Is operational control risk informative of financial reporting deficiencies?

Lawrence, A, Minutti-Meza, M and Vyas, D (2018) Is operational control risk informative of financial reporting deficiencies? Auditing: A Journal of Practice and Theory, 37 (1). pp. 139-165. ISSN 0278-0380

Abstract

This study provides evidence concerning the significance of assessing operational control risk as part of an integrative evaluation of internal controls. We examine whether operational control risk indicators can be used as cues to potential unreported financial reporting control weaknesses and financial reporting deficiencies. We use data breaches and an operational control risk index, created through textual analysis of Form 10-Ks, as our two primary indicators of operational control risk. We find positive relations between our operational control risk indicators and future financial reporting control weaknesses, restatements, SEC comment letters, and audit fees, even after controlling for contemporaneous financial reporting control weaknesses. These findings suggest that operational control risk is informative of potential financial reporting deficiencies.

More Details

Item Type: Article
Subject Areas: Accounting
Date Deposited: 19 Dec 2017 15:07
Subjects: Operations control
Financial reporting
Risk
Last Modified: 13 Oct 2024 00:42
URI: https://lbsresearch.london.edu/id/eprint/945
More

Export and Share


Download

Full text not available from this repository.

Statistics

Altmetrics
View details on Dimensions' website

Downloads from LBS Research Online

View details

Actions (login required)

Edit Item Edit Item