Social Identification and Differences in External and Internal Auditor Objectivity

Abstract

SUMMARY Stefaniak et al.'s (2012) paper, “The Effects of Organizational Identification on Internal and External Auditors' Evaluation of Internal Control Deficiencies,” investigates how the relationships that internal (external) auditors form with their employers (audit clients) influence their objectivity. Stefaniak et al. (2012) found, in a case concerning an internal control issue, that when internal auditors are more attached to their employers, they are more conservative when control issues. Conversely, when external auditors are more attached to their audit clients, they are more lenient. The primary implication is that external auditors' reliance on internal auditors' work, as suggested by Auditing Standard No. 5, could yield an overall positive effect on audit efficiency and perhaps even effectiveness.