'Serving Two Masters' and the Chief Audit Executive's Communication: Experimental Evidence About Internal Auditors’ Judgments
| Autor: | Florian Hoos, Anne d'Arcy, Natalia Kochetova-Kozloski |
|---|---|
| Přispěvatelé: | Haldemann, Antoine, Groupement de Recherche et d'Etudes en Gestion à HEC (GREGH), Ecole des Hautes Etudes Commerciales (HEC Paris)-Centre National de la Recherche Scientifique (CNRS), HEC Paris Research Paper Series |
| Rok vydání: | 2013 |
| Předmět: |
corporate governance
internal audit function effectiveness internal controls Control environment Engineering media_common.quotation_subject Applied psychology Audit committee Accounting Chief audit executive Joint audit jel:M42 jel:M48 JEL: M - Business Administration and Business Economics • Marketing • Accounting • Personnel Economics/M.M4 - Accounting and Auditing/M.M4.M48 - Government Policy and Regulation Set (psychology) media_common business.industry Corporate governance Ambiguity jel:G34 Internal audit [SHS.GESTION]Humanities and Social Sciences/Business administration JEL: M - Business Administration and Business Economics • Marketing • Accounting • Personnel Economics/M.M4 - Accounting and Auditing/M.M4.M42 - Auditing business [SHS.GESTION] Humanities and Social Sciences/Business administration |
| Popis: | The position of an internal audit function as a “servant of two masters” (i.e. management and the audit committee) may lead to a conflict of priorities. In this setting, the tone at the top set by the Chief Audit Executive (CAE) plays a critical role in balancing the potentially competing preferences of management and the audit committee. We examine whether the emphasis in the CAE’s communication with internal auditors influences their judgments. We also test whether such influence is more pronounced in an internal audit task where potential for justification created through task complexity and ambiguity is high, as compared to low. We test two hypotheses in a mixed experimental design with the communicated preferences of the CAE to subordinates (cost reduction vs. effectiveness of internal controls) as a between-subjects factor, and levels of opportunity for justification (low, medium, high) manipulated within subjects. Findings suggest that the emphasis in the CAE’s message can bias internal auditors’ judgments, and such influence is more pronounced when the opportunity for justification is high, resulting in the elimination of a significantly greater number of internal controls and the design of less effective processes. |
| Databáze: | OpenAIRE |
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