2019B01 – Internal control quality and audit quality (Prof. dr. Hofmann)

What?

The study is aimed at investigating two interrelated themes: (1) Understanding the relevance of internal control quality for audit quality, and (2) identifying an information channel that (may) allow auditors to more accurately and efficiently assess internal control quality.

Why?

High profile frauds throughout the last years exposed failures of internal controls over financial reporting (GAO 2002) and underline the importance of audit quality as an independent assurance of the credibility of accounting information (DeFond and Zhang 2014). While there is already a broad literature on auditor’s independence as a driver of audit quality, we know relatively little on auditor’s ability to assess fraud risk during the audit process as well as its determinants (e.g., DeFond and Zhang 2014).