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External auditor reliance on the work of the internal audit function in Jordanian listed companies
Al-Sukker, Ashraf Ross, Don Abdel-Qader, Waleed Al-Akra, Mahmoud
Al-Sukker, Ashraf
Ross, Don
Abdel-Qader, Waleed
Al-Akra, Mahmoud
Abstract
This study investigates the factors that influence external auditor (EA) reliance on the work of the internal audit function (IAF) in Jordanian listed companies (JLCs). It evaluates the effect of internal auditor objectivity, competence and work performance as perceived by senior Jordanian EAs. The study employs a mixed method comprising a survey‐based factorial experiment in addition to semi‐structured interviews. The results, based on 35 fully‐crossed factorial experiments and nine interviews with senior EAs and external audit managers, show that IAF objectivity has the greatest influence on the EA's decision to rely on the work of the IAF, followed closely by IAF competence and IAF work performance. Further, there was a significant interactive effect between objectivity and competence, indicating that the EAs do not consider the influence of individual factors in isolation. In interviews, the EAs put forward many reasons for the importance of all three of the independent variables. Our results have direct implications for organizations as well as for professional bodies and regulatory authorities charged with encouraging the development of IAFs.
Keywords
audit quality, External audit, internal audit
Date
2018
Type
Journal article
Journal
International Journal of Auditing
Book
Volume
22
Issue
2
Page Range
317-328
Article Number
ACU Department
Peter Faber Business School
Faculty of Law and Business
Faculty of Law and Business
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Relation URI
Source URL
Event URL
Open Access Status
License
File Access
Controlled