THE NEED FOR AN INTERNAL AUDITOR REPORT TO EXTERNAL STAKEHOLDERS TO IMPROVE GOVERNANCE TRANSPARENCY

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Quistions on Academic Research Case
The need for an Internal Auditor Report to External Stakeholders to Improve Governance Transparency

Naimah AlBaharnah
Prof. Liotta, Joseph P
AC629, Contemporary Issues In Auditing
June 19, 2014
What is the issue being addressed in the paper? 

Sarbanes Oxley mandates requires all public companies to establish internal controls and procedures for financial reporting. In addition they must document, test and maintain those controls and procedures to ensure their effectiveness. The purposes of SOX are to emphasis on corporate governance and to reduce the possibilities of corporate fraud by increasing the stringency of procedures and requirements for financial reporting.
Under Sarbanes Oxley act,
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Finally, Resources section in the IAR, which provide users with information about the financial resource, devoted to the internal audit function, whether the internal audit function is in- house or outsourced function.
d. Describe any limitations of the research.
There are cost considerations for using IAR. One cost consideration is the possibility that IAR disclosure will increase internal auditor liabilities when financial report failures occur, consequently, increases s the risk of lawsuits weather by the SEC seeking statutory fines, penalties and remedial measures, or private lawsuits seeking monetary damages.
Another potential cost to IAR disclosure relates to the increased information load. The research finds that information overload may lead investors to take poor decision because they may stop paying attention to the details when there is too much information.
Additionally, The research highlights the direct and indirect cost of preparing, distributing information, and revealing proprietary information to competitors.
Overall, the research strongly support the idea of that IAR would provide external stakeholders with important information and does not consider those costs as a major issue.
e. Describe the research methodology used as a basis for the conclusions.
The researchers conducted 18

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