Abstract
Messner (2009) and Roberts (2009) argue that there are limits ofaccountability and transparency for accountants. We study the 20 th -centurydevelopment of independent auditors’ evaluation of internal controls as aU.S. example of attempted limits on auditors’ fraud detectionresponsibilities. While internal controls provide market value, theirevaluation during an audit has value largely to auditors themselves, whoshift some of the costs of the audit and much of the responsibility for frauddetection to management. A content analysis of the Montgomery’s Auditingseries from 1912 to 1998 demonstrates that the percent of text devoted toboth internal control techniques and their evaluation was a positive functionof time, while the attention given to fraud detection techniques moved in theopposite direction. Our data do not support the literature that explainsinternal controls evaluation by auditors as an efficiency measure or reactionto competitive price pressures.
Recommended Citation
Moussalli, Stephanie D.; Gray, O. Ronald; and Karahan, Gokhan
(2012)
"Illuminating the Limits of Auditor Accountability for Fraud Detection through a Historical Study of Internal Control Evaluation,"
Journal of Business, Industry, and Economics: Vol. 17, Article 7.
Available at:
https://roar.una.edu/jobie/vol17/iss1/7