Title: Innovative IT firms and the internal control environment

Authors: Shoshana Altschuller; Abraham N. Fried; David S. Gelb

Addresses: Department of Information Systems, Hagan School of Business, Iona College 715 North Avenue, New Rochelle, NY 10801, USA ' Department of Accounting and Taxation, Stillman School of Business, Seton Hall University 400 South Orange Avenue, South Orange, NJ 07079, USA ' Department of Accounting and Taxation, Stillman School of Business, Seton Hall University 400 South Orange Avenue, South Orange, NJ 07079, USA

Abstract: Internal control over financial reporting is mandated by the Sarbanes-Oxley Act of 2002. Given the integral role of information technology (IT) in financial processing and reporting, IT is hypothesised to be a contributor to the strength of a firm's internal controls. This study explores the relationship between innovative use of IT and internal control weaknesses. The analysis indicates that firms that are ranked in the Information Week 500 as innovative users of IT are less likely to be cited by their auditors for internal control weaknesses. Implications include the importance of solid IT governance practices and a strong focus on IT controls in today's heavily IT-enabled business environments.

Keywords: internal controls; internal control weaknesses; innovative IT; IT governance; information technology; financial reporting.

DOI: 10.1504/IJTPM.2016.075938

International Journal of Technology, Policy and Management, 2016 Vol.16 No.1, pp.79 - 93

Published online: 17 Apr 2016 *

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