Abstract:
This study aims to identify extent to which external auditors rely on internal auditors
and internal controls in Sri Lanka through the analysis of primary data collected. The
data collection was performed by a well-structured questionnaire developed based on
previous literatures on the area of the topic. The population of the study comprise of
external auditors from numerous audit firms located across Sri Lanka. The model
used for the study is estimated and hypotheses testing using regression analysis with
Statistical Package for Social Sciences (SPSS) statistical software was used to
analyze the data collected.
Previous literature recognized that technical competence and work performed are the
two most important criteria that external auditors consider in their reliance on internal
auditors (Haron, et al., 2004). According to Suwaidan and Qasim (2010), external
auditors in Jordan recognize that objectivity, competence and work performance of
internal auditors are key factors affecting their reliance decisions.
Results regenerated from the study provides an understanding of the role of internal
auditors and internal controls on the work performed by external auditors. This will
further enable to gain a comprehensive understanding of the relationship between
external auditors and internal auditors in the modern business environment
