Internship and audit expectation gap among undergraduate students in Universiti Utara Malaysia

The accounting profession has long faced the issue of an audit expectation gap: being the gap between the quality of the profession's performance,its objectives and results, and that which the society expects.Studies have been carried out worldwide to determine the effect of education in narrowing the audit expectation gap.Extending the knowledge acquired, this paper investigates whether intership program could reduce the audit expectation gap in Malaysia.Using a pre-post method, the research instrument adapted from Ferguson el al. (2000) is administered to the UUM's accounting students before and after completing an internship program.The results show a significant change in their perceptions after the internship program.However changes in perceptions may not warrant an internship program as a means of reducing the audit expectation gap as misperceptions abaut the duties of auditors for fraud prevention and detection are still found among respondents. Nevertheless, an internship can still be used to complement audit education as it is an ideal way to expose students to professional issues and enables them to have a better insight of the actual performance and duties of auditors

Practical training and the audit expectations gap: The case of accounting undergraduates of Universiti Utara Malaysia

The accounting profession has long faced the issue of an audit expectation gap; being the gap between the quality of the profession’s performance, its objectives and results, and that which the society expects.The profession believes that the gap could be reduced over time through education.Studies have been carried out overseas and in Malaysia to determine the effect of education in narrowing the audit expectation gap. Extending the knowledge acquired, this paper investigates whether academic internship programs could reduce the audit expectation gap in Malaysia.Using a pre-post method, the research instrument adapted from Ferguson et al.(2000) is administered to the Universiti Utara Malaysia’s accounting students at the beginning and end of their internship program.The results show there is a significant change in perceptions among students after the internship program. However, changes in perceptions do not warrant an internship program as a means of reducing the audit expectation gap as misperceptions are still found among respondents on issues of auditing after the completion of the internship program. Nevertheless, an internship program can still be used to complement audit education in a university as it is an ideal way to expose students to professional issues and enables them to have a better insight of the actual performance and duties of auditors

AN EXPLORATIVE STUDY OF THE INTERNATIONAL CONSISTENCY OF AUDITOR SPECIALIZATION

Industry specialization can be seen as a differentiation strategy of the auditor. Previous research demonstrates the advantages of such a strategy (e.g., DeFond et al., 2000; Balsam et al., 2003; Dunn and Mayhew, 2004). The literature uses two constructs to measure specialization, the market share of an auditor in a specific market, and a portfolio approach focusing on the major industries in the portfolio of clients of the auditor (e.g., Hogan and Jeter, 1999; Balsam et al., 2003; Neal and Riley, 2004). The objective of this paper is to investigate whether auditor specialization is consistent across countries. Compared to competing auditors, an industry specialized auditor must have unique assets that result in clients in that specific industry systematically choosing the specialist auditor. Logically, this specialist knowledge can translate into an audit methodology that is specifically suited for this industry. Large audit firms make significant investments in developing tools to assist auditors in applying this methodology. As the specialized knowledge of auditors can be transferred from one country to another, we can expect that industry specialization is consistent across countries for international audit firms. If an audit approach, specifically designed for an industry, is transferred through manuals to another country, one can expect that the audit firm has the same competitive advantage in that other country. This would result in consistent patterns in international auditor specialization. If this can not be observed, it might mean that the audit firm does not have an audit methodology that results in competitive advantage or that this methodology is not transferred from one country to another. We use data on 55 235 European companies to analyze auditor specialization and find a relative degree of consistency across countries. The paper starts with a review of the relevant literature, describes our data and presents the results of our analysis.

Interaction between internal auditors and the audit committee: An analysis of expectations and perceptions

This study, based on six case studies within a Belgian context, provides a qualitative assessment of the interaction between internal auditors (IA) and audit committees (AC), by analysing their expectations and perceptions. It became clear that both groups have high expectations vis-à-vis each other, although perceptions of IA-AC interactions are not universally positive. Our empirical data indicate that audit committee members want internal auditors to be an important information provider. Therefore they expect internal auditors to demonstrate and communicate, as much as possible, their contribution to the monitoring and functioning of the organisation, and to play both an active and proactive role in risk management. It became clear that, in most cases, due to a mismatch of interests, there is an under-emphasis on the internal audit oversight role of the audit committee, which is more perceived by the internal auditors than by audit committee members. In order to reduce this mismatch, both parties should broaden their interests in a converging way, in conjunction with clear communication about the mission and roles of internal audit.internal audit, audit committee, interaction, corporate governance, case studies.

Interaction between internal audit and different organisational parties: An analysis of expectations and perceptions

This study, based on six case studies within a Belgian context, provides a qualitative assessment of the interaction between internal auditors and the audit committee as well as CEOs and CFOs by analysing their expectations and perceptions. It became clear that both groups have high expectations vis-à-vis the internal auditor(s), although the perceptions of the interactions are not universally positive. On the one hand, audit committee members want the internal auditor(s) to be(come) an important information provider. Therefore they expect the internal auditor(s) to demonstrate and communicate as much as possible their contribution to the monitoring and functioning of the organisation as well as to play a (pro)active role in risk management. It became clear that in most cases, due to a mismatch of interests, there is an under-emphasis on the internal audit oversight roles of the audit committee, which is more perceived by the internal auditors than by audit committee members. In order to reduce this mismatch, both parties should broaden their interests in a converging way completed with a clear communication about the mission and roles of internal audit. On the other hand, CEOs and CFOs want the internal auditor(s) to compensate their loss of control that results from an increased organisational complexity. CEOs and CFOs expect the internal auditor(s) to fulfil an active management supporting role with a strong focus on continuous improvement in risk management, internal controls, organisational processes and strategic important projects. Thereby, internal auditor(s) are expected to create a sufficient level of risk and control awareness within the organisation. Although the interaction with CEOs and CFOs is stronger than the interaction with audit committee members, we found that the expression of findings and suggestions in more quantitative terms and regular informal contacts can still improve this interaction.

Internal audit: the expert in providing comfort to the audit committee. The case of risk management and internal control

This study investigates to what extent audit committees feel uncomfortable about risk management and internal control, and focuses on how internal audit can be the expert in providing comfort in these areas, building upon the sociology of professions literature. Four case studies reveal that audit committees need comfort with respect to the control environment. Thanks to their internal position, their familiarity with the company, and their position close to people across the company, internal audit seems to be the most suitable one to provide comfort and be the ‘guard of the corporate culture’. Furthermore, audit committees need comfort regarding the internal controls in high-risk areas. Besides internal audit’s assurance role, active involvement in the improvement of these internal controls provides a significant level of comfort to the audit committee. Their unique conceptual and companyspecific knowledge about risk management and internal control, combined with the right inter-personal skills, enables internal audit to provide this comfort. Formal audit reports and presentations, together with informal contacts, seem to be important ways of providing this comfort. Finally, it becomes clear that the overall level of comfort in the audit committee can be enhanced through a ‘joint audit approach’ between internal and external audit.internal audit, audit committee, risk management, internal control, comfort, expert, sociology of professions, case studies

Contemporary internal auditing practices : (new) roles and influencing variables. Evidence from extended case studies

Following the recommendation made by Rittenberg (1999), this study encompasses the broader nature of internal auditing that is evolving in practice and confirmed by the revised definition of internal auditing and the new Professional Practices Framework, both issued by the IIA in 1999. This study, based on six extended case studies, attempts to contribute to the literature by studying contemporary internal auditing practices in Belgium (assurance and / or consulting oriented), refining the influence of three predefined variables (reporting relationship, organisational support and internal control system) and determining other important influencing variables. Most internal auditing activities could be classified as a combination of assurance and consulting services. Moreover, we recognised a limited proportion of pure assurance activities and a sometimes quite extensive proportion of pure consulting activities. On the one hand, a strong administrative reporting relationship with management, a strong organisational support, a weak internal control system and a relatively young internal auditing department are in most cases associated with relatively higher proportion of consulting oriented activities. On the other hand, a strong functional reporting relationship with the audit committee, a weak organisational support, a strong internal control system and a more mature internal auditing department are linked with a relatively higher proportion of assurance oriented activities. Based on the results of this study, specific hypotheses for further research are presented.internal auditing, Belgium, extended case studies, assurance, consulting, reporting relationship, organisational support, internal control system, maturity

Disclosure of improvement activities related to tangible assets

In times of globalization, harmonization, and increasing competition, striking the proper balance between, at one extreme, flexibility or a true and fair view, and, at the other, comparability or rigidity, is a delicate one. In this article, we argue that maintenance measures may be split into one of the two categories: Value Preserving Maintenance (VPM), or Value Increasing Maintenance (VIM). Given the significance of maintenance expenditures, and that continuous improvement is a key requirement of success in this new environment, then VIM-measurement is a readily understood and valid indicator of management and firm performance. In addition, VIMmeasures give a more true and fair view of the change in wealth of the enterprise than accumulated maintenance expenses that conventionally are treated as income adjustment entries.Accounting; assets; disclosure; maintenance.

Interaction between internal auditors and senior management: A qualitative analysis of expectations and perceptions

This study, based on six case studies within a Belgian context, provides a qualitative assessment of the interaction between internal auditors and senior management (CEOs and CFOs) by analysing their expectations and perceptions. Moreover, this analysis is completed with suggestions to further improve the interaction. CEOs and CFOs want the internal auditors to compensate their loss of control that results from an increased organisational complexity. They expect the internal auditors to fulfil an active management supporting role with a strong focus on continuous improvement in risk management, internal controls, organisational processes and strategic important projects. Thereby, internal auditors are expected to create a sufficient level of risk and control awareness within the organisation. Although CEOs and CFOs are generally satisfied about their interaction with the internal auditors, we found that the expression of findings and suggestions in more quantitative terms and regular informal contacts can still improve this interaction.internal audit, audit committee, interaction, corporate govern