The Association between Internal Control Situations and Specialist Auditor Choices

Abstract

This investigation sought to uncover empirical results of the influence of internal control quality on the probability of auditor turnover. Our findings show that the probability of auditor termination significantly increases for companies with material deficiencies in their internal control system. We also discovered that such companies are less likely to hire auditors specializing in a particular industry. Finally, our results demonstrate that companies with material deficiencies in their internal control system are more likely to pay higher audit fees when hiring specialist auditors in order to restore their internal control system.