This study examines whether auditors’ evaluation and report of firms’ internal control over financial reporting (ICFR) affects firm operational efficiency. Prior research indicates that the strength of internal controls is positively associated with economic benefits. However,...

Audits of internal control over financial reporting (ICFR) are typically “integrated” with the audit of the financial statements (FS)— both audits are conducted by the same audit firm, which designs procedures to satisfy the objectives of both audits simultaneously. A common assumption is...