TY  - JOUR
AB  - Purpose– This research seeks to examine whether two relevant characteristics, source objectivity and internal control effectiveness, influence how auditors evaluate evidence items supporting accounting estimates.Design/methodology/approach– A controlled experiment approach with a sample of 24 auditors from one large international firm.Findings– Results indicate that effective internal controls reduce the impact of relying on internal as opposed to external evidence items. Results also suggest that auditors place reliance on internal control effectiveness when they evaluate external evidence items.Practical implications– Recent professional trends, such as the demand for faster financial reporting, put pressure on auditors to rely on internal rather than more persuasive external evidence items. Relying on less persuasive evidence items reduces audit effectiveness. Auditors may respond by examining a second evidence characteristic; US audit standards suggest evaluating internal control effectiveness if evidence was generated from internal (i.e. client) sources. Thus, this study explores whether internal control effectiveness reduces the impact of relying on evidence items with lower source objectivity.Originality/value– Prior research has concentrated on examining the impact of a change in one evidence characteristic on audit judgment; this study expands the understanding of the evidence evaluation process by exploring how auditors evaluate multiple evidence characteristics. Furthermore, as suggested by Bonner, this research identifies an audit judgment deficiency (i.e. reliance on less persuasive internal evidence due to the demand for faster financial reporting) and examines one potential remedy (i.e. consideration of internal control effectiveness).
VL  - 23
IS  - 3
SN  - 0268-6902
DO  - 10.1108/02686900810857712
UR  - https://doi.org/10.1108/02686900810857712
AU  - Janvrin Diane
PY  - 2008
Y1  - 2008/01/01
TI  - To what extent does internal control effectiveness increase the value of internal evidence?
T2  - Managerial Auditing Journal
PB  - Emerald Group Publishing Limited
SP  - 262
EP  - 282
Y2  - 2024/04/19
ER  -