Decision-making differences between big six and non-big six auditing firms

the implications for the internal audit function

Asokan Anandarajan, Gary Kleinman

Research output: Contribution to journalReview articleResearchpeer-review

Abstract

Internal auditors have a direct interest in understanding how external audit firms make decisions that may have important implications for their own firm. Explores whether differently sized audit firms apply professional standards in a similar manner. Such uniform application should be expected given that all auditors should be guided by professional standards in making the qualification decision. The micro-economic environments facing big six and non-big six firms differ. Investigates whether big six and non-big six firms use the same information in deciding whether to issue a going concern modification. This study found that differently sized auditing firms did not apply the standards in a similar manner and did not use information available similarly. Internal audit audiences should find this lack of uniform application of interest since the internal audit function may be called in to contribute information to the decision-making process involved in selecting a new auditing firm. Also, the internal audit function may be involved in selecting acquisition targets for the firm. Should there be a suspicion of going concern problems involving a potential acquisition, the information provided in this paper should be useful to the internal audit function in evaluating the presence or lack of a going concern modification with respect to the potential acquisition's financial statements.

Original languageEnglish
Pages (from-to)295-305
Number of pages11
JournalManagerial Auditing Journal
Volume15
Issue number6
DOIs
StatePublished - 1 Aug 2000

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Auditing
Internal audit function
Decision making
Going concern
Auditors
Professional standards
Audit firms
Suspicion
Internal audit
Microeconomics
Decision-making process
Qualification
External audit
Economic environment
Financial statements
Information use

Keywords

  • Auditing guidelines
  • Auditors
  • Internal audit

Cite this

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Decision-making differences between big six and non-big six auditing firms : the implications for the internal audit function. / Anandarajan, Asokan; Kleinman, Gary.

In: Managerial Auditing Journal, Vol. 15, No. 6, 01.08.2000, p. 295-305.

Research output: Contribution to journalReview articleResearchpeer-review

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