How to Synergize the Works of Internal Auditors and External Auditors - Research Paper Example

How to Synergize the Works of Internal Auditors and External Auditors ABSTRACT Internal and external auditors have been used over the years to promote transparency and compliance with the accounting procedures in listed companies. The external and internal auditors have had separate duties in the audit process. However, conflicts have been witnessed between the internal and external auditors and this has therefore greatly undermined their effectiveness. Due to this, there has been the need to come up with ways to improve the overall efficiency of the whole process. This research paper explores how to synergize the works of Internal Auditors and External Auditors in listed companies. To achieve the objectives of the research, secondary sources were used to obtain data. The data obtained was analyzed and discussed. Finally a conclusion was made in response to the research question. Table of Contents CHAPTER 1: INTRODUCTION 3 1.1: Background 3 1.2: Research Objectives 4 1.3: Research Question 4 CHAPTER 2: LITERATURE REVIEW 5 2.1: Auditing 5 2.2: The roles and responsibilities of internal auditors 6 2.3: Reporting structure of internal audit functions and duties 7 2.4: Roles Of External Auditors 8 2.5: How Internal and External Auditors benefit a listed company 9 2.6: Relationship Between Internal Auditors And External Auditors 11 2.7: How The Internal And External Auditors Can Work Together 13 2.7: Internal Control 14 2.7: Reporting the financial statements 14 2.8: Fraud and Corruption 15 2.9: Risk Management 15 2.10: Role of the Audit Committee 15 CHAPTER 3: METHODOLOGY 16 3.1: DATA COLLECTION 16 CHAPTER 4: ANALYSIS AND DISCUSSION 17 CHAPTER 5: CONCLUSION 18 5.1: Conclusion 18 5.2: Limitation of Research and Implication to Future Research 19 REFERENCE LIST: 21 CHAPTER 1: INTRODUCTION 1.1: Background Since the late 1980’s, there are increasing financial scandals gradually occur in some listed companies. By that time, the corporate governance introduces some guidelines to the listed companies in disclosing their practices transparently. In this situation, investors can set their criteria in selecting the company to be invested in accordance to the disclosure from companies. From the investor’s viewpoint, distinct techniques matching globally accepted technique acts as ennobling influences for their logical investment choices. Within the United States, there are accounting and corporate legislation that direct disclosure practices of listed companies. (Alzurqan, Al_Sufy & A1-Haddad 2011, p. 56) These regulations include comprehensive guidelines of the disclosures that how to be made in listed company. Auditing has been assigned as an important part of the disclosure process. So the internal auditors and external auditors cannot be separated in listed companies. Moreover, according to ASA No. 9 “The Effect of an Internal Audit Function on the Scope of the Independent Auditor's Examination”, it was a first standard to require the external auditors evaluate the work performed by the internal auditor. ASA No. 65 “The auditor's consideration of the internal audit function in an audit of financial statements.” that requires the internal auditors assist directly to the independent external auditor (Moeller, 2005). Thus, it can be seen that the external auditors and internal auditors are in the close relationship in listed companies. Also, the responsibility of the internal auditors is extended and that of the external auditors is narrower. The research paper intends to assess the importance of external auditors and internal auditors in listed companies. In addition, the research paper will identify the functions of internal and external audits. The work of internal and external audit has great chemical reaction in facilitating financial control. The case has not always been that. There are increasing companies reporting errors in their financial reporting, but the auditors aware too late. The reasons for these differences are because of the fact that the two teams are overseen by the company financial management. Second, the auditors’ ethical code precludes stronger interactions with the clients. Third, auditors have limited access to information (Karagiorgos, Drogala, Eleftheriadis & Christodoulou 2010, pp. 2-3; Thornton 2010, pp. 3, 8). By identifying and analyzing the specific factors that contribute to the increasing errors overlooked by both the internal and external auditors. This research paper will try to show how they interact with each other. Furthermore, the research paper will also try to find out the conflicts between external auditors and internal auditors in order to determine how these functions can be more synergized in listed companies. 1.2: Research Objectives The research study intends to meet the following objectives: determine the significance of internal and external audits in listed companies; determine the relationship between internal and external audit functions; and how to synergize their work. 1.3: Research Question In meeting the identified research objectives this research study will answer following research question: What are the roles and responsibilities of internal auditors? What are the roles and responsibilities of external auditors? How do internal auditors and external auditors benefit a listed company? How is the relationship between internal auditors and external auditors? How to avoid or minimize the conflicts between internal auditors and external auditors? How internal auditors and external auditors synergize their work? CHAPTER 2: LITERATURE REVIEW 2.1: Auditing Schneider (2004, p. 20) defines an audit to be a planned, documented activity that is done in order to determine the adequacy and compliance with established or standard procedures. The determination is done by qualified personnel through investigation, examination or evaluation of objective evidence so as to establish compliance and effectiveness of implementation of such procedures. This process by be carried out in the fields of accounting, quality management, project management and energy conservation. Auditing therefore refers to the systemic and independent examination of financial data of an enterprise with the intention of determining compliance with state standards or procedures. When carrying out the auditing, the auditor recognizes the proposition that lies before him or her, collects any available evidence, evaluates it and makes his or her own judgment on the basis of the evidence got and the evaluation done with respect to the set standards. The judgment that is generated from the investigation and evaluation is communicated in the form an audit report. The intention of doing this is to give an opinion that can be used to enhance financial control, effective risk management and governance in that particular company or organization (Rittenberg & Covaleski, 2007, p. 107). Auditing is an effective way for financial control. In its relation to the listed companies, it acts as a safeguard for the investors against fraud, negligence or error on the part of the company's financial situation. (Moore, Tetlock & Bazerman) The auditing process that is carried out in a publicly traded company can either be an internal audit or an external audit (Pickett. 2003, p. 34). These two different types of audits are carried out with the sole intention of determining compliance with stated standard or procedures. Despite the similarity in the overall goal, the processes differ in terms of mode of operation and the various structures, data and personnel involved. 2.2: The roles and responsibilities of internal auditors It is important to first define what internal auditing is in order to understand the responsibilities of internal auditors. Moore, Tetlock & Bazerman (2010, p. 13) defines internal auditing as an assurance process that is carried out in an organization so as to increase the value of the processes and the business as a whole. The process is both independent and objective. The internal audit is meant to help the business or organization to accomplish their objectives and vision through a systemic approach of evaluation effectiveness and risk management (Selime & Yiannaka, 2000). Internal auditors have several roles and responsibilities in an organization (Moeller, 2005, p. 57). The first role of internal auditors is evaluating and providing an assertion that an organization’s risk management, governance and control structures are working correctly. By doing so they are able to let the organization know that the systems that are in-place can be effectively used in achieving the objectives of the organization (Holm & Larsen, 2007). The second role that is played by internal auditors is reporting of risk management issues as well as other internal control deficiencies identified to the audit committees (Egle, 1999). The team of internal auditors also provides recommendations that can be used to deal with such control issues to the committee for consideration and debate. The third role of internal auditors according the Institute of Internal Auditors is the evaluation of information security as well as the associated risks. Moore, Tetlock & Bazerman (2010, p. 12) states that the task of checking whether an organization has a secure information control system is directly vested on the internal auditors to determine and make recommendations. Furthermore, the internal auditors should regularly review and evaluate regulatory compliance programs. This, however, should always be done with consultation with legal counsel as to avoid any kind of conflicts with the laws of the land. Apart from the normal duties of evaluating compliance and control procedures in an organization, the team of internal auditors should maintain open communication between the management and the audit committee. Moore, Tetlock & Bazerman (2010, p. 13) further states that the internal auditors should always ensure hat the engage in constant education and staff development so as to enhance agreed or intended practices within the organization. This should be in addition to providing the required support to the organization’s anti fraud programs. Arena & Azzone (2010, p 45) indicates that due to the nature of work and the responsibilities that the internal auditors have, it is always vital that the work closely with all the involved departments and structures. This will not only make the effective, but further ensures that the organization’s goals and objectives are fully and effectively achieved (De Moor & De Beede, 2005). 2.3: Reporting structure of internal audit functions and duties The existing corporate governance regulations do not fully address the interaction between the audit committee and the internal audit functions in most countries Arena & Azzone, 2010, p 48). Due to this, internal auditors have therefore traditionally reported to the CFO or The Chief risk officer. This has, however changed with the internal auditors now being able to directly report their findings and recommendations to the companies’ audit committee. William & Parish (2009, p. 36) say that this has been the case due to increased responsibilities and powers of the audit committee., The audit committee is now able to hire and fire the chief audit officer in most companies. This has therefore ensured internal independence as well as the objectivity of the auditor. Despite the increased empowerment of the audit committee in relation to internal auditing, William & Parish (2009, p. 36) are of the opinion that there should be a clearer definition of the relationship between the two. The relationship between the committee and the internal audit functions should always be clearly defined and addressed in the companies’ audit charter. This is to endure that there is no clashing of interest or interference. This will help in increasing the effectiveness of the internal auditors. When the relationship is clearly defined, the companies should be able to achieve its goals and objectives. The evaluation and examinations of the operation procedures will also be done effectively, independently and objectively (Moeller, 2005, p. 56). 2.4: Roles Of External Auditors External auditors are not employees of the organization where they are carrying out the auditing. The primary interest of external auditors is the determination of whether the existing business activities of a company are consistent with the results in the statement (Moeller, 2005, p. 56). The external auditors therefore examine the bookkeeping records of the firm so as to determine whether they are consistent with the accepted accounting practices. The external auditors give an impartial judgment on the annual accounts of a given organization (Arena & Azzone, 2010, p 46). The external auditor can decide to rely on the efficacy of the internal auditors. When they decide to do so, they will have to carry out an evaluation of the internal auditing system. Thornton (2010, p. 45) states that the roles and responsibilities of external auditors vary from nation to nation. Professional auditing standards require that external auditing is planned and conducted so as to obtain rational assertion that the financial report of an organization is free from any kind of alteration (Baker, 2009, p.44). The external auditors normally examine the underlying transactions and records that support financial statement balances. Hake (2005, p 45) states that it is the duty of the external auditors to assess the overall financial statement presentation when they are carrying out the planned audit. Braiotta, Hickok & Main (2004, p. 265) states that one consistency among countries is the expectation that the external auditors will understand the internal control systems that are used by a business or a public traded company. The external auditor is therefore expected to identify significant weaknesses that are present in the internal control system and report that particular weaknesses in the management either orally or through a confidential management letter. The external auditors are furthermore required to specify the ways and methods that they used in evaluating and reporting the internal control system in a publicly traded company (Zaharia Lalar &Tilea, 2013 p. 43) 2.5: How Internal and External Auditors benefit a listed company Internal auditing as well as external auditing are both essential to the long term success o an organization (Haron et al., 2005, p. 56). This is because alongside the non executive directors, executive management, they form the cornerstone of corporate governance. Without the external and the internal auditors, the board of directors will not be able to have the need information and insights on how well people within the organization are managing risks. The external and internal auditors add credibility and reliability to reports from the organizations to the share holders. They provide assurance to the listed company shareholders that the members of the management team are able to fulfill their duties (Hake, 2005, p 45). The internal auditors operate within the governance structures of the organization. As such, they benefit the company by providing assurance on the internal control systems that are in place and thereby helping the organization improve. In addition to that they are able to facilitate and assist the managers in making change and improvements that are needed in order to help grow the business (Herda, Notbohm & Dowdell, 2014 p.67). External and internal auditors play an important role in risk management in an organization. The external auditors identify all the financial risk that the organization faces and provides recommendations to the management of the company. The internal auditors on the other hand deal with all the risks that the company may face their management and flow of information and governance in the company (Hake, 2005, p 45). External audits gives a view on the reliability if the financial statement of an organization. This therefore allows the directors of a company to be able to report to the owners based on the information contained in the financial statements and the audit reports. It is a legal requirement that any listed company must comply with the audit requirements of Section 303A.07(c).This requirement by law is fulfilled by the company when it hires internal and external auditors to help the company in internal control, risk management and assessment of financial statement of a company. 2.6: Relationship Between Internal Auditors And External Auditors Due to the huge interest and the social responsibility of every public company, it is normally mandatory that the annual accounts are audited by the external auditors. In addition to that, many companies also have internal audit departments which audit the accounts on regular basis. Because of this relationship in the work that the two auditors carry out, there exist a strong relationship between their operations and findings (Malta 2003, p. 260). The external auditor may rely on the work that is done by the internal auditor. This can be done in order to reduce the cost of audit. But since the internal auditor is not as independent as the external auditor, this can lead to loss of audit assurance. Therefore, the external auditor may use agreed ways to judge and also evaluate the reliability if the internal audit department to determine reliability of internal audit findings to use. During the audit work, the eternal auditor may require extra or moiré insight into the internal audit findings and operations in the company. The internal audit is better placed to help the external auditor in such situations because the internal auditor has more specific knowledge of the internal processes and operations of the company. It is very important for both external and internal auditors to work together. This is basically because both the internal auditors and external auditors work to ensure that the objectives of the company are achieved Malta (2003, p. 260). In addition the two teams are supposed to ensure that the control mechanisms that are set up in the company to help monitor the financial aspects and other aspects are fully functional as per the requirement of the organization and accounting procedure. Mautz, (2004, p. 60) state that it is therefore important for the external and internal auditors to set up a professional working relationship. Such kind of relationship should benefit both the internal and external auditor. At times, it is important for internal auditors to seek the required input from the external auditor so to be able to develop the best internal audit strategy and work plan. Internal and external auditors consult with each other during the planning phase, so that the two parties can be able to address the financial and business systems that have been identified to underpin the financial statement of the organization (Moeller, 2005, p. 56). Such a relationship does not only benefit both parties but also the organization. This is because the business or organization will have a clear picture of its control systems and the financial systems (Alzurqan, et al. 2011, p. 56). Despite the call for internal auditors and external auditors to work together in the duties of scrutinizing business and accounting practices, conflicts normally arise in the course of the work. According to Desal, Roberts & Srivastava (2010), auditors have traditionally been responsible for financial reporting, observing the code of ethics, risk management and compliance with correlative regulations (Mitea-Popla & Geamanu, 2009). The internal and external auditors work independently, but on duplicated functions with the internal audit team responsible for preparing financial statements while the external audit team is responsible for certifying them (Moore, Tetlock & Bazerman, 2010). In essence, internal auditors are responsible for administrative, operational and financial controls while the external auditors are responsible for certifying the financial control. Given that both the internal and external auditors are recruited by the management or directors of the company (Arena & Azone 2010). Working on duplicated functions normally cause conflict of interest in the audit work. When such conflicts arise, the effectiveness and the usefulness of the audit process is greatly compromised. 2.7: How The Internal And External Auditors Can Work Together The Sarbanes-Oxley act and guidance presented by the PCAOB, the status of the work done performed by the internal auditors is apparently increased and the external auditors should rely on them in their audit for the evaluation of internal controls of an organization. It enhances the work function of internal audit and improves the performance of the control system. It should be noted that there are difficulties encountered by the external auditors if they fail to effectively communicate with those conducting internal audit work and share the information needed (William & Parish, 2009, p. 36). If the external auditors make decisions to perform audit procedures depending on the internal audit, they need to confirm that they are available to access all the relevant information and they should make sure the adequate and proper documentation prepared by the internal auditors. It is the key element in the cooperation of the external auditors and internal auditors. The external auditors consider the audit procedures used by the internal auditors and decide the degree of belief on it. For this reason, regulations are released to provide standards for those issues. SOX provides a high level of interest in the external auditors’ work performance in regard to the evaluation of the strength of the internal audit function, as given that the top level management is liable to certify the accuracy of financial information provided. (Desal, Roberts & Srivastava 2010, pp. 19-24). Due to the relationship between the work done by the internal auditors and the external auditors, it is vital that the duties and work done by the two are synergized so as to increase audit reliability (William & Parish, 2009, p. 36). Despite the fact that the external and internal auditors have different and defined roles, both of them share the same broad purpose of ensuring the there is the highest standards of regularity and propriety in listed companies. Good corporation helps in maximizing the benefits that are obtained form their work. In order to synergize the roles of the internal and external auditors, cooperation that is built on confidence, consultation, commitment and communication is required (Malta, 2003, p. 260). 2.7: Internal Control It is the primary duty of the internal auditors to measure and evaluate the effectiveness of a company’s internal control system. The external auditor on the other hand is required to make assessment of the adequacies of the companies’ financial statement and the design of the audit procedures. Exchange of information is therefore required in this process. When the internal auditors are able to provide information to the external auditors that the existing internal controls are adequate, the external auditors can use this information in determining the extent of their audit activities (Malta, 2003, p. 260). 2.7: Reporting the financial statements The findings of the work done by the internal auditor can be used in reporting on the financial statement by the external auditor. Moreover, the opinion of the internal auditor can be helpful when carrying out the external audit. There are also several opportunities that can be used by the internal and external auditors to carry out joint testing work which can be used for both internal an external audit work. 2.8: Fraud and Corruption Both the internal auditor and external auditor have an interest in the detection as well as prevention of crimes in a company. In such situations, the internal auditor has much wider role than the external auditor. The internal auditor understands the specific operating procedures of the company which may be useful in determining frauds which may cause material misstatement in the company’s financial statement (Malta, 2003, p. 260).. Therefore, the external auditor can work with the internal audit report in assessing the risks of fraud in the financial statements 2.9: Risk Management Managing risk is a major intention purpose of carrying out internal audits. Risks can be well managed when there are a good frameworks and plans that not only help in determining the risks but also in combating them so as to avoid the impact that they may have on the company. The external and internal auditor may work together so as to be able to identify the risks that the company faces and also come up with ways of dealing with the risks (William & Parish, 2009, p. 36). 2.10: Role of the Audit Committee The audit committee plays an important role in the both the internal and external audit processes. Therefore the committee can hugely help in synergizing the work of both the internal and external auditors. The committee can promote the corporation by giving suggestions on the practical areas where the two groups of auditors can work together so as to harmonize their work, reduce audit costs and increase reliability. External auditors do not have the same level of access and relationships as internal auditors. Given the nature of their work, the internal auditors have the capacity to interact with all levels of the company (Mitea-Popla & Geamanu, 2009). According to Reinstein, Lander, & Gavin, T.A (2004, p. 34) a consultative approach can be very useful in the audit practice, especially when developing the work plans. The internal auditors should often liaise with the external auditors on behalf of the organization or company and also be responsible for coordinating external audit activities in the business. Moeller & Herbert (2005, p. 67) states that this role can be a very prudent and useful way for the internal auditor to be aware of any planned external audit. This will further allow the internal auditors to facilitate the needs of the external audit process so as to enable the external auditors meet the goals and objectives. A constructive relationship between internal and external audit teams can also assist in external audits by encouraging the involvement of the top managers of the business in the process. This will help in making the audit more effective and efficient and will in turn benefit the publicly traded company. It is very beneficial if external auditors and internal auditors meet periodically. This will go a long way in ensuring that they avoid redundancy and duplication of duties. In addition, such meetings allow each party to know the duties and roles performed by another. Exchange between the two groups leads to better understanding of responsibilities. This goes a long way to ensure that their respective duties are properly planned and synchronized to avoid conflicts that are associated with misunderstanding (William & Parish, 2009, p. 36). CHAPTER 3: METHODOLOGY 3.1: DATA COLLECTION In a bid to answer the research questions, the research study conducted secondary data analysis. The data was collected from publicly available data sources that included online sources, libraries, published and non-published materials. Relevant previous literature regarding the research questions was also analyzed to gain insights into the challenges faced by both internal and external auditors. Of particular interest was the determination the solution for minimizing or avoiding the conflicts the internal auditors and external auditors. The data and literature collected was then classified in each research question. The research report includes both analysis of the data collected and interpreted by identifying the complex interactions of factors. The research study applied a qualitative research approach based on the principles of positivist paradigm. This research therefore used reason and observation to understand the relationship between internal and external auditors in listed companies. This allowed the research to acquire an unambiguous understanding of relationships. However, the study did not adopt a quantitative approach. Moreover the data and literature collected using the selected tools were analyzed and presented based on the need to pool and translate the collected raw information. CHAPTER 4: ANALYSIS AND DISCUSSION From the data that was collected it was clear that both internal and external auditors have their specific duties. The primary object of the internal auditors is to ensure that control mechanisms that are put in place by the organization and functioning properly. On the other hand, the external auditors have the primary function or duty of giving an outside opinion or perspective on the financial and accounting practices in an organization. Despite the two having different duties, they have the overall objective of ensuring that the financial systems of the organization are functioning properly and that there is no misstatement or fraud taking place. When both the internal auditors and external auditors carry out their duties, they help the company by providing the assurance that all financial control systems are functioning properly. This helps the business know whether there is any form of fraud or misappropriation within its ranks. From the collected data, it is revealed that there is the need for the external and internal auditors to establish a professional and collaborative working relation. This not only helps avoid redundancy, but also the conflicts that may arise during the audit process. The conflicts that normally arise are indicated to be basically because of lack of understanding of each other’s duties. In addition to that, lack of planning and coordination also lead to such conflicts between the external and internal auditors. In order to avoid such conflicts and also synergize their duties, it is necessary for both parties to adopt a collaborative approach when carrying out their tasks. Periodical meetings between the internal and external auditors can play and important part in helping synergize their duties. It will help the plan and understand the specific roles of each party. It will also give them a chance to share vital audit information. CHAPTER 5: CONCLUSION 5.1: Conclusion Both the internal and eternal auditors play and important role in a publicly traded company by ensuring compliance with accounting procedures and business practices. It is therefore vital for the external and internal auditors to adopt a professional relationship and collaborative approach to help them synergize their duties so as to fully benefit a publicly traded company and avoid conflicts. It is obvious that it is both beneficial for the internal and external auditor if they corporate in the working process. The internal auditor has more insight into the operations of the company and they can help the external auditor in carrying out the audit. In the same way the external auditor can help the internal auditor in determine the best available internal control strategies that can be used in the organization. In addition to that, both the internal and external auditor can collaborate in coming in carrying out joint audit task that can be beneficial to both the internal audit and external, audit process. Collaboration is also required in the risk management, assessment of the financial statement as well as in internal control. The audit committee can also help in helping synergize the roles and duties of the external auditors. This can be done through suggesting of areas of collaboration and encouraging the two groups to work together so as to help create more reliability of the audit. 5.2: Limitation of Research and Implication to Future Research There are some limitations that exist in this research. The first limitation is that the study relied more on secondary sources of information and this therefore meant that it lacked first hand information. The second limitation is that the study focused on synergizing the work of external auditors and internal auditors based solely on their duties and the nature of work they do in a public company. This therefore meant that other factors than may cause conflict in their duties that are not related to their work were not considered. Despite the above limitations, the findings of this research can be used to help improve the performance and reliability of audit practice. This will not only benefit companies, but also the internal and external auditors. The findings can also be used to carry out further research on ways that can be used to streamline the external and internal audit processes so as to benefit the auditors and the public companies. REFERENCE LIST: Alzurqan, S.T., Al_Sufy, F. J. & A1-Haddad, W 2011, ‘The effect of corporate governance on the performance if Jordanian industrial companies: An empirical study on Amman Stock Exchange,’ International Journal of Humanities and Social, vol. 1. no. 4, pp. 55-69. Available from: http://www.ijhssnet.com/journals/Vol._1_No._4;_April_2011/8.pdf Arena, M. & Azzone, G. 2010, Internal audit effectiveness: relevant drivers of auditees satisfaction Available from: http://www.cass.city.ac.uk/__data/assets/pdf_file/0003/37335/Marika-Arena.pdf Baker, R. 2009, ‘From a member of a company to a registered external auditor: the role of external auditor in corporate governance’, Australian Accounting Review, Vol.19, No. 19. Braiotta, L. Hickok, R. & Main H. 2004, The audit committee handbook. 4th edition, John Wiley & Sons, New Jersey.Available from www.svir.ch/documents/Liste_SVIR-Bibliothek_2012_fuer_HP.pdf Cohen, A. & Sayag, G 2010, ‘The Effectiveness of internal auditing: an empirical examination of its determinants in Israeli organizations,’ Australian Accounting Review, vol. 20. No. 3, pp. 296-307. Available from: http://poli.haifa.ac.il/~acohen/docs/The_effectiveness_of_internal_auditing.pdf Colbert, J. 2002, ‘Corporate governance: communications from internal and external auditors’, Managerial Auditing Journal, Vol. 17, No. 3 pp. 147 – 152,Availabl from http://dx.doi.org/10.1108/02686900210419930 Desal, V. & Roberts, R.W.& Srivastava, R. 2010, ‘An analytical model for external Auditor Evaluation of the Internal Audit Function Using Belief Functions,’ Contemporary Accounting Research Available from: http://eycarat.faculty.ku.edu/myssi/_pdf/CAR%20Version%20August%2027-2009.pdf De Moor,P. & De Beede,I. 2005, ‘Environmental auditing and the role of accounting profession :a literature review’, Environmental Management,Vol.36,No. 2,pp 205-219. Egle, T. 1999, ‘Managing external auditor relationship, Internal Auditor. Hake, E 2005, ‘Financial illusion: accounting for profits in an Enron world’, Journal of Economic Issues, vol 26, no.3, pp 45. Available from www.ju.edu/dcob/.../Richard%20Cebula%20CV.d.. Holm, C. & Larsen, P.2007, ‘Risk and control development in corporate governance: changing roles of external auditors’, Cooperate Governance, vol.15, No. 2. Haron, H. & Chambers, A. & Ramsi, R. & Ismail, I 2004, ‘The reliance of external auditors on internal auditors’, Managerial Auditing Journal, vol. 19, no. 9, pp. 1148-1159.Available from http://www.researchgate.net/publication/50934457_Reliance_of_External_Auditors_on_Internal_Audit_Work_A_Corporate_Governance_Perspective/links/09e4150ca8ac7cc8ee000000 Herda, D.Notbohm,M & Dowdell,T.2014, ‘The effects of external audit of the internal control over financial reporting on financing reporting for clients of big 4, second tier and small audit firms’, Research in Accounting Regulations, Vol. 26, pp.98-103 Karagiorgos, T., Drogala, G., Eleftheriadis, I. & Christodoulou, P 2010, ‘Internal Audit contribution to Efficient Risk Management,’ Journal of Business Management, vol. 2. no. 1, pp. 1-14. Available from: http://www.drogalas.gr/uploads/publications/INTERNAL_AUDIT_CONTRIBUTION_TO_EFFICIENT_RISK_MANAGEMENT.pdf Lemon, M.W.& Tatum K.W.2003, Internal auditing’s systematic, disciplined process, The Institute of Internal Auditors Research Foundation. Available from www.theiia.org. Maletta, M 2003, ‘An examination of auditors’ decision to use internal auditors as assistants: the effect of inherent risk’, Journal of Contemporary Accounting Research, vol. 9, no. 2, pp 252-278.Available from onlinelibrary.wiley.com/journal/10.../(ISSN)1911-38... Mautz, R 2004, ‘ Internal and external auditors: how do they relate?’, Corporate Accounting, vol.3, no.4, pp.56-58.Available from http://www.globalresearch.com.my/journal/JoGM_July2012_V4N1_2.pdf Moore, D., Tetlock, P. E. & Bazerman L. T 2006, ‘Conflicts of Interest and the case of auditor independence: moral seduction and strategic issue cycling,’ Academy Of Management Review, vol. 31, no.1, 10-19 Available from: http://faculty.haas.berkeley.edu/tetlock/pdfsnewones/2006%20auditorsmooreetalpiece.pdf Mitea-Popla, C. and Geamanu, M. (2009) ‘Internal Audit VS. External Audit,’ KBO Internation Conference, pp. 87-91. Available from http://www.doctorate-posdru.ulbsibiu.ro/media/phd/file_31cd_conf_proc_full_article_000528.pdf#page=87 Moeller, R.R. 2005, Brink's Modern Internal Auditing, pp.223-224. Available from: http://books.google.com.hk/books?id=jxQ2eFpGN70C&pg=PA223&dq=sas+no.+65&hl=zh- Moeller, R. & Herbert W 2005, Brink’s modern internal auditing. 6th edition, John Wiley & Sons, New Jersey.Available from http://cenynimaw.files.wordpress.com/2014/06/brinks-modern-internal-auditing-a-common-body-of-knowledge.pdf Peacock, E.& Pelfrey, S 2000, ‘How internal auditors view the external audit?’, The Internal Auditor,vol.46, pp.48-54.Available from http://www.diva-portal.org/smash/get/diva2:240041/FULLTEXT01.pdf Pickett, K 2003, The internal audit handbook, John Wiley & Sons, New Jersey.Available from books.google.com/books?isbn=0470662115 Reinstein, A., Lander, G.H. & Gavin, T.A 2004, ‘The external auditor’s consideration of the internal audit function’, Managerial Auditing Journal, vol. 9, no. 7, pp. 29-36.Available from http://www.oeconomica.uab.ro/upload/lucrari/1020081/18.pdf Reinstein, G. & Gavin, A. 1994, ’The external auditors consideration of the internal audit Function’, Managerial Auditing Journal, Vol. 9, No. 7, pp. 29 – 36, Available from http://dx.doi.org/10.1108/02686909410067570 Rittenberg, L.E. & Covaleski, M 2007, The outsourcing dilemma: what’s best for internal auditing, The Institute of Internal Auditors Research Foundation, Florida.Available from https://na.theiia.org/iiarf/Public%20Documents/Chapter%201%20Internal%20Auditing%20History%20Evolution%20and%20Prospects.pdf Schneider, A. 2004 ‘Modelling external auditors’ evaluations of internal auditing’, Journal of Accounting Research, vol. 22 no. 2,pp. 657-78.Available from http://www.emeraldinsight.com/doi/abs/10.1108/02686901011054845 Selime, G. & Yiannaka, A, 2000, ‘Outsourcing of internal audit function: a survey of the UK public and private sector’, International Journal of Auditing, Vol.4, pp. 213-226. Stefaniak, C &Cornell,R. 2011, ‘Social identification and differences in internal and external auditor objectives’, American Auditing Association,Vol.5,No. 2, pp9-14. Thornton, G 2010, Evaluating the internal and external audit function. the audit committee guide series, John Wiley & Sons, Hoboken.Available form http://mpra.ub.uni-muenchen.de/44954/1/MPRA_paper_44954.pdf William, T. & Parish, J 2009, ‘Co-sourcing: what's in it for me?,’ Journal of Accountancy.Available from http://www.journalofaccountancy.com/issues/1999/may/thomas.htm Zaharia,D., Lalar, A. &Tilea, D. 2013, ‘The role of internal audit regarding the corporate governance and current crisis’, Social Behavioral Science,pp4819-4823. Read More