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Article
Publication date: 1 June 2023

Yonghai Wang and Jiawei Wang

This study aims to examine the causal relationship between mandatory CSR disclosure and financial audit efficiency.

Abstract

Purpose

This study aims to examine the causal relationship between mandatory CSR disclosure and financial audit efficiency.

Design/methodology/approach

The authors use the unique institutional setting of China, where a subset of listed firms are mandated to disclose their corporate social responsibility (CSR) reports. The authors use propensity score matching and difference-in-differences approaches to compare audit efficiency in the pre- and post-mandatory CSR disclosure periods between the treatment and control groups. The regression models are estimated with robust standard errors clustered at the firm level.

Findings

This study finds that following China’s adoption of the mandatory disclosure of CSR, audit report lags decreased by 6% on average, suggesting that audit efficiency improved greatly following mandatory CSR disclosure. Moreover, this association is stronger when firms have better CSR performance, higher CSR report preparation costs, more earnings management before disclosure regulations and better internal controls and when firms belong to high-profile industries and in Big 4 (Big 10) accounting firms. Moreover, neither audit quality nor audit fees decrease when shorter audit lags occur for firms with mandatory CSR disclosures. Overall, the evidence suggests that mandatory CSR disclosure has a positive effect on audit efficiency and that the improvement of audit efficiency does not come as a consequence of reducing audit fees or deteriorating audit quality.

Research limitations/implications

The results reported in this study have practical and policy implications for policymakers, accounting firms and auditors to pay more attention to CSR information.

Originality/value

This study provides evidence of the causal relationship between mandatory CSR disclosure regulation and audit efficiency. It enriches the research on audit service production efficiency from the perspective of nonfinancial information disclosure.

Details

Managerial Auditing Journal, vol. 38 no. 6
Type: Research Article
ISSN: 0268-6902

Keywords

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 relevant…

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. 34 no. 2
Type: Research Article
ISSN: 0114-0582

Keywords

Article
Publication date: 12 September 2020

Ying Chen, Bin Lin, Lizhen Lu and Gaoguang Zhou

The purpose of this study is to examine the effects of internal audit function (IAF) quality on the operational efficiency of Chinese firms.

2077

Abstract

Purpose

The purpose of this study is to examine the effects of internal audit function (IAF) quality on the operational efficiency of Chinese firms.

Design/methodology/approach

The authors use regression models with a sample of Chinese listed companies to test their research hypotheses.

Findings

The authors find that IAF quality is positively associated with firm operational efficiency. The result is unchanged after correcting for endogeneity via the instrumental variable method and using an alternative measure of firm operational efficiency. The authors show that IAF competence improves firm operational efficiency, but the relationship between IAF independence and firm operational efficiency is insignificant. Additionally, they find that IAF quality can only significantly improve firm operational efficiency in the presence of effective corporate governance at the firm level and strong institutions at the province level. Using path analysis, the authors find that an IAF can improve firm operational efficiency directly or indirectly by promoting firm internal control quality.

Practical implications

The findings of this study suggest the need for a balance between IAF competence and independence to achieve the goals of IAF. Additionally, the authors study suggests that the effectiveness of IAF is contingent on corporate governance and market-based institutions.

Originality/value

The study’s findings contribute to the burgeoning literature on the relationship between IAF and firm operational performance and deepen the authors’ understanding of the role of IAF in an emerging economy whose government plays a major role in promoting and enforcing internal audits. The study also empirically support the Internal Audit Governance Maturity Model proposed by the Institute of Internal Auditors.

Details

Managerial Auditing Journal, vol. 35 no. 8
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 October 1998

Warwick Funnell

The introduction of efficiency auditing in Australian Commonwealth state audit created a level of stress and threat for the Auditor‐General never previously encountered. Using…

1261

Abstract

The introduction of efficiency auditing in Australian Commonwealth state audit created a level of stress and threat for the Auditor‐General never previously encountered. Using insights from processual analysis as developed by Turner to demonstrate the pressures on state audit, the paper focuses on the principal events constituting the short life of the new Efficiency Audit Division (1978‐84) which had been established within the Australian Audit Office to develop efficiency auditing methods and to carry out efficiency audits. It documents for the first time a level of executive intrusion in state audit which contradicts the image promoted in Westminster democracies of a robustly independent state auditor and highlights the political nature of state audit.

Details

Accounting, Auditing & Accountability Journal, vol. 11 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 3 April 2017

Peter Wanke, Carlos Barros and Md. Abul Kalam Azad

The purpose of this paper is to measure the efficiency and the productive slacks of a sample of major UK auditing firms between 2005 and 2012.

Abstract

Purpose

The purpose of this paper is to measure the efficiency and the productive slacks of a sample of major UK auditing firms between 2005 and 2012.

Design/methodology/approach

Using the bootstrapping technique as the cornerstone method, DEA estimates were computed, allowing the test for differences in the levels of efficiency and in the potentials for decreasing inputs and increasing outputs. Then, neural networks were combined with DEA estimates to model, with effective predictive ability, the drivers of auditing firms’ performance.

Findings

The findings indicate an ambiguous impact of regulatory policies on efficiency levels. Results also indicate an eventual capacity shortfall, since the most important productive resource does not seem to cope with demand growth in the future.

Originality/value

This paper aims to focus on efficiency, complementing previous research in the UK that focuses on productivity, and helps in establishing a decision-support system to slack evaluation.

Details

Benchmarking: An International Journal, vol. 24 no. 3
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 25 December 2023

Hamideh Asnaashari and Fatemeh Khodabandehlou

In light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of…

Abstract

Purpose

In light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of applying Lean Six Sigma (LSS) techniques on the effectiveness and efficiency of IA.

Design/methodology/approach

The study used a quantitative approach, surveying Iranian internal auditors with a sample size of 384 participants. Data analysis involved confirmatory factor analysis and structural equation modeling.

Findings

The analyses demonstrate a significant association between LSS application and IA effectiveness and efficiency. In addition, an exploratory analysis indicates that the application of LSS techniques by less experienced internal auditors had a reverse effect on IA function quality as a component of IA competency. However, IA motivation factors, including education and position, did not mediate the impact of LSS on IA effectiveness and efficiency.

Research limitations/implications

This study was conducted with Iranian internal auditors, which may limit the generalizability of the findings to other countries. However, the primary academic implication of this research lies in its novel perspective on emphasizing the concept of continuous improvement in IA through the use of LSS techniques. By focusing on the need for internal auditors to add value to the business in new ways, this research contributes to the literature on IA quality.

Practical implications

This study has significant implications for the effective management of IA departments. By promoting the application of LSS techniques in IA, lean auditing is enhanced, and IA can create value by improving the quality of its functions. Moreover, IA regulators can benefit from this study as it emphasizes providing guidance and training on LSS techniques to enhance IA skills.

Originality/value

This research is pioneering in applying LSS methodology to enhance the effectiveness and efficiency of internal auditing. It also considers the integration of lean thinking into current audit practices, making it unique and valuable in internal auditing research.

Details

International Journal of Lean Six Sigma, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2040-4166

Keywords

Article
Publication date: 1 March 1987

James Guthrie

Pressures and demands for accountability and efficiency in the public sector in Australia have given rise to changes and reforms in government administration at both federal and…

Abstract

Pressures and demands for accountability and efficiency in the public sector in Australia have given rise to changes and reforms in government administration at both federal and state levels. Developments and experimentation with “techniques” such as programme budgeting, new forms of financial management, annual reporting, efficiency and comprehensive audits, have added their impact. A concept of “new audits” has emerged. The approaches and practices of Commonwealth — at the federal level — and New South Wales — at the state level — are compared. The way in which “new audit” differs from traditional audit is illustrated and then assessed within a framework of accountability.

Details

Managerial Auditing Journal, vol. 2 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 June 1997

Chen Weizhong and Sun Shourong

Describes the ingredients for internal audit success in a large state‐integrated petroleum company. With 1,600 auditors and 25,000 audits performed, a varied contribution has been…

1167

Abstract

Describes the ingredients for internal audit success in a large state‐integrated petroleum company. With 1,600 auditors and 25,000 audits performed, a varied contribution has been made across all areas of the business. Significant factors have been the interrelationships of independence, authoritativeness and efficiency and this theme pervades. The outworkings of this formula has actually led to demand from the top to establish an additional audit division branch.

Details

Managerial Auditing Journal, vol. 12 no. 4/5
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 June 1993

Gurdeep Singh Batra and Narinder Kaur

Proper and effective control through audit is necessary in the caseof public enterprises as the funds invested in them do not belong tothose who manage the affairs of these…

Abstract

Proper and effective control through audit is necessary in the case of public enterprises as the funds invested in them do not belong to those who manage the affairs of these enterprises. That is why it is important that their financial operations are subjected to severe scrutiny. Examines the problems of audit control of public enterprises, which would indicate an insight into the legal framework of audit accountability and the deviations emerging there from in actual practice. Government auditors do not have sufficient appreciation of the commercial nature of the public enterprises, and too detailed and continuous audit dampens the initiative of enterprising managers, forcing them to adopt a more cautious approach and restricting the scope of delegation of powers. In some cases the Comptroller and Auditor‐General is the sole auditor, and in other cases he performs the superimposed audit in addition to the audit by the professional auditor. Therefore, finds that audit control over public enterprises varies from case to case, and the CAG should interpret this power according to the need of situation, and there should be external efficiency audit for public enterprises.

Details

Managerial Auditing Journal, vol. 8 no. 6
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 March 1989

James Guthrie

In this decade we have witnessed in the Australian public sectortremendous pressures for change in the name of accountability andefficiency. Changes have occurred in public sector…

Abstract

In this decade we have witnessed in the Australian public sector tremendous pressures for change in the name of accountability and efficiency. Changes have occurred in public sector management and in public sector accounting. Techniques such as programme budgeting, financial management initiatives, enhanced annual reporting and performance audits have all been promoted. These changes have led to a “new” accounting for the public sector. Performance auditing is compared at the commonwealth and the state level, and a study is provided of how a change in accounting can affect the organisation, in a social and political context. Differences between performance auditing and traditional auditing are illustrated and then assessed within a framework of accountability.

Details

International Journal of Public Sector Management, vol. 2 no. 3
Type: Research Article
ISSN: 0951-3558

Keywords

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