Janet Morrill
University of Manitoba
Cameron Morrill
University of Manitoba
Lori Kopp
University of Lethbridge
Abstract: Internal control evaluation is a series of sub-tasks, generally conducted in the following order: (1) obtain an understanding of internal control design and operation; (2) identify specific controls for relevant transaction-related objectives; (3) identify and evaluate weaknesses; and (4) test controls. In contrast, Bell et al. (1997) suggest that an understanding of the risks should precede acquiring an understanding of the clientÂ’s key processes. In an experimental setting, we investigate the extent to which the order of the sub-tasks (i. e., identifying risk first vs. identifying controls first) affects the identification of risks, controls and weaknesses. Our results indicate that participants who identified risks first identified significantly more weaknesses, but significantly fewer controls, than did participants who identified controls first. Alternative internal control questionnaire formats (risk-based vs. transaction-based) had no effect on participant performance in the task. We conclude that our results are consistent with output interference.
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