External auditors’ reliance on internal audit: the impact of sourcing arrangements and consulting activities
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This study examines the impact of internal audit outsourcing and involvement in consulting on external auditors' reliance on the work of internal audit. We test whether these factors influence reliance on internal audit work already undertaken and the use of internal auditors as assistants, distinguishing between control evaluation and substantive testing. Involvement in consulting impacts reliance on work undertaken and the use of internal auditors as assistants for control evaluation. External auditors make greater use of internal auditors as assistants for substantive testing when internal audit is provided in-house. Overall, external auditors use internal audit more for control evaluation tasks.
Accounting and Finance
Copyright 2009 Blackwell Publishing. This is the author-manuscript version of the paper. Reproduced in accordance with the copyright policy of the publisher.The definitive version is available at www.interscience.wiley.com
Auditing and Accountability