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1
Brown, Veena L. "The Effects of Manager-Auditor Affiliation and PCAOB Inspection Reports on Audit Committee Members' Auditor Selection." Current Issues in Auditing 11, no. 1 (September 1, 2016): P1—P10. http://dx.doi.org/10.2308/ciia-51611.
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SUMMARY This article summarizes the “The Effects of Prior Manager-Auditor Affiliation and PCAOB Inspection Reports on Audit Committee Members' Auditor Recommendations” (Abbott, Brown, and Higgs 2016), who investigate the extent to which audit committee members (ACM) of small public companies consider auditors' Public Company Accounting Oversight Board (PCAOB) inspection reports and/or the auditors' prior affiliation with management in their auditor hiring decisions. The authors find participants (the study's proxy for ACM) incorporate the inspection report, as well as the auditor's prior affiliation with management into their selection decision. Specifically, an auditor's prior affiliation with management negatively impacts his/her chances of being selected by the audit committee. To the extent inspection results measure auditors' competence and prior affiliation with management measures auditor independence, the authors find auditor independence influences auditor selection decisions only when an auditor is deemed competent. In this paper, I discuss the implications of Abbott et al.'s (2016) findings for auditors, public companies, audit committees, and regulators/policymakers interested in understanding whether and how major aspects of the Sarbanes-Oxley Act of 2002 are being implemented within corporate governance.
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Fakhfakh, Mondher. "The Islamic harmonization of consolidated auditors’ reports." Journal of Islamic Accounting and Business Research 11, no. 3 (January 2, 2020): 647–73. http://dx.doi.org/10.1108/jiabr-08-2017-0114.
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Purpose The purpose of this paper is to examine the level of harmonization of consolidated auditors’ reports issued by the independent auditors of Islamic banks. Design/methodology/approach A statistical measurement of the homogenization of the consolidated auditors’ reports of Islamic banks. International and Islamic auditing standards on consolidated auditors’ reports are used as the control (ISA 700 and AAOIFI standard-IAS2). Findings The results show a lack of harmonization among the Islamic bank’s groups in several elements related to the form of the consolidated auditor’s report and in all elements related to the independent auditor’s report. Originality/value This paper provides new empirical evidence about the measurement of harmonization in the form and content of the consolidated auditors’ reports of Islamic banks groups. It discusses the level of compliance with the consolidated elements enumerated by the standards issued by the International Federation of Accountants and the Accounting and Auditing Organization for Islamic Financial Institutions.
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Brouwer, Arjan, Peter Eimers, and Henk Langendijk. "The relationship between key audit matters in the new auditor's report and the risks reported in the management report and the estimates and judgments in the notes to the financial statements." Maandblad Voor Accountancy en Bedrijfseconomie 90, no. 12 (December 15, 2016): 580–613. http://dx.doi.org/10.5117/mab.90.31228.
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For decades, auditors have communicated their opinion on financial statements with standard wordings in the auditor’s report. However, stakeholders expect more information from the auditor. The limited transparency regarding an auditor’s actual activities, has contributed to the dissatisfaction concerning the functioning of auditors. The new (extended) auditor’s report is an answer to the information needs of stakeholders. The key audit matters reported by the auditor provide new insights to financial statement users with respect to significant estimates and risks reported in the financial statements. It may be expected from the auditor that he pays extra attention to the most significant estimates and risks. This article contains an examination of the degree to which reported key audit matters match with the significant risks presented in the directors’ reports, and with the significant accounting policies and estimates in the notes. We have studied management reports, financial statements and auditor’s reports of 50 companies listed in the Netherlands (at the AEX and Midkap index) in 2015. Our study shows that the key audit matters in the new auditor’s report often correspond with the significant accounting policies and estimates as they are reported by management in the notes. However, only in ten percent of the cases, the risks presented in the directors’ reports are mentioned as key audit matters in the new auditor’s report. Auditors have a strong focus on balance sheet items as key audit matters. Many companies recognize the riskiness of issues like reliability and continuity of IT systems and complying with regulation, but these are hardly mentioned as key audit matters. This is also a general finding of our study for issues related to the internal controls of the audited companies.
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Fakhfakh, Mondher. "The harmonization of audit reports of Islamic banks." Journal of Islamic Accounting and Business Research 8, no. 2 (April 10, 2017): 203–28. http://dx.doi.org/10.1108/jiabr-05-2014-0016.
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Purpose The purpose of this paper is to examine the level of harmonization of auditors’ reports issued by independent auditors of Islamic banks. Design/methodology/approach The homogenization of the auditors’ reports of Islamic banks has been statistically measured. Supranational auditing standards on auditors’ reports (ISA 700 and AAOIFI standard) are used as the control. Findings The results show lack of harmonization in several elements related to the form of the auditor’s report and in all elements related to the content of the auditor’s report among the Islamic banks. Originality/value This paper provides new empirical evidence about the measurement of harmonization in the form and content of the auditors’ reports of Islamic banks. It discusses the level of compliance with the elements enumerated by the standards issued by the International Federation of Accountants and the Accounting and Auditing Organization for Islamic Financial Institutions.
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Farah Freihat, Abdel Razaq, Ismail Hamad Al-Shaar, and Ayda Farhan. "Code of ethics for professional accountants and change the external auditor: A study of the emerging markets." Corporate Ownership and Control 18, no. 3 (2021): 201–12. http://dx.doi.org/10.22495/cocv18i3art16.
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To ensure the independence of auditors and the credibility of financial statements, this study investigates if Jordanian manufacturing companies change their external auditors. Moreover, assess if that change is influenced by the International Code of Ethics for Professional Accountants (ICEPA). The study figured out the viewpoints of external auditors and financial managers of public industrial companies listed on the Amman Stock Exchange. Auditor’s changing data is gathered from the annual reports of (59) manufacturing firms from 2006 to 2015. (280) questionnaires were collected from financial managers and auditors of manufacturing firms to assess if auditors comply with ICEPA. The binomial test and the logistic regression analysis were used. The study showed that the change of the external auditor in Jordanian companies is significantly affected by the ICEPA. However, external auditors and financial managers have different views of the effects of the ICEPA on the change of the external auditor in Jordan.
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Son, Myungsoo, Hakjoon Song, and Youngkyun Park. "PCAOB Inspection Reports and Shareholder Ratification of the Auditor." Accounting and the Public Interest 17, no. 1 (May 1, 2017): 107–29. http://dx.doi.org/10.2308/apin-51802.
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ABSTRACT We examine the effect of unfavorable PCAOB inspection reports, which contain audit deficiencies related to GAAS and/or GAAP violations, on shareholder voting for the auditor ratification. We further investigate whether shareholders likely vote against ratification for the auditors receiving deficiency reports in a weak corporate governance environment. Overall, we do not find evidence that shareholders vote against auditor ratifications when their auditors receive unfavorable inspection reports. However, we find some evidence that shareholders cast their votes against the ratifications of auditors receiving unfavorable inspection reports when the corporate governance is weak, as proxied by CEO duality and a low level of board diligence. Our results suggest that shareholders seem not to incorporate inspection reports as a potential proxy for auditor quality in their vote decisions on auditor ratification. Data Availability: Data are available from public sources identified in the paper.
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Krishnan, Jagan, and Yinqi Zhang. "Auditor Litigation Risk and Corporate Disclosure of Quarterly Review Report." AUDITING: A Journal of Practice & Theory 24, s-1 (December 1, 2005): 115–38. http://dx.doi.org/10.2308/aud.2005.24.s-1.115.
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The U.S. Securities and Exchange Commission (SEC) recently made timely reviews of quarterly financial statements mandatory for all registrants. The objective is to improve corporate quarterly reporting. However, formal review reports are not required to be included in 10-Q filings, and may not even be issued by auditors. A priori, one would expect these reports to be useful to investors if they imply added auditor diligence or if they contain modifications to the standard report. We find that only 5.7 percent of the companies in our sample attached the auditor's review report in their 10-Q filings. Also the majority of these reports are “clean,” suggesting that clients may not be disclosing the reports when they are modified. After controlling for factors such as auditor type, agency costs, capital market transactions, and company size, we find a significant negative association between auditors' litigation risk and disclosure of the review report. In addition, we find that the disclosure of the review report is associated with auditor type and company size.
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Pobrić, Amira. "Emphasis of Matter paragraph in auditor's reports on financial statements of listed companies in Bosnia and Herzegovina." Ekonomski izazovi 13, no. 25 (2024): 45–56. http://dx.doi.org/10.5937/ekoizazov2425043p.
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This paper analyses auditor's reports on financial statements of listed companies in Bosnia and Herzegovina. The goal of the research is to determine the frequency of the inclusion of the Emphasis of Matter paragraph in auditor's reports, as well as to identify the matters to which auditors most often draw the attention of users of financial statements within this paragraph. The research was conducted on a sample of 689 auditor's reports and covered the period from 2018 to 2021. The content analysis method was used. This research shows that the frequency of the inclusion of the Emphasis of Matter paragraph in auditor's reports was 22.5%. On average, auditors were more likely to include this paragraph in auditor's reports containing a modified audit opinion compared to auditor's reports containing an unqualified opinion. The auditors mostly drew the attention of the users of financial statements to the violation of the requirements defined by the International Accounting Standards, then to the uncertainty regarding the future outcomes of litigations, the amount and structure of certain types of assets, liabilities and income, poor performance of companies, non-compliance with laws and regulations, etc. The results show that there are indications that auditors in certain situations use the Emphasis of Matter paragraph instead of modifying the audit opinion.
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Mediawati, Elis. "The Influence of Auditor Ethics and Auditor Experience on Company Financial Reports." International Journal of Business, Law, and Education 4, no. 2 (November 30, 2023): 1270–81. http://dx.doi.org/10.56442/ijble.v4i2.316.
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This research investigates the influence of auditor ethics and auditor experience on the quality of financial reports in the garment sector of West Java, Indonesia. This study employs a quantitative approach to measure auditor ethics and experience, utilizing statistical tools for analysis. The research targets financial auditors in Indonesia, with a sample size of 150 auditors selected purposively based on specific criteria.The study emphasizes the importance of auditors in ensuring the accuracy and reliability of financial information. The garment industry in West Java holds significance in Indonesia's manufacturing sector, particularly in terms of employment and export revenue. The research aims to contribute to the understanding of how auditor ethics and experience impact financial reporting quality in this specific industry.
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Goicoechea, Estibaliz, Fernando Gómez-Bezares, and José Vicente Ugarte. "Improving Audit Reports: A Consensus between Auditors and Users." International Journal of Financial Studies 9, no. 2 (April 29, 2021): 25. http://dx.doi.org/10.3390/ijfs9020025.
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Audit reports represent the only information stakeholders have about conducted audits and they are a key instrument used in economic and financial decisions. Improving audit reports should be a priority of regulators and auditors. The authors solicited perceptions from 212 experienced auditors and financial report users about the value of audit reports and ways to improve their format and content. An analysis of the responses suggests that adding information on audits (such as auditor’s responsibility about fraud) and on annual accounts and client’s information systems, without significant changes in the format, would improve the decision usefulness of audit reports. The growing sophistication of markets and reporting standards requires new information in audit reports, such as auditors’ conclusions about management’s estimates in annual accounts. The study is useful to regulators, auditors’ corporations, academics, and users and contributes to the current audit literature by providing evidence on consensus between auditors and users with regard to the format and content of audit reports.
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Abbott, Lawrence J., Katherine A. Gunny, and Tracey Chunqi Zhang. "When the PCAOB Talks, Who Listens? Evidence from Stakeholder Reaction to GAAP-Deficient PCAOB Inspection Reports of Small Auditors." AUDITING: A Journal of Practice & Theory 32, no. 2 (December 1, 2012): 1–31. http://dx.doi.org/10.2308/ajpt-50374.
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SUMMARY: Section 104 of the Sarbanes-Oxley Act (SOX) created the Public Company Accounting Oversight Board (PCAOB). The PCAOB conducts inspections of registered public accounting firms that provide audits for publicly traded companies. The results of the inspection process are summarized in publicly available reports at the PCAOB website. Using these reports, we categorize the inspection reports into three levels of increasing severity: clean, GAAS-deficient, and GAAP-deficient. We examine the potential use of GAAP-deficient PCAOB inspection reports as perceived audit quality signals for the clients of GAAP-deficient auditors that are inspected on a triennial basis by the PCAOB. Our investigation is predicated on the notion that audit quality is generally not directly observable. Thus, the clients of these auditors may seek to signal their desire for audit quality by dismissing their GAAP-deficient auditors. Our results suggest that the clients of GAAP-deficient, triennially inspected auditors are more likely to dismiss these auditors in favor of triennially inspected auditors that are not GAAP-deficient. In addition, we find that greater agency conflicts, the presence of an independent and expert audit committee, and outside blockholdings magnify this effect. Interestingly, we find no evidence that the clients use GAAP-deficient reports to procure a subsequent-year audit fee discount or more favorable going-concern auditor reporting treatment. Our evidence indicates that PCAOB inspection reports created heterogeneity in auditor brand name among a group of non-Big N/non-national auditors that did not previously exist and are universally treated by prior research as “other auditors.”
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Kusuma, Ida Bagus Kade Diva Jati Darma, and Ni Luh Sari Widhiyani. "Pengaruh Independensi, Komitmen Organisasi dan Gaya Kepemimpinan Transformasional pada Kinerja Auditor di Kantor Akuntan Publik Se-Provinsi Bali." BUDGETING : Journal of Business, Management and Accounting 5, no. 1 (December 31, 2023): 457–75. http://dx.doi.org/10.31539/budgeting.v5i1.7615.
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Many cases are caused by the auditor's lack of ability to detect fraud in financial reports, resulting in losses that have a negative impact on various parties involved in the company. With this case, it is feared that users of financial information will doubt the information presented in audited reports and this could lead to a crisis of confidence and loss of credibility for the public accounting profession in processing and presenting financial information. This research was conducted to determine the influence of independence, organizational commitment and transformational leadership style on the performance of auditors in Public Accounting Firms throughout Bali Province. The theoretical basis in this research is the theory of attitudes and behavior. The sample in this study was 62 auditors at 10 public accounting firms in Bali Province. In this research, data collection was carried out by distributing questionnaires to 10 Public Accounting Firms in Bali Province and given to 64 Auditors. The sample used in this research was the purposive sampling method. The data analysis method used is multiple linear regression analysis. This research supports the theory of attitudes and behavior. This research is closely related to attitude and behavior theory which can explain how independence, organizational commitment and transformational leadership style influence auditor performance. Research shows that independence, organizational commitment and transformational leadership style have a positive effect on auditor performance. If the auditor's independence, organizational commitment and transformational leadership style are higher, the auditor's performance will be better.
Keywords: Auditor Performanc, Independence, Organizational Commitment, Transformational Leadership Style, Public Accountant
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Asti Nasution, Shabrina Tri, Idhar Yahya, Prihatin Lumbanraja, and Erwin Abubakar. "ASSESSING THE AUDITOR'S WORKLOAD THROUGH PROFESSIONAL SKEPTICISM." Proceedings of International Conference on Finance Economics and Business (ICOFEB) 1 (December 30, 2023): 0014. http://dx.doi.org/10.29103/icofeb.v1i-.459.
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Preparing financial reports is not just information to convey the condition of the Company in carrying out each activity, but also assesses the auditor's success in conveying honestly and responsibly the condition of the Company. However, sometimes this is not entirely the case, because auditors face many limitations, one of the studies is the auditor's workload, the increasing auditor's workload results in negative emotions felt by the auditor. This research aims to examine the auditor's workload through the auditor's professional skepticism. The population used was 102 auditors who work at the representative financial audit agency of North Sumatra province. The sampling technique was purposive sampling to meet the researcher's needs, so the sample was 20. The data collection technique used a Likert scale questionnaire with a total of 6 statements and the data analysis technique used was factor analysis with the variable number of auditor employees (P1); Audit findings reported by the auditor (P2); excessive working hours (P3); dysfunctional auditor behavior (P4); Excessive work demands (P5) and the auditor's ability to find fraud decreased (P6) which were analyzed using Factor Analysis (KMO) via SPSS IBM 27 for Windows. The results obtained show that 3 factors result in the auditor's workload influencing professional skepticism, including (a) Behavioral workload which includes audit findings reported by the auditor; excessive working hours and dysfunctional auditor behavior; (b) Workload for completing an audit which includes excessive work demands and (c) Limited Auditor Workload including the number of auditors employees and the auditor's ability to find fraud decreased. Thus, it can be concluded that the quality of the report is also determined by the auditor's workload in conveying the truth and criticizing findings in accordance with the reporting framework and financial reporting standards.
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Triandi, Triandi, Arief Fahmi, and Nindha Hafidza Putri. "Analisis Kemampuan Profesional Dan Independensi Auditor Internal Terhadap Kualitas Laporan Audit Pada PDAM Tirta Pakuan Kota Bogor." Jurnal Ilmiah Akuntansi Kesatuan 3, no. 2 (August 1, 2015): 130–37. http://dx.doi.org/10.37641/jiakes.v3i2.855.
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This study aims to determine the professional ability, the intemal auditor independence and audit quality reports as well as to analyze the influence of professional ability and independence of intemal auditors on the quality of the audit report. The research method used was a qualitative and quantitative methods. To answer the research hypotheses using multiple regression analysis, after previous classical assumption testing program with the help of SPSS 22. The results showed that the overall professional capabilities included in both criteria, but on indicators in implementing the tasks are constrained by the management as well as biowledge ofengagementfindings of irregularities still in suficient criteria. Internal auditor independence variables included in both categories. While the variable quality of the audit repon is included in the excellent category. In testing normality obtained Asymp value. Sig of 0.200, interpret test data has a nonnal distribution. In testing multicollinearity tolerance value obtained at X1 and X2 at 0.321, X1 and X2 VIF value of3.115, indicating that there is no multicollinearity in the data. In heteroscedasticity test indicates heteroscedasticity does not occur because of the graph dots spread randomly. By hypothesis testing using multiple linear regression analysis showed the regression coeficientsfor the variables X1 of 0.460 and 0.553 for X2 variables, showed that every capability professional intemal auditors (X1) of one unit will lead to increased quality of audit reports (Y) equal to 0.460 and any independence internal auditors (X2) of one unit will lead to increased quality of audit reports (Y) equal to 0.553. To the value of the correlation coeficient (R) obtained a value of 0.966, indicating that there is a strong relationship between the ability of professional internal auditor, internal auditor independence and audit quality reports. Simultaneously (together), the internal auditor's professional ability and independence of intemal auditors have a significant effect on the quality ofthe audit report.
Keywords: Professional ability, Independence, and Quality Audit Report.
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Kaplan, Steven E., and David D. Williams. "Do Going Concern Audit Reports Protect Auditors from Litigation? A Simultaneous Equations Approach." Accounting Review 88, no. 1 (August 1, 2012): 199–232. http://dx.doi.org/10.2308/accr-50279.
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ABSTRACT: Audit researchers have a long-standing interest in understanding whether issuing a going concern report to financially stressed clients protects auditors from litigation. An endogeneity issue arises, in that litigation risk affects the going concern decision and the going concern decision impacts auditor litigation risk. Using a simultaneous equations approach, we find a significant positive association between auditors' ex ante litigation risk and going concern reporting. By applying simultaneous equations, we also find a significant negative association between going concern reporting and auditor litigation, suggesting that auditors deter lawsuits by issuing going concern reports to their financially stressed clients. Our research further provides a more rigorous analysis of the relation between going concern reporting and lawsuit outcomes in the form of auditor litigation dismissals, small settlement amounts, and large settlement amounts. Our results indicate that when auditors are named in lawsuits, having issued a going concern report reduces the likelihood of large financial settlements. Data Availability: The data used in this study are publicly available through sources identified in the study.
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Jubarah, Sufyan Salameh. "External Auditor Role in Auditing the Extent of Jordanian Industrial Public Shareholding Companies Compliance in Disclosing about Sustainability Reports Dimensions." International Journal of Economics and Finance 10, no. 6 (May 30, 2018): 193. http://dx.doi.org/10.5539/ijef.v10n6p193.
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This study aimed to determine the role of the external auditor in auditing the extent of compliance of Jordanian industrial public shareholding companies in disclosing the dimensions of the sustainability reports. To achieve this study goal, the researcher used the t-test for binary comparisons in hypothesis testing. This study population consisted audit offices operate in Jordan, which amount is 82 registered and practicing offices in which 400 registered and practicing auditors work. The study sample was selected randomly from the external auditors in these offices and it consisted of 200 respondents. The study reached to there is a role for the external auditor in auditing the extent of compliance of Jordanian industrial public shareholding companies in disclosing the environmental, economic, and social dimensions. However, the level of this role in disclosing of social dimension was high. The study recommended that the external auditors should verify that companies are committed to publish information about extent of including of the environment in their vision or mission or objectives. The study also recommends confirmation of the auditor's obligation to ensure commitment of the companies in stating the environmental effects when taking investment decisions.
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Geiger, Marshall A., and K. Raghunandan. "Bankruptcies, Audit Reports, and the Reform Act." AUDITING: A Journal of Practice & Theory 20, no. 1 (March 1, 2001): 187–95. http://dx.doi.org/10.2308/aud.2001.20.1.187.
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The Private Securities Litigation Reform Act (Reform Act) was enacted as law in 1995 and represents a major victory for the public accounting profession. Since audit reporting for publicly traded companies that enter bankruptcy continues to be of interest to legislators and the public, the Reform Act also includes audit reporting requirements regarding the auditor's assessments of a company's ability to continue as a going concern. This study examines the potential impact of the Reform Act on auditor reporting by examining audit reports for 383 bankrupt companies during the 1991–1998 period. The results indicate that, after controlling for financial stress, company size, default status, audit reporting lag and bankruptcy filing lag, auditors were less likely to have issued prior going-concern modified audit reports for bankrupt companies after the Reform Act.
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Ettredge, Michael, James Heintz, Chan Li, and Susan Scholz. "Auditor Realignments Accompanying Implementation of SOX 404 ICFR Reporting Requirements." Accounting Horizons 25, no. 1 (March 1, 2011): 17–39. http://dx.doi.org/10.2308/acch.2011.25.1.17.
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ABSTRACT: We examine the impact of adverse auditors’ opinions on clients’ internal control over financial reporting (ICFR), issued under SOX Section 404, on auditor dismissals. Companies receiving adverse ICFR opinions are more likely to subsequently dismiss their auditors. This association between adverse reports and dismissals persists over a four-year period beginning with the initial year of SOX 404 reporting. Our evidence also suggests that these dismissals tend to be part of clients’ efforts to improve their overall financial reporting. Clients receiving adverse reports are more likely to switch to higher-quality auditors, as proxied by Big 4 membership and two measures of industry specialization, than are clients receiving favorable reports. Further, adverse opinion clients that dismiss auditors and then hire new auditors that specialize in the client’s industry are more likely to receive an improved ICFR report in the next year.
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Carcello, Joseph V., and Terry L. Neal. "Audit Committee Characteristics and Auditor Dismissals following “New” Going-Concern Reports." Accounting Review 78, no. 1 (January 1, 2003): 95–117. http://dx.doi.org/10.2308/accr.2003.78.1.95.
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One important role of audit committees is to protect external auditors from dismissal following the issuance of an unfavorable report. We examine auditor dismissals following new going-concern reports that Big 6 firms issued between 1988 and 1999. Our findings suggest that audit committees with greater independence, greater governance expertise, and lower stockholdings are more effective in shielding auditors from dismissal after the issuance of new going-concern reports. In addition, we find that the relation between audit committee independence and auditor protection from dismissal has grown stronger over time. Finally, independent audit committee members experience a significant increase in turnover rate after auditor dismissals. These findings, coupled with those from Carcello and Neal (2000), suggest that when affiliated directors dominate the audit committee, management often can (1) pressure its auditor to issue an unmodified report despite going-concern issues, and (2) dismiss its auditor if the auditor refuses to issue an unmodified report.
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Havasi, Rodabeh, and Roya Darabi. "The Effect of Auditor’s Industry Specialization on the Quality of Financial Reporting of the Listed Companies in Tehran Stock Exchange." Asian Social Science 12, no. 8 (July 7, 2016): 92. http://dx.doi.org/10.5539/ass.v12n8p92.
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<p>This study examines the effect of auditor’s industry specialization on quality of financial reporting of the listed companies in Tehran Stock Exchange during the period of 7 years from 2008 to 2014. It is expected that industry specialist auditors will show more competence and auditing quality in discovering opportunistic behavior in executives and most probably they will report financial statements to maintain their reputation; in other words, it is expected that auditors specialized in industry will have an effective role in corporate governance and improving the quality of financial reporting. In this research, the accurate of predicting future cash flows operations through components of the operation profit was served as a measure for the quality of financial reporting and patters of the market share based on the total audited properties of the company and total auditor income was used as auditor expertise characteristics in that audited unit's industry were used. A total number of 119 companies were selected as samples and using logit regression model, the results were analyzed. The findings suggest that auditor's expertise in the industry, has a direct impact on the quality of corporate financial reporting. In this regard, testing the research's hypotheses showed that the auditor expertise in the industry (on the basis of market share pattern based on auditor's total revenue) has no significant effect on the quality of financial reporting. However, if the auditor expertise in the industry (on the basis of market share pattern based on the sum of the audited assets) was to be measured, it will leave a significant effect on the quality of financial reports. Therefore, it is concluded that the factor of the auditor's expertise in the industry is sensitive in relation with the type of indices used to assess it. </p>
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Abdulahad, Alaa Fareed. "The ability to reduce the expectation gap between financial reporting users and auditors: an analytical study of audit offices in Iraq." Economic Annals-ХХI 188, no. 3-4 (May 10, 2021): 174–81. http://dx.doi.org/10.21003/ea.v188-20.
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As a result of the exposure of the audit profession to many criticisms directed by the financial community and users of financial reports, by failing to provide the desired services, resulting in a gap of expectation between the financial community and users of financial reports and auditors, the profession had to take into account the requirements of the financial community and users of financial reports to reduce the expectation gap between the financial community and users of financial reports and auditors. From this point, the study is based on examining the gap between the financial community and users of financial reports and auditors, as well as on ways to reduce this gap by an analytical study of the opinions of both auditors working in audit offices operating in Iraq and a number of users of financial reports employed in joint stock companies. In order to achieve these objectives, a survey was conducted in 2020, under which 140 questionnaires were distributed. One of the most important findings of the research is that a major reason for the gap of expectations in the audit profession from the point of view of users of financial reports is the underperformance of the auditor’s responsibilities, and the lack of auditing standards is a major reason for the gap of expectations in the audit profession from the point of view of auditors.
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Vanstraelen, Ann. "Going-Concern Opinions, Auditor Switching, and the Self-Fulfilling Prophecy Effect Examined in the Regulatory Context of Belgium." Journal of Accounting, Auditing & Finance 18, no. 2 (April 2003): 231–54. http://dx.doi.org/10.1177/0148558x0301800204.
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Previous studies have demonstrated that auditors are reluctant to issue going-concern opinions. Some suggest this reluctance is strategic and stems from the auditor's desire to avoid loss of clients or reputation. This paper investigates the threat of loss resulting from auditor switching and client bankruptcy in the regulatory context of Belgium. Belgium requires companies to engage an audit firm for a three-year period. Consequently, the client's threat of switching auditors is potentially more credible in the third year than in the first two years. The empirical results support the hypothesis that going-concern opinions significantly increase the probability of bankruptcy. Thus, going-concern reports remain relevant even in a country where debt financing is dominant. In addition, clients are four times more likely to switch auditors at the end of the mandatory term if they receive a going-concern opinion in the final year of the term relative to the previous two years. This strongly suggests that mandatory terms influence the association between going-concern opinions and auditor switching.
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Mnif, Dr Yosra, and Abdul Star Abdul Jabar Salamn. "The role of joint auditing to improving the quality of the electronic auditor's report in Iraqi banks." INTERNATIONAL JOURNAL OF RESEARCH IN SOCIAL SCIENCES & HUMANITIES 12, no. 03 (2022): 327–47. http://dx.doi.org/10.37648/ijrssh.v12i03.020.
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This study aims to demonstrate the impact of joint auditing on improving the quality of the electronic auditor's report in Iraqi banks, by examining whether the banks that have been audited by independent auditors are of high quality in the electronic audit report from the banks that are audited by a single auditor. In addition, to test the hypotheses, the study used a sample of 10 Iraqi banks during the period from 2015 to 2020. The results of multiple regression analyzes show that the companies that were audited by joint auditors are of high quality in the electronic audit report from the banks that were audited by individual auditors. . However, the results showed that electronic audit reports are more appropriate in banks that use joint audit, and the results also showed that the electronic audit report is more understandable and has an honest representation in banks that use joint audit.
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Saleh, Hameed Ali, Ali Razzaq Ali, Abbas Naser Saadoon Almshabbak, Hussein Kadhim Sharaf, Hussein Falah Hasan, and Ali Saad Alwan. "The impact of auditor-client range on audit quality and timely auditor report." Corporate and Business Strategy Review 5, no. 1, special Issue (2024): 329–35. http://dx.doi.org/10.22495/cbsrv5i1siart7.
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This study delves into the dynamic relationship between auditor-client proximity and its effect on audit quality and the punctuality of auditor reports within companies trading on the Tehran Stock Exchange (TSE). A comprehensive analysis was conducted on a sample of 108 businesses, spanning the years 2013 to 2019. Employing an innovative methodology, our findings reveal that the geographical distance between auditors and clients fails to exhibit statistically significant correlations with audit quality (Almagsoosi et al., 2022). Instead, our research emphasizes the crucial role of proximity in fostering productive conversations between auditors and clients, leading to more punctual audit reports. Notably, this study pioneers the investigation of the spatial interval between auditors and clients, marking a significant contribution to the field. By elucidating the implications of engaging nonlocal auditors, our research not only contributes to innovation but also introduces novel insights into the realm of audit quality and timely reporting practices, expanding the horizons of auditing research
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Hurley, Patrick J., and Brian W. Mayhew. "Market Reactions to a High-Quality Auditor and Managerial Preference for Audit Quality." AUDITING: A Journal of Practice & Theory 38, no. 4 (July 1, 2019): 131–49. http://dx.doi.org/10.2308/ajpt-52478.
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SUMMARY We insert an automated high-quality (HQ) auditor into established experimental audit markets to test the impact of high-quality competition on other auditors' supply of and managers' demand for audit quality. Theory predicts that managers will demand high levels of audit quality to avoid investors' price-protecting behavior. This demand should result in the HQ auditor dominating the market and increase other auditors' audit quality provision to compete with the HQ auditor. However, we find that the HQ auditor does not dominate the market—despite holding audit costs constant and investors placing a premium on HQ auditor reports. We also find that adding an HQ auditor results in other auditors lowering audit quality. Additional analyses indicate some managers demand lower audit quality to avoid negative audit reports, consistent with loss aversion as a potential explanation. Our findings indicate a need to develop a more comprehensive theory of the demand for auditing. Data Availability: The laboratory market data used in this study are available from the authors upon request.
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Hancu-Budui, Andreea, and Ana Zorio-Grima. "New Public Governance and Public Value Co-creation: The Case of the European Court of Auditors Environmental Audits." Revista de Contabilidad 27, no. 2 (July 1, 2024): 275–87. http://dx.doi.org/10.6018/rcsar.519241.
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This article seeks to bring evidence on public value co-creation between public auditors and auditees, with a focus on the environment, as a matter of pressing interest for the citizens. We analyse data from performance audit reports issued by the European Court of Auditors: the tonality of audit conclusions and the corresponding auditees’ replies and the degree of acceptance and implementation of audit recommendations by the auditees. The analysis is performed using the theoretical perspectives of institutional logics and public value co-creation. We use qualitative and quantitative methods, including sentiment analysis and bivariate analysis. We find evidence that the EU public auditors increased their focus on environmental issues, following an increasingly trending institutional logic of focusing on non-financial topics of public interest. However, the tonality of environment-related audit conclusions and the auditees’ replies does not differ from the non-environment-related ones. We also demonstrate that public auditors co-created public value together with the auditees through a significantly higher acceptance of their recommendations in environmental than in non-environmental audits. The article contributes to the existing literature by using data from a supranational supreme audit institution and by applying an innovative research methodology in the audit field (sentiment analysis). It also offers practitioners valuable insights on performance audit’s evolution and impact. Although the data is limited to one supreme audit institution, this research can open future research avenues to perform comparative analysis with other supreme audit institutions or extend the research scope to content analysis of the substance of audit findings. Este artículo busca aportar evidencias sobre la co-creación de valor público entre los auditores públicos y los entes auditados, poniendo el foco en el medio ambiente como un asunto de interés apremiante para la ciudadanía. Analizamos los datos de los informes de auditoría de gestión emitidos por el Tribunal de Cuentas Europeo: el tono de las conclusiones de auditoría y las correspondientes respuestas de los auditados y el grado de aceptación e implementación de las recomendaciones de auditoría por parte de los auditados. El análisis se realiza desde las perspectivas teóricas de las lógicas institucionales y la co-creación de valor público. Utilizamos métodos cualitativos y cuantitativos, incluido el análisis de sentimiento y el análisis bivariado. Encontramos evidencia de que los auditores públicos de la UE incrementaron su enfoque en temas medioambientales, emitiendo un número cada vez mayor de informes relacionados con el medioambiente, siguiendo una lógica institucional actual de la nueva gobernanza pública de enfocarse en temas no financieros de interés público. No obstante, la tonalidad de los informes de auditoría, las conclusiones y las respuestas de los auditados en auditorias medioambientales no difieren del resto. También demostramos que los auditores públicos cocrearon valor público junto con los auditados a través de una aceptación significativamente mayor de sus recomendaciones en las auditorías ambientales si la comparamos con la aceptación en las no ambientales. El artículo contribuye a la literatura existente utilizando datos de una institución de auditoria supranacional y aplicando una metodología de investigación innovadora en el campo de la auditoría (análisis de sentimiento). También ofrece a los profesionales información valiosa sobre la evolución y el impacto de la auditoría de gestión en el sector público. Aunque los datos se limitan a una única institución auditora, este artículo puede abrir vías de investigación futuras para realizar análisis comparativos con otros tribunales de cuentas o ampliar el alcance de la investigación al análisis de contenido de las conclusiones de auditoría y de las respuestas de los auditados.
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Gray, Glen L., Jerry L. Turner, Paul J. Coram, and Theodore J. Mock. "Perceptions and Misperceptions Regarding the Unqualified Auditor's Report by Financial Statement Preparers, Users, and Auditors." Accounting Horizons 25, no. 4 (December 1, 2011): 659–84. http://dx.doi.org/10.2308/acch-50060.
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SYNOPSIS U.S. and international auditing standard setters continue to raise questions about standard auditors' reports and are exploring alternatives to those reports. Government agencies and professional organizations are also raising questions about the auditor's report. These questions point to a continued existence of an “audit expectation gap.” To investigate perceptions and misperceptions regarding the auditor's report, we conducted focus groups with five different stakeholder groups—financial statement preparers (CFOs), users (bankers, analysts, and non-professional investors), and external auditors. This approach allows detailed comparisons between the perceptions of the different stakeholder groups affected by the auditor's report. Findings include that financial statement users value the audit, but do not read the entire auditor's report. It is not clear to users, preparers, and auditors what the auditor's report is intended to communicate or the level of assurance being provided by the report. Stakeholders offered numerous suggestions to improve the auditor's report, but they also recognize those suggestions could significantly change the auditor's risk profile and increase audit fees. We suggest future research to determine if potential changes to the auditor's report would change users' behavior and if any resulting benefits outweigh the additional risks and costs.
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Crucean, Andreea Claudia. "THE INFORMATION CONTENT OF AUDIT OPINION FOR USERS OF FINANCIAL STATEMENTS." Oradea Journal of Business and Economics 4, no. 2 (September 2019): 91–101. http://dx.doi.org/10.47535/1991ojbe081.
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In a market economy with frequent changes, audit is an area that can provide some stability at the economic and social lever, even if the economic and financial crises have questioned the audit work and led to a decrease in the trust of the intended users in the auditors work, leading to a distortion of the primary purpose of the financial audit. The article presents the relevant aspects of the evolution of audit reporting, especially on the underlying issues that expressing qualified opinions or disclaimer of opinion. The content of paper includes a review literature, national and international, and a case study that identified and analyzed the qualified opinions expressed in the auditor’s independent reports, after analysis the financial statements of companies listed on the Bucharest Stock Exchange for the period 2015, 2016 and 2017. The entities were grouped on 9 sectors of activity and researched for each industry if the auditors expressed an unqualified opinion or a modified opinion and if the auditor is part of a Big4 company or belongs to another auditor category. The reasons behind the modified opinions were analyzed and grouped according to the frequency of their appearance in the audit reports. The most important conclusion of the case study was that in all cases, the reasons that led to express modified opinions, was detailed in the auditor’s report, this being considered as a reference guide for the future auditor’s missions, as well as, a recommendation for improving the highlighted aspects.
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Soepriyanto, Gatot, Meiryani Meiryani, Aretha Amelia, and Jajat Sudrajat. "The effect of workload and burnout on auditor performance during the COVID-19 pandemic." Journal of Governance and Regulation 12, no. 1 (2023): 8–21. http://dx.doi.org/10.22495/jgrv12i1art1.
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The COVID-19 pandemic has put an auditor under pressure to help clients with financial reports. The objective of this research is to investigate the effect of workload and burnout on auditor performance during the COVID-19 pandemic of external auditors in Jakarta. This research employs a quantitative method with a convenience sampling approach. The sample of this study was 101 respondents from 34 public accounting firms in the Jakarta Capital Special Region that were active and registered on the website database of the Financial Services Authority (OJK). The results showed that workload had a positive effect on auditor performance while burnout has a negative effect on auditor performance. This shows that the high workload tends to affect the auditor’s motivation to improve the auditor’s performance and the high burnout tends to affect the auditor’s performance decline.
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Hendrian, Hendrian, Rini Dwiyani Hadiwidjaja, and Eko Suwardi. "Antecedent Factors on an Auditors' Attitude Towards Conducting an Intended Qualified Audit." Journal of Finance and Banking Review Vol. 2 (4) Oct-Dec 2017 2, no. 4 (December 21, 2017): 08–21. http://dx.doi.org/10.35609/jfbr.2017.2.4(2).
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Objective - This study proposes to investigate an auditor's works by usingthe model on the Theory of Reasoned Action (TRA), with the inducement of intervention by a supervisor, that influences an auditor's aattitudes. The study uses the TRA proposed by Fishben and Ajzen (1975) to predict and explain the behaviors of Indonesian auditors. The results reveal those factors influencing an auditor's intention to provide qualified and reliable audit reports. Methodology/Technique - The study focuses on audit implementation in the public sector, specifically the auditing of financial statements in regional administrations. The study examined a total of 53 governmental auditors from the Audit Board of the Indonesian Republic (BPK-RI). A Structural Equation Model (SEM) was used for the analysis. Findings - The results of the study show that perceived audit risk, moral norms, and incentives have a positive and statistically significant impact on an auditor's attitude when performing an audit. Meanwhile, intervention by a supervisor has a negative impact, and is not statistically significant towards the auditor's attitude and behavior. This means that the auditor's attitude and behavior implies that there is no intervention from their supervisor when performing an audit. Furthermore, an auditor's attitude influences their intention to perform qualified and credible audits. Novelty - This study infers that The Indonesian Republic Decree No. 188 of the Year 2014 regarding Personel Performance Benefit in the Audit Boards of Indonesia Republic (BPK-RI) is achieving its intended purpose. Type of Paper - Empirical Keywords: Auditor; Attitude; Risk Perception; Audit Reports. JEL Classification: M40, M42.
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Saluy, Amad Badawi, Novawiguna Kemalsari, Unang Toto Handiman, Peby Arwiya, Ahmad Faridi, Bustanul Arifin Caya, and Haliansyah Machmud. "Human Resources Perspective: Audit Fee, Internal Control, and Audit Materiality Affect Auditor Switching." WSEAS TRANSACTIONS ON BUSINESS AND ECONOMICS 21 (October 24, 2023): 21–34. http://dx.doi.org/10.37394/23207.2024.21.3.
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Auditor switching is a topic that has garnered significant attention from researchers in the field of accounting and auditing. Auditor Switching has important implications for audit quality and auditor independence. Auditor switching is often considered a strategy or approach used by companies to promote transparency, independence, and accountability in financial reports. Hence, this study aims to analyze factors that influence auditor switching such as audit fees, internal controls, and audit materiality. 175 in-person surveys were conducted with public accounting firm auditors from Jakarta Region, Indonesia. The study revealed that auditors related to auditor switching and indicated that audit fees, internal control, and audit materiality have a significant influence on auditors switching. Auditor switching seen from the perspective of human resources has a significant impact on the human resources of public accounting firms. The ability of public accounting firms to recruit and retain talented professionals, and public accounting firms need to attract and retain skilled auditors to provide quality services to their clients. Public accounting firms invest significant resources in training and developing their auditors to ensure they possess the necessary knowledge and skills.
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Jaber, Sattar, and Samah Hussein. "دور فحص التقارير المتكاملة للاستدامة في جودة عمل مراقب الحسابات." Al Kut Journal of Economics and Administrative Sciences 16, no. 50 (March 15, 2024): 1–19. http://dx.doi.org/10.29124/kjeas.1650.01.
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The research aims to know the impact of examining integrated sustainability reports in improving and raising the quality of the auditor’s work and giving correct and highly confident decisions for use by stakeholders. To achieve this goal, work was done to prepare a questionnaire consisting of two axes: examining integrated sustainability reports and the quality of the auditor’s work, which consists of The research community consisted of a group of auditors in Iraq, and the effect of integrating variables on the performance of the auditor’s work was demonstrated through the researcher’s use of the program. Statistician (SPSS) in analyzing the questionnaire. The researcher also used statistical tests and testing hypotheses and reached the most important conclusions. Examining the integrated reports for sustainability ensures the workflow of the auditor with high quality, while emphasizing that all efforts made are working to achieve the goals planned by the management of the economic units and preparing the reports. Integrated sustainability is more developed because it integrated financial and non-financial information together and focused on economic, environmental, social and governance issues. This is reflected in the quality of the auditors’ work. And how to link it with the economic unit’s strategy to enable stakeholders to know the extent of the economic unit’s ability to create value and maintain it in the long, medium and short term. Among the most important recommendations is that it is necessary to direct the management of the economic units to integrate the dimensions of sustainability (economic, environmental, social and governance) with their strategy when developing policies, systems and plans. Programs and their performance to help achieve the set goals
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Hutagaol, Kartini. "PENGARUH PROFESIONAL AUDITOR TERHADAP KUALITAS AUDITOR." Jurakunman (Jurnal Akuntansi dan Manajemen) 16, no. 1 (February 6, 2023): 76. http://dx.doi.org/10.48042/jurakunman.v16i1.180.
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This study aims to see how the influence of professional auditors on the quality of auditors. Reports that can be trusted with good audit quality reduce fears of manipulation in the financial statements presented a company and can increase public confidence in the reliability of reports financial statements that have been audited by a public accountant. Findings in research that the professionalism of the auditor agrees to be implemented. This can be seen from the acquisition % auditor professionalism score of 72.40%. Furthermore, the findings about quality audit that the overall quality of the audit agrees to be carried out. Then that quality can build the credibility of information and quality of financial reporting information can help users to get useful information., this can be seen from the acquisition of % audit quality score of 75.11%. To see professional influence auditor on auditor quality is calculated using the SPSS program, with a value correlation coefficient of 0.538, this means that there is a relationship between auditor professionalism on audit quality. Correlation coefficient of 0.538 are in the medium category (0.40 - 0.5999). Next, the sig. = 0.02 less than 0.05 this shows that there is a significant relationship between auditor professionalism on audit quality. From the correlation table it is found that the value of p. value of 0.000 is below 0.05 this shows that even though the correlation coefficient is 0.538gives a moderate effect but based on statistical tests that there is a significant effect significant of the auditor's professionalism variable on audit quality Keywords : Professional Auditor, Quality Auditor
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Li, Liuchuang, Baolei Qi, Gaoliang Tian, and Guochang Zhang. "The Contagion Effect of Low-Quality Audits at the Level of Individual Auditors." Accounting Review 92, no. 1 (February 1, 2016): 137–63. http://dx.doi.org/10.2308/accr-51407.
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ABSTRACT This study examines the relation between the audit failures of individual auditors and the quality of other audits performed by these same auditors. Employing a Chinese setting where audit reports reveal the identities of engagement auditors, we find that auditors who have performed failed audits also deliver lower-quality audits on other audit engagements, with this “contagion” effect spreading both over time and to other audits performed by these same auditors in the same year. However, we find little evidence that an audit failure also casts doubt on the quality of audits performed by “non-failed” auditors who are same-office colleagues of a “failed” auditor. We further discover that the contagion effect is attenuated for female auditors, auditors holding a master's degree, and auditors with more auditing experience. Our results underscore the usefulness of disclosing the identity and personal characteristics of individual auditors to investors and regulators.
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Ameen, Iman Baqer, and Asaad Mohammed Ali Wahhab. "The Influence of the External Auditor's Critical Thinking Skills on the Report's Quality." Technium Social Sciences Journal 53 (January 9, 2024): 280–98. http://dx.doi.org/10.47577/tssj.v53i1.10383.
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The main aim of this study was to determine a relationship between the critical thinking skills of auditors and the caliber of their reports. The objective was to improve the auditors' expertise in this cognitive field, evaluate its effect on their professional competence, and analyze its influence on their capacity to express opinions. A descriptive-analytical technique was utilized to accomplish the study's goals. The research hypotheses were evaluated using simple linear regression analysis, precisely the least squares method. This goal was achieved using the SPSS v.26 program. To meet the research inquiries, the researchers developed a questionnaire with two dimensions to collect data. The core framework for the analytical thinking of an external auditor comprises four key aspects: inductive reasoning, deductive reasoning, exploratory thinking, and problem-solving thinking. The study sample comprised 205 individuals, including 113 auditors from the Federal Board of Financial Supervision and 92 auditors from auditing offices and enterprises in Iraq. The study's findings suggest a positive association between the independent variable, critical thinking skill, and the dependent variable, the quality of the report. This is because most auditors in the Board of Financial Supervision affirm that auditors from the federal and audit offices demonstrate curiosity and apply professional skepticism at every stage of the audit process. This exemplifies their aptitude for employing inductive reasoning and constructing. Nevertheless, they can produce inventive concepts that efficiently tackle work-related difficulties. Furthermore, the task of identifying appropriate solutions is complex, often necessitating the use of electronic programs to tackle challenges faced during the auditing of electronic systems effectively. The respondents agreed that the auditor's proficiency in critical thinking will improve the quality of the report he produces.
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Pusparani, Ni Ketut Ayu Mirah, and I. Dewa Nyoman Wiratmaja. "Pengaruh Kompetensi dan Independensi Auditor pada Kualitas Audit." E-Jurnal Akuntansi 30, no. 3 (March 14, 2020): 725. http://dx.doi.org/10.24843/eja.2020.v30.i03.p14.
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Public accountants are professionally accountable to the public for the quality of their audit reports. In carrying out its duties an auditor must have the skills and experience by considering quality and quantity. The purpose of conducting research on the relationship of competence and independence in audit quality is to obtain empirical evidence of the relationship between the two. The population in this study was 82 auditors. The saturated sample technique is a technique used to determine the sample and 52 auditors who are part of the 13 KAPs registered at IAPI and made respondents in this study. Multiple linear regression analysis was chosen to analyze the data. The results prove that good auditor competence and good independence will improve the quality of audit reports produced by an auditor.
Keywords: Competency; Independence; Audit Quality.
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Pratoomsuwan, Thanyawee, and Orapan Yolrabil. "Key audit matter and auditor liability: evidence from auditor evaluators in Thailand." Journal of Applied Accounting Research 21, no. 4 (June 30, 2020): 741–62. http://dx.doi.org/10.1108/jaar-10-2019-0147.
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PurposeThis study examines the effects of key audit matter (KAM) disclosures in auditors' reports on auditor liability in cases of fraud and error misstatements using evaluators with audit experience.Design/methodology/approachThe experiment is conducted using 174 professional auditors as participants.FindingsThe participating auditors assess higher auditor liability when misstatements are related to errors rather than when they are related to fraud. In addition, the results also demonstrate that KAM disclosures reduce auditor liability only in cases of fraud and not in cases of errors. Together, the results support the view that KAM reduces the negative affective reactions of evaluators, which in turn, reduce the assessed auditor liability.Research limitations/implicationsThis study did not analyze the setting in which auditors who act as peer evaluators had an opportunity to discuss the case among their peers, which may have affected their judgments.Practical implicationsThe results of KAM disclosures on auditor liability in cases of error and fraud misstatements inform auditors that, different from the auditors' concern that disclosing KAM may increase auditors' legal risk, it tends to decrease or at least have no impact on the liability judgment.Originality/valueThis study contributes to the accounting literature by adding findings on another aspect of KAM in different audit settings, particularly, in the Thai legal environment with different types of undetected misstatements. The current conflicting results on how KAM disclosures affect auditor liability warrant further investigation of this issue in other audit contexts in different countries.
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Carlé, Tobias, Nicolas Pappert, and Reiner Quick. "Text similarity, boilerplates and their determinants in key audit matters disclosure." Corporate Ownership and Control 20, no. 2 (2023): 49–62. http://dx.doi.org/10.22495/cocv20i2art4.
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Like the European Commission, many regulators and standard setters worldwide have substantially revised the requirements for auditor’s reports on statutory audits of public interest entities. Their objective was to improve the report’s information content and, hence, the transparency of the audit. A significant change was the introduction of a key audit matters (KAM) disclosure which increased the scope, meaningfulness, and individuality of auditor’s reports. However, critics fear that auditors could use similar or standard formulations (i.e., boilerplate reporting) and not really increase the information value of the auditor’s report. Therefore, this study investigates text similarities in KAM disclosure practice in the auditor’s reports of German HDAX companies between 2017 and 2019. The results suggest that auditors often use similar formulations when disclosing a KAM on the same issue at the client level in consecutive years. We further find that the similarity rate is significantly negatively correlated to an audit firm change, and positively correlated to client firms that have a stable financial position measured by a high portion of equity
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Hegazy, Mohamed Abdel Aziz, and Samar Salama. "Effects of qualitative factors and auditors’ personal characteristics on materiality judgments." Managerial Auditing Journal 37, no. 3 (February 1, 2022): 305–35. http://dx.doi.org/10.1108/maj-08-2019-2379.
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Purpose The purpose of this paper is to investigate the effect of qualitative materiality factors on auditors’ assessment of materiality and the determination of the type of the auditors’ reports. This paper also analyzes whether differences in personal characteristics of auditors can influence their use of qualitative materiality factors in assessing material misstatements. Design/methodology/approach A questionnaire and experimental case studies were undertaken to determine whether differences in personal characteristics of auditors can influence their degree of reliance on qualitative factors in assessing the materiality of detected misstatements. Descriptive and statistical tests were used to analyze the data collected. Findings The results of this paper show that qualitative materiality factors strongly influence the auditor’s materiality judgments. However, no significant differences were found regarding the effects of auditors’ personal characteristics on the degree to which they rely on the qualitative factors in their materiality judgments. Also, in certain situations, auditors considered factors other than the income for assessing certain misstatements as material and consequently modified their audit reports. Originality/value This paper examines the influence of qualitative factors on auditors’ materiality judgments and develops a list of qualitative factors to be considered by auditors when assessing materiality. It also concludes that the nature of misstatement is the least important qualitative factor considered by auditors when assessing materiality of detected misstatements and that the existence of more explicit or standardized qualitative materiality guidelines would lead to a more uniform judgment among auditors.
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Ria, Ria. "Remote Audit Compared to Onsite Audit and the Capabilities Required in the View of Internal Auditor Practices." Al Qalam: Jurnal Ilmiah Keagamaan dan Kemasyarakatan 17, no. 2 (March 15, 2023): 255. http://dx.doi.org/10.35931/aq.v17i2.1980.
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<em>The COVID-19 pandemic has made the business model change even faster. One of the things that must be adjusted is the organization that is engaged in auditing, especially internal audit. If in the past, the audit process was carried out with on-site visits, now it can be done with a new process called remotes audits. therefore, this requires new competence in conducting audits, especially how to conduct remote audits, but can still produce audit reports of the same quality as the previous reports. In practice, there are some similarities and differences in conducting remote audits compared to onsite audits. This paper will discuss the internal auditor's views regarding the similarities and differences between the remote audits and onsite audits processes from the view of auditors practitioners and what capabilities the auditor needs to deepen so that the remote audits process can run well. this study uses an explorative descriptive method involving 20 internal auditors as respondents, who were asked for their opinion in October 2022. The results of the study indicates that there is no difference in the planning process and reporting process. The only difference is in fieldwork, where remote auditing is technically more difficult. In addition, auditors are expected to deepen their knowledge in the field of digital and communication technology.</em>
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Elliott, John A., Aloke Ghosh, and Elisabeth Peltier. "Pricing of Risky Initial Audit Engagements." AUDITING: A Journal of Practice & Theory 32, no. 4 (May 1, 2013): 25–43. http://dx.doi.org/10.2308/ajpt-50523.
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SUMMARY We reexamine the association between audit fees and risky initial engagements by developing an ex ante client-risk metric that is based on auditor change 8-K filings. We concentrate on auditor-client disagreements and other reportable events (restatement, management integrity, scope limitations, illegal acts, reaudits) disclosed in the 8-K auditor change filings. We find that audit fees are significantly higher for clients reporting disagreements and other reportable events in their 8-K auditor change filings for the initial year of engagement. However, the fee premium is only attributable to Big 4 auditors. While the Big 4 charge 45 percent higher fees when clients have disagreements or other reportable events, there is no such fee premium associated with non-Big 4 clients. More importantly, Big 4 predecessor auditors increase fees prior to the auditor switch as clients develop problems. Big 4 successor auditors continue to charge significantly higher fees for at least three years following adverse 8-K disclosures. Our results provide evidence on how successor and predecessor auditors incorporate risk in the pricing of audit fees, where risk is based on the information contained in auditor change 8-K reports.
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Ginting, Rudi. "Pengaruh Pengalaman Auditor, Profesionalisme Auditor, Task Complexity, Time Pressure, Gender dan Etika Profesi Terhadap Auditor Materiality Judgments (DKI Jakarta, Indonesia)." JAK (Jurnal Akuntansi) Kajian Ilmiah Akuntansi 11, no. 2 (July 18, 2024): 361–82. http://dx.doi.org/10.30656/jak.v11i2.9007.
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Abstract Public Accounting Firms are professional institutions that are obliged to uphold ethics and professionalism, and are capable of global competition on an international and national scale. Auditors are responsible for implementing professional standards and upholding the required provisions. In the implementation of audited financial reports, misinformation is still found and there are even frauds in financial reports, so that it raises questions about the professionalism of Public Accountants who should provide reports that are reliable, accurate and free of material misstatement. This debate has never been resolved, apart from involving large public accounting firms in the country and abroad. This research aims to examine the impact of experience, professionalism, complexity, pressure, gender and ethics on the auditor's assessment of materiality in audited financial reports. The research population is registered auditors at the Indonesian Institute of Public Accountants (IAPI) in the DKI Jakarta area. The simple random sampling method was used to select samples, distribute questionnaires to auditors who work at Public Accounting Firms (KAP) in the area. A total of 80 auditors filled out and returned the questionnaire as a sample. Data were analyzed using multiple linear regression with SPSS software, and tested the hypotheses in this research. Examination of the data shows that experience, professionalism, complexity, pressure and gender influence the consideration of materiality levels in financial reports. Meanwhile, professional ethics has no impact or influence on the consideration of the level of materiality in financial reports. Keywords: Experience, Professionalism, Task Complexity, Time Pressure, Gender, Professional Ethics, Materiality
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Mayhew, Brian W., and Joel E. Pike. "Does Investor Selection of Auditors Enhance Auditor Independence?" Accounting Review 79, no. 3 (July 1, 2004): 797–822. http://dx.doi.org/10.2308/accr.2004.79.3.797.
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This paper reports the results of experiments designed to examine whether investor selection of auditors enhances auditor independence. The experimental design enables us to explore the effect on independence of different institutional rules as to who hires and fires auditors and to directly measure independence violations. The results suggest that transferring the power to hire and fire the auditor from managers to investors significantly decreases the proportion of independence violations. Additional analysis suggests that a reduction in independence violations increases the overall economic surplus generated in the markets examined.
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Kandemir, H. Kubra. "Auditing versus consultancy: a critique of the EU law reforms on the new form of auditing." Journal of Governance and Regulation 5, no. 3 (2016): 90–97. http://dx.doi.org/10.22495/jgr_v5_i3_p8.
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Auditors used to serve the interest of the shareholders only. However, there have been significant changes in terms of auditors’ role and their function. Auditors are now expected to verify financial statements, but at the same time give an assurance regarding the financial sustainability of the entity. Regarding the latter role, audit firms provide consulting services, including risk assessment and management services. However, the law does not assign the latter role to external auditors. This situation results in an expectations gap in relation to both the role of the auditors and the scope of the external auditing. In addition, the growing economic importance of consulting and the long years of auditor tenure is likely to impair auditor independence. This paper submits that the new form of auditing is not problematic but creates issues. First, the expectations between the users of the financial reports and auditors are wider. Second, auditors’ independence is damaged due to the long years of auditor tenure and dependence of non-audit fees generated from consultancy services that not related to audit. The recent law reforms issued by the European Commission has brought some important provisions in terms of filling the expectations gap, reinforcing auditor independence and reducing the familiarity threat. EU’s relatively strict rules on provision of non-audit services and audit firm rotation are expected to have an important impact in the audit market. A critical analysis of the new EU law is submitted with some policy recommendations.
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Mohammed Shani, Murtadha, and Layth Ali Hammadi Al-Tameemi. "The Impact of Using Artificial Intelligence in the Audit Process to Enhance the Transparency of Financial Reports and its Reflection on the Reputation of the External Auditor." Journal of Advance Research in Business, Management and Accounting (ISSN: 2456-3544) 7, no. 3 (March 21, 2021): 21–32. http://dx.doi.org/10.61841/7axn7168.
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Purpose – The papers. This research aims to identify the concept of artificial intelligence, demonstrate the impact of artificial intelligence in improving the external auditor’s skills, and demonstrate the extent to which the external auditor can use artificial intelligence. Design/methodology/approach: A review of previous research was conducted to determine and discuss what these researchers have found and the results they have reached. Artificial intelligence and some of its applications were studied to demonstrate its impact on the reputation of the auditor. Findings – The use of modern technologies in the audit process in a way that is reflected in the transparency of financial reports, because this development may affect the reputation of audit offices, as the use of artificial intelligence in major audit companies in auditing companies’ data that is automated electronically may replace the external auditor in a way that threatens the future of auditors. Originality/value: The value of the paper lies in that it studies the problems of using artificial intelligence in the audit process in a way that reflects transparency in financial reports. Explaining the impact on the auditor’s reputation, this paper provides a general overview of the lack of significance
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Dennis, Sean A., Jeremy B. Griffin, and Karla M. Zehms. "The Value Relevance of Managers' and Auditors' Disclosures About Material Measurement Uncertainty." Accounting Review 94, no. 4 (September 1, 2018): 215–43. http://dx.doi.org/10.2308/accr-52272.
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ABSTRACT Regulators now require auditors to provide information about how they evaluate complex estimates. Because users encounter this auditor-provided information alongside management-provided information, we jointly examine the value relevance of these disclosures. We also examine whether visual cues in audit reports influence how nonprofessional investors use these disclosures. We find that disclosures from managers and auditors provide different value-relevant information about the same underlying issue. While users struggle to weight fully narrative auditor disclosures in their valuation judgments without corresponding management disclosures, visual cues facilitate their weighting of information about the audit. Specifically, users take increased price protection when auditor disclosures also include visual cues. However, consistent with market signaling theory, corresponding voluntary disclosures from management attenuate this price protection. This suggests management can mitigate negative valuation effects that may arise from auditor disclosures, and implies that visual cues in audit reports can prompt managers to increase disclosure transparency. Data Availability: Contact the authors.
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Chen, Qi, Xu Jiang, and Yun Zhang. "The Effects of Audit Quality Disclosure on Audit Effort and Investment Efficiency." Accounting Review 94, no. 4 (September 1, 2018): 189–214. http://dx.doi.org/10.2308/accr-52286.
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ABSTRACT We develop a model to evaluate the costs and benefits of disclosing information about audit quality. Specifically, we examine whether audit quality disclosure affects auditors' effort and investors' investment efficiency. In our setting, an auditor exerts unobservable effort to influence audit quality and is motivated by liability in the event of audit failure. The usefulness of audited financial reports for investors depends on both the quality of the underlying financial reporting (e.g., as embodied by GAAP) and the quality of auditors' reports (i.e., the likelihood with which audit evidence uncovers managerial misreporting). We show that audit quality disclosure increases auditors' effort incentives if and only if the underlying financial reporting quality is relatively weak. We also show that such disclosure can actually reduce investment efficiency. Our analyses contribute to the debate about policies aimed at improving audit transparency.
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Dewi, Sofiana. "IMPLEMENTASI PERAN AUDITOR INTERNAL DALAM PEMENUHAN KARAKTERISTIK KUALITATIF LAPORAN KEUANGAN KEMENTERIAN PEKERJAAN UMUM DAN PERUMAHAN RAKYAT." Jurnal BPPK: Badan Pendidikan dan Pelatihan Keuangan 16, no. 1 (November 27, 2023): 57–66. http://dx.doi.org/10.48108/jurnalbppk.v16i1.727.
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ABSTRAK
Penelitan bertujuan untuk mengulas tentang peran auditor internal dalam peningkatan kualitas laporan keuangan pemerintah pusat dan pemerintah daerah. Selain itu, dalam implementasinya, penelitian ini juga bertujuan untuk mengulas peran Auditor Inspektorat Jenderal dalam peningkatan Laporan Keuangan Kementerian PUPR. Metode yang digunakan dalam penelitian adalah studi literatur dan studi lapangan. Studi literatur dilakukan pada 6 (enam) penelitian kuantitatif dan 1 (satu) penelitian kualitatif yang membahas tentang peran auditor internal dalam peningkatan kualitas laporan keuangan pada pemerintah pusat dan pemerintah daerah. Studi literatur dilakukan dengan menggunakan data yang bersumber dari artikel, jurnal, skripsi, dan buku. Selain itu, studi lapangan dilakukan melalui wawancara dengan 4 (empat) informan yang terdiri dari 2 (dua) orang Penyusun Laporan Keuangan Kementerian PUPR dan 2 (dua) orang lainnya merupakan Auditor Inspektorat Jenderal Kementerian PUPR. Hasil penelitian dengan studi literatur menunjukkan bahwa secara keseluruhan auditor internal berpengaruh secara signifikan terhadap peningkatan kualitas laporan keuangan pemerintah pusat dan pemerintah daerah. Dari hasil wawancara disimpulkan bahwa Auditor Inspektorat Jenderal berperan aktif dalam peningkatan kualitas Laporan Keuangan Kementerian PUPR melalui fungsinya dalam kegiatan penjaminan dan konsultasi.
Kata Kunci :
Laporan Keuangan; Auditor Internal; Penjaminan dan Konsultasi.
ABSTRACT
This research aims to review the role of internal auditors in improving the quality of financial reports of the central government and local governments. In addition, in its implementation, this study also aims to review the role of the Inspectorate General Auditor in improving the PUPR Ministry's Financial Report. The method used in this research is literature study and field study. The literature study was conducted in 6 (six) quantitative studies and 1 (one) qualitative research which discussed the role of internal auditors in improving the quality of financial reports at the central government and local governments. Literature study was conducted using data sourced from articles, journals, theses, and books. In addition, the field study was conducted through interviews with 4 (four) informants consisting of 2 (two) Compilers of the Ministry of PUPR's Financial Statements and 2 (two) others who were Auditors of the Inspectorate General of the Ministry of PUPR. The results of the research with literature studies show that overall internal auditors have a significant effect on improving the quality of financial reports for the central government and local governments. From the results of the interview, it was concluded that the Inspectorate General Auditor plays an active role in improving the quality of the PUPR Ministry's Financial Reports through its functions in guarantee and consulting activities.
Keywords :
Financial Repots; Internal Auditors; Assurance and Consulting.
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Ciptani, Monika Kussetya, Mila Reyes, and Regitha Seshanda Azizah. "Balancing Audit Quality to Auditees Cash Reserves: A Phenomenon in Indonesia." International Journal of Research and Innovation in Social Science VIII, no. IV (2024): 824–35. http://dx.doi.org/10.47772/ijriss.2024.804060.
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High audit quality is essential for capital providers seeking accurate financial reports for investments. External auditors play a crucial role in safeguarding capital providers’ interests by detecting fraud and ensuring financial statement reliability. High-quality auditors scrutinize reports thoroughly, reducing legal disputes and financial constraints for entities. This research was conducted with a focus on several sectors on a company including, Finance, Manufacture and Mining Sector listed on IDX 2017-2021, with a total of 250 sample of a company. Research shows that firms with high audit quality rely less on cash reserves, enhancing cash liquidity and attracting investors. This research confirms that high audit quality significantly increases auditees’ cash reserves, emphasizing the need for auditors to protect shareholder interests and avoid legal and reputational risks beyond verifying financial statements.
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Wiedjaja, Debby Audrey, and Rizky Eriandani. "Auditor Characteristics and Audit Report Lag: Industry Specialization and Long Tenure as Moderating Variables." Jurnal Dinamika Akuntansi 13, no. 2 (October 6, 2021): 106–16. http://dx.doi.org/10.15294/jda.v13i2.25496.
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Purpose: This study aims to analyze the effect of audit tenure and auditor workload on Audit Report Lag (ARL) and provide empirical evidence of whether the selection of industry-specialized auditors and audit partners with specific workloads can weaken this relationship.Method: This research was conducted using moderated regression analysis. Selection of the research sample using purposive sampling method, from all public listed companies during 2015-2017, 945 firm years were selected.Finding: This study found that audit tenure moderately significantly negatively affects ARL. Besides, this study can also prove that partners with heavy workloads can lead to longer ARL. However, a long partner-client relationship can weaken the workload and ARL relationship because of the auditor's more familiarity and information. Based on these results, the characteristics of auditors affect the timeliness of audit reporting.Novelty: This study enriched the literature by finding out how to deal with audit delay effectively, whereas previous research only focused on identifying ARL causes. This research's implication is expected to provide broader insight to the company regarding several factors that can help companies issue their financial reports on time when the auditors have high workloads and short tenures.