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Changes in Internal Auditing During the Time of the Major US Accounting Scandals
Author(s) -
Carcello Joseph V.,
Hermanson Dana R.,
Raghunandan K.
Publication year - 2005
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/j.1099-1123.2005.00273.x
Subject(s) - accounting , internal audit , business , staffing , audit , internal control , operational auditing , chief audit executive , corporate governance , cash flow , external auditor , joint audit , finance , economics , management
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.