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1
Bills, Kenneth L., Lauren M. Cunningham, and Linda A. Myers. "Small Audit Firm Membership in Associations, Networks, and Alliances: Implications for Audit Quality and Audit Fees." Accounting Review 91, no. 3 (July 1, 2015): 767–92. http://dx.doi.org/10.2308/accr-51228.
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ABSTRACT In this study, we examine the benefits of membership in an accounting firm association, network, or alliance (collectively referred to as “an association”). Associations provide member accounting firms with numerous benefits, including access to the expertise of professionals from other independent member firms, joint conferences and technical trainings, assistance in dealing with staffing and geographic limitations, and the ability to use the association name in marketing materials. We expect these benefits to result in higher-quality audits and higher audit fees (or audit fee premiums). Using hand-collected data on association membership, we find that association member firms conduct higher-quality audits than nonmember firms, where audit quality is proxied for by fewer Public Company Accounting Oversight Board (PCAOB) inspection deficiencies and fewer financial statement misstatements, as well as less extreme absolute discretionary accruals and lower positive discretionary accruals. We also find that audit fees are higher for clients of member firms than for clients of nonmember firms, suggesting that clients are willing to pay an audit fee premium to engage association member audit firms. Finally, we find that member firm audits are of similar quality to a size-matched sample of Big 4 audits, but member firm clients pay lower fee premiums than do Big 4 clients. Our inferences are robust to the use of company size-matched control samples, audit firm size-matched control samples, propensity score matching, two-stage least squares regression, and to analyses that consider changes in association membership. Our findings should be of interest to regulators because they suggest that association membership assists small audit firms in overcoming barriers to auditing larger audit clients. In addition, our findings should be informative to audit committees when making auditor selection decisions, and to investors and accounting researchers interested in the relation between audit firm type and audit quality.
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Djamaa, Wahjuny, Yustin Triastuti, and Putri Diaz Tami. "Pengaruh Fee Audit, Kompetensi, Etika Auditor, dan Tekanan Anggaran Waktu terhadap Kualitas Audit pada Kantor Akuntan Publik (KAP) di Depok & Jakarta Tahun 2020." El-Mal: Jurnal Kajian Ekonomi & Bisnis Islam 3, no. 6 (April 25, 2022): 1179–205. http://dx.doi.org/10.47467/elmal.v4i1.1302.
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The purpose of this study is to discuss and determine the effect of audit fees, competence, auditor ethics and time budget pressure on audit quality at a public accounting firm in Depok. Therefore, we need an audit to clearly determine whether our company's financial statements are in accordance with the guarantee. truth and fairness. The truth and fairness of the audit is very influential on the financial statements, so the company needs an audit. An audit that is able to improve the quality of information, but on the other hand, is a good audit. The public spotlight in recent years is the low quality of audits due to the involvement of public accountants in it. Therefore, companies must also maximize Audit Quality which can be influenced by Audit Fees, Competence, Auditor Ethics, and Time Budget Pressure. This type of research is quantitative research. Samples were taken using convenience sample method. The sample consisted of 30 respondents with the positions of Auditor, Public Accountant, Manager, and Supervisor from the Trisnowati & Mariati Public Accounting Firm (KAP), Hary Suganda Public Accounting Firm (KAP), SE.AK.CPA.CA.BKP, Public Accounting Firm (KAP) ) Irfan Zulmendra, Budiandru Public Accountant Office (KAP) located in Depok & Jakarta, so that the research data analyzed were 30 respondents. The results of the study can be concluded that: (1) Audit Fee has a significant effect on Audit Quality with a significance value of tcount 0.030 <ttable 0.05; (2) Competence has a significant effect on Audit Quality with a significance value of tcount 0.000 <ttable 0.05; (3) Auditor Ethics has no significant effect on Audit Quality with a value of tcount 0.393> ttable 0.05; Time Budget Pressure has a significant effect on Audit Quality with tcount 0.000 <ttable 0.05; Audit Fee, Competence, Auditor Ethics, and Time Budget Pressure have a significant effect on Audit Quality with a value of Fcount 7.645> Ftable 2.74.
Keywords: Audit Fee, Competence, Auditor Ethics, Time Budget Pressure, and Audit Quality
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Nevidomyi, V., Yu Myronenko, K. Kanonishena-Kovalenko, and Ya Horobchuk. "IMPLEMENTATION OF INTERNATIONAL STANDARDS OF SUPREME AUDIT INSTITUTIONS TO THE FINANCIAL AUDITS OF THE ACCOUNTING CHAMBER OF UKRAINE." Bulletin of Taras Shevchenko National University of Kyiv. Economics, no. 208 (2020): 32–41. http://dx.doi.org/10.17721/1728-2667.2020/208-1/4.
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The peculiarities of financial audits conducted by the Accounting Chamber of Ukraine according to a methodology that meets the requirements of ISSAI are explored. The Financial Audit Manual with detailed instructions, audit procedures, and templates of audit documentation, elaborated by the Accounting Chamber and international partners in 2019, is considered. The analysis of the experience of 31 European SAIs showed that most of SAIs do not publish audit manuals, in particular, only SAI of Albania, Georgia, Lithuania, Moldova, and Romania provided free access to financial audit manuals. The methodological recommendations for conducting the financial audit by the Accounting Chamber of Ukraine, adopted and published in 2015, cover all the issues that are outlined in such manuals of SAIs from those countries..Besides, the risks of providing open access to the Financial Audit Manual, elaborated by the Accounting Chamber of Ukraine were detected. They are the risks of fraud by officials of audited entities, not detecting a material risks by auditors, the use of intellectual property of the Accounting Chamber for commercial purposes by other entities and reputational risks due to breach of agreements with international partners involved in the development of the manual. The Financial Audit Manual was tested on six financial audits conducted by the Accounting Chamber in 2019 and main results are analyzed in the paper. Significant deficiencies of internal control, fraud risks and risks associated with accounting, budgeting and financial reporting software, and the need of improvement in accounting policies, internal control and workflow in all audit entities were identified. Additionally,, the audit results are presented in a user-friendly format tailored to the needs of decision- makers, with an emphasis on issues that require rapid response. Based on the conducted analysis, the conclusions about the low quality of financial and budgetary reporting of public sector entities and the systematic nature of identified problems and risks were made. Thus, the importance of financial audits was emphasized and the proposals for further improvement of this type of audit of the Accounting Chamber were elaborated. In particular, updating of the legislation and internal documents, usage of modern information technologies and software for audits, translation of ISSAI, training for staff, changes in personnel policy, improvement of the quality control system.
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Akresh, Abraham D. "A Risk Model to Opine on Internal Control." Accounting Horizons 24, no. 1 (March 1, 2010): 65–78. http://dx.doi.org/10.2308/acch.2010.24.1.65.
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SYNOPSIS: In recent years, auditors have reported on the effectiveness of internal control, usually as part of integrated audits. The audit risk model currently in auditing standards was designed for financial statement audits, not internal control audits—a key part of integrated audits. Because the audit of processes (internal control) is conceptually different from the audit of outputs (financial statements), the auditor needs a different risk model to provide a conceptual framework for internal control audits. The model I propose1 provides the auditor a method to determine the appropriate nature, timing, and extent of testing in an integrated audit. My model is focused on the risk of material weakness, rather than the risk of material misstatement. I also show how the auditor would use two different models in an integrated audit.
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Patskan, V. V. "INTERNATIONAL ACCOUNT COOPERATION THE CHAMBER AS THE SUPREME AUDIT AUTHORITY OF UKRAINE WITHIN THE BILATERAL AND MULTILATERAL FRAMEWORK INTERNATIONAL TREATIES." Actual problems of native jurisprudence, no. 06 (March 2, 2020): 96–101. http://dx.doi.org/10.15421/3919102.
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The article is devoted to the International cooperation of the Accounting Chamber as the supreme audit institution of Ukraine in the framework of bilateral and multilateral international treaties. International cooperation is an important tool for the institutional development of the Accounting Chamber and for enhancing its ability to perform the functions of the supreme audit institution of Ukraine. In the framework of bilateral and multilateral international treaties as well as in the framework of bilateral cooperation, international cooperation provides for the exchange of experience and knowledge in order to improve the external state audit, as well as to carry out international coordinated parallel audits in important areas for Ukraine. The Accounting Chamber carries out international cooperation in the following main areas: development of bilateral and multilateral cooperation with the SAA of foreign countries; cooperation with the European Organization of Supreme Audit Institutions (EUROSAI) and the International Organization of Supreme Audit Authorities (INTOSAI); ensuring the activities of the EUROSAI Working Group on the audit of funds allocated for the prevention and remediation of disasters, chaired by the Accounting Chamber; Participation in EUROSAI Working Groups and Task Forces (Environmental Audit; Information Technology and Municipal Audit); Participation in INTOSAI Working Groups (Environmental Audit; Public Debt; Anti-Corruption and Money Laundering); participation in work of other regional associations of the SBI; cooperation with international organizations and participation in international technical assistance projects and programs; the participation of the Accounting Chamber in audits of programs financed by the European Union; organizing and conducting international coordinated concurrent audits with the participation of members of the Working Group on Audit of Funds Allocated for Disaster Prevention and Elimination. International cooperation of the Accounting Chamber as the supreme audit institution of Ukraine in the framework of bilateral and multilateral international treaties is essential for the effective operation of the Accounting Chamber as the supreme audit body of Ukraine, the development of bilateral and multilateral partnerships of Ukraine with other countries of the world, ensuring a high level of trust on the part of society other state authorities, the international community, the highest audit bodies of certain foreign countries. Important in this cooperation is also to ensure the implementation of bilateral international treaties, as well as to carry out, on their basis, parallel audits by the Accounting Chamber and the supreme audit institution of the countries concerned. International cooperation of the Accounting Chamber as the supreme audit body of Ukraine in the framework of bilateral and multilateral international treaties is also an important guarantee for proper control over the flow of funds to the State Budget of Ukraine and their use, as well as ensuring the transparency of the work of the Accounting Chamber and the integrity of its members and officials, its functioning as the supreme audit body of Ukraine.
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Wang, Dechun, and Jian Zhou. "The Impact of PCAOB Auditing Standard No. 5 on Audit Fees and Audit Quality." Accounting Horizons 26, no. 3 (April 1, 2012): 493–511. http://dx.doi.org/10.2308/acch-50183.
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SYNOPSIS We investigate the impact of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 5 (AS5) on audit fees and audit quality. AS5 supersedes Auditing Standard No. 2 (AS2), and became effective for audits for accelerated filers for fiscal years ending on or after November 15, 2007. Using a large sample of accelerated filers subject to AS5, we find evidence that audit fees decrease upon the adoption of AS5. More importantly, even though AS5 adoption reduces audit fees for our test sample, we find no evidence of a decrease in audit quality. In summary, we document evidence that AS5 improves the efficiency of internal control audits. JEL Classifications: M41.
7
Wedemeyer, Phil D. "A Perspective on the PCAOB—Past and Future." Accounting Horizons 28, no. 4 (August 1, 2014): 937–47. http://dx.doi.org/10.2308/acch-50889.
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SYNOPSIS The auditing of financial statements of public companies in the United States is now a regulated industry, and the primary instrument of its regulation is the Public Company Accounting Oversight Board (PCAOB), an entity created by the Sarbanes-Oxley Act of 2002 (SOX). The PCAOB is one element of a politicized regulatory structure and, as a result, future developments in auditing will continue to be difficult to predict. SOX requirements for PCAOB inspections of audit firms substantially increased the possibility that an audit will be subsequently evaluated despite the absence of identified errors in audited financial statements. The SOX requirement for an auditor's opinion on internal controls over financial reporting (ICFR) immediately increased audit costs and continues to generate heated political debate. In addition, certain aspects of audit quality and PCAOB inspections as well as reporting and audit standards have, or will, affect the conduct of audits and the activities of audit firms. The net effect of these changes has been to increase the cost of audits, particularly as a result of increased review, other quality control activities, and the performance of audits of ICFR, where required. In return, the quality of audits in terms of compliance with audit standards has improved significantly. However, the business models of audit firms and the processes for education and certification of accountants have remained substantially unchanged and are major influences on the quality of audits.
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Lowensohn, Suzanne H., and Frank Collins. "The Role and Perceptions of Independent Audit Partners in the Governmental Audit Market." Accounting and the Public Interest 1, no. 1 (January 1, 2001): 17–41. http://dx.doi.org/10.2308/api.2001.1.1.17.
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Audits are the primary means of monitoring that public funds are appropriately spent by governmental entities. Currently, independent auditors (rather than governmental auditors) are the primary suppliers of governmental audit services, despite the fact that many of them view governmental audits as “secondary” (AICPA 1987). Furthermore, nongovernmental auditors are believed to be less “independent” and more prone to lose sight of the programmatic demand to safeguard the public trust (Power 1997) than governmental auditors. To better understand the supply of governmental audit services, this study investigates independent audit firm partner opinions of governmental audits and their motivation to pursue these engagements. Multiple regression results of our data reveal that partners are more likely to pursue governmental audits if they believe that desirable intrinsic and extrinsic rewards are attainable through performing these audits. Furthermore, environmental risk factors—an active political climate and authoritative changes—reduce partner motivation to pursue governmental audits. It is suggested that environmental risk factors disrupt the comfortable principal/agent relationship of the auditor and auditee because the relationships have become decoupled (abstracted) from the audit's programmatic mission.
9
Zhang, Joseph H. "Accounting Comparability, Audit Effort, and Audit Outcomes." Contemporary Accounting Research 35, no. 1 (February 8, 2018): 245–76. http://dx.doi.org/10.1111/1911-3846.12381.
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Read, William J., Dasaratha V. Rama, and K. Raghunandan. "Local and Regional Audit Firms and the Market for SEC Audits." Accounting Horizons 18, no. 4 (December 1, 2004): 241–54. http://dx.doi.org/10.2308/acch.2004.18.4.241.
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The period after the demise of Enron and Andersen has been tumultuous for the accounting profession. In congressional hearings and in responses to the SEC and GAO, auditors have stated that provisions of the Sarbanes-Oxley Act of 2002 (SOA) and related SEC rules changes would cause many local and regional audit firms to terminate audit work for SEC registrants. In this study, we provide empirical evidence about small audit firms and recent changes in the market for SEC audits. After examining all auditor resignations during 2000–2003, we find that 47 local and regional audit firms disclosed in Form 8-Ks filed in 2002–2003 that they were ceasing all SEC audits; only eight such firms that made this disclosure in 2000–2001. From interviews with audit partners of such firms, we find that the primary reasons for ceasing SEC audits is the perception of a more stringent oversight by the recently created Public Company Accounting Oversight Board (PCAOB), increased professional liability insurance costs, and increased scrutiny of SEC registrants. We also find that many local and regional audit firms that had no SEC audit clients in 2002 voluntarily registered with the PCAOB. Interviews with partners of such audit firms indicate that the primary reason for voluntarily registering with the PCAOB is to signal their audit quality to non-SEC registrants (private companies, nonprofits, etc.) and their stakeholders.
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Chui, Lawrence, Oksana Kim, and Byron J. Pike. "The Effect of Audit Duality on Audit Quality." Journal of International Accounting Research 19, no. 2 (April 17, 2020): 65–89. http://dx.doi.org/10.2308/jiar-19-523.
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ABSTRACT The Russian regulatory environment offers a unique audit duality situation in which public companies receive two separate financial statement audits by the same audit firm: one based on Russian Accounting Standards (RAS) and the other on International Financial Reporting Standards (IFRS). We assess whether audit duality influences audit quality, measured by modifications to the standard audit report. Using a sample of public Russian companies from 2004 to 2016, we find that audit duality significantly reduces auditors' propensity to modify the audit opinions for both the RAS and IFRS audits as compared to companies that engage a different firm for each audit. This potential reduction in audit quality is mitigated when the company is in a loss position. The presence of Big N dual auditors does not diminish the observed findings and, in fact, appears to translate into lower-quality RAS-based audits of financially distressed companies. JEL Classifications: M42; M48.
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Dennis, Sean A., Denise Dickins, Christine E. Earley, Christine Nolder, and Tammie J. Schaefer. "Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Rulemaking Docket Matter No. 042: PCAOB Release No. 2017-005, Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard— Dividing Responsibility for the Audit with Another Accounting Firm." Current Issues in Auditing 12, no. 1 (March 1, 2018): C11—C18. http://dx.doi.org/10.2308/ciia-52090.
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SUMMARY On September 26, 2017, the Public Company Accounting Oversight Board (PCAOB) solicited public comments on Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard—Dividing the Responsibility for the Audit with Another Accounting Firm. The supplemental request for comment seeks commenters' views on the proposed amendments and standard related to audits involving accounting firms and individuals other than the accounting firm that issues the audit report. The comment period ended on November 15, 2017. This commentary summarizes the contributors' views on these amendments. Data Availability: The supplemental request for comment Proposed Amendments Relating to the Supervision of Audits Involving Other Auditors and Proposed Auditing Standard—Dividing Responsibility for the Audit with Another Accounting Firm is available at: https://pcaobus.org/Rulemaking/Docket042/2017-005-other-auditors-SRC.pdf, and the comment letter sent in by the Auditing Standards Committee is available at: https://pcaobus.org/Rulemaking/Docket042/020b_AAA.pdf.
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Anggraini, Anggi Ratna. "Dilema Praktik Kantor Akuntan Publik: Pertautan Antara Keberlangsungan Hidup dengan Kualitas Audit." Jurnal Ekonomi Modernisasi 14, no. 3 (December 28, 2018): 177–94. http://dx.doi.org/10.21067/jem.v14i3.2835.
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This research focuses on the dilemma of small Public Accounting Firms in maintaining their survival, but still maintaining their audit quality. This research is qualitative research with interpretive paradigm and the case study method. This study shows how Public Accounting Firm X faces a dilemma situation when auditing small clients with low fees, while maintaining their audit quality. Public Accounting Firm X in its survival growth strategy uses a "zebra", a "radar" and a business diamond strategy. Public Accounting Firm X itself has a dilemma when faced with a small client who can only pay a low fee for audit services, if using the indicator minimum hourly charge-out rates determined by IAPI, then the audit fee cannot be applied on the client. In the end, the audit procedures carried out must be adequate to maintain audit quality, where Public Accounting Firm X uses Excel based Standard Working Paper during audits and cuts the leveling level. Regulations that accommodate more smaller clients in the area are needed related to audit services.
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Blokdijk, Hans, Fred Drieenhuizen, Dan A. Simunic, and Michael T. Stein. "An Analysis of Cross-Sectional Differences in Big and Non-Big Public Accounting Firms' Audit Programs." AUDITING: A Journal of Practice & Theory 25, no. 1 (May 1, 2006): 27–48. http://dx.doi.org/10.2308/aud.2006.25.1.27.
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A significant body of prior research has shown that audits by the Big 5 (now Big 4) public accounting firms are quality differentiated relative to non-Big 5 audits. This result can be derived analytically by assuming that Big 5 and non-Big 5 firms face different loss functions for “audit failures” and is consistent with a variety of empirical evidence from studies of audit fees, auditor changes, and the stock price reaction to audited earnings. However, there is no existing evidence (of which we are aware) concerning the underlying production differences between Big 5 and non-Big 5 audits. As a result, existing empirical evidence cannot distinguish between the possibility that Big 5 audits are simply perceived to be different (e.g., by investors) or actually differ in how they are produced. Our research objective is to identify the production characteristics of audit engagements that may explain the differences in expected audit quality between Big 5 and non-Big 5 firms. In this archival study, we examine the total audit effort and the allocation of effort to four audit phases—planning, (control) risk assessment, substantive testing, and completion—for a cross-section sample of 113 audits of Dutch companies in 1998/99 by 14 public accounting firms. We find that, after controlling for client characteristics: (1) both types of auditors exert about the same amount of total audit effort; (2) Big 5 auditors allocate relatively more effort to planning and (control) risk assessment, and relatively less to substantive testing and completion; and (3) client size, use of the business-risk-based audit approach, and reliance on client internal controls affect audit hours differently for the two auditor types. We conclude that the Big 5 firms actually produce a higher audit quality level, and that this quality difference is related to how audit hours are deployed in a more contextual and less procedural audit approach.
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Senjaya, Melya, and Friska Firnanti. "Auditor Characteristics, Audit Tenure, Audit Fee and Audit Quality." GATR Global Journal of Business and Social Science Review (GJBSSR) Vol.5(3) Jul-Sep 2017 5, no. 3 (June 22, 2017): 94–99. http://dx.doi.org/10.35609/gjbssr.2017.5.3(12).
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Objective - The purpose of this research is to obtain empirical evidence about the factors that affect audit quality for auditors working in Public Accounting Firms in DKI Jakarta. Methodology/Technique - The independent variables used in this research are: independence, work experience, competency, accountability, audit tenure, and audit fee. The object of this research consists of 25 Public Accounting Firms located in DKI Jakarta. There are 164 respondents used as samples in this study. The sample was selected based on a convenience sampling method with criteria including auditors working at public accounting firms located in DKI Jakarta, with a minimum of one year work duration. This research used statistical tests of multiple regression. Findings - The result shows that independence, accountability, and audit tenure have an effect on audit quality. Meanwhile, work experience, competency, and audit fees have no influence on audit quality. Novelty - The study suggests that to improve audit quality, Public Accounting Firms should pay attention to the independence and accountability of its auditors. Type of Paper: Empirical Keywords: Audit Quality; Independence; Work Experience; Competency; Accountability; Audit Tenure; Audit Fee. JEL Classification: M41, M42.
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Liu, Chenyong, and Chunhao Xu. "The effect of audit engagement partner professional experience on audit quality and audit fees: early evidence from Form AP disclosure." Asian Review of Accounting 29, no. 2 (February 8, 2021): 128–49. http://dx.doi.org/10.1108/ara-08-2020-0121.
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PurposeThe purpose of this study is to examine the effect of audit engagement partner's professional experience on audit quality. The authors also investigate the relationship between the audit partner's experience and audit fees in both Big 4 and non-Big 4 accounting firms.Design/methodology/approachSince the Public Company Accounting Oversight Board (PCAOB) officially enacted Rule 3211 in 2017, US accounting firms are required to disclose detailed information of engagement partners in Form AP (PCAOB, 2015b). The authors obtained a sample of 2,283 audit partners from Form AP and hand collected their individual professional experience data through Certified Public Accountant (CPA) database, corporate disclosure and social media sites (e.g. Linkedin). Econometric models with fixed effects are used in this study to test our hypotheses. Two-stage least square (2SLS) model is used in the robustness test.FindingsThe authors find that the relationship between audit engagement partner's professional experience and audit quality is concave. It indicates that audit quality is increasing during the early stage of engagement partners' career and then decreases as the partners approaching the late-career phase. Further, the authors find that partner's professional experience is positively associated with audit fees in non-Big 4 accounting firms but not significantly associated with audit fees in Big 4 accounting firms.Practical implicationsThe finding of how auditor experience impacts audit quality can be useful for accounting firms to better plan their staffing in auditing engagements. This study’s results are also helpful for small accounting firms to optimize their pricing strategy.Originality/valueThis study provides new empirical evidence about the relation between auditor professional experience and audit quality. Furthermore, the authors extend the literature of audit fee determinants by testing the joint effects of audit firm-level factors and auditor individual-level professional experience on audit fees.
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Hite, Peggy A., and John Hasseldine. "Tax Practitioner Credentials and the Incidence of IRS Audit Adjustments." Accounting Horizons 17, no. 1 (March 1, 2003): 1–14. http://dx.doi.org/10.2308/acch.2003.17.1.1.
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This study analyzes a random selection of Internal Revenue Service (IRS) office audits from October 1997 to July 1998, the type of audit that concerns most taxpayers. Taxpayers engage paid preparers in order to avoid this type of audit and to avoid any resulting tax adjustments. The study examines whether there are more audit adjustments and penalty assessments on tax returns with paid-preparer assistance than on tax returns without paid-preparer assistance. By comparing the frequency of adjustments on IRS office audits, the study finds that there are significantly fewer tax adjustments on paid-preparer returns than on self-prepared returns. Moreover, CPA-prepared returns resulted in fewer audit adjustments than non CPA-prepared returns.
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Banker, Rajiv D., Xiaorong Li, Steven A. Maex, and Wenyun Shi. "The Audit Implications of Cloud Computing." Accounting Horizons 34, no. 4 (June 30, 2020): 1–31. http://dx.doi.org/10.2308/horizons-19-166.
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SYNOPSIS Over the last decade, many firms have shifted from in-house managed information systems to cloud computing arrangements. Despite regulatory interest in the audit impact of new technologies, little empirical work has studied how auditors behave when clients introduce cloud platforms into their accounting information system. Ex ante, it is unclear whether cloud computing allows for increased audit efficiency through reliance on service organization control reports or introduces additional complexity and risk to the audit. Leveraging a 2015 accounting standards update from the Financial Accounting Standards Board to identify material cloud users, we find that these firms pay an audit fee premium of approximately 5 percent compared to nonusers. This premium attenuates when hiring an audit office with more cloud users in its portfolio, suggesting that cloud audit experience can reduce auditors' costs when conducting such audits. We also explore how audit lag and subsequent restatements vary cross-sectionally with cloud use. JEL Classifications: M41; M48. Data Availability: Data are available from the public sources cited in the text.
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Kinney, William R., Roger D. Martin, and Marcy L. Shepardson. "Reflections on a Decade of SOX 404(b) Audit Production and Alternatives." Accounting Horizons 27, no. 4 (December 1, 2013): 799–813. http://dx.doi.org/10.2308/acch-10362.
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SYNOPSIS Since passage of the quickly finalized Sarbanes-Oxley Act during July 2002, audit production in the U.S. has been substantially expanded by mandated internal control audits. The control audit mandate is unique to the U.S. and costly to apply, yet little is known about the conduct of control audits or the efficacy of lower-cost alternatives. This paper reflects our overall knowledge about control audit production and observation of a consistent message across public and limited non-public archival data, analytical studies, and numerous personal experiences of audit practitioners. Our primary observation is that, absent any financial misstatement, auditors find it difficult to identify material weaknesses in control design. Conversely, when auditors know about misstatements they can, and do, detect related material weaknesses and thereby identify most public companies found by mandated control audits to have ineffective controls. Thus, it appears possible to exploit this observation to identify and publicly disclose most companies with weak controls without incurring the cost of full internal control audits. We believe that U.S. markets could benefit from more transparency about the current U.S. audit production process and from informed debate about the best mechanism design for balancing the needs of all parties interested in internal control quality disclosure.
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Bronson, Scott N., Adi Masli, and Joseph H. Schroeder. "Releasing Earnings when the Audit is Less Complete: Implications for Audit Quality and the Auditor/Client Relationship." Accounting Horizons 35, no. 2 (March 1, 2021): 27–55. http://dx.doi.org/10.2308/horizons-18-056.
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SYNOPSIS This study examines the effect of audit completeness at the annual earnings announcement date on audit quality and auditor/client retention decisions. The vast majority of companies now release earnings before the year-end audit is complete while, historically, companies would release earnings on or after the date of audit completion. Management's decision to release earnings when the audit is less complete can adversely impact audit quality and has negative implications for the overall auditor/client dynamic. We find that audits that are less complete at the earnings announcement date are associated with a higher likelihood of financial statement misstatements in audit areas that are typically performed toward the end of audit fieldwork. We also find a higher likelihood of auditor turnover during the following year. Taken together, the results suggest lower financial reporting/audit quality and higher auditor turnover for companies that release earnings when the audit is less complete. Data Availability: The data used are publicly available from the sources cited in the text.
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Le, Thi Thu Ha, and Thanh Thuy Pham. "Assessment of the quality of the audits of Vietnamese commercial banks financial statements." Mezhdunarodnaja jekonomika (The World Economics), no. 3 (March 1, 2021): 232–38. http://dx.doi.org/10.33920/vne-04-2103-06.
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The aim of the research is to assess the quality of the audits of Vietnamese commercial banks’ fi nancial statements in recent years. Two audit quality indicators are used in the assessment: fi rstly, the quality of the audit reports and the audited fi nancial statements; and secondly, the quality of the factors aff ecting audit quality. One of the factors aff ecting audit quality the characteristic of audit organizations such as the scale of the organizations, the level of knowledge in the fi eld of banking audit, Qualifi cations and experience of auditors, Independence of the auditor and the audit organization, Cost of the audit, Audit procedures, Audit quality control. Other factors are quality control of audit of fi nancial statement of commercial banks; communication between banking supervisors; legislative base (system of accounting standards, standards on auditing); and the eff ectiveness of the internal control system (ICS) of commercial banks. To study and assess the quality of the audits of commercial banks’ fi nancial statements, the authors conducted questionnaires, interviews on audit and study of audited accounting (fi nancial) statements. The result of the research indicates that the audits of Vietnamese commercial banks’ fi nancial statements have basically met the quality required by the current auditing standards. However, there are still some shortcomings in audit methodology and procedures, audit reports and audited fi nancial statements. The authors also suggest some measures to the audit fi rms and government bodies to improve the audit quality.
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Office, Editorial. "Audit Research Summaries." Maandblad Voor Accountancy en Bedrijfseconomie 90, no. 6 (June 20, 2016): 280–84. http://dx.doi.org/10.5117/mab.90.31325.
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Ook deze maand presenteren wij weer enkele “Audit Research Summaries” uit de database van de American Accounting Association (www.auditingresearchsummaries. org). Op 6 april jongstleden is de consultatieperiode van het voorstel voor de herziening van de Nederlandse Corporate Governance Code afgerond. De Monitoring Commissie Corporate Governance verwacht na de zomer de definitieve aangepaste code te presenteren. Transparantie en verantwoording vormen bouwstenen voor goede corporate governance. In het bijzonder vervult de accountant bij de verantwoordingsinformatie in de vorm van de jaarrekening een belangrijke controlerende rol; de accountant communiceert over zijn controlebevindingen primair met directie en commissarissen.
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Farag, Magdy. "The impact of accelerated filing requirements on meeting audit report deadlines." Accounting Research Journal 30, no. 01 (May 2, 2017): 58–72. http://dx.doi.org/10.1108/arj-11-2013-0086.
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Purpose The purpose of this study is to examine audit report lags and audit report deadline margins. It specifically examines whether audits of large accelerated filers are completed within a shorter period as compared with regular accelerated filers due to the introduction of new deadline filing requirements by the SEC. The paper also examines whether large accelerated filers have shorter audit report deadline margins. Design/methodology/approach Using a sample of 7,129 firm-year observations over the period 2007-2013, an OLS regression model is applied by regressing audit report lags and audit report deadline margins on an indicator variable for large accelerated filers and a set of control variables. Findings Results indicate that audits of large accelerated filers have shorter audit report lags as compared with regular accelerated filers. Also, large accelerated filers have shorter audit report deadline margins as compared with regular accelerated filers. These results suggest that even though large accelerated filers’ audits are more complex by nature, auditors of these firms are under more pressure to complete their audits and issue their clients’ audit reports on time. Research limitations/implications While the control variables included in the models are all based on established theories and validated in prior research, there may still be some control variables that were excluded from the study’s models. Also, these results cannot be generalized beyond firms that are categorized as large accelerated filers or accelerated filers. Practical/implications Public accounting firms should be prepared to devote more resources to large accelerated filers’ clients. Also, regulators might need to reconsider revising the filing deadline requirements for the new category of large accelerated filers by weighing the pros against the cons of these new deadlines, as it appears that auditors of large accelerated filers need more time to complete their audits. Originality/value This study uses a new measuring tool in addition to audit report lags, which is the ‘audit report deadline margin’.
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Deb, Rajat. "Financial Audit or Forensic Audit? Government Sector Panorama." Indian Journal of Corporate Governance 11, no. 2 (November 18, 2018): 135–58. http://dx.doi.org/10.1177/0974686218806724.
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The study has been motivated to assay the selective stakeholders’ perceptions on whether the government financial audit has been converted into forensic audit. Adopting a cross-sectional study design with survey strategy through a self-administered interview schedule with a 50-item inventory, data has been collected from randomly chosen 120 sample respondents having equal representations from two groups—current and retired government employees and businessmen of Tripura. The significant statistical results have concluded that corruption and accounting slacks have important impacts on the government audits, and the latter if used in an appropriate manner are likely to detect frauds and catalyse in bringing accounting reforms.
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Hegazy, Mohamed, and Hekmat Ebrahim. "Are joint audits associated with higher audit quality?" Corporate Ownership and Control 19, no. 2 (2022): 204–16. http://dx.doi.org/10.22495/cocv19i2art16.
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This paper investigates and assesses whether a joint audit engagement results in higher audit quality compared to a single audit given audit firms’ characteristics and complexity of their clients’ activities. The research adopts a survey-based questionnaire sent to external auditors of five audit firms with international affiliation including two Big 4 firms to assess their perceptions about whether joint audit improves audit quality compared to a single audit. Also, interviews with audit partners and professors of auditing were made to check the reliability of the survey. Descriptive and inferential statistics are used to test the research hypotheses. The results reveal that joint audit enhances the quality of the audit as auditors in joint audits deliver high audit quality and ensure continuity with the client. The results also confirm the importance to perform joint audit engagements involving one of the Big 4 with one audit partner possessing industry specialization related to the audit engagement. However, no variation was found in audit quality in a joint audit compared to a single audit for listed companies compared to non listed companies even when there are discrepancies in the joint audit partners’ level of competence and experience. The study is among the first to survey the impact of joint audits compared to single audits on audit quality in an emerging economy. The study identifies valuable insights and provides recommendations to audit firms, professional and oversight bodies, and government to encourage the use of joint audits versus single audits to improve audit quality
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Yowanda, Vera, Vini Kristina, Riki Pernando, Sherly Sherly, Erika Erika, Wilsa Road Betterment Sitepu, and Rika Dinarianti. "Pengaruh Skeptisme, Pengalaman Auditor, dan Self Efficacy Terhadap Audit Judgement Pada Kantor Akuntan Publik di Medan." Jurnal Ilmiah ESAI 13, no. 2 (May 5, 2021): 124–40. http://dx.doi.org/10.25181/esai.v13i2.1306.
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Judgment audit is a consideration made by public accountants in making an audit plan, and before issuing an opinion on the company's financial statements. The independent variables of this study are skepticism, auditor experience, and self efficacy. The dependent variable of this study is judgment audit. The purpose of this study is to examine and analyze the influence of skepticism, auditor experience, and self efficacy on judgment audits at the Public Accountant Office in Medan. This research uses descriptive quantitative research methods with the nature of research of causal relationships. The data were collected with questionnaires which were tested for validity and reliability before conducting the research. The test equipment used is normality test, multicollinearity test, and heteroscedasticity test. This study uses purposive sampling with a total of 90 respondents in the Public Accountant Office in Medan. The results of the study on the hypothesis indicate that skepticism, auditor experience, and self efficacy partially and simultaneously influence the judgment audit on the Public Accounting Firm in Medan. The conclusion of this study shows that skepticism, auditor experience, and self-efficacy have a positive and significant effect on judgment audits at the Public Accountant Office in Medan.Keywords: Skepticism, Auditor Experience, Self Efficacy, Audit Judgment
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Kesselly, Jerome M. "The Role Professional Accountant Firms play within the Liberian Market in Terms of Strategic Implementation of Financial Statement Audit." TEXILA INTERNATIONAL JOURNAL OF ACADEMIC RESEARCH 9, no. 1 (January 28, 2022): 112–19. http://dx.doi.org/10.21522/tijar.2014.09.01.art011.
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The study has evaluated the role Professional Accountant Firms play in the Liberian market and to understand the strategic tools used in implementing financial statement Audits [1]. A deductive approach was adopted, and information was collected from thirty respondents via Unstructured face-to-face interviews. Purposive sampling was engaged as this technique aided the cognizant arrangement of targeted respondents (Audit Associates, Staff Auditors, Semi Senior Auditors, Senior Auditors, Asst. Audit managers, Audit Managers, and Audit Partners). The findings show that Professional Accountant Firms in Liberia play a positive and significant role in the Liberian market. Professional Accountant Firms make great contributions in keeping Liberian businesses at full compliant with international financial reporting standards, legal and regulatory requirements, and their own policies and procedures. It is recommended that to be more efficient, Liberian businesses should embrace the role Professional Accountant Firms play within the Liberian market. It is concluded that the Liberia Institute of certified Public Accountants (LICPA) should strengthen, trained, and Licensed all Professional Accountant Firms to meet the growing need of the Professional Accounting industry in the Country.
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Indrayati, Sumiadji, and Jaswadi. "Implementing Public Accountant Professional Standards to Improve Audit Quality in Public Accountant Firms in East Java, Indonesia." International Journal of Finance & Banking Studies (2147-4486) 11, no. 1 (January 5, 2022): 34–45. http://dx.doi.org/10.20525/ijfbs.v11i1.1537.
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The purpose of this research is to adopt public accounting professional standards in Malang and Surabaya, East Java, Indonesia, in order to improve audit quality. A total of 150 junior and senior auditors, supervisors, managers, and partners from public accounting companies in Malang and Surabaya, Indonesia, were included in the sample. The study's findings revealed that the competency of the auditors performing audits on behalf of the customer had an impact on the audit quality. Recommendations for improving audit quality based on public accountants' professional standards should be maximized and implemented to public accountants' audits on the client side so that auditor quality improves and more assignments are completed.
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Chaika, O. "Simplified Monomials in English for Audit and Accounting." Mìžnarodnij fìlologìčnij časopis 12, no. 1 (December 22, 2020): 93–97. http://dx.doi.org/10.31548/philolog2021.01.093.
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Cullinan, Charles P., and Xiaochuan Zheng. "Accounting outsourcing and audit lag." Managerial Auditing Journal 32, no. 3 (March 6, 2017): 276–94. http://dx.doi.org/10.1108/maj-03-2016-1349.
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Purpose This paper examines the relationship between accounting outsourcing and audit lag. Accounting outsourcing may reduce misstatement risk, reducing the amount of audit effort necessary and thereby decrease audit lag. Alternatively, outsourcing may increase the amount of coordination necessary between the auditor, client management and the outside accounting service provider and thereby increase audit lag. Design/methodology/approach The accounting outsourcing/audit lag relationship is examined among closed-end mutual funds. These funds often outsource their accounting functions and disclose the names and services provided by any company providing services to the fund. These disclosures permit a consistent measurement of whether the fund outsources their accounting functions or performs them in-house. Findings This paper finds a positive relationship between accounting outsourcing and audit lag; outsourcing funds have audit lags that are two to three days longer than those not outsourcing their accounting. The results are robust to different specifications, controls for the distinctive characteristics of closed-end funds and consideration of endogeneity. Practical implications Closed-end funds could consider the increased time necessary to complete the audit when deciding whether to outsource their accounting functions. Originality/value By identifying a unique setting in which outsourcing data can be consistently obtained and analyzed (i.e. closed-end funds), this is the first study to empirically evaluate the relationship between accounting outsourcing and audit lag.
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Krukovskaya, Elena. "Directions of improving the quality of accounting, audit and control of agricultural enterprises leasing activities." University Economic Bulletin, no. 42 (June 19, 2019): 18–22. http://dx.doi.org/10.31470/2306-546x-2019-42-18-22.
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The subject of the study is theoretical and practical aspects of accounting, audit and control of leasing activity and improvement of their quality on the basis of the unification of transaction accounting and the regulation of audit and control procedures. The purpose of the work is to solve the problems of organization, the content and methods of accounting, audit and control of leasing activities to increase its efficiency and further distribution in agribusiness. Methodological basis of the article became as general scientific, and special methods of scientific knowledge. Methods were used: monographic, abstract-logical, dialectical, system-structural analysis, special methods of accounting and audit. Results of work. The article thoroughly investigates the issues of maintenance and improvement of accounting, audit and control of leasing operations at Ukrainian enterprises. The proposals for improving the methodology of leasing audit, individual procedures and structural elements of audit and control are substantiated. The basic stages of the audit of leasing operations are developed, taking into account the specifics of their content, which lead to an increase in the quality of the audits. The field of application of results. Conclusions and results of the article can be used in the educational-scientific process of the economic faculties of higher educational institutions. It is expedient to transfer them for practical use in the practice of agrarian enterprises, audit companies and controlling structures. Conclusions. Improving the content of accounting systems and programs of control and audit of leasing activities should be based on the following basic procedures: legal expertise of a leasing agreement with a certain influence of their accounting regulations; checking the completeness, estimating the cost and documenting the records of the leased objects; checking the accounting of lease payments; verification of amortization amounts accrued under leasing objects; verification of validity of the inclusion of lease payments in the expenses taken for the purpose of taxation of profits; studying and assessing the compliance of the tax accounting registers.
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Prena, Gine Das, and I. Wayan Angga Sudiartama. "Pengaruh Independensi dan Profesionalisme Terhadap Kualitas Audit dengan Kepuasan Kerja Sebagai Variabel Pemoderasi." WACANA EKONOMI (Jurnal Ekonomi, Bisnis dan Akuntansi) 19, no. 1 (March 2, 2020): 30–34. http://dx.doi.org/10.22225/we.19.1.1578.30-34.
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Abstract-This study aims to influence independence and professionalism on audit quality with job satisfaction as moderating variables. The research was conducted at the Public Accounting Office located in the Bali Region. The population of this research is all auditors who work at the Public Accountant Office in Bali with a purposive sampling technique to obtain a sample of 112 auditors. Data is collected using questionnaires. Data analyzed uses Moderated Regression Analysis. The results of the study show that 1) Independence has a positive effect on audit quality at the Public Accounting Firm in Bali. 2) Professionalism has a positive effect on audit quality at the Public Accountant Office in Bali. 3) Job Satisfaction strengthens the influence of Independence on audit quality at the Public Accounting Firm in Bali. 4) Job Satisfaction strengthens the influence of audit Professionalism on audit quality at the Public Accounting Firm in Bali.
Keywords: Independence; professionalism; audit quality; job satisfaction
Abstrak-Penelitian ini bertujuan untuk Pengaruh lndependensi dan Profesionalisme Terhadap Kualitas audit dengan Kepuasan Kerja sebagai Variabel Pemoderasi. Penelitian dilakukan di Kantor Akuntan Publik yang berada di Wilayah Bali. Populasi penelitian ini adalah seluruh auditor yang bekerja pada Kantor Akuntan Publik di Bali dengan teknik purposive sampling sehingga diperoleh sampel sebanyak 112 Auditor. Data dikumpulkan dengan menggunakan kuisioner. Data dianalsis mengguanakan Moderated Regression Analysis. Hasil penelitian menunjukan bahwa 1) Independensi berpengaruh positif terhadap kualitas audit pada Kantor Akuntan Publik di Bali. 2) Profesionalisme berpengaruh positif terhadap kualitas audit pada Kantor Akuntan Publik di Bali. 3) Kepuasan Kerja memperkuat pengaruh Independensi terhadap kualitas audit pada Kantor Akuntan Publik di Bali. 4) Kepuasan Kerja memperkuat pengaruh Profesionalisme audit pada kualitas audit pada Kantor Akuntan Publik di Bali.
Kata Kunci: Independensi; profesionalisme; kualitas audit; kepuasan kerja
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Barghathi, Yasser, Esinath Ndiweni, and Alhashmi Aboubaker Lasyoud. "Joint audit, audit market concentration, and audit quality: Perceptions of stakeholders in the UAE." Corporate Ownership and Control 17, no. 2 (2020): 32–45. http://dx.doi.org/10.22495/cocv17i2art3.
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The present study is intended to scholarly explore auditors’ perceptions regarding joint audits; whether it can improve audit quality. To reach this goal, participants were enrolled from Big 4, non-Big 4, and other stockholders. In addition, the present study examines the perception of the same stakeholders in terms of how audit concentration affects the audit market in the UAE. Being a qualitative study, 12 semi-structured interviews were conducted to collect required data; 4 face to face and 8 through using Google forms. The finding of the study revealed mixed perception regarding joint audits; it may improve audit quality at the cost of high fees and free-rider problems. Findings of the study has practical implication for policymakers of emerging economies around the globe, such as policymakers who can make joint audits as compulsory. Another significance of the present work is that it has allowed for the perception of stakeholders, who are at the center of the controversial subject of joint audits and audit market concentration. The study suggests that there is a need for removing language barriers; it will benefit some firms in the form of directly communicating with auditors either in English or in Urdu.
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Chang, C. Janie, Yan Luo, and Linying Zhou. "Audit deficiency and auditor workload: evidence from PCAOB triennially inspected firms." Review of Accounting and Finance 16, no. 4 (November 13, 2017): 478–96. http://dx.doi.org/10.1108/raf-03-2017-0050.
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Purpose The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB). Design/methodology/approach Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms. Findings The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period. Originality/value This study is among the first to investigate the impact of firm workload on deficient audits.
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Fauzi, Ahmad, and Ach Faqih Supandi. "Perkembangan Audit Syariah Di Indonesia." Jurnal Istiqro 5, no. 1 (January 30, 2019): 24. http://dx.doi.org/10.30739/istiqro.v5i1.339.
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Shari'ah audits, especially in Indonesia, have opportunities in Indonesia with the world's largest Muslim majority population. And the shari'ah audit challenges for future development are better, including (1) regulatory issues such as shari'ah audit standards that are inadequate, the absence of a sharia audit framework and lack of encouragement from the government. (2) Problems of human resources such as the qualifications of shari'ah auditors in accounting and syari'ah are not balanced, the limited number of shari'ah auditors, lack of accountability of shari'ah auditors (DPS) and shari'ah auditors (DPS) are less independent. (3) Audit process problems such as DPS are not yet equipped with sharia audit procedures, Ex-ante and audit ex-poses have not been maximized and the separation of financial audits with sharia audits.
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Choi, Jong-Hag, Chansog (Francis) Kim, Jeong-Bon Kim, and Yoonseok Zang. "Audit Office Size, Audit Quality, and Audit Pricing." AUDITING: A Journal of Practice & Theory 29, no. 1 (May 1, 2010): 73–97. http://dx.doi.org/10.2308/aud.2010.29.1.73.
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SUMMARY: Using a large sample of U.S. audit client firms over the period 2000–2005, this paper investigates whether and how the size of a local practice office within an audit firm (hereafter, office size) is a significant, engagement-specific factor determining audit quality and audit fees over and beyond audit firm size at the national level and auditor industry leadership at the city or office level. For our empirical tests, audit quality is measured by unsigned abnormal accruals, and the office size is measured in two different ways: one based on the number of audit clients in each office and the other based on a total of audit fees earned by each office. Our results show that the office size has significantly positive relations with both audit quality and audit fees, even after controlling for national-level audit firm size and office-level industry expertise. These positive relations support the view that large local offices provide higher-quality audits compared with small local offices, and that such quality differences are priced in the market for audit services.
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Wang, Yanyan, Lisheng Yu, and Yuping Zhao. "The Association between Audit-Partner Quality and Engagement Quality: Evidence from Financial Report Misstatements." AUDITING: A Journal of Practice & Theory 34, no. 3 (October 1, 2014): 81–111. http://dx.doi.org/10.2308/ajpt-50954.
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SUMMARY We study whether audit-partner quality influences the probability of annual report misstatements (measured by restatements) and whether various levels of quality control attenuate such influences. We measure audit-partner quality with audit failure rate (i.e., the total number of audit failures associated with an audit partner divided by the total number of audit reports signed by the same partner). We report the following key findings. First, an audit partner's past audit failure rate is positively associated with the probability that the current year annual report that he/she audits is subsequently restated. This positive association is more pronounced for engagement partners (i.e., partners who actually conduct the audits) than for review partners (i.e., partners who review the audits). Incorporating audit-partner audit failure rates substantially increases the predictive power for future financial report restatements. Second, neither engagement-team-level nor audit-firm-level quality controls consistently attenuate engagement audit partners' influence on the probability of future restatements. Third, engagement audit partners' influence on the probability of future restatements becomes stronger for audits of more important clients. Taken together, the evidence suggests that, despite various levels of quality control, audit-partner quality significantly influences engagement quality and that such influences are exacerbated by the audit partners' own economic incentives. JEL Classifications: M42. Data Availability: Data used in this study are available from public sources.
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Bhattacharjee, Sudip, Mario J. Maletta, and Kimberly K. Moreno. "The Role of Account Subjectivity and Risk of Material Misstatement on Auditors' Internal Audit Reliance Judgments." Accounting Horizons 30, no. 2 (December 1, 2015): 225–38. http://dx.doi.org/10.2308/acch-51363.
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SYNOPSIS Using a field-based questionnaire, we examine how auditors simultaneously use client-level misstatement risk (inherent risk and control risk) with account subjectivity when utilizing internal audit. We contend that auditor use of internal audit will reflect a balance of the costs and benefits of using internal audit. Prior audit research has primarily focused on lower and higher risk conditions, with relatively few studies examining the implications of moderate risk on internal audit use. Data on actual audits from an instrument administered to external auditors reveal significant differences in reliance decisions across lower, moderate, and higher misstatement risk levels. Results reveal that increases in account subjectivity have no effect on auditors' internal audit reliance when risk of material misstatement is at lower levels. However, auditors increase their internal audit reliance when account subjectivity increases across moderate misstatement risk. Finally, our results suggest that auditors decrease their internal audit reliance when account subjectivity increases across higher misstatement risk. By examining these risk variables in combination, we provide insight into the complexities associated with external auditors' internal audit usage. This research could be of interest to practitioners and academics by providing insight into how multiple risk factors may be combined when utilizing internal audit.
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Englisch, Joachim, and Nevia Cicin-Šain. "DAC 7: An Entire New Framework for Joint Audits in the EU: How Do the Taxpayers Fare?" Intertax 50, Issue 1 (January 1, 2022): 7–27. http://dx.doi.org/10.54648/taxi2022002.
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Joint audits have the potential to facilitate tax collection and at the same time enhance tax certainty for taxpayers. However, the several European Union (EU) pilot projects initiated by certain Member States made it evident that a better regulatory framework was urgently needed. The EU legislator therefore used the opportunity of the sixth amendment of the Directive on administrative cooperation, known as DAC 7, to devise a new legal framework for joint audits. In this contribution the authors discuss this latest development. They analyse some key clarifications and novelties to be found in the new Article 12a DAC regarding joint audits. The article furthermore highlights the remaining open issues and inadequacies of the joint audit provisions in DAC 7, with a particular focus on taxpayer rights. Among the issues that are analysed in depth in this article are the initiation of joint audits at the taxpayer’s request, the possibility to conduct a joint audit without the taxpayer’s consent, and the legal instruments at the disposal of the taxpayer against the initiation of a joint audit or certain audit activities. Further issues concerning the applicable law, data protection standards as well as legal instruments against the findings ensuing from a joint audit are also part of the analysis. Joint audits, DAC 7, taxpayer rights, tax secrecy, data protection, final report.
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Rizqia, Amelia, and Anies Lastiati. "Audit Quality and Tax Avoidance: The Role of Independent Commissioners and Audit Committee's Financial Expertise." Journal of Accounting Auditing and Business 4, no. 1 (January 13, 2021): 14. http://dx.doi.org/10.24198/jaab.v4i1.29642.
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Abstract: This study aims to examine the effect of audit quality on tax avoidance. It further examines whether an independent board of commissioners and the audit committee's expertise affect the relationship between audit quality and tax avoidance. The study observed manufacturing companies listed on the Indonesia Stock Exchange (IDX) and the Malaysia Stock Exchange in 2018. Tax avoidance is measured by abnormal book-tax difference, while audit quality is proxied by Big Four-accounting firm and the audit tenure. The test results show that Big Four firms lower the tax avoidance level done by corporations, but not audit tenure. Furthermore, results also show that the audit committee's financial background weakens the relationship between audit quality and tax avoidance, but not an independent board of commissioners. The results are consistently found in both countries examined. The accounting firm that audits the company's financial statements gives an impact on the displayed actual company value, but not with audit committee's expertise which ineffective in carrying out its supervisory function without an understanding of the company's operational and business activities; thus the diversity of audit committee backgrounds is still needed. Furthermore, regulators should consider adopting a policy related to the estimated useful life of assets to minimise the gaps between accounting regulations and tax regulations
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Sunarsih, Ni Made, Ni Putu Shinta Dewi, and I. Made Candra Wira Wiguna. "PENGARUH FEE AUDIT, KOMPETENSI AUDITOR, ETIKA AUDITOR DAN TEKANAN ANGGARAN WAKTU TERHADAP KUALITAS AUDIT KANTOR AKUNTAN PUBLIK WILAYAH BALI." Widya Akuntansi dan Keuangan 1, no. 2 (August 28, 2019): 49–65. http://dx.doi.org/10.32795/widyaakuntansi.v1i2.382.
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Audit quality is very important in order to maintain the trust of clients and those who use audit reports. The profession of public accounting is a profession of public trust. From the profession of public accounting, the public expects a free and impartial assessment of the information presented by company management in financial statements where the public accounting profession is responsible for raising the level of reliability of the company's financial statements, so that people obtain reliable financial information as a basis for decision making.
This study aims to re-examine the effect of audit fee variables, auditor competence, auditor ethics and time budget pressure on audit quality. The type of data used is primary data. This research was conducted at the Bali Regional Public Accountant Office. The sampling technique uses purposive sampling technique. The data analysis technique uses multiple linear regression. The population in this study were 86 auditor samples in this study were 39 auditors who worked at least 1 year and had been assigned to field work.
Based on the results of the study showed that the audit fee variable, auditor competency and auditor ethics had a positive effect on audit quality at the Bali Regional Public Accountant Office. While the results of the study show that the time budget pressure variables negatively affect audit quality at the Bali Regional Public Accountant Office.
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Ahn, Jaehan, Rani Hoitash, and Udi Hoitash. "Auditor Task-Specific Expertise: The Case of Fair Value Accounting." Accounting Review 95, no. 3 (October 11, 2019): 1–32. http://dx.doi.org/10.2308/accr-52599.
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ABSTRACT PCAOB inspections repeatedly indicate deficiencies in audits of fair-value (FV) estimates, prompting regulators to improve the related auditing standards. We predict that auditor task-specific FV expertise, gained from work experience during the audit of FV measurements, can contribute to higher audit quality. Utilizing FV-related restatements and comment letters, we find that expertise in auditing Level 3 FV estimates at the office level is associated with greater FV audit quality. Level 2 FV expertise or national level FV expertise is not associated with higher FV audit quality. Following the receipt of a comment letter, we further find that auditor FV expertise is associated with lower comment letter remediation costs and higher FV disclosure quality. Finally, we find that the value relevance of Level 3 FV disclosures increases with the extent of auditor FV expertise. Collectively, our results highlight that auditor fair value expertise contributes to the credibility and usefulness of FV disclosures.
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Richardson, Alan J. "AUDITOR SWITCHING AND THE GREAT DEPRESSION." Accounting Historians Journal 33, no. 2 (December 1, 2006): 39–62. http://dx.doi.org/10.2308/0148-4184.33.2.39.
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This paper explores the pattern of auditor switching in Canada before and during the Great Depression based on a sample of 1,344 financial statements. Hierarchical log linear analysis shows that there is a significant change in the pattern of switches. Prior to the Depression, the contemporary pattern of auditor switching is observed; that is, there is a flow of clients from small to large audit firms and from Canadian to international audit firms. During the Depression, however, this flow of clients is reversed with large international firms losing clients through switches, on average, to Canadian and smaller audit firms. The contemporary audit literature suggests possible reasons for the observed patterns in terms of the demand for higher quality audits by clients and audit firms' risk management of potential client bankruptcy.
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Choi,Sang-Moon and 도경분. "Audit Quality and Accounting Accruals." Korea International Accounting Review ll, no. 20 (December 2007): 1–16. http://dx.doi.org/10.21073/kiar.2007..20.001.
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H. Mohammed, Nishtiman, Yazar Adı Yazar Soyadı, Ku Nor Izah Ku Ismail, and Noor Afza Amran. "Audit Quality and Accounting Conservatism." journal of accounting finance and auditing studies (JAFAS) 5, no. 2 (April 1, 2019): 1–23. http://dx.doi.org/10.32602/jafas.2019.17.
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McSWEENEY, BRENDAN. "ACCOUNTING FOR THE AUDIT COMMISSION." Political Quarterly 59, no. 1 (January 1988): 28–43. http://dx.doi.org/10.1111/j.1467-923x.1988.tb02379.x.
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Holloway, David G. "Accounting for the Audit Commission." Educational Management & Administration 26, no. 1 (January 1998): 49–56. http://dx.doi.org/10.1177/0263211x98261005.
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Boginskaya, Zoya, and Tatyana Gladkova. "Accounting Reliability Concept: Audit Practices." Auditor 7, no. 10 (November 3, 2021): 33–39. http://dx.doi.org/10.12737/1998-0701-2021-7-10-33-39.
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Practical aspects of applicable concepts for the preparation of reliable financial statements are analyzed, in particular, an overview and analysis of typical errors encountered in the practice of auditing accounting statements. Theoretical aspects of qualification and interpretation of errors in relation to changes of relevant documents regulating audit are considered; a list of typical errors made during the preparation of financial statements for 2018-2020 is indicated; the actions of the auditor in relation to the identified errors are formulated; analysis of the impact of errors on the auditor’s opinion on the reliability of accounting statements in audit reports.
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Kim, Hyungtae, Byungjin Kwak, Youngdeok Lim, and Jaeyoon Yu. "Audit committee accounting expertise, CEO power, and audit pricing." Asia-Pacific Journal of Accounting & Economics 24, no. 3-4 (November 3, 2015): 421–39. http://dx.doi.org/10.1080/16081625.2015.1105753.
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Baatwah, Saeed Rabea, Zalailah Salleh, and Jenny Stewart. "Audit committee chair accounting expertise and audit report timeliness." Asian Review of Accounting 27, no. 2 (May 7, 2019): 273–306. http://dx.doi.org/10.1108/ara-12-2017-0190.
Full textAbstract:
Purpose The purpose of this paper is to investigate whether the characteristics of the audit committee (AC) chair affect audit report timeliness. In particular, the direct association between AC chair accounting expertise and audit report delay, and the moderating effect of other characteristics of AC chair on this association are examined. Design/methodology/approach To achieve the purpose of this study, the characteristics examined by this study are AC chair expertise, shareholding, tenure and multiple directorships. Furthermore, a sample of Malaysian companies during the period 2005–2011 and the fixed effects panel data method are utilized. Findings The results suggest that an AC chair with accounting expertise is associated with a reduction in audit delay. The reduction is more obvious when the chair holds shares in the company, but is weakened by longer tenure and multiple directorships. These results are robust after conducting several robust tests. Using mediating analysis, the authors also document that an AC chair with accounting expertise can enhance the timeliness of audit reports even when the quality of financial reporting is lower. The reported result is supported by additional analysis that finds that AC chairs with accounting expertise and AC chairs with accounting expertise and shareholding are significantly associated with shorter abnormal audit delay. Originality/value This study provides comprehensive analysis concerning the association between AC chair and audit report timeliness using a unique setting. It is among the limited evidence that reports the moderating effect of AC chair characteristics on the role of such chair on audit report timeliness.