IDEAS home Printed from https://ideas.repec.org/a/ids/ijaape/v6y2010i4p346-367.html
   My bibliography  Save this article

Pivotal change in US policy: how the Sarbanes-Oxley Act affected internal auditing and its relationship to external auditing

Author

Listed:
  • L. Murphy Smith
  • Michael S. Drake
  • Michael K. Shaub

Abstract

Accounting regulation is one aspect of the government's role in protecting the investing public's interest. The Sarbanes-Oxley Act of 2002 (SOX) was an effort by the US Congress to remedy negative effects of earlier major accounting failures. Requirements of SOX highlight the critical role of internal control as a component of accurate and reliable financial reporting. This new emphasis on effective internal controls places internal auditors of public companies at centre stage. Internal audit departments are asked to identify, evaluate, and test the effectiveness of internal controls over financial reporting. This study examines the perceived role of the internal audit function in the external audit and financial reporting process. Results indicate that internal audit participation in the external audit process is perceived to be important by both internal and external auditors. Internal auditors are performing more work for the external auditors after the passage of SOX. Thus, implicitly, external auditors are placing greater reliance on the work of internal auditors.

Suggested Citation

  • L. Murphy Smith & Michael S. Drake & Michael K. Shaub, 2010. "Pivotal change in US policy: how the Sarbanes-Oxley Act affected internal auditing and its relationship to external auditing," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 6(4), pages 346-367.
  • Handle: RePEc:ids:ijaape:v:6:y:2010:i:4:p:346-367
    as

    Download full text from publisher

    File URL: http://www.inderscience.com/link.php?id=36151
    Download Restriction: Access to full text is restricted to subscribers.

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

    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:ids:ijaape:v:6:y:2010:i:4:p:346-367. 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: (Carmel O'Grady). General contact details of provider: http://www.inderscience.com/browse/index.php?journalID=41 .

    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.

    We have no references for this item. You can help adding them by using 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 RePEc Author Service 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.