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Does external auditor coordination influence internal auditor effort?

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  • Nkansa, Porschia

Abstract

The purpose of this study is to investigate how the level of controls testing coordination with the external auditor affects internal auditors' effort. The internal auditor's planned substantive testing audit hours are the measure of effort in this study. Regulators and stakeholder organizations have encouraged more collaboration between external and internal auditors to improve audit efficiency. The effect of external auditor coordination on internal auditors' planned audit hours has important implications for audit efficiency and effectiveness. An experiment is conducted with 112 internal auditors to examine the hypothesized effect. The study uses a 2 × 2 between-subjects design and manipulates fraud risk and external auditor coordination. Consistent with my prediction, I find that coordination moderates the relationship between fraud risk and planned audit hours. The results illustrate that although high external auditor controls testing coordination decreases internal auditors' planned substantive testing audit hours, internal auditors are more sensitive to responding to fraud risk when external auditor controls testing coordination is high.

Suggested Citation

  • Nkansa, Porschia, 2024. "Does external auditor coordination influence internal auditor effort?," Advances in accounting, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:advacc:v:65:y:2024:i:c:s0882611023000433
    DOI: 10.1016/j.adiac.2023.100684
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