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1 – 10 of over 1000Barbara Borgato and Pier Luigi Marchini
The purpose of this paper is to explore the practice of integrated reporting (IR) assurance from the auditors’ point of view, including the main challenges to be addressed and…
Abstract
Purpose
The purpose of this paper is to explore the practice of integrated reporting (IR) assurance from the auditors’ point of view, including the main challenges to be addressed and insights on evolution and potential new assurance approaches.
Design/methodology/approach
Based on an exploratory research design, the paper conducted semi-structured interviews with 10 expert auditors, accounting assurance providers and non-accounting assurance providers, in the Italian context, combining an open coding approach with an axial coding approach, and using a three-stage process to organize data.
Findings
Respondents confirmed that current IR practices do not represent a real paradigm shift and that the need for in-depth changes in the assurance approach will depend on how these practices evolve. The main challenges highlighted are the absence of suitable criteria, the difficulty of assuring narratives and future-oriented information, and the low level of maturity of internal systems and processes of companies and stakeholders. Proposals for overcoming these challenges are framed mainly within current assurance models, although some respondents pointed out the need for a shift towards new assurance approaches.
Research limitations/implications
The paper relies on a small sample of well-informed subjects active in Italy; thus, the results may not represent the views of all auditors.
Practical implications
The findings identify areas that practitioners and assurance provider firms should focus on, looking to IR assurance and its growing importance and application as a future business area. They may be useful to standard setters and regulators to better understand limits and opportunities of requiring IR assurance on specific information not strictly related to financial information, and for the development of guidance or standards for IR assurance.
Originality/value
This research contributes to the currently underexplored area of IR assurance. Relatively few studies have investigated this topic from an empirical point of view, and no study involving auditors has been carried out in the Italian context.
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Mahdi Salehi, Hossein Tarighi and Tahereh Alidoust Shahri
The purpose of this paper is to investigate the relationship between auditor characteristics and the level of tax avoidance in an emerging market.
Abstract
Purpose
The purpose of this paper is to investigate the relationship between auditor characteristics and the level of tax avoidance in an emerging market.
Design/methodology/approach
In this regard, the effect of various factors such as auditor tenure, auditor industry specialization, audit reports and audit fees on tax avoidance was examined. The study sample includes listed companies in the Tehran Stock Exchange. The time period of study is six years from 2011 to 2016. Also in this study, firm size, leverage, firm age and auditor size were controlled.
Findings
The results of this research were determined in four hypotheses. First and second hypotheses that explore the relationship between auditor tenure and auditor industry specialization with tax avoidance were not confirmed. But the results showed a significant relationship between the type of audit opinions and audit fees with tax avoidance.
Originality/value
The current study investigates the auditor characteristics on tax avoidance in a developing nation of Iran and the results may helpful the developing countries.
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Henry Jarva and Teresa Zeitler
The purpose of this paper is to examine the implications of the COVID-19 pandemic on internal auditing as the pandemic forced individual internal auditors and audit teams to…
Abstract
Purpose
The purpose of this paper is to examine the implications of the COVID-19 pandemic on internal auditing as the pandemic forced individual internal auditors and audit teams to conduct the work remotely.
Design/methodology/approach
Five in-depth semi-structured interviews of internal audit experts that work in German retail and manufacturing industry were conducted between February and April 2021.
Findings
The authors find that the importance of audit technologies did not change significantly due to the pandemic, as audit technologies were already an integral part of internal audits. Interestingly, the transition to remote audits occurred with remarkable speed and efficiency. The presence of well-functioning information and communication technologies emerges as a critical facilitator for effective remote communication, collaboration and data exchange. However, audit technologies can only partially replace physical on-site examinations and human interaction. The main challenges of remote audits are related to the auditing of non-digitalized processes and the inherent limitations of auditee interviews and interactions.
Research limitations/implications
The authors' interview approach does not allow to cover variations between industries and between countries. While internal audit experts provided notably consistent responses during the interviews, acknowledging that the sample size is very small is important.
Practical implications
The COVID-19 pandemic serves as a catalyst for increased digitalization and technology adoption within the realm of internal auditing. A hybrid approach combining the benefits of on-site and remote audits is expected to prevail in the future.
Originality/value
The paper is among the first to document the effects of the COVID-19 pandemic on the work of internal auditing using field-based research methods.
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Domenico Campa, Alberto Quagli and Paola Ramassa
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Abstract
Purpose
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Design/methodology/approach
This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.
Findings
The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.
Research limitations/implications
This study outlines directions for future accounting research on fraud.
Practical implications
The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.
Originality/value
This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.
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This study aims to understand independence in internal auditing by investigating how internal auditor independence is constructed when analysed in its corporate governance context.
Abstract
Purpose
This study aims to understand independence in internal auditing by investigating how internal auditor independence is constructed when analysed in its corporate governance context.
Design/methodology/approach
A critical discourse analysis (CDA) of the corporate governance reports of Swedish large stock market listed non-financial companies, for three consecutive years, is undertaken, using a theoretical lens of organisational embeddedness and operational coupling to understand independence as a situated practice.
Findings
The study develops four archetypes of internal auditor independence – autarchic, instrumental, symbiotic and subservient – and discusses each archetype's implications for independence, related to tripartite relations with management and the audit committee, regarding who has the mandate to direct work and how the work is done. It finds that internal auditors always have a capacity to be independent. Although they are not independent in relation to agents in the subservient archetype, they are independent of those down the organisational chain of command, suggesting independence is both situational and relational.
Research limitations/implications
The analysis contributes a novel approach to the literature and develops a conception of independence using the dimensions of embeddedness and coupling. The archetypes offer an analytical framework for future studies on independence.
Practical implications
Internal auditors may understand their practice differently through the archetypes that result from this study.
Social implications
Internal auditors' power relations within corporate governance further an understanding of the pressures on internal auditors and their role.
Originality/value
This study contributes new knowledge on the situatedness of independence by showing how internal auditors are embedded and coupled helps build their independence.
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The purpose of this paper is to analyze how “New Deal” regulatory initiatives, primarily the Securities Acts and the Securities and Exchange Commission (SEC), changed US auditors’…
Abstract
Purpose
The purpose of this paper is to analyze how “New Deal” regulatory initiatives, primarily the Securities Acts and the Securities and Exchange Commission (SEC), changed US auditors’ professional knowledge conception, culminating in the 1938 expansion of the Committee on Accounting Procedure (CAP), the first US body to set accounting principles.
Design/methodology/approach
The paper combines Halliday’s (1985) knowledge mandates with Hancher and Moran’s (1989) regulatory space to attain a theory-based understanding of auditors’ changing knowledge conceptions amid regulatory pressure. It draws on a range of primary and secondary sources to examine the period from 1929 to 1938.
Findings
Following the stock market crash, the newly created SEC aimed to engage auditors as a means to regulate companies’ accounting practices based on a set of codified principles. While entailing increased status, this new role conflicted with the auditors’ knowledge conception, which was based on professional judgment and personal integrity. Pressure from the SEC and academics eventually made auditors agree to a codification of their professional knowledge and create the CAP as a cooperative regulatory solution.
Originality/value
The paper explores the role of auditors’ knowledge conceptions in the emergence of today’s standard setting. It is suggested that auditors’ incomplete control of their professional knowledge made standard setting a form of co-regulation, located between the actors occupying the regulatory space of accounting.
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Deepak Verma, Varun Dawar and Pankaj Chaudhary
The present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India…
Abstract
Purpose
The present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India, considered an emerging market.
Design/methodology/approach
The sample selected represents the 376 non-financial firms listed on the Bombay Stock Exchange (BSE). With a 20-year time frame, the authors used the absolute value of discretionary accruals (McNichols, 2002) (DA) as a proxy for EM, which is inversely related to EQ. The authors analyzed data using OLS, fixed effect (FE), 2SLS and Panel-IV estimators.
Findings
The authors found that most audit attributes positively affect EQ. In the Indian context, joint auditor (JA), auditor size (A_SIZE), auditor fee (A_FEE) and auditor tenure (A_TENURE) have a negative association with EM indicating high EQ. In contrast, auditor rotation (A_ROTATON) positively affects EM confirming low EQ.
Research limitations/implications
The present study uses Big-4 and its member firms as a proxy of auditor size (A_SIZE); instead, other bases may be taken for it, like the dominant audit firms in a particular industry in sample data, etc. The authors have started audit tenure from the base year, i.e. 2001, which may ignore the association of auditor and auditee just before 2001.
Practical implications
The study findings would enhance policymakers' willingness to prepare appropriate regulations regarding JAs and auditor rotation, which might improve financial market efficiency and reduce financial fraud among Indian corporates.
Originality/value
To the best of the authors' knowledge, this is the first study to incorporate “Joint Auditor” (JA) as a proxy for audit quality in the Indian context, which might significantly contribute to the literature.
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Manh Dung Tran, Khairil Faizal Khairi and Nur Hidayah Laili
The purpose of this paper is to investigate the differences of audit quality of financial statements among auditors, including Big 4 and non-Big 4 auditors.
Abstract
Purpose
The purpose of this paper is to investigate the differences of audit quality of financial statements among auditors, including Big 4 and non-Big 4 auditors.
Design/methodology/approach
By employing cross-sectional analysis of compliance (a proxy of audit quality) of goodwill impairment testing of listed firms in the context of Hong Kong, the variation of audit quality of financial statements of auditees has been shown.
Findings
Audit quality of Big 4 auditors is viewed to be higher than that of non-Big 4 audit firms and the homogeneity of audit quality among Big 4 auditors is not long accepted, but variation.
Practical implications
Even though unqualified opinions have been given on the auditors’ reports, the quality of financial statements audit is a skeptical issue because of the high level of non-compliance of goodwill impairment testing under International Financial Reporting Standards.
Originality/value
This study does emphasize the higher audit quality of financial statements of Big 4 auditors than that of non-Big 4 auditors and stresses the variation of audit quality among Big 4 auditors.
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Filmiar Yunida Nawangsari and Iswajuni Iswajuni
The purpose of this paper is to examine the effects of simultaneous and partial auditor switching toward the abnormal return of manufacturing companies listed in Indonesia Stock…
Abstract
Purpose
The purpose of this paper is to examine the effects of simultaneous and partial auditor switching toward the abnormal return of manufacturing companies listed in Indonesia Stock Exchange between 2009 and 2012.
Design/methodology/approach
Auditor switching is divided into some types: lateral Big 4 to Big 4 (B4B4), lateral non Big 4 to non Big 4 (NB4NB4), cross-up (CU) and cross-down. The abnormal return is measured with a market-adjusted model. In this study, company size is used as the control variable and is measured using the natural logarithm of the total assets (LnTA) and return on equity. Multiple linear regression is used for analysis with significant value a= 5 percent. The hypotheses were tested using f-test and t-test.
Findings
The result shows that simultaneous auditor switchings affect the abnormal return. In partial auditor switching, only CU switch has effects on the abnormal return.
Originality/value
This study provides additional literature on the effect of auditor switching, especially on an abnormal return.
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Muhammad Rifqi Abdillah, Agus Widodo Mardijuwono and Habiburrochman Habiburrochman
The purpose of this paper is to examine and analyze the factors that affect an auditor’s efficiency in completing the audit process proxied by audit report lag. The factors used…
Abstract
Purpose
The purpose of this paper is to examine and analyze the factors that affect an auditor’s efficiency in completing the audit process proxied by audit report lag. The factors used in this study are selected by looking at the characteristics of the company and the characteristics of an auditor.
Design/methodology/approach
Company characteristics were proxied by the audit committee effectiveness, financial condition, accounting complexity and profitability, whereas auditor characteristics were proxied with auditor reputation, audit tenure and auditors industry specialization. Populations of this study were all manufacturing companies listed in Indonesian Stock Exchange in 2014–2016. Based on the purposive sampling method, the number of samples obtained from 231 companies was 77. Multiple linear regression method was used to analyze this study. Hypothesis testing was done by statistical t-test (partial).
Findings
The results showed that partially variables of the audit committee effectiveness and profitability had a significant negative effect on audit report lag while the variable financial condition had a significant positive effect on audit report lag. Meanwhile, variables of the accounting complexity, auditor reputation, audit tenure and auditors’ industry specialization did not show significant influence on audit report lag.
Originality/value
This study tests both company’s and auditor’s characteristic on audit report lag that as far as authors know never been tested simultaneously.
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