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'Serving Two Masters' and the Chief Audit Executive's Communication: Experimental Evidence About Internal Auditors’ Judgments

Abstract : The position of an internal audit function (IAF) as a “servant of two masters” (i.e., management and the audit committee) may lead to a conflict of priorities. In this setting, the tone at the top set by the Chief Audit Executive (CAE) plays a critical role in balancing the potentially competing priorities of the “two masters.” We test two hypotheses in a mixed experimental design with the communicated preferences of the CAE to subordinates (cost reduction vs. effectiveness of internal controls) as a between-subjects factor, and levels of ambiguity (low, medium, high) manipulated within-subjects. Findings suggest that the emphasis in the CAE’s message can influence internal auditors’ judgments, and such influence is more pronounced when task ambiguity is high, resulting in the elimination of a significantly greater number of internal controls and the design of less effective processes. We discuss implications of our results for modern IAFs and the role of the CAE.
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https://hal-hec.archives-ouvertes.fr/hal-02011436
Contributor : Antoine Haldemann <>
Submitted on : Thursday, February 7, 2019 - 9:14:51 PM
Last modification on : Friday, February 8, 2019 - 1:28:23 AM

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  • HAL Id : hal-02011436, version 1

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Florian Hoos, Natalia Kochetova-Kozloski, Anne d'Arcy. 'Serving Two Masters' and the Chief Audit Executive's Communication: Experimental Evidence About Internal Auditors’ Judgments. 2013. ⟨hal-02011436⟩

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