Doctoral Dissertations
Date of Award
6-1981
Degree Type
Dissertation
Major
Business Administration
Major Professor
Jan R Williams
Committee Members
Keith G Stanga, James H Scheiner, H Alan Lasater
Abstract
The questionable business practices of the early and middle 1970's led to a decline in public confidence in business. Public reaction was most evident when investigation into illegal corporate contributions to former President Nixon's 1972 re-election revealed that a number of prominent American corporations engaged in overseas payoffs. This set the stage for the introduction of the Foreign Corrupt Practices Act of 1977 (FCPA) which is designed to correct the abuses of the past and restore public confidence in business and the market process. The FCPA includes two sections, a bribery section and an accounting section. The primary element of the FCPA is the strengthening of internal control systems as specified in the accounting section.
A by-product of the sensitive payments issue (SPI) and the FCPA has been an increased interest in the activities and role of the internal audit staff. The primary focus of this research is the impact of the internal control requirement of the FCPA on the internal audit function within a firm. The responsibility for internal control rests with management; however, the internal audit staff serves as an arm of management and the audit committee in evaluating and monitoring the internal control system for compliance with the FCPA.
A questionnaire was utilized to determine if the SPI and/or the FCPA (specifically the internal control section) has significantly changed the environment of the internal audit group (size, functions, activities, responsibilities, etc.). The questionnaire approach was used because a data base was not available from existing information. Since the FCPA is associated primarily with large companies the sample selection for the questionnaire was made from internal audit managers employed by the companies listed in the Fortune Top 50 life insurance companies, diversified financial companies, retailing companies, transportation companies, utilities, and 200 industrials in the Fortune 1000 Directory. The population included all of the top 150 U.S. multinationals. The objective in selecting the sample was to measure differences across industry classifications and differences due to size.
This study indicates that there have been noticeable changes in the internal audit function as a result of the SPI/FCPA. The SPI/FCPA have had some differential impacts on the internal audit staffs of Fortune 500 companies as opposed to Fortune Second 500 companies. Also there has been a greater impact on international companies than domestic companies in certain areas. There has been a greater impact on some Fortune Top 50 classifications than on others in certain areas.
Recommended Citation
Sumners, Glenn E., "An empirical investigation of the impact of the sensitive payments issue and the Foreign Corrupt Practices Act of 1977 on the internal audit function. " PhD diss., University of Tennessee, 1981.
https://trace.tennessee.edu/utk_graddiss/13526