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Article
Publication date: 1 August 2003

Zabihollah Rezaee, Kingsley O. Olibe and George Minmier

An increasing number of earnings restatements along with many allegations of financial statement fraud committed by high profile companies (e.g. Enron, WorldCom, Global…

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15057

Abstract

An increasing number of earnings restatements along with many allegations of financial statement fraud committed by high profile companies (e.g. Enron, WorldCom, Global Crossing, Adelphia) has eroded the public confidence in corporate governance, the financial reporting process, and audit functions. The Sarbanes‐Oxley Act of 2002 was an attempt to regain confidence and trust in corporate America and the accounting profession. The Act addresses corporate scandals and the perceived crisis in the auditing profession. Some of its provisions relate to the audit committee oversight function over corporate governance, financial reporting, internal control structure, internal audit functions, and external audit services. This study examines three types of audit committee disclosures: the annual report of the audit committee; reporting of the audit committee charter in the proxy statement at least once every three years; and disclosure in the proxy statement of whether the audit committee had fulfilled its responsibilities as specified in the charter. This study conducts a content analysis on audit committee disclosures of Fortune 100 companies.

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Managerial Auditing Journal, vol. 18 no. 6/7
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 14 March 2016

Henry Huang and H. Gin Chong

This paper aims to analyze Public Companies Accounting Oversight Board (PCAOB) inspection reports on audit reports of those inspected accounting firms in Brazil, Russia…

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348

Abstract

Purpose

This paper aims to analyze Public Companies Accounting Oversight Board (PCAOB) inspection reports on audit reports of those inspected accounting firms in Brazil, Russia, India and China (BRIC). In meeting the requirements of the Sarbanes-Oxley Act, the PCAOB conducts inspections on audit reports of firms listed on the New York Stock Exchange.

Design/methodology/approach

The reports include those submitted by both the US audit parent firms and their secondary firms located outside the USA. In each PCAOB report, it unravels the nature of audit deficiencies. The focus is on Big Four because they play a dominant role in the marketplace and issuers’ market capitalization. All the seven-year deficiencies are documented since publications of the reports from 2004 to 2012.

Findings

Of the 37 reports, 19 (51 per cent) were issued relating to audits conducted by the Big Four. Out of these 19 reports, 10 (53 per cent) contain inspection criticism. These include audit quality and common recurring audit deficiencies.

Research limitations/implications

This paper is based solely on those inspection reports published by the PCAOB.

Practical implications

The findings have significant implications to audit firms and the audit profession on improving audit quality, firms’ internal control and reports.

Originality/value

No known prior research paper is available on the ramifications of the PCAOB’s inspection reports relating to BRIC.

Details

International Journal of Law and Management, vol. 58 no. 2
Type: Research Article
ISSN: 1754-243X

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Article
Publication date: 1 March 1992

Dale L. Flesher

Describes how audit reports issued by the General Accounting Office(GAO) can be used to teach internal auditing students not only aboutaudit reports, but the wide…

Abstract

Describes how audit reports issued by the General Accounting Office (GAO) can be used to teach internal auditing students not only about audit reports, but the wide subject‐matter examined by internal auditors. Audit reports are available free from the GAO. Details how students learn by comparing the GAO reports with the recommendations in textbooks and journal articles.

Details

Managerial Auditing Journal, vol. 7 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 September 2005

Ros Collins, Ruth Lewis, Adrian Flynn, Michael Emmans Dean, Lindsey Myers, Paul Wilson and Alison Eastwood

The Centre for Reviews and Dissemination was commissioned to conduct a systmatic review of clinical audits undertaken to assess the implementation and effectiveness of the…

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1109

Abstract

Purpose

The Centre for Reviews and Dissemination was commissioned to conduct a systmatic review of clinical audits undertaken to assess the implementation and effectiveness of the National Health Service (NHS) two‐week waiting time policy for cancer referrals in England and Wales. This paper highlights the logistical difficulties experienced by the review team in trying to obtain information from the NHS, and discusses what needs to be done in order to improve the reporting and usefulness of clinical audit reports.

Design/methodology/approach

A total of 650 key individuals within NHS Trusts and Strategic Health Authorities were contacted for copies of relevant audits. Other key individuals and organisations across the NHS were also contacted, web sites of key organisations searched, requests for audits on relevant e‐mail discussion lists posted and electronic databases and conference proceedings searched.

Findings

Finds that many trusts do not appear to hold a centralised record of what clinical audits have been performed within the trust. In many instances several follow‐up contacts were necessary. The majority of included audits were poorly reported, with fewer than half providing sufficient detail on methodological aspects for the audit to be reproducible.

Practical implications

There should be a system of recording ongoing and completed audits conducted within the NHS, to ensure that audit reports are produced and accessible. The NHS needs to make sure that not only are appropriate audit methods used but that audit reports are written up in sufficient detail to allow the reader to ascertain how the audit was conducted and to assess the validity of the results. Documentary evidence of action plans would make it easier for those not directly involved in the audit to assess if, and in what ways, the audit findings are being acted upon to improve existing practices and procedures.

Originality/value

This paper discusses what needs to be done in order to improve the reporting and usefulness of clinical audit reports.

Details

Clinical Governance: An International Journal, vol. 10 no. 3
Type: Research Article
ISSN: 1477-7274

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Article
Publication date: 1 January 1986

Glenn E. Sumners and Richard A. Roy

Conducting an audit is an input. Gaining effective action on the findings is an output. Auditors need therefore to involve their clients more in the total process.

Abstract

Conducting an audit is an input. Gaining effective action on the findings is an output. Auditors need therefore to involve their clients more in the total process.

Details

Managerial Auditing Journal, vol. 1 no. 1
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 12 October 2010

Eric G. Olson

It is clear that the trend toward measuring and managing greenhouse gas (GHG) emissions on a global scale is not slowing, even though different countries and geographic…

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2741

Abstract

Purpose

It is clear that the trend toward measuring and managing greenhouse gas (GHG) emissions on a global scale is not slowing, even though different countries and geographic regions are approaching the issue with different points of view and different levels of vigor. Along with an increase in measuring and managing GHG emissions, enterprises around the world should expect to see a higher level of independent assurance and audit reporting needed. The purpose of this paper is to identify and discuss the challenges and opportunities that accompany GHG emissions accounting and auditing, as well as the supply chain and operational dependencies that are different from traditional financial auditing.

Design/methodology/approach

This paper explores the challenges and opportunities from measuring and auditing GHG emissions, and contrasts audits of sustainability information with more traditional financial auditing. It also explores some of the issues in supply chain and operational dependencies that are important in measuring and auditing GHG emissions and are different from more traditional accounting practices.

Findings

With the importance of processes to independently audit GHG emissions and natural resource consumption expected to grow in the future, it is important to understand how past experience with financial accounting and auditing can play a role in shaping the future for environmental stewardship. This paper shows that there are a number of key differences between financial and carbon auditing, which must be considered as enterprises begin to consider how to best support increasingly important sustainability reporting. As more publicly traded firms voluntarily issue sustainability reports and new legislation drives a greater need for standardized carbon accounting, so too will the need for auditing GHG emissions grow. This paper explains that GHG auditing will require cross‐functional skills with operational and process knowledge, accounting capabilities and an understanding of how operational data correlates with estimates for GHG emissions.

Originality/value

Much existing work addresses why, where, how, and who should be measuring and managing GHG emissions, but little attention is being given to the unique challenges that must be overcome in order to achieve reporting transparency. Independent auditing of GHG emissions has maintained a low profile while reporting is voluntary and standards are not fully agreed upon. However, with the possibility of legally binding legislation on the horizon, enterprises that are prepared to audit their GHG emissions and resolve issues early will be well positioned from both a compliance and market‐competition perspective.

Details

Managerial Auditing Journal, vol. 25 no. 9
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 1 August 1996

Barry J. Bryan

Examines the influence of various audit firm and client characteristics on compliance with Generally Accepted Auditing Standards’ (GAAS) reporting standards for private…

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952

Abstract

Examines the influence of various audit firm and client characteristics on compliance with Generally Accepted Auditing Standards’ (GAAS) reporting standards for private sector audits performed by small audit firms. Because prior studies in this area have focused on public sector audits, an important contribution of this study is the use of an observable quality measure as the dependent variable on audits performed in the private sector. Obtains data for the study from the quality reviews of firms licensed to practise in the State of Arkansas during the years 1989‐1991. Suggests that audit fees, the complexity of the engagement and membership in the state Certified Public Accountants’ society are positively related to compliance with GAAS reporting standards on private sector engagements performed by small audit firms. In addition, firm size is negatively related to compliance with GAAS reporting standards on private sector engagements performed by small audit firms.

Details

Managerial Auditing Journal, vol. 11 no. 6
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 18 January 2022

Michael Kend and Lan Anh Nguyen

The purpose of this study is to explore audit procedure disclosures related to key audit risks, during the prior year and the initial year of the COVID-19 outbreak, by…

Abstract

Purpose

The purpose of this study is to explore audit procedure disclosures related to key audit risks, during the prior year and the initial year of the COVID-19 outbreak, by reporting on matters published in over 3,000 Australian statutory audit reports during 2019 and 2020.

Design/methodology/approach

This study partially uses latent semantic analysis methods to apply textual and readability analyses to external audit reports in Australia. The authors measure the tone of the audit reports using the Loughran and McDonald (2011) approach.

Findings

The authors find that 3% of audit procedures undertaken during 2020 were designed to address audit risks associated with the COVID-19 pandemic. As a percentage of total audit procedures undertaken during 2020, the authors find that smaller practitioners reported much less audit procedures related to COVID-19 audit risks than most larger audit firms. Finally, the textual analysis further found differences in the sentiment or tone of words used by different auditors in 2020, but differences in sentiment or tone were not found when 2020 was compared to the prior year 2019.

Originality/value

This study provides early evidence on whether auditors designed audit procedures to deal specifically with audit risks that arose due to the COVID-19 pandemic and on the extent and nature of those audit procedures. The study will help policymakers to better understand whether Key Audit Matters provided informational value to investors during a time of global crisis.

Details

Managerial Auditing Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 21 December 2021

Saeed Rabea Baatwah, Waddah Kamal Hassan Omer and Khaled Salmen Aljaaidi

This study aims to examine the effect on audit efficiency of outsourced internal audit function (IAF) providers with industry and/or firm-specific expertise. Drawing on…

Abstract

Purpose

This study aims to examine the effect on audit efficiency of outsourced internal audit function (IAF) providers with industry and/or firm-specific expertise. Drawing on relevant studies from external and internal audit literature, the authors assume that such IAF providers are associated with greater audit efficiency as proxied by audit report lag and audit fees.

Design/methodology/approach

Based on a sample of firms listed on the Omani capital market during 2005–2019, the pooled regressions are used to test the developed hypotheses. The authors use the market share approach to identify outsourced IAF industry expertise providers and tenure to measure the firm-specific expertise of outsourced IAF providers.

Findings

The authors find that industry outsourced IAF providers are not associated with shorter audit report lag and lower audit fees. The authors also find that firm-specific expertise outsourced IAF providers are associated with a greater reduction in audit report lag and audit fees. These conclusions are robust under a battery of analyses. The significant contribution of firm-specific expertise outsourced IAF providers to audit efficiency is incremental when abnormal audit report lag and audit fees analysis is conducted.

Originality/value

The results are the first to attest to the contribution of outsourced IAF with firm-specific expertise. They also show that industry expertise held by outsourced IAF providers does not contribute to audit efficiency.

Details

Pacific Accounting Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 5 October 2021

Jalil Khaksar, Mahdi Salehi and Mahmoud Lari DashtBayaz

This paper aims to analyze the relationship between the following auditor's characteristics with detecting frauds in the listed companies on the Tehran Stock Exchange.

Abstract

Purpose

This paper aims to analyze the relationship between the following auditor's characteristics with detecting frauds in the listed companies on the Tehran Stock Exchange.

Design/methodology/approach

A multiple regression model is used to test the research hypothesis. The hypothesis was further tested with a sample of 187 companies listed on the Tehran Stock Exchange (1,309 observations) from 2012 to 2018 and by using multiple regression models based on panel data and the random-effects model.

Findings

The results suggest a positive and significant relationship between audit firms' size, auditor rotation, specialization in the industry, the audit market's focus, auditor's independence, audit report lag and renewal of financial statements with fraud detection. The results revealed a significant relationship between the period of auditor tenure, auditor's narcissism, audit fees and the type of auditors' opinion (un-qualified opinion) with fraud detection.

Originality/value

As the present study is a pioneer in examining this issue in the emerging markets, it provides users, analysts and legal entities with useful information about auditor characteristics that significantly affect the fraud detection of financial statements. The results mitigate the literature gap and improve knowledge in this area.

Details

Journal of Facilities Management , vol. 20 no. 1
Type: Research Article
ISSN: 1472-5967

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