Outsourcing and Audit Risk for Internal Audit Services

Contemporary Accounting Research

Volumn 17, Issue 3, 2000, Pages 387-428

  Caplan, Dennis H ^a   Kirschenheiter, Michael ^b  

^a IOWA STATE UNIVERSITY   (United States)

^b Och Spine at New York Presbyterian Hospitals   (United States)

Author keywords

Agency theory; Audit risk; Internal audit; Outsourcing

Indexed keywords

EID: 0347616171     PISSN: 08239150     EISSN: None     Source Type: Journal    
DOI: 10.1506/8CP5-XAYG-7U37-H7VR     Document Type: Article

References (50)

1. Allen, R. D. 1996. Managing internal audit conflicts. Internal Auditor 53 (August): 58-61.
2. American Institute of Certified Public Accountants (AICPA). 1984. Statement on Auditing Standards No. 47. Audit risk and materiality in conducting an audit. New York: AICPA.
3. _. 1994. Audit risk alert - 1994. New York: AICPA.
4. American Institute of Certified Public Accountants, Professional Ethics Executive Committee. 1993. Ethics Ruling No. 97. Performance of Certain Extended Audit Services. New York: AICPA.
5. Anderson, R. J. 1996. New ethics rules for CPA firms. Journal of Accountancy 182 (August): 61-64.
6. Antle, R. 1982. The auditor as an economic agent. Journal of Accounting Research 20 (Autumn): 503-27.
7. _. 1984. Auditor independence. Journal of Accounting Research 22 (Spring): 1-19.
8. Antle, R., and J. S. Demski. 1991. Contracting frictions, regulation, and the structure of CPA firms. Journal of Accounting Research 29 (Supplement): 1-24.
9. Antle, R., and R. A. Lambert. 1988. Accountants' loss functions and induced preferences for conservatism. In Economic Analysis of Information and Contracts: Essays in Honour of John E. Butterworth, eds. G. A. Feltham, A. H. Amershi, and W. T. Ziemba, eds. Boston: Kluwer.
10. Arens, A. A., and J. K. Loebbecke. 1994. Auditing: An integrated approach, 6th ed. Englewood Cliffs, NJ: Prentice Hall.
11. Baiman, S., J. H. Evans III, and N. J. Nagarajan. 1991. Collusion in auditing. Journal of Accounting Research 29 (Spring): 1-18.
12. Baiman, S., J. H. Evans III, and J. Noel. 1987. Optimal contracts with a utility-maximizing auditor. Journal of Accounting Research 25 (Autumn): 217-44.
13. Baiman, S., D. F. Larcker, and M. V. Rajan. 1995. Organizational design for business units. Journal of Accounting Research 33 (Autumn): 205-29.
14. Balachandran, B. V., and R. T. S. Ramakrishnan. 1987. A theory of audit partnerships: Audit firm size and fees. Journal of Accounting Research 25 (Spring): 111-26.
15. Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. 1999. Report and recommendations of the Blue Ribbon Committee on Improving the Effectiveness of Corporate Audit Committees. New York: New York Stock Exchange and The National Association of Securities Dealers.
16. Bums, D. C., J. W. Greenspan, and C. Hartwell. 1994. The state of professionalism in internal auditing. Accounting Historians Journal 21 (2): 85-116.
17. Caplan, D. 1999. Internal controls and the detection of management fraud. Journal of Accounting Research 37 (Spring): 101-17.
18. Coopers & Lybrand LLP 1995. Internal audit services. New York: Coopers & Lybrand.
19. Cremer, J. 1995. Arm's length relationships. Quarterly Journal of Economics 110 (2): 275-95.
20. Deloitte Touche Tohmatsu International. 1995. Internal audit in leading financial institutions: A worldwide study of the changing landscape. New York: DTTI.
21. Dye, R. A. 1993. Auditing standards, legal liability, and auditor wealth. Journal of Political Economy 101 (5): 887-914.
22. Dye, R. A., B. V. Balachandran, and R. P. Magee. 1990. Contingent fees for audit firms. Journal of Accounting Research 28 (Autumn): 239-66.
23. Federal Deposit Insurance Corporation Improvement Act. 1991. U.S. Pub. L. 102-242. 105 Stat. 2242-2246.
24. Federal Trade Commission. 1990. Consent agreement between the American Institute of CPAs and the Federal Trade Commission. Docket No. C.3297.
25. Feltham, G. A. 1990. Discussion of "An equilibrium analysis of optimal audit contracts". Contemporary Accounting Research 7 (Fall): 56-60.
26. Finley, D. R. 1994. Game theoretic analysis of discovery sampling for internal fraud control auditing. Contemporary Accounting Research 11 (Summer): 91-114.
27. Finn, M., and M. Penno. 1997. The element of surprise and its role in auditing for fraud. Working paper, The University of Chicago.
28. Foreign Corrupt Practices Act. 1977. U.S. Pub. L. 95-213. 91 Stat. 1494.
29. Gibbons, R. 1998. Incentives in organizations. Journal of Economic Perspectives 12 (Fall): 115-32.
30. Hodgson, D. and L. Puschaver. 1995. Sourcing internal audit services: A threat or a best practice? CPA Journal 65 (December): 60-63.
31. Holmström, B. 1979. Moral hazard and observability. Bell Journal of Economics 10: 74-91.
32. _. 1999. The firm as a subeconomy. Journal of Law, Economics, and Organization 15 (1): 74-102.
33. Holmström, B., and P. Milgrom. 1991. Multitask principal-agent analyses: Incentive contracts, asset ownership, and job design. Journal of Law, Economics, and Organization (7): 24-51.
34. _. 1994. The firm as an incentive system. American Economic Review 84(4): 972-91.
35. Holmström, B., and J. Roberts. 1998. The boundaries of the firm revisited. Journal of Economic Perspectives 12 (Fall): 73-94.
36. Institute of Internal Auditors (IIA). 1994. The IIA's perspective on outsourcing internal auditing: A professional briefing for chief audit executives. Professional Issues Pamphlet 94-1. Altamonte Springs, FL: IIA.
37. _. 1995. Standards for the professional practice of internal auditing. Altamonte Springs, FL: IIA.
38. _. 1996. The Institute consolidates its evolving view of outsourcing internal auditing. IIA Today (March/April): 1-4.
39. Kirschenheiter, M. 1999. Optimal contracting, accounting standards and market structures. Contemporary Accounting Research 16 (Summer): 243-76.
40. Kralovetz, R. G. 1996. A guide to successful outsourcing. Management Accounting 78 (October): 32-38.
41. Melumad, N., and L. Thoman. 1990a. An equilibrium analysis of optimal audit contracts. Contemporary Accounting Research 7 (Fall): 22-55.
42. _. 1990b. On auditors and the courts in an adverse selection setting. Journal of Accounting Research 28 (Spring): 77-120.
43. National Commission on Fraudulent Financial Reporting (Treadway Commission). 1987. Report of the National Commission on Fraudulent Financial Reporting. New York: NCFFR.
44. Newman, D. P., J. Park, and J. R. Smith. 1998. Allocating internal audit resources to minimize detection risk due to theft. Auditing: A Journal of Practice & Theory 17 (1): 69-82.
45. Newman, D. P., S. Rhoades, and R. Smith. 1996. Allocating audit resources to detect fraud. Review of Accounting Studies 1 (2): 161-82.
46. Sawyer, L. B., and G. E. Sumners. 1988. Sawyer's internal auditing, 3rd ed. Altamonte Springs, FL: The Institute of Internal Auditors.
47. Schroeder, D. L., and K. E. Reinhard. 1997. Salaries 1996. Management Accounting 78 (June): 20-29.
48. Seaberg, G. 1996. Smartsourcing. Internal Auditor 53 (December): 60-65.
49. White, K. R., and J. A. Xander. 1984. Survey of internal auditing: Trends and practices. Altamonte Springs, FL: The Institute of Internal Auditors.
50. Widener, S. K., and F. H. Selto. 1999. Management control systems and boundaries of the firm: Why do firms outsource internal auditing activities. Journal of Management Accounting Research 11: 45-73.