Internal control audits: Judges' perceptions of the credibility of the financial reporting process and likely auditor liability

Marianne M. Jennings, Kurt Pany, Philip Reckers

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

This paper reports the results of a study in which fifty-seven sitting United States judges participated in a behavioral experiment to assess the perceived credibility of the financial reporting process and the legal risk auditors bear under conditions where they provide an internal control audit report (vs. no report) under two corporate governance environments. We find that participating judges believe internal control audits provide enhanced assurance that intentional misstatements do not exist and also serve to provide elevated protection to the public, but only under conditions of a strong corporate governance environment beyond current regulatory requirements. We also find that, after being informed of an undetected material fraud, judges who currently have high expectations of the auditing profession find auditors more liable when an internal control audit report has been issued (as compared to when no such report has been issued).

Original languageEnglish (US)
Pages (from-to)182-190
Number of pages9
JournalAdvances in Accounting
Volume24
Issue number2
DOIs
StatePublished - Dec 2008

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Auditor liability
Credibility
Financial reporting
Internal control
Audit
Audit reports
Corporate governance
Auditors
Governance environment
Auditing
Experiment
Assurance
Fraud

Keywords

  • Corporate governance
  • Integrated audit
  • Judges
  • Reporting on internal control

ASJC Scopus subject areas

  • Accounting
  • Finance

Cite this

Internal control audits : Judges' perceptions of the credibility of the financial reporting process and likely auditor liability. / Jennings, Marianne M.; Pany, Kurt; Reckers, Philip.

In: Advances in Accounting, Vol. 24, No. 2, 12.2008, p. 182-190.

Research output: Contribution to journalArticle

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