The Effects of Disclosure Type and Audit Committee Expertise on Chief Audit Executives’ Tolerance for Financial Misstatements

Authors

Carolyn S. Norman, Virginia Commonwealth University
Jacob M. Rose, University of New Hampshire - Main Campus
Ikseon Suh, Marquette UniversityFollow

Document Type

Article

Publication Date

2011

Source Publication

Accounting, Organizations and Society

Abstract

This study involves an experiment where 73 Chief Audit Executives and deputy Chief Audit Executives determine the amount of adjustment required to correct a misstatement. We manipulate the financial reporting location of the misstatement (recognized vs. disclosed) and the level of audit committee expertise (high vs. low). The results indicate that financial reporting location has significant effects on internal auditors’ decisions to correct misstatements. Specifically, internal auditors are more willing to waive disclosed misstatements relative to recognized misstatements. Contrary to expectations, the results do not indicate that increased audit committee expertise and associated increases in audit committee members’ perceived powers cause internal auditors to be less willing to waive misstatements.

Comments

Accepted version. Accounting, Organizations and Society, Vol. 36, No. 2 (February, 2011): 102-108. Permalink. © 2011 Elsevier Ltd. Used with permission.

Recommended Citation

Norman, Carolyn S.; Rose, Jacob M.; and Suh, Ikseon, "The Effects of Disclosure Type and Audit Committee Expertise on Chief Audit Executives’ Tolerance for Financial Misstatements" (2011). Accounting Faculty Research and Publications. 55.
https://epublications.marquette.edu/account_fac/55