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This commissioned paper reviews literature outlining reasons for a perceived gap between academics and standard setters as policy makers. The aim of this paper is to emphasise how academics and standard setters can collaborate on accounting and audit research and assist standard setters to act in the public interest.

The approach is primarily a literature and document review of relevant issues, summarising New Zealand’s standard setting arrangements, providing examples of successful policy-changing research, and making recommendations on future research topics.

Despite the long-held views of a gap between academic researchers and standard setters, increasingly standard setters utilise research and request input from academics in their deliberations. Standard setters can increase the likelihood of relevant research by promoting critical issues for research and connecting their practitioner networks with academics. Academics can bridge the gap by selecting topics of mutual interest and by communicating their findings extensively and well.

Increasing collaboration should lead to better accounting and audit standards.

This paper highlights matters of concern in the New Zealand standard setting environment where there is a strategic objective to undertake research.

The purpose of this exploratory study is to better understand the interactions between external auditors, their audit clients and audit regulators when considering the supply of and demand for high-level audit technology. The authors examine the developed markets of Australia, New Zealand and the UK to better understand: how high-level audit technology has started to become embedded into existing audit spaces and any emerging issues this technology has created for the audit profession.

Through the theoretical lens of the socio-technical (ST) systems of innovation theory, the present study involved semi-structured interviews with 25 stakeholders in Australia and New Zealand from 2019 to 2020 and 21 stakeholders in the UK from 2016 to 2018.

Advancements are revitalizing the technologies of not only the external auditors and their firms but also of their audit clients. Although the audit model is changing, external auditors are reported to be reluctant to fully engage with new audit technologies. In this setting, the authors find audit rules are yet to become embedded in the objects or practices of ST systems and that keeping up with the pace of change for regulators and standard setters is a major challenge.

The findings of this study raise call for regulators to be more up to speed with these new technological changes, as audit standards need to be amended accordingly. Although the International Auditing and Assurance Standards Board deliberates, both clients and auditors need to lobby for specific audit data analytics regulations.

The present study provides perspectives about new audit practices that emerge due to high-level technological advancements and then embed themselves into existing audit spaces. The authors draw on several different stakeholder groups, not just the Big Four firms. The ST systems theoretical lens we adopt better helps us understand how audit firms at the organisational level are adapting to these new technological changes in existing audit spaces.

IFAC, a Swiss‐registered non‐governmental organization, is emerging as an important international (auditing) standard setter amongst a powerful group of regulators, including the World Bank, the International Organisation of Securities Commissions (IOSCO) and the European Commission (EC). The purpose of this paper is to focus on the changing governance and accountability structures within IFAC, the way such changes are shaping, or re‐shaping, its “public interest” commitments and the resulting strategic implications for processes of auditor regulation and public oversight in the global financial arena.

The material and analysis presented in the paper derives from an extensive review of official reports, consultation documents and related responses, a range of other information available on IFAC's web site (www.ifac.org) or those of other key regulatory players in the global financial arena.

The paper analyzes how IFAC is succeeding as an international standard setter with an established place in the global financial infrastructure. From analysis of the recent establishment of a Public Interest Oversight Board (PIOB) and the changing nature of representation on IFAC's Public Interest Activity Committees (PIACs), the paper reveals a growing reliance on governance by experts together with a growth in influence of the large, multinational accounting firms. Governance of auditors has become a matter of global importance and governance structures are being reconfigured.

By highlighting the changes that have taken place within IFAC's governance system, the paper establishes the importance for public policy of further study and debate concerning the nature and practical operation of such a system, particularly given IFAC's position within a complex but developing global governance arena.

IFAC is becoming an integral player in global financial governance processes and yet has not been subject to any substantial academic accounting research. This paper seeks to rectify this by focusing on the structures and processes underpinning both the development of IFAC's International Standards on Auditing (ISAs) and its own global strategy for advancement.

The US federal government requires auditors to follow governmental auditing standards when performing audits of entities expending significant federal government dollars. This study explores stakeholder participation during the comment letter phase of government auditing standard setting to determine if participation is symbolic or substantive.

Researchers conduct an analysis of the 179 comment letters submitted to the US Government Accountability Office (GAO) and received for their 2010 and 2017 exposure drafts of government auditing standards.

The distribution of stakeholder participation groups in the government auditing standard-setting process differs from the distribution in the private company auditing standard-setting process. On average, participants submit letters that are greater than two pages in length. Participants also contribute feedback on topics that the GAO directly solicits. Taken together, the results demonstrate stakeholder behaviors that are consistent with a substantive rather than symbolic due process involvement for government auditing standards.

Stakeholder beliefs are inferred based on the observed behavior of comment letter submissions. Also, there is a subjective element to the classification of the comment letters for the study.

Given the far-reaching implications of Yellow Book auditing standards on public, private and nonprofit entities, the findings are relevant to a heterogeneous audience. This study reveals opportunities for users of government auditing standards, practitioners and academics for greater involvement in due process standard setting to bring additional legitimacy to the GAO and its standard-setting activities.

Beyond the current study, little empirical research examines Yellow Book auditing standards or the due process through which these standards are established. This is the first study to examine the complete set of comment letters for the 2010 and 2017 exposure drafts of government auditing standards.

This paper aims to extend the literature by examining the need for International Financial Reporting Standards (IFRS) for Sri Lankan small and medium entities (SMEs) and investigating the institutional pressures that drove the adoption of the IFRS for SMEs in a developing country, Sri Lanka.

The theoretical framework adopted in this study draws on insights from new institutional sociology theory. An interview-based qualitative research was conducted with accountants and owners of SMEs, representatives from government agencies and the accounting standards-setting authority of Sri Lanka.

The emphasis on the need for international accounting standards for SMEs due to international structures and activities is not a priority for Sri Lankan SMEs. Sri Lankan SME owners do not receive requests to provide internationally comparable financial statements from their trade partners and international activities such as foreign exports, borrowings and ownerships are irrelevant business activities for them. Hence, findings reveal that the decision to adopt the IFRS for SMEs was in response to institutional pressures rather than alleged benefits of internationally comparable financial information. It appears from the results that the influence of local users’ needs and the government interference on the development of accounting standards does not exist in Sri Lanka.

The research is limited to a single country. The data were collected from SMEs in Sri Lanka, as intended by the research boundary.[AQ1] The study has implications for policy makers, and standard setters charged with developing and implementing an appropriate financial reporting framework for SMEs.

The extant literature on IFRS for SMEs is sparse and mostly conducted through questionnaire surveys with a single user group of SME financial information.

This study aims to analyze the utilization of big data and data analytics (BDA) in financial auditing, focusing on the process of producing legitimacy around these techniques, the factors fostering or hindering such process and the action auditors take to legitimate BDA inside and outside the audit community.

The analysis bases on semi-structured interviews with partners and senior managers of Italian audit companies.

The BDA’s legitimation process is more advanced in the audit professional environment than outside the audit community. The Big Four lead the BDA-driven audit innovation process and BDA is used to complement traditional audit procedures. Outside the audit community, the digital maturity of audit clients, the lack of audit standards and the audit oversight authority’s negative view prevent the full legitimation of BDA.

This research highlights factors influencing the utilization of BDA to enhance audit quality. The results can, thus, be used to enhance the audit strategy and to innovate audit practices by using BDA as a source of adequate audit evidence. Audit regulators and standards setters can also use the results to revise the current auditing standards and guidance.

This study adds to the literature on digital transformation in auditing by analyzing the legitimation process of a new audit technique. The paper answers the call for more empirical studies on the utilization of BDA in financial auditing by analyzing the application of such techniques in an unexplored operational setting in which auditees are mainly medium-sized enterprises and family-run businesses.

This paper seeks to focus on the issue of materiality judgements and the need for public disclosure of materiality levels. Insights about the concept of materiality are drawn from the words of users of audited financial reports, auditee managements, suppliers to the market for audit services and auditing standard setters and regulators.

This paper reports findings arising from face‐to‐face office interviews with individuals representing identified groups of stakeholders in the market for audit services about the issue of “materiality” as this concept is applied in auditing. The interviews canvassed many issues related to audit as part of a larger project entitled “The future of audit”.

In general, stakeholders perceive that the concepts involved in audit materiality are not well understood and they point to the difficulty in providing educative materiality about it, especially in relation to qualitative materiality, to retail investors in particular. There are mixed views as to whether the actual level of tolerable error, as per one of the meanings of materiality in the audit space, should be disclosed, with some feeling that it might be detrimental or dangerous.

If incremental information about materiality is to be disclosed, the issue of where, what to whom, by whom and when arise. Various suggestions are made by stakeholders in respect of these questions.

The paper concludes by drawing from the insights gained by the authors through the comments of participant stakeholders to make recommendations that deal with the issue of audit materiality.

Blockchain is expected to impact reporting and auditing processes. Indeed, the increasing use of blockchain could affect the nature and extent of information available to auditors and how audits are performed. This paper aims to investigate how auditors are assessing the relevance of the current auditing standards in light of the emergent use of blockchain technology.

Based on qualitative content analysis, this paper analyzed semi-structured interviews with auditors to understand their shared perception of how the current auditing standards address blockchain’s emergence.

The findings reveal a growing demand for information technology (IT) auditing standards, as well as a mismatch in timing between the quickly changing IT environment and the regulators’ slowness in releasing new standards or updating standards.

The findings reflect the external auditors’ points of view and cannot be generalized to all countries, but future studies should address the development of specific IT-related auditing standards to better fit the fast-evolving technology environment in ways that consider the other stakeholders’ points of view, including those of the standard setters.

The results of this study show that auditors consider the current auditing standards for IT to be too vague, and they need more guidance on both auditing blockchain and using technologies as audit tools.

The original contribution of this study lies in the in-depth understanding it provides of the adequacy of the current auditing standards to audit companies using blockchain, which is an under-researched topic.

This study examines the perceptions of interested stakeholders on the factors affecting the use of data analytics (DA) in financial statement audits. Response letters submitted by stakeholders of the auditing services to the International Auditing and Assurance Standards Board's (IAASB) Data Analytics Working Group (DAWG) served as sources for analysis.

The modified information technology audit model was used as a framework to perform a direct content analysis of all the 50 response letters submitted to the DAWG.

The analysis showed that a range of attributes, such as the usefulness of DA in auditing, authoritative guidance (auditing standards), data reliability and quality, auditors' skills, clients' factors and costs, were the factors perceived by stakeholders to be affecting the use of DA in external auditing.

This study is subjected to the limitations inherent to all content analysis studies. Nonetheless, the findings offer additional insights about potential factors affecting the adoption of DA in audit practices.

The data noted in the published statements highlighted the perceptions of a range of stakeholders with regards to the factors affecting the use of DA in auditing.

The purpose of this study is to understand how the new reforms related to key audit matters (KAM) disclosures in Australia may have impacted audit quality by eliciting the perceptions of key stakeholders in the audit and assurance services market.

The study uses a qualitative approach and New Institutional Sociology (NIS) to explain how auditors have responded to the KAM reforms. Interviews were conducted with 20 individuals representing identified groups of stakeholders in the market for audit and assurance services in Australia.

The study finds there is little consensus between some stakeholder groups on whether the KAM reforms may have improved audit quality, based on the perceptions shared. The findings conveyed that the auditors and regulators, standard setters acknowledge that KAM disclosures are either costly and/or time-consuming to implement. The Big Four auditors indicate these reforms led to changes mainly around internal consultations and independent reviews, whereas the non-Big Four auditors highlighted increased interactions with audit clients.

This is one of the first studies to examine the perceived post-implementation impacts on audit quality of the KAM reforms (ISA 701) after the initial two years of implementation and how auditors have responded, explored through the lens of institutional logic.