Article2012

Determinants of the Persistence of Internal Control Weaknesses

Bonnie K. Klamm · Kevin W. Kobelsky · Marcia Weidenmier Watson

73 citations0/0 files storedAccounting Horizons

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Accounting and Organizational Management Corporate Governance and Financial Management

Abstract

SYNOPSIS This paper analyzes the degree to which material weaknesses (MWs) in internal control reported under the Sarbanes-Oxley Act of 2002 (SOX) affect the future reporting of MWs. Particularly, we examine information technology (IT) and non-IT MWs and their breakdown into specific IT-related entity-level, non-IT-related entity-level, and account-level deficiencies. Analysis reveals that most account-level and entity-level deficiencies occur at a significantly higher rate in SOX 404 reports with at least one IT MW than in MW reports with only non-IT MWs. Further, the presence and count of both types of MWs and all three types of deficiencies are associated with increased future MWs, as are lower profitability, non-Big 6 auditor, and firm complexity. Specific control deficiencies related to senior management, training, and IT control environment have the strongest impact on future MWs. These results indicate that effective corporate governance of both the IT and non-IT domains is pivotal in establishing and maintaining strong internal controls over financial reporting. Data Availability: Data are available from the public sources identified in the paper.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 73 citations exist upstream.

References

2007Determinants of weaknesses in internal control over financial reporting 2007Accruals Quality and Internal Control over Financial Reporting 2006Audit Committee Quality, Auditor Independence, and Internal Control Weaknesses 2005The Disclosure of Material Weaknesses in Internal Control after the Sarbanes-Oxley Act 2007Market reactions to the disclosure of internal control weaknesses and to the characteristics of those weaknesses under section 302 of the Sarbanes Oxley Act of 2002 2008Internal Control Weaknesses and Information Uncertainty 2006SOX Section 404 Material Weakness Disclosures and Audit Fees 2009Audit Committees, Boards of Directors, and Remediation of Material Weaknesses in Internal Control*

Cited by

2015Repairing Organizational Legitimacy Following Information Technology (IT) Material Weaknesses: Executive Turnover, IT Expertise, and IT System Upgrades 2016The effect of auditor IT expertise on internal controls 2015The Association between Information Technology Investments and Audit Risk 2014Internal control over financial reporting: opportunities using the COBIT framework

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.