Corporate governance, audit quality, and the Sarbanes-Oxley act: Evidence from internal audit outsourcing

• 成果类型: Article
• 署名作者: Abbott, Lawrence J.; Parker, Susan; Peters, Gary F.; Rama, Dasaratha V.
• 署名单位: University of Memphis; Santa Clara University; University of Arkansas System; University of Arkansas Fayetteville; State University System of Florida; Florida International University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2007.82.4.803
• 发表日期: 2007
• 页码: 803-835
• 关键词: NONAUDIT SERVICES; committee members; empirical-analysis; market valuation; fees; INDEPENDENCE; DIRECTORS; BOARD; RESTATEMENTS; experience

摘要

This study extends current literature related to nonaudit services by investigating internal audit outsourcing to the external auditor. We posit that certain types of internal audit outsourcing (i.e., those which are nonroutine, and thus tend to be nonrecurring in nature) are unlikely to lead to economic bonding, while offering significant potential for improvements in audit coverage and scope when provided by the external auditor. Alternatively, outsourcing routine internal audit tasks is more likely to lead to economic bonding, as well as potentially threatening internal auditor independence. Our results are consistent with firms with independent, active, and expert audit committees being less likely to outsource routine internal auditing activities to the external auditor. However, the outsourcing of nonroutine internal audit activities such as special projects and EDP consulting are not negatively related to effective audit committees. Additionally, outsourcing of either type of internal audit activity to an outside service provider other than the external auditor is not related to effective audit committees. Collectively, we interpret these findings as supportive of an effective audit committee's ability to monitor the sourcing of the firm's total (i.e., internal and external) audit coverage, while simultaneously exhibiting concern for external auditor independence.