Internal Audit Professionalism and Section 404 Compliance: The View of Chief Audit Executives from Northeast Ohio

International Journal of Auditing
Int. J. Audit. 11: 41–49 (2007)

AUTHORS:
Albert L. Nagy
William J. Cenker

ABSTRACT:

This study explores the notion that the recently heightened regulation over United States public  company reporting limits the amount of professional judgment required by internal auditors, and in the long run may reduce the overall value and professionalism of the internal audit group. Our assessment is based on face-to-face interviews conducted with Chief Audit Executives (CAEs) from 17 publicly listed companies located in Northeast Ohio, United States, and is in general agreement with the extant literature on the topic. We find that despite several short-term benefits from the Section 404 work for the individual auditor (e.g., increased pay and job security), the compliance work may indeed be a threat to the long-term reputation of the internal audit profession. Based on the existing literature and the CAEs’ responses, the Section 404 work does appear to be driving the internal audit profession

down a new path.

Key words: Internal audit, Sarbanes-Oxley Act, professional judgment, professionalism, Section 404, regulation

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