When controls matter: evidence of non-linear association between Internal Control Weaknesses and Audit Quality

ABSTRACT This study aimed to analyze the association between Internal Control Weaknesses (or Deficiencies - ICDs) and Audit Quality (AQ). The article fills a gap in national literature, as it provides evidence of an reported ICDs main AQ proxies. is relevant because evinces lack contemporary listed Brazilian companies, but found lagged these variables. Unlike prior studies, was observed that previous year can function Red Flag current year, thus contributing risk assessment by accountants, auditors, members governance audit committees, regulators. study, documentary descriptive, with quantitative approach, analyzed data from sample 257 companies on Brazil Stock Exchange Over-the-Counter Market (Brasil, Bolsa, Balcão [B3]) period 2010-2018. Data were assessed using regression models panel data, logistic negative binomial. results showed that, although there are significant differences proxies for ICD those did not, no statistically disclosure However, delay probability being involved Administrative Sanctioning Procedure (ASP) associated number year.