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Reinforcing users’ confidence in statutory audit during a post-crisis period : An empirical study

Umar-Farook Aziz (Department of Accounting and Finance, Leicester Business School, De Montfort University, Leicester, UK)
Kamil Omoteso (Department of Economics, Finance and Accounting, Coventry Business School, Coventry University, Coventry, UK)

Journal of Applied Accounting Research

ISSN: 0967-5426

Article publication date: 4 November 2014

682

Abstract

Purpose

The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its value relevance and decision usefulness in the aftermath of the financial crisis.

Design/methodology/approach

This research used a structured questionnaire to collect data from practising accountants, auditors and accounting academics within the UK. A factor analysis was undertaken to examine the potential inter-correlations that could exist between different factors obtained from the literature. The analysis reduced these variables into the more important factors which were subsequently modelled in a logistic regression analysis.

Findings

The paper identified, as critical factors for enhancing statutory audits, “a continuously updated accounting curriculum”, “expansion of the auditor's role”, “frequent meetings between regulators and auditors”, “mandatory rotation of auditors”, “limiting the provision of non-audit services”, “knowledge requirements from disciplines other than accounting” and “encouraging joint audits”. It is hoped that addressing these issues might improve confidence in the audit profession, thereby reinforcing its value relevance.

Research limitations/implications

The study's findings imply that professional accountancy bodies, accounting educators and accounting firms will need to incorporate the key factors identified in this study into their curriculum and training schemes. However, the generalisability of these findings might be limited as the research data were primarily obtained from UK accountants alone.

Originality/value

This study extends the frontiers of knowledge on critical factors that could reinforce users’ confidence in the statutory audit function and have implications for policy and practice.

Keywords

Acknowledgements

The authors acknowledge the feedback on the earlier version of this paper from participants at the British Accounting and Finance Association's Joint Annual Conference of the Northern Area Group and Interdisciplinary Perspectives Special Interest Group held in September 2013 at Nottingham Trent University, UK. The authors also thank the Guest Editors and the two anonymous reviewers for their comments and useful suggestions.

Citation

Aziz, U.-F. and Omoteso, K. (2014), "Reinforcing users’ confidence in statutory audit during a post-crisis period : An empirical study", Journal of Applied Accounting Research, Vol. 15 No. 3, pp. 308-322. https://doi.org/10.1108/JAAR-11-2013-0108

Publisher

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Emerald Group Publishing Limited

Copyright © 2014, Emerald Group Publishing Limited

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