Auditing red flags and weaknesses internal control disclosure in IBRX 100 listed companies
DOI:
https://doi.org/10.5007/2175-8069.2021.e76636Abstract
This study analyzes the effect of Audit Red Flags (ARF) on the Internal Control Weaknesses (ICW) of IBRX 100 (Brazil100 Index) listed companies from 2010 to 2018. Data were analyzed using content analysis, average/median/proportion differences test, and logistic/Poisson regression. Results showed the types of ICW most disclosured were accounting policy; technology failures; and specific accounts. It was also observed that red flags related to revenues, receivable account, and depreciation reduce the probability of ICW disclosure, while those related with profitability and debt increase it. The findings are consistent for different specifications and increase the ARF role as flags of ICW contributing for risk assessment and decrease of informational asymmetry of investors, auditors, regulators, and accounting information users.
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