Please use this identifier to cite or link to this item: http://hdl.handle.net/20.500.12188/4787
Title: The different dioptrIA of internal auditors versus external auditors in the observation of internal controls - research in the Republic of North Macedonia
Authors: Bozhinovska Lazarevska, Zorica 
Jancevska, Ivana 
Trpeska, Marina 
Atanasovski, Atanasko 
Keywords: Internal auditor, external auditor, internal control, social identity theory, organizational silence, objectivity
Issue Date: Oct-2019
Publisher: 29th EBES Conference - Lisbon
Conference: 29th EBES Confeerence - Lisbon
Abstract: Opportunity represents an extremely important element of the fraud triangle. It is usually related to the internal controls which if not designed well or not functioning efficiently make it possible for a motivated fraudster to achieve his fraudulent scheme. The corporate scandals that marked the end of the previous and the beginning of this century were initiated and realized by unscrupulous managers taking advantage of the existence of internal controls weaknesses. Observing the internal control weaknesses as an opportunity for fraud has increased their significance in the eyes of stakeholders, such as managers, internal and external auditors. Internal control is in fact a subject to examinations and assessments performed by the both - internal and external auditors. The internal auditors being part of the organization should, on one hand, objectively assess the decisions taken by the management, and on the other hand, act advisory in designing an adequate and efficient internal control system. Hence the double identity of the internal auditors, i.e. two social categories of the internal auditors. As per the external auditors, it is exactly that double identity that jeopardizes the objectivity of internal auditors. Considering the fact that the internal auditors are part of the organization, whereas the external auditors act as outsiders, it is expected that their perceptions of the internal control system would differ. The Social Identity Theory stipulates that the internal auditors being part of the organization have an advantage over external auditors in obtaining information about the weaknesses of the internal control system and this advantage increases as the material significance of the weakness increases, as per the Organizational Silence Theory. However, the Social Identity Theory also states that the more the auditors identifies with the organization, their objectivity in assessing the internal control system decreases. In this regards, the adherence to the Code of Ethics for the Internal Auditors positively affects the objectivity of internal auditors in assessing the internal control system, and as their objectivity increases, the confidence of external auditors in the work of internal auditors also increases. Within this paper, will be presented a research which aims to determine and quantify the differences between internal and external auditors in obtaining and assessing information on the weaknesses of the internal control system. The research is consisted of two parts. In first part are discussed the differences in obtaining information about the weaknesses of the internal control system between the internal and external auditors, while in the second part, the differences in assessing the received information on the weaknesses of the internal control system. At the end of the paper, using the SPSS data processing program will be presented the results of the conducted research, i.e. on the basis of the obtained results, it will be determined whether there are significant differences between the internal and external auditors in obtaining and assessing information on the weaknesses of the internal control system.
URI: http://hdl.handle.net/20.500.12188/4787
Appears in Collections:Faculty of Economics 02: Conference papers / Трудови од научни конференции

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