Internal audit and financial reporting in the Spanish banking industry (original) (raw)

Managerial Auditing Journal, 2012

Abstract

PurposeThe purpose of this paper is to examine the relationship between a firm's internal audit function (IAF) and the quality of its financial reporting. Since regulations on corporate governance were introduced, numerous national and international bodies have emphasized the fundamental role of the IAF in the financial reporting process, especially since it generally leads to higher quality reporting.Design/methodology/approachThe paper uses questionnaires sent to internal audit directors of Spanish banks.FindingsBanks with high quality financial reporting have greater collaboration between internal and external auditors in the annual audit. Greater involvement of internal audit in reviewing financial reporting leads to improved quality financial reporting.Research limitations/implicationsBesides the usual caveats of survey research, there are limitations to this study. First, the problem of response bias may exist. Second, the 66 per cent survey response rate may mean that res...

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