Internal controls have been and continue to be an important concern for companies, shareholders, and accounting professionals. Strong internal controls enable managers and upper-level accountants to ensure the integrity of the financial data and assist in making strategic decisions within the company to maintain a competitive advantage. The present study sought to answer the research question: To what extent does Chief Financial Officer (CFO) turnover and auditor turnover relate to internal control weaknesses for public companies that have reported weaknesses from 2010 to 2013, controlling for company size? To answer the research question, secondary data obtained through Audit Analytics were analyzed using multiple linear regressions. Data were collected for companies that reported one or more internal control weaknesses each year between 2010 and 2013. Companies were categorized as large or small based on their accelerated or non-accelerated filing status. Only companies that maintained the same filing status for all 4 years and experienced an auditor or CFO change during the selected time period were included in the sample. A statistically significant correlation was found between CFO turnover and internal control weaknesses when factoring in company size. Specifically, company size was linked to the number of internal control weaknesses with larger companies reporting significantly fewer internal control weaknesses than smaller companies. More research is necessary to understand which characteristics of small and large companies may relate to internal control weaknesses. However, regardless of company size, the present research suggests that organizations can use agency theory to strengthen their internal controls and reduce vulnerabilities by improving governance over individual roles and responsibilities.
|Commitee:||Dell'Osso, Linda, Robinson, Gary|
|Department:||Business and Technology|
|School Location:||United States -- Minnesota|
|Source:||DAI-A 78/07(E), Dissertation Abstracts International|
|Subjects:||Accounting, Business education|
|Keywords:||Auditor, CFOs, Control, Internal, Turnover, Weaknesses|
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