Article Number One :

 Year : 2017
 Author(s) : Kathleen A. Bentley-Goode, Nathan J. Newton, & Anne M. Thompson.
 Title : Business Strategy, Internal Control Over Financial Reporting, and Audit
Reporting Quality.
 Purpose : The purpose of this study is to examine whether a company’s business
strategy is an underlying determinant of the strength of its internal control over financial
reporting (ICFR) and auditors’ internal control reporting quality.
 Research Question(s) / Hypothesis : The researchers test the following
hypothesis, stated in the alternative form based on theoretical expectations:
- H1a: Business strategy is associated with the likelihood that a company reports a
material weakness in ICFR.
- H1b: Business strategy is associated with the likelihood of remediating reported
material weaknesses in ICFR.
- H2: Business strategy is associated with lower auditor internal control reporting quality.
 Methodology : This study is qualitative study which examines whether a company’s
business strategy is an underlying determinant of the strength of its internal control over
financial reporting (ICFR) and auditors’ internal control reporting quality.
 Sampling : The sampling of this study consists of 19,350 observations.
 Results : The findings of this research are that the firms with greater prospector-like
characteristics are more likely to report and less likely to remediate material weaknesses,
incremental to known determinants of material weaknesses, and the auditors’ internal
control reporting quality is lower among clients with greater prospector-like
characteristics when measured using the timeliness of reported material weaknesses. The
findings indicate that business strategy is a useful summary indicator for evaluating
companies’ internal control strength and suggest that internal control reporting is an
important area for audit quality improvement among prospector-like clients.
 Recommendation for future research : Future research could investigate which
aspects of control risk assessment and planning are most problematic for auditors of firms
with greater prospector characteristics, and it could also investigate whether additional
effort improves auditors’ ability to accumulate and evaluate evidence, resulting in more
timely internal control reporting.