Quotation Hoos, Florian, Kochetova-Kozloski, Natalia, d'Arcy, Anne. 2015. The Importance of the Chief Audit Executive's Communication: Experimental Evidence on Internal Auditors' Judgements in a 'Two Masters Setting' International Journal of Auditing 19 (3): S. 166-181.


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Abstract

The position of an internal audit function (IAF) as a ‘servant of two masters’ (i.e., management and the audit committee) may lead to a conflict of priorities. In this setting, the tone at the top set by the Chief Audit Executive (CAE) plays a critical role in balancing the potentially competing priorities of the ‘two masters’. We test two hypotheses in a mixed experimental design with the communicated preferences of the CAE to subordinates (cost reduction vs. effectiveness of internal controls) as a between-subjects factor, and levels of ambiguity (low, medium, high) manipulated within-subjects. Findings suggest that the emphasis in the CAE's message can influence internal auditors' judgments, and such influence is more pronounced when task ambiguity is high, resulting in the elimination of a significantly greater number of internal controls and the design of less effective processes. We discuss implications of our results for modern IAFs and the role of the CAE.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Journal article
Journal International Journal of Auditing
WU-Journal-Rating new FIN-A, STRAT-B, WH-B
Language English
Title The Importance of the Chief Audit Executive's Communication: Experimental Evidence on Internal Auditors' Judgements in a 'Two Masters Setting'
Volume 19
Number 3
Year 2015
Page from 166
Page to 181
URL http://onlinelibrary.wiley.com/doi/10.1111/ijau.12046/abstract
DOI http://dx.doi.org/10.1111/ijau.12046

Associations

People
d'Arcy, Anne (Details)
External
Hoos, Florian (Department of Accounting and Management Control at HEC Paris, France)
Kochetova-Kozloski, Natalia (Saint Mary¿s University - Sobey School of Business, Canada)
Organization
Corporate Governance IN (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5327 Accounting (Details)
5333 Business management (Details)
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