Using a field-based questionnaire administered to practicing auditors, we examine how auditors simultaneously combine the key planning variables, client-level misstatement risk (comprised of inherent risk and control risk) with account-level subjectivity, when utilizing internal audit as a cost...

PCAOB Auditing Standard No. 5 (AS5) allows external auditors (EAs) to rely on the internal audit function (IAF) when the internal audit activities meet certain criteria and the EAs would find efficiencies in relying on their work (PCAOB 2007). This paper reviews the extant literature on the EAs'...