6
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Steven Kaplan & Joseph Schultz, 2007. "Intentions to Report Questionable Acts: An Examination of the Influence of Anonymous Reporting Channel, Internal Audit Quality, and Setting," Journal of Business Ethics, Springer, pages 109-124.
    2. Joel S. Demski, 2003. "Corporate Conflicts of Interest," Journal of Economic Perspectives, American Economic Association, pages 51-72.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christ, Margaret H. & Masli, Adi & Sharp, Nathan Y. & Wood, David A., 2015. "Rotational internal audit programs and financial reporting quality: Do compensating controls help?," Accounting, Organizations and Society, Elsevier, pages 37-59.
    2. Florian Hoos & Grégoire Bollmann, 2012. "Is accountability a double-edged sword? Experimental evidence on the effectiveness of internal controls to prevent fraud," Metrika: International Journal for Theoretical and Applied Statistics, Springer, pages 115-132.
    3. Neu, Dean & Everett, Jeff & Rahaman, Abu Shiraz & Martinez, Daniel, 2013. "Accounting and networks of corruption," Accounting, Organizations and Society, Elsevier, pages 505-524.
    4. repec:kap:jmgtgv:v:21:y:2017:i:3:d:10.1007_s10997-016-9357-1 is not listed on IDEAS
    5. repec:kap:jmgtgv:v:21:y:2017:i:2:d:10.1007_s10997-016-9342-8 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:aosoci:v:35:y:2010:i:5:p:546-557. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu). General contact details of provider: http://www.elsevier.com/locate/aos .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.