Dissertation
INTERNAL AUDIT QUALITY AND RISK MANAGEMENT
Washington State University
Doctor of Philosophy (PhD), Washington State University
01/2022
DOI:
https://doi.org/10.7273/000004438
Handle:
https://hdl.handle.net/2376/118874
Abstract
In Study One, I conduct a systematic literature review to understand how accounting researchers define internal audit (IA) quality. Based on the IA quality framework created by Trotman and Duncan (2018) and drawing from 54 IA quality and IA effectiveness studies published from 1993 to 2021, I design a theoretical framework to illustrate how internal auditors, together with the audit committees, management, and external auditors, impact the four dimensions of IA quality: input (e.g., competence, objectivity); process (e.g., compliance with standards, risk-based approach); output (e.g., audit plan completion rate, implemented internal audit recommendations); and outcome dimensions (e.g., financial performance, internal control). I formally distinguish the construct of IA quality from IA effectiveness and consider IA effectiveness, consisting of output and outcome dimensions, as a subconstruct of IA quality. Additionally, I map the measures of IA quality used in prior literature into the framework by dimensions and stakeholders to provide further guidance for researchers and practitioners. In Study Two, I investigate how internal audit functions (IAFs) prioritize and manage emerging risk in their day-to-day practice. In the context of the 2019 college admissions scandal and based on contingency theory, I test the association between internal audit structure (i.e., centralized IAF, decentralized IAF, and hybrid IAF) and IAFs’ decisions on whether and when to mitigate admissions risk. I find that internal auditors are likely to plan admissions audits within two years after the scandal. More importantly, the results suggest that centralized IAFs are more likely to proactively address admissions risk before the scandal than decentralized IAFs, while decentralized IAFs are more likely to respond to the admissions risk after the scandal than centralized IAFs. Furthermore, I find that hybrid structures can maximize the advantages and minimize the disadvantages of centralized and decentralized structures. The results of the study demonstrate that risk management strategies vary among the three types of internal audit structures. It provides additional evidence supporting the contingency theory that organizational structure impacts organizational performance.
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Details
- Title
- INTERNAL AUDIT QUALITY AND RISK MANAGEMENT
- Creators
- Han Yan
- Contributors
- Beau Barnes (Advisor)Jacob Jaggi (Advisor)Claire K Latham (Committee Member)Olusola Adesope (Committee Member)
- Awarding Institution
- Washington State University
- Academic Unit
- Carson College of Business
- Theses and Dissertations
- Doctor of Philosophy (PhD), Washington State University
- Publisher
- Washington State University
- Number of pages
- 126
- Identifiers
- 99900883437001842
- Language
- English
- Resource Type
- Dissertation