تمایل حسابرسان خارجی برای اتکا به کار حسابرسان داخلی: تاثیر سبک کار و موانع برای همکاری

The extent to which external auditors rely on the work of internal auditors is an important judgment. Recently, the Public Company Accounting Oversight Board has recommended that external auditors “rely (more) on the work of others” to reduce the greater-than-expected costs associated with compliance with Section 404 of the Sarbanes–Oxley Act. Reliance decisions, however, are complex decision tasks that require professional judgment and may be influenced by a number of factors, both external (environmental) and internal (cognitive and affective), including the auditors' working style and pervious experiences related to barriers to external/internal auditor cooperation (e.g., previously experienced low versus high internal auditor objectivity and/or competence). We experimentally examine these influences in our research reported herein. Consistent with expectations, external auditors' work styles significantly influenced the extent of planned audit testing, internal auditor reliance judgments, and interpretation of analytical procedures results. Auditors' perceptions about internal auditors' competence and objectivity, developed over years of interaction, also influenced these judgments, and interacted with work styles. Inconsistent with expectations, auditor rank (senior versus manager) did not influence judgments.

An important judgment for external auditors is whether to rely on internal auditors' work. This judgment has been one of great contention for years with external auditors tending to rely less than audit clients prefer. Recent guidance from the Public Companies Accounting Oversight Board (PCAOB) has recommended that external auditors “rely (more) on the work of others” to reduce the greater-than-expected corporate (audit client) costs associated with compliance with Section 404 of the Sarbanes–Oxley Act (SOX) (PCAOB, 2007a).From the perspective of the PCAOB, an external auditor that appropriately relies on the work of others such as internal auditors can achieve enhanced audit efficiency without a loss of effectiveness (PCAOB, 2007b). Limited research, however, has been conducted to investigate individual external auditor's reliance judgments, especially since the passage of SOX. On the one hand, relying on the work of internal auditors has the potential to enhance audit efficiency and reduce regulatory compliance costs (pleasing regulators, legislators and clients alike, whose efficiency demands have likely increased under the current economic conditions). In addition, as clients make substantial investments in their internal audit departments, there is increased pressure on the external auditor to lower the audit fee as increased reliance on work of the internal auditor should directly lead to less work by the external auditor. Increased reliance, however, may also impose costs on the external auditor. Audit firms have expressed concern about lost audit effectiveness and enhanced legal liability, and have been reluctant to rely on internal auditors in high risk areas regardless of pressures from clients or standard setters (Arel, Jennings, Pany, & Reckers, forthcoming). Prescriptively, decisions on whether to rely on internal auditors work should be based on the competence and objectivity of the client's internal audit staff. Campbell (1993) suggests however that external auditors' decisions about whether or not to rely on internal auditors are highly contingent on their prior experiences with various past internal auditors (and not necessarily the current client's internal audit staff). That is, reliance judgments will be influenced by previously experienced barriers to communication and cooperation. Previous research in both accounting (e.g., Kida, Moreno, & Smith, 2001) and psychology (e.g., Slovic, Finucane, Peters, & MacGregor, 2002) argue that judgment studies often focus excessively on cognition and ignore other affective variables and biases developed over time. Thus, arguably, individual differences across auditors in developed working styles and past experiences with barriers to communication and cooperation may influence reliance judgments. Building on this literature, we examine experimentally the influence of different conflict management styles and differing perceptions of barriers to communication and cooperation on reliance judgments. The purpose of this paper is to assess the extent to which the working styles of individual external auditors, experience level of the auditors (seniors versus managers) and previously experienced barriers to communications and cooperation will influence prospective reliance on internal auditors' work, under selected conditions commonly found in practice. Working with members of the auditing profession, we developed and tested information-rich scenarios representative of conditions found in practice that raise audit quality concerns. Participants in our experiment included 48 auditors at the senior rank and 48 auditors at the manager rank. Consistent with expectations, auditors' working style influenced their judgments about extent of audit testing, reliance on internal auditor work, and interpretation of analytical procedures results; and auditors working style interacted with their previous experiences regarding internal audit's competence and objectivity. Inconsistent with expectations, auditor rank (senior versus manager) did not influence judgments. The remainder of this paper is as follows: first, prior literature on auditor reliance on internal auditors will be discussed. Then, the methods used to collect the data will be described, followed by the results. Finally, the results will be discussed as well as the limitations to the study and opportunities for future research

Before discussion of the results of the study, certain limitations will be noted. First, it is possible that participants may not respond to cases in an experimental setting in the same way that they would respond in practice. Further, although the cases presented to the participants include much of the information that would typically be available for performing the required task, it is possible that the analytical procedures task may not have included all of the “potentially relevant” information. Moreover, it is difficult to incorporate all forms of the social interaction that would occur between the auditor and the client. Future research in field settings could provide a richer context to observe these interactions and would nicely complement this experimental research. However, the inclusion of the conflict and communication barriers scales provides a relative advantage to this study compared to most prior auditing research. Second, since all of the participants were from either one Big 4 firm or one large national firm the results may not necessarily generalize to all auditors. Given the PCAOB's focus on increasing the auditors' use of the work of others during an integrated audit, there is a need to understand influences affecting reliance judgments. The results of this study suggest that auditors' conflict management styles, and two identified barriers to communication do influence reliance decisions, in addition to and sometimes interactively with previously documented influences: demonstrated client commitment to internal audit, budgetary pressures and perceptions of risk. Omission of any of these variables in past research may in part account for mixed results. Omission of any of these variables in future research incurs the risks of misinterpreted results because of a “missing variables” problem. Among our findings is evidence that auditors do respond to the client's commitment to internal audit. Auditors do rate the work of the internal auditor more useful when the client devotes additional resources to the internal audit department. Second, we find that auditors have preferred working (conflict management) styles that influence their judgments but from which they will deviate under selected conditions. Third, we find that perceived barriers to communications and cooperation register significance but in a highly interactive/configural manner depending on other environment conditions. Lastly, while we anticipated potential experience or rank effects (and thus secured auditors of both the senior and manager rank) we found no experience or rank effects in any analysis. We did find that our manager participants perceived significantly lower risks due to error or irregularity, but neither when examined independently or in combination with perceived risk, did rank register significance directly or interactively in any analyses. These findings suggest that in addition to client risks and internal audit quality, auditors' reliance on internal audit work may depend on their willingness to confront management or prefer to avoid conflict, as well as their perceptions about whether it will be pleasant or unpleasant to work with internal audit. Such individual differences may very well exert significant influence over any task that requires significant judgment. These findings require confirmation in subsequent research. If confirmed, means for remediation should be tested. One obvious avenue for remediation would be focused training; audit firms may consider training auditors in conflict resolution strategies with management, and internal audit departments might consider training in the communication styles of their staff. Future research is needed to evaluate the effectiveness of these proposed training programs. For example, to what extent are auditors prepared to stand up to aggressive management, and how can their desire to avoid conflict be mitigated by training or other quality control mechanisms like engagement quality review? Another obvious avenue for mitigation of these non-normative findings would be restructuring the audit process. Creative audit process changes could also be tested proactively by future researchers. In addition, external auditors cited inadequate accounting knowledge, lack of understanding of technical terms, defensiveness and differences in perception quite frequently as potential barriers to communication with internal auditors. To the extent that “learned” coping strategies based on past experiences are less than optimal in a post-SOX world, instruction on preferred coping strategies may be called for. It is also likely that one universal coping strategy may not optimal. Future research also could investigate internal auditors' perceptions about barriers to communication with external auditors, because communications is a two way street. In addition, these results suggest that future studies should consider the fact that auditors will carry many experiences and learned operating styles into the various tasks presented to them and that the influence of these individual differences will depend on the nature of the specific task. For example, future research in AS5 settings is important and needed. It is possible in this task context auditors may be more willing to rely on internal audit work, and less concerned about risk.