Changes in Internal Auditing During the Time of the Major US Accounting Scandals

Changes in Internal Auditing During the Time of the Major US Accounting Scandals We examine changes in internal auditing during the time of the Enron and WorldCom disasters and the related legislative and media focus on internal control and corporate governance. Data gathered from 271 mid‐sized US public companies reveal that internal audit budgets, staffing levels, meetings with the audit committee, and meeting length increased markedly during this time. Regression analyses provide some evidence of (a) larger budget increases among smaller companies, (b) larger budget and staff increases in companies with greater financial resources (i.e., stronger operating cash flows) or with greater liquidity risk (i.e., lower current ratios), and (c) industry differences in the change in internal auditing. We encourage additional research on recent changes in internal auditing, including research in other countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Auditing Wiley

Changes in Internal Auditing During the Time of the Major US Accounting Scandals

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Publisher
Wiley
Copyright
Copyright © 2005 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1090-6738
eISSN
1099-1123
DOI
10.1111/j.1099-1123.2005.00273.x
Publisher site
See Article on Publisher Site

Abstract

We examine changes in internal auditing during the time of the Enron and WorldCom disasters and the related legislative and media focus on internal control and corporate governance. Data gathered from 271 mid‐sized US public companies reveal that internal audit budgets, staffing levels, meetings with the audit committee, and meeting length increased markedly during this time. Regression analyses provide some evidence of (a) larger budget increases among smaller companies, (b) larger budget and staff increases in companies with greater financial resources (i.e., stronger operating cash flows) or with greater liquidity risk (i.e., lower current ratios), and (c) industry differences in the change in internal auditing. We encourage additional research on recent changes in internal auditing, including research in other countries.

Journal

International Journal of AuditingWiley

Published: Jul 1, 2005

References

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