Open AccessMultilocation Audit Risks
Author(s) -
Robert D. Allen,
James K. Loebbecke
Publication year - 2011
Publication title -
journal of applied business research
Language(s) - English
Resource type - Journals
eISSN - 2157-8834
pISSN - 0892-7626
DOI - 10.19030/jabr.v14i4.5647
Subject(s) - audit , business , accounting , business risks , audit risk , actuarial science , risk management , audit plan , risk assessment , risk analysis (engineering) , joint audit , internal audit , computer science , finance , computer security
Multilocation audits (MLAs) pose unusual risks for external auditors. Recent lawsuits against auditors manifest these risks. Despite the complexity and risk, there is little existing research and/or professional guidance that address MLA issues. This sparsity is especially surprising given that most companies of medium and large size conduct business activities in multiple locations. The purpose of this paper is to identify risks that exist in a MLA environment that do not necessarily exist in a single-location audit. The MLA risk framework was developed by 1) identifying risk factors specific to MLAs that we believe are important in audit planning, 2) evaluating the risk factors through interviews with MLA experts, 3) examining the policy and procedure manuals of public accounting firms, and 4) relating the risk factors to the audit risk model. The paper is intended to provide a framework for future research related to MLAs.