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As a consequence of the global financial and economic crisis, the European Commission recently reformed the audit market. One objective was to restore public trust in the auditing profession and thus to enhance the audit function. This study investigates whether perceptions of auditor independence and audit quality are influenced by audit firm rotation, auditor retention and joint audits, because regulators argue that these instruments can improve auditor independence and audit quality. Therefore, we conduct an experiment with bank directors and institutional investors in Germany. The results indicate a negative main effect for joint audits on perceived auditor independence, and that a rotation cycle of 24 years marginally significantly impairs participant perceptions of audit quality, compared to a rotation cycle of only ten years. Besides the main effects, planned contrast tests suggest a negative interaction between rotation and joint audit on participant perceptions of auditor independence. Moreover, a negative interaction effect is revealed between rotation after 24 years and retention on perceptions of audit quality. It is particularly noteworthy that we failed to identify a positive impact of the regulatory measures taken or supported by the European Commission on perceptions of auditor independence and audit quality.

The purpose of this paper is to analyze the impact of the off-office audit of natural resource assets on the prevention and control of water pollution against a background of big data using a differences-in-differences model.

This study constructs a differences-in-differences model to evaluate the policy effects of off-office audit based on panel data from 11 cities in Anhui Province, China, from 2011 to 2017, and analyzes the dynamic effect of the audit and intermediary effect of industrial structure.

The implementation of the audit system can effectively reduce water pollution. Dynamic effect analysis showed that the audit policy can not only improve the quality of water resources but can also have a cumulative effect over time. That is, the prevention and control effect on water pollution is getting stronger and stronger. The results of the robustness test verified the effectiveness of water pollution prevention and control. However, the results of the influence mechanism analysis showed that the mediating effect of the industrial structure was not obvious in the short term.

These findings shed light on the effect of the off-office audit of natural resource assets on the prevention and control of water pollution, and provide a theoretical basis for the formulation of relevant environmental policies. Furthermore, these findings show that the implementation of the audit system can effectively reduce water pollution, which has practical significance for the sustainable development of China's economy against the background of big data.

This study quantitatively analyzes the policy effect of off-office auditing from the perspective of water resources based on a big data background, which differs from the existing research that mainly focuses on basic theoretical analysis.

This study aims to investigate the busy season contagion effects on other clients of the Big 4 auditor’s local office associated with the non-timely (NT) filing(s) by large accelerated filer (LAF) client(s) of the office. Specifically, the authors examine the influence such events have on the audit quality and timeliness of other clients of that office.

Using panel data of annual NT filings of LAF clients between 2006 and 2019, the authors apply the ordinary least squares regression technique to model audit reporting lag (ARL) and the logistic regression technique to model the probability of restatements.

Controlling for audit firm, industry and year-fixed effects, the authors find that a LAF NT filing reduces audit quality and audit timeliness of other clients of the office, as measured by restatement risk and ARL. The impact on ARL is most pronounced on the medium and small clients within the office. The deteriorated audit quality is observed for medium clients.

The results of this study have practical implications for auditors and regulators. They reveal the contagion effect in the auditor’s local office with the NT LAF client. The main limitation of the study is the lack of staffing utilization data to allow for drawing conclusions on causality.

To the best of the authors’ knowledge, this is the first study to document the contagion effect of NT filings of LAF clients conducted at the auditor’s local office level.

Auditing is seasonal, with the majority of U.S. public companies having a December fiscal year-end. This results in an audit “busy season” and “off-season” with a non-trivial seasonal impact on the pricing of audit services. We apply an economic framework that explains how audit seasonality affects both the magnitude and the price elasticity of audit demand and audit supply. We find that the audit busy season is associated with an audit fee premium of approximately 10% based on a meta-analysis of 97 analyses from 18 audit fee studies of U.S public companies. A meta-regression of the contextual differences in research design between studies reveals that examining only Big N attenuates the busy season effect size but does not eliminate it, and that the busy season effect size may be larger post-SOX.

The purpose of this paper is to examine the determinants of audit report lag in Sub-Saharan African Central Banks. In this case, the determinants were divided into two categories: independent variables and mediating variables. The independent variables, which were generated from board characteristics, included board size, board gender diversity, governor duality, audit committee size and audit committee meetings. The mediating variables were auditing characteristics and they comprised audit mandate, audit approach and audit quality.

The study used data from 192 observations from African Central Banks' financial reports for the period 2000–2016. The data collected were analyzed using path analysis, whereby four regression models were run and tested simultaneously. From the analysis, the study determined total effects and then decomposed the total effects into direct and indirect effects.

The study results indicate that in the case of board characteristics, governor duality and audit committee size were found to have a positive influence on audit report lag. In the case of audit quality, only audit mandate was found to have a negative influence on audit quality in the Central Banks. However, the introduction of mediating variables increased the positive effect of governor duality and audit committee size, while also making board size and board gender diversity have a significant negative effect on audit report lag.

The findings of this paper have implications for the practice and policy of the auditing and governance of Central Banks, which includes designing appropriate governance structures as well as proper auditing strategies.

This is the first study which has examined factors influencing audit report lag in Central Banks. Previous studies on Central Banks' governance have examined the independence and autonomy of the Central Banks, as well as their accounting. This paper extends prior studies by examining the effects of those factors. Another contribution is the study's application of auditing characteristics as mediating variables.

This study aims to empirically evaluate the effectiveness of government auditing of local authorities’ compliance with the procurement rules.

A diff-in-diff approach is used where the measure of compliance is (changes in) the incidence of private litigation under the Public Procurement Act, in audited vs non-audited municipalities. Further, semi-structured interviews were conducted with chief procurement officials.

No statistically significant effect is found. While strong effects of audits can be ruled out, the statistical results and the interviews do not, however, contradict a modest but long-lasting effect.

Few studies have addressed the effect of public procurement auditing on compliance. This study develops an empirical framework and presents empirical results.

The main objective on this research is providing evidence of the contagion effect of decreasing audit's quality. Audit failure affects the quality of the financial analysis that has been carried out and has a big impact on the accuracy of decision making due to the material information bias. Findings of this research will urge the Public Accounting Firm (PAF) to design a quality control of the audit services. This action is taken with the consideration of maintaining the quality of audit services and the reputation of auditors.

Utilizing manufacturing data listed on Bursa Efek Indonesia (BEI), the researchers developed a model to explain the audit failure which is seen from restatement of financial statement in the subsequent period.

This research indicates that audit failure to detect the misstatement will decrease the audit's quality of other companies audited by the same auditor. There is also an insight that contagion effect of decreasing auditor quality was stronger for non-big four and non-industry specialist auditors.

Audit failure still has the potential to occur. There is the potential that a failure in an audit of a particular client entity has an impact on defects of other clients served. If this allegation is proven, there are big challenges faced by the public accounting profession and PAF to pay special attention in order to maintain the professional reputation.

Professional body and government need to develop a robust standard and operating procedures as well as quality control on audit engagement.

Due to the intention of fraud occurred in Indonesia, namely SNP Finance and Garuda Indonesia case. It is important to learn from that cases. This research gives fruitful insights to prevent the same case in the future.

This paper reviews studies that have examined how accounting information impacts commercial lending judgments. Issues discussed involve the usefulness of accounting data in lending decisions, effects of different accounting methods on lenders’ judgments, bankruptcy and default judgments, and decision processes pertaining to the use of accounting information in lending decisions. Additionally, the paper reviews the research on how audits and other forms of assurance influence commercial loan officers’ judgments. Topics include the way perceived auditor independence influences loan officers’ judgments, the impact of financial statement audits and audit opinions on lending decisions, how internal control reports and other CPA firm reports influence loan decisions, ways in which audit report disclosures and wording impact lending decisions, how perceived auditor quality affects lending decisions, and the effects of limited assurance engagements on loan officers’ judgments.

This paper aims to investigate whether close auditor-client relationships affect audit quality over the tenure of the audit partner and the potential role of partner rotation in mitigating this effect.

Using the Chinese mandatory audit partner rotation setting, the authors identify the existence of a close auditor-client relationship if the audit partner tenure with a client is larger than the audit firm tenure with that client. The sample period (1998–2009) is divided into voluntary and mandatory rotation periods when examining the effects of audit partner tenure on audit quality for the normal and close auditor-client relationship subsamples, respectively. The authors also conduct a propensity score matching analysis to address a selection issue.

The paper finds that under the voluntary partner rotation regime, audit quality decreases with audit partner tenure for the subsample with close auditor-client relationships, whereas this effect is not shown in the normal relationship subsample. However, audit quality no longer declines with audit partner tenure under the mandatory partner rotation regime.

This is the first study that directly examines the effect of audit partner tenure on audit quality associated with close auditor-client relationships under the voluntary and mandatory partner rotation regimes.

The purpose of this study is to illustrate the potentially detrimental effects on audit decision-making of certain judgmental heuristics, which can lead to systematic judgmental biases. This paper provides background on the heuristics and biases approaches to decision-making to increase auditors' awareness of the anchoring and adjustment effects affecting audit judgments adversely.

This study reports the results of an experimental research design analyzing the audit judgment of 85 auditors in Switzerland.

Based on the results of the experiment, the results indicate evidence on the existence of the anchoring and adjustment heuristic in Swiss audit judgments. The authors could identify an influence of the audit company size, the auditors' experience and the auditors' knowledge about behaviorism and anchor heuristic with regard to the anchoring and adjustment effect on audit judgment.

The experimental tasks were relatively simple abstractions from the more complex analytical review situations faced by practicing auditors. Due to the small sample size, the authors cannot ensure representativeness of the results.

Professional judgment is a skill that auditor acquires overtime, combined with experience and knowledge, that allows him to achieve reasonable judgments, being independent of other opinions and free from material biases in a given circumstance. Our results show that auditors who are aware of biases and heuristics are less prone to judgment biases.

This paper is the first to analyze the impact of auditors' explicit experience and knowledge about behaviorism and anchor heuristic on the anchoring and adjustment effect on audit judgment. Through a stronger awareness of cognitive biases, a professional skepticism can be enhanced.