HCBE Faculty Articles

Towards a Decision Aid for External Audit Evaluation of the Internal Audit Function

ORCID

Renu Desai0000-0002-2717-2895

,

Vikram Desai0000-0002-7277-2371

Document Type

Article

Publication Title

The Journal of Global Business Issues

ISSN

1931-311X

Publication Date

2010

Abstract/Excerpt

The purpose of this paper is to inform practitioners about leading research in the field of internal audit and corporate governance. There has been considerable progress in academic research towards the development of a decision aid for External Audit evaluation of the Internal Audit Function. Desai et al. (2009) developed a theoretical model of the decision process used by external auditors to determine the strength of their client’s internal audit function. They further tested this model using computer simulations. The model is based on three factors identified by auditing standards and prior academic research: Competence, Work Performance, and Objectivity. The results of the analysis revealed that modelling the “And” relationship is essential for assessing the strength of the IA function. As far as interrelationships are concerned, the analysis revealed that when the three factors have a strong or a perfect relationship, the strength of the IA function remains high even if we have positive or negative evidence about one of the factors. The model developed by Desai et al. (2009) is an important step towards developing a decision aid for external auditors for evaluating the internal audit function. To advance the development of this model the next step will be to test the assumptions of the model empirically in the real audit world among real external auditors.

Volume

4

Issue

1

First Page

69

Last Page

72

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