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The purpose of this paper is to investigate the comment letters (CLs) in the standard-setting process of audits of less complex entities (LCEs). The objective is to gain insight into the overall picture of the CLs and to report on areas where comment providers agree or disagree with IAASB's Part 10.

A content analysis of 60 comment letter (CLs) was conducted to investigate the suggested additional Part 10 on audits of groups' financial statements in the proposed ISA for LCEs. Hence, this study examines three specific topics: (1) the views related to the use of the International Standard on Auditing (ISA) for LCEs for group audits in which component auditors are involved, (2) the proposed group-specific qualitative characteristics to describe the scope of group audits and, finally, (3) insights into the content of the proposed Part 10 and related conforming amendments. The Gioia method is used to provide a holistic approach to concept development of the arguments about the new Part 10.

The CLs stated that, while the proposed Part 10 has some weak points, it still provides a solid and practical structure within which to undertake an LCE group audit and a promising basis for further development. For instance, when discussing the improvements, the CLs stated that Part 10 should allow for more auditor judgment when determining when the involvement of component auditors renders a group audit complex. In addition, the CLs asserted that professional judgment should be engaged when considering the qualitative characteristics and the complexity of the group.

This study contributes to the very scarce research about the ISA for LCEs and the role of lobbying in shaping the audit standard-setting process.

The objective of this paper is to extend the debate on audit quality in the less complex entity (LCE) context by analyzing comment letters submitted to the International Auditing and Assurance Standards Board (IAASB). The IAASB has drafted a new, stand-alone standard for audits of LCEs’ financial statements.

The Gioia method is utilized to conduct the qualitative analysis. This enables the material to shine and provide a comprehensive picture of the important aspects of the comment letters about the International Standard on Auditing (ISA) for LCEs. A content analysis of the 145 comment letters is conducted to identify the extent of the support for and the arguments against the new, stand-alone draft standard for audits of LCEs’ financial statements. In addition, this study considers how the comment letters describe the respondents’ views on audit quality in relation to the new standard. Finally, the tone of the comment letters and audit quality arguments is investigated.

The findings provide a useful framework of the most frequently used arguments supporting and opposing the ISA for LCEs. Within the themes identified, a wide variety of issues and concerns are discussed. The results reveal that the arguments in the comment letters are contradictory. For instance, when discussing audit quality, those interest groups that perceived many positive opportunities in the adoption of the ISA for LCEs thought that the audit quality would increase. Conversely, those interest groups that were skeptical about the success of the ISA for LCEs argued that the audit quality could be compromised by the general prejudice that the ISA for LCEs might be perceived as a lower-quality audit with fewer procedures.

This paper is, to the best of the authors’ knowledge, the first to examine the content of comment letters in the context of a new, stand-alone standard for audits of LCEs. The international audience can utilize the results in the context of the widely discussed issue of reducing LCEs’ auditing obligations. This study aims to contribute to the two streams of accounting literature concerning audit quality and political lobbying.

The aim of this paper is to contribute to knowledge about the diversity of credibility arrangements in new audit spaces “in the margins” of auditing and the implications of such arrangements.

The paper is based on an in-depth qualitative study of the lesbian, gay, bisexual, transgender, queer and intersex (LGBTQI) rights certification run by the Swedish Federation for Lesbian, Gay, Bisexual, Transgender, Queer and Intersex Rights (RFSL) during its first decade of operation. We have interviewed employees and studied documents at the certification units within the RFSL. We have also interviewed certified organizations.

We highlight two features that explain the unusual credibility arrangements in this audit practice: the role of beneficiaries in the organizational arrangements chosen and the role of responsibility as an organizing value with consequences for responsibility allocation in this certification. These features make it possible for the RFSL to act as a credible auditor even though it deviates from common arrangements for credible audits.

The RFSL certification is different in several ways. First, the RFSL acts as both a trainer and an auditor. Second, the trainers/auditors at the RFSL have no accreditation to guarantee their credibility. Third, the RFSL decides for itself what standards should apply for the certification and adapts these standards to the operation being audited. Therefore, this case provides a good opportunity to study alternative credibility arrangements in the margins of auditing as well as their justifications.

This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.

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.

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.

This study outlines directions for future accounting research on fraud.

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.

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.

This rich descriptive study examines auditors' client risk assessment (i.e. “key audit matters”/critical audit matters) disclosures in expanded audit reports of 328 Financial Times Stock Exchange (FTSE) 350 companies. The study compares auditor-identified client risks with corporate risk disclosures identified in audit committee reports, in terms of number and type of risks. The research also compares variation in auditor-identified client risks between individual Big 4 audit firms. In addition, the study examines auditor ranking of their client risks disclosed.

The study manually content analyses disclosures in audit reports and audit committee reports of a sample of 328 FTSE-350 companies with 2015 year-ends.

Audit committees identify more risks than auditors (23% more risks). However, auditor-identified client risks and audit-committee-identified risks are similar (80% similar), as are auditor-identified client risks between the individual Big 4 audit firms. Only ten (3%) audit reports rank the importance of auditor-identified client risks.

Sample is restricted to one year, one jurisdiction, large-listed companies and companies audited by Big 4 auditors.

The study provides important insights for regulators, auditors and users of financial statements by identifying influences on disclosure of auditor-identified client risks.

The paper mobilises institutional theory to interpret the findings. The findings suggest that auditor-identified client risks in expanded audit reports may demonstrate mimetic behaviour in terms of similarity with audit-committee-identified risks and similarity between individual Big 4 audit firms. The study provides important insights for regulators, auditors and users of financial statements by identifying influences on disclosure of auditor-identified client risks.

The purpose of this paper is to explore how internal auditors’ (IAs) roles have changed because of the diffusion of neoliberal ideologies in the Ukrainian public sector.

A qualitative methodological approach was applied. Data were collected from 29 semi-structured interviews with public sector auditors in Ukraine’s central government; secondary data analysis was also performed.

IAs’ role in Ukraine’s central government has changed significantly, with reforms attempting to move to performance auditing. Consequently, Ukrainian central government IAs appeared in the multi-expectation situation, due to the division of the role senders into two different areas. On one hand, IAs are expected to perform new roles set by the Ministry of Finance of Ukraine, while their traditional role as “watchdogs” is still expected by managers (heads of institutions). Diverging expectations resulted in the role conflict that impedes the change in IAs’ role and performance auditing introduction in the Ukrainian central government. Moreover, we identify factors that motivate IAs to prioritise managers’ expectations, while trying to cope with the existing role conflict in Ukraine’s central government.

This study makes a threefold contribution by enriching the understanding of auditors’ roles, role conflicts that public sector auditors may experience and factors that influence how auditors cope with such conflicts, through the lenses of role theory; exploring the change in roles with the emergence of performance auditing; and shedding light on public sector auditing in the less explored context of a post-Soviet country.

This paper aims to examine the role of Blockchain in the accounting and auditing literature and profession. Specifically, the paper investigates auditors' perceptions about the role of blockchain in accounting and auditing and the perceived potential benefits and challenges of blockchain-based accounting systems in Egypt. Moreover, what are the capabilities required for successfully implementing blockchain-based accounting systems?

A mixed-method approach was adopted to achieve the research objectives. The qualitative study included 11 in-depth interviews with external auditors, and the results of the interviews and the literature review helped develop a survey collected from 58 auditors.

The findings revealed low-to-moderate awareness of Blockchain-based accounting systems. Also, there were significant differences between auditors from large audit firms and small-and-medium audit firms regarding the benefits and challenges associated with Blockchain-based accounting systems.

The results provide valuable insights for practitioners, researchers and policymakers.

Understanding blockchain-based accounting systems and the benefits and challenges associated with their application is crucial for developing effective strategies and frameworks to overcome barriers and realize the transformative potential of blockchain in the accounting and audit market.

This study explores the relationship between leverage and earnings management in the context of Palestinian-listed companies, while also investigating whether audit industry specialization influences this relationship.

The data used in this study are extracted from public financial reports of 39 firms listed on Palestine Stock Exchange (PEX), spread across the service, insurance, industry and investment sectors, for the time period 2011–2022. A model is developed to test 4 hypotheses about the relationships between long-term and short-term debts, and earnings management, and then to examine the influence of audit industry specialization on these relationships.

The results depict a significant, negative relationship between long-term debt and earnings management. Whereas the association between short-term debt and earnings management is insignificant. Audit industry specialization is proven to have no influence on the relationships between the independent and the dependent variables. Results are robust for firms that changed their accounting policies and using different audit industry specialization proxies.

The association between leverage and earnings management is a significant research topic, given that previous research identifies credit ratings and debt covenant violations as key factors which motivate earnings management. This paper fills a substantial research gap by examining the relationship between the two variables in the context of Palestinian-listed firms, while emphasizing the distinction between long-term and short-term debts. It also highlights key relationships that have been neglected in this particular context, which adds to the body of literature. Furthermore, the research's findings provide a solid information base that is of great interest to accounting and auditing experts and that may be seriously evaluated to support and advance the PEX sector.

This study aims to investigate why and how shared service centres (SSCs) are implemented as well as how they affect audit firm practice and audit quality.

In this qualitative study guided by the theoretical framework of institutional theory, the authors conducted 25 semi-structured interviews in seven European countries, including 16 interviews with audit partners from Big 4 firms, 6 with audit team members, 2 with interviewees from second-tier audit firms and 1 with a member of an oversight body.

The authors show that the central rationale for audit firms to implement SSCs is economic rather than external legitimacy. The authors find that SSC implementation has substantial effects on audit practices, particularly those related to standardisation, coordination and monitoring activities. The authors also highlight the potential impacts on audit quality.

By exploring the motivation for and effects of SSC implementation amongst audit firms, the authors offer insights into the best practices related to subsequent change processes and audit quality.

This paper aims to examine the association between the working relationship between internal and external auditors and the moral courage of internal auditors to report management fraud in the Tunisian setting.

Data are gathered from 163 internal auditors working in Tunisian companies and a partial least squares–structural equation model (PLS-SEM) is used to test the hypothesis regarding the effect of the cooperation between internal and external auditors on internal auditors’ moral courage.

The results of this study provide strong empirical support for the positive impact of the working relationship between internal and external auditors on internal auditors’ moral courage to report management fraud and unethical behaviors.

The reported results increase the awareness of Tunisian regulators to enact regulations that strengthen the collaboration between internal and external auditors to promote internal auditors’ moral courage and then limit fraud and improve organizational performance in the Tunisian setting.

This paper fills one of the major research gaps in internal audit and moral courage research streams by revealing that the courageous behavior of internal auditors can be fostered by specific means efficacy such as the working relationship between internal and external auditors.