Identifying and Ranking the Obstacles of Internal Controls Evaluation in the External Audit Process

Internal control evaluation is a risk-assessment process utilized by both a firm and its auditor to assess various aspects of the firm’s accounting information system. Accounting internal control systems which are affected by an entity’s board of directors, management, and other personnel are designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, the reliability of financial reporting, and compliance of the organization with laws and regulations. The purpose of this study is to identify the most important obstacles of internal control evaluation in the external audit process from the viewpoint of companies’ managers and external auditors in Iran. The research period was fall 2014 and the research data was gathered through a questionnaire. In order to test validity and reliability of questionnaire, factor analysis and cronbach’s alpha were used respectively. Kolmogorov-Smirnov test, T-test and Chi-square test were used to test hypotheses. Friedman test was used to rank the identified obstacles. According to the research findings, from the managers’ viewpoint issues such as lack of higher education, being traditional accounting systems and lack of proper auditing guidelines were the most important obstacles. From the external auditors’ viewpoint, issues such as lack of affordable of internal control evaluation, lower audit fees and lack of professional training were the most important obstacles. DOI: 10.5901/mjss.2015.v6n6s2p613