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Internal auditors and the external audit: a transaction cost perspective

Cameron Morrill (Department of Accounting and Finance, I.H. Asper School of Business, University of Manitoba, Winnipeg, Manitoba, Canada)
Janet Morrill (Department of Accounting and Finance, I.H. Asper School of Business, University of Manitoba, Winnipeg, Manitoba, Canada)

Managerial Auditing Journal

ISSN: 0268-6902

Article publication date: 1 August 2003

6836

Abstract

Questions exist regarding the extent to which internal auditors should participate in the external audit, and wide variations are observed in practice. Many professional bodies increasingly advocate the view that increased coordination between the internal and external auditors, including increased use of the internal auditor for the external audit, provides more efficient and effective audit coverage. However, others maintain that internal auditors should not focus on areas that are the subject of external audit interest. This article attempts to shed light on this debate by using insights from transaction cost economics (TCE) to identify conditions under which organizations encourage internal audit participation in the external audit. An analysis of survey data collected from directors of Canadian internal audit departments indicate that some (TCE) variables, particularly transaction‐specific investment, are significantly associated with internal audit participation in the external audit.

Keywords

Citation

Morrill, C. and Morrill, J. (2003), "Internal auditors and the external audit: a transaction cost perspective", Managerial Auditing Journal, Vol. 18 No. 6/7, pp. 490-504. https://doi.org/10.1108/02686900310482632

Publisher

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MCB UP Ltd

Copyright © 2003, MCB UP Limited

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