External auditors' reliance on the internal audit functions and audit fees
by Ibrahim Emair Albawwat
Global Business and Economics Review (GBER), Vol. 26, No. 4, 2022

Abstract: This study aimed at examining the direct and indirect relationship between external auditors' (EAs) reliance upon the internal audit function (IAF) and external audit fees in light of the latest revisions made on ISA 610. Data was collected using a questionnaire and then analysed using partial least squares structural equation modelling. Also, follow-up interviews were conducted to allow a more in-depth discussion of the questionnaire's responses. The results show an insignificant direct impact of EAs' reliance upon external audit fees but a significant indirect relationship mediated by external audit work hours. The results also show that reliance on work already performed by the IAF contributes to more reduction in external audit fees than reliance by using IAF to provide direct assistance. This study contributes to the literature by providing empirical evidence on the outcomes of EAs' reliance on IAF while considering the revisions made to the ISA 610.

Online publication date: Tue, 07-Jun-2022

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