Risk Management, Ethical Environment, Internal Audit Activity and Accounting Control Procedural Quality: A Structural Equation Model

Kirsten Rae; N Subramaniam; John Sands

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Risk Management, Ethical Environment, Internal Audit Activity and Accounting Control Procedural Quality: A Structural Equation Model

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Risk Management, Ethical Environment, Internal Audit Activity and Accounting Control Procedural Quality: A Structural Equation Model

Kirsten Rae, N Subramaniam and John Sands

Proceedings of the 2007 Accounting and Finance Association of Australia and New Zealand Conference, pp.1-30

Accounting & Finance Association of Australia and New Zealand (AFAANZ) Conference, 2007 (Gold Coast, Australia, 01-Jul-2007–03-Jul-2007)

Accounting and Finance Association of Australia and New Zealand

2007

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Abstract

Information Systems

risk management

ethics

accounting control

This study examines the impact of three organisational factors, namely, the ethical environment, scope of risk management and internal audit activities on accounting control procedural quality. Based on a questionnaire survey of a 64 Australian firms, data are analysed using a structural equation model. The results of the study support (1) a direct and positive relationship between ethical environment and accounting control rocedural quality, and (2) an indirect relationship between the scope of risk management and accounting control procedural quality mediated by the extent of internal audit activity within the organisation. Our findings suggest that accounting control procedural quality may be enhanced by fostering a more ethical environment, and by undertaking more extensive internal audit activities as the scope of risk management increases. This study provides empirical evidence in an area where such evidence is scant and highlights the significant inter-relationships that exists within a network of internal controls comprising ethical environment, risk management, internal audit and accounting-based controls.

Details

Title: Risk Management, Ethical Environment, Internal Audit Activity and Accounting Control Procedural Quality: A Structural Equation Model
Authors: Kirsten Rae (Author) - Griffith University
N Subramaniam (Author) - Griffith University
John Sands (Author) - Griffith University
Publication details: Proceedings of the 2007 Accounting and Finance Association of Australia and New Zealand Conference, pp.1-30
Conference details: Accounting & Finance Association of Australia and New Zealand (AFAANZ) Conference, 2007 (Gold Coast, Australia, 01-Jul-2007–03-Jul-2007)
Publisher: Accounting and Finance Association of Australia and New Zealand
Date published: 2007
Organisation Unit: University of the Sunshine Coast, Queensland; USC Business School - Legacy
Language: English
Record Identifier: 99449109902621
Output Type: Conference paper

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