Search results

1 – 10 of over 15000
Book part
Publication date: 9 May 2012

James Lloyd Bierstaker, James E. Hunton and Jay C. Thibodeau

The current study examines the effect of fraud training on auditors' ability to identify fraud risk factors. This is important because most auditors have little or no…

Abstract

The current study examines the effect of fraud training on auditors' ability to identify fraud risk factors. This is important because most auditors have little or no direct experience with fraud; thus, research that investigates the potential effect of indirect experience through training is vitally important to fraud detection and audit quality. A total of 369 experienced auditors completed a complex audit simulation task that involved 15 seeded fraud risk red flags. A total of 143 auditors participated in a 30-minute training session focused specifically on fraud risk, while the remaining 226 auditors learned about general internal control risk during this time block. The results indicate that auditors with fraud training identified significantly more red flags and obtained greater knowledge about fraud risk than auditors who did not receive the training. Considering that the fraud training consumed only 30 minutes out of a 64-hour training session, the findings suggest that even modest exposure to fraud training is quite effective.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78052-758-1

Book part
Publication date: 28 December 2006

C. Richard Baker

This paper has two purposes. The first is to demonstrate that over time, and in a number of professional and academic places, the concept of auditor independence has been…

Abstract

This paper has two purposes. The first is to demonstrate that over time, and in a number of professional and academic places, the concept of auditor independence has been contested; that is, there have been different concepts of auditor independence within different time periods, and even when there appears to have been consensus on the meaning of auditor independence, there have been significant debates about auditor independence. The second purpose of the paper is to advocate a complete reconsideration of the concept of auditor independence; one which would move us towards the idea that auditors should be prohibited from acting as advocates in any way on behalf of their clients, and that client management should have no ability whatsoever to determine the audit fee or the scope of audit engagement. These are controversial ideas. They are meant to be so.

Details

Independent Accounts
Type: Book
ISBN: 978-0-76231-382-2

Open Access
Article
Publication date: 12 January 2023

Imen Khelil

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…

Abstract

Purpose

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.

Design/methodology/approach

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.

Findings

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.

Practical implications

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.

Originality/value

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.

Details

Arab Gulf Journal of Scientific Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-9899

Keywords

Article
Publication date: 20 January 2023

He Xiao, Jianqun Xi and Hanjie Meng

This study aims to investigate the impact of mandatory audit partner rotation (MAPR) on Chinese listed firms’ insider trading, as well as the moderating effects of firm…

Abstract

Purpose

This study aims to investigate the impact of mandatory audit partner rotation (MAPR) on Chinese listed firms’ insider trading, as well as the moderating effects of firm characteristics on this impact. The economic mechanism behind this impact is also explored.

Design/methodology/approach

This study conducts a regression analysis on firms associated with mandatory and voluntary audit partner rotation based on 2009–2019 firm data and examines whether corporate insiders of these two types of firms increase their share sales within 12 months before their financial statements are submitted to a new rotated auditor.

Findings

Client firms’ corporate insiders increase their share sales within 12 months before their financial statements are submitted to a new mandatory rotated auditor. In addition, such an association is less pronounced for client firms that changed from Big 4 auditors to those with higher financial constraints. This is more pronounced for client firms with higher information asymmetry. The economic mechanism of the finding is that is the MAPR implementation reduces earnings management activities from client firms. Moreover, client firms’ buy-and-hold stock returns decline in the first year after MAPR.

Research limitations/implications

This study should assist investors, corporate shareholders and Chinese policymakers. Investors can be well protected through the adoption of MAPR because upcoming auditors enhance the audit quality of clients by restraining managers’ manipulation of reported earnings and declining firms’ insider trading afterwards. Investors, Chinese policymakers and corporate shareholders should pay more attention to firms’ financial report quality, auditor selection, financial situation, corporate governance and the information environment. Explicitly, firms with less transparent financial report quality, non-big 4 auditors and fewer financial constraints are more likely to be involved in insider trading.

Originality/value

To the best of the authors’ knowledge, none of the extant studies have examined the impact of MAPR on insider sales. This study extends the research on the effect of the audit process on firm market performance by investigating the impact of audit partner rotation policy on insider trading behaviors.

Details

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

Keywords

Article
Publication date: 10 January 2023

Ranto Partomuan Sihombing, Dian Agustia and Noorlailie Soewarno

Data analytics can change the working of advisory services (AS) that internal auditors routinely carry out. Not getting psychological support from employers and co-workers…

Abstract

Purpose

Data analytics can change the working of advisory services (AS) that internal auditors routinely carry out. Not getting psychological support from employers and co-workers can cause internal auditors to be reluctant to use data analytics. Based on trait activation theory, this study aims to examine the mediating effect of data analytics on the relationship between organizational psychological safety (OPS) and AS.

Design/methodology/approach

The authors surveyed inspectorate auditors in government ministries and institutions who are internal government auditors in Indonesia. This study applied the partial least square structural equation modeling method to test the hypothesis. The total respondents involved in this study were 103 auditors.

Findings

There are two main findings in this study. First, OPS has a direct effect on AS. Second, data analytics mediates the relationship between OPS and AS.

Practical implications

This study’s finding has implications for leaders in ministries and government agencies to provide psychological support so that inspectorate auditors increasingly take advantage of data analytics in the process of AS that are always carried out.

Originality/value

To the best of the authors’ knowledge, this is the first study to examine the mediating effect of data analytics on the relationship between OPS and AS.

Details

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

Keywords

Article
Publication date: 27 January 2023

Jin Jiang, Xiangyun Lu, Yihan Wu and Hua Zhang

The purpose of this study is to investigate the effects of capital market liberalization on audit reporting and pricing. The authors use the announcement of the…

Abstract

Purpose

The purpose of this study is to investigate the effects of capital market liberalization on audit reporting and pricing. The authors use the announcement of the Shanghai-Hong Kong Stock Connect program in China as a shock to capital market liberalization.

Design/methodology/approach

The authors use the difference-in-differences method to study the difference in changes in the frequency of modified audit opinions and audit fees between the treatment group and the control group.

Findings

This study finds that capital market liberalization increases reputational and litigation risks for auditors and leads to more conservative audit reports. In addition, capital market liberalization stimulates the management of eligible firms to improve the information environment, helps to reduce information asymmetry and decreases audit fees. Specifically, the authors identify the channels of active foreign institutional investors as a new governance mechanism through which capital market liberalization impacts eligible firm and auditor decisions.

Research limitations/implications

This study complements the literature by showing that capital market liberalization may bring a new and strong governance mechanism for eligible firms and auditors.

Practical implications

This study may provide new references for active foreign institutional shareholders as a new and strong governance mechanism in weak institutional regimes such as China, auditors’ optimization decisions when litigation risks increase and management’s improvements in the information environment under the monitoring of foreign institutional shareholders.

Originality/value

Overall, this study contributes to the literature by showing that capital market liberalization can bring a new governance mechanism for the management of eligible firms and auditors in a weak institutional environment. Foreign institutional shareholders may be superior to the domestic market forces and other corporate governance in the role of monitoring the management of eligible firms and auditors.

Details

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

Keywords

Article
Publication date: 1 June 2000

Giselle Bou‐Raad

The role of internal auditors is changing from a traditional audit approach to a more proactive value‐added approach where internal auditors are taking up partnerships…

8584

Abstract

The role of internal auditors is changing from a traditional audit approach to a more proactive value‐added approach where internal auditors are taking up partnerships with management. The debate of internal auditors needing to expand their repertoire has been around for many decades, though now, the evidence of more internal auditors changing their practices has began to emerge and examples are visible. Internal auditors are seen to be accepting change to keep up with the demands of the market place and are doing so in order to provide a service of value to the organisation that employs them. Southcorp, Qantas and KMPG Consulting are a few providing their internal auditors with opportunities to undertake assurance based services and are finding this new branch of practice to be most valuable in assisting their managers to execute the objectives of the organisation

Details

Managerial Auditing Journal, vol. 15 no. 4
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 January 1980

Gareth Morgan

This paper analyses the internal auditor's role from a perspective which emphasises the pluralist nature of organisational life. The internal auditor operates in…

Abstract

This paper analyses the internal auditor's role from a perspective which emphasises the pluralist nature of organisational life. The internal auditor operates in organisational contexts where norms and values are at best only partially shared, and where the auditor's formal concern for improved efficiency and control of resource use may be viewed with varying degrees of favour. The pluralist nature of organisational life reflects itself in day‐to‐day strains, tensions and conflicts between internal auditors and auditees, which cannot be eliminated through traditional “Human Relations” approaches to organisational problems. There are inherent conflicts between audit and other organisational roles, and also insofar as its modern conception is concerned, within the internal auditor's role itself.

Details

Managerial Finance, vol. 5 no. 2
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 1 April 1996

Glen D. Moyes and Iftekhar Hasan

Investigates the relative importance of potential factors associated with the likelihood of detecting fraud during the audit of financial statements. Based on a survey of…

5645

Abstract

Investigates the relative importance of potential factors associated with the likelihood of detecting fraud during the audit of financial statements. Based on a survey of 357 auditors, reveals auditing experience of the auditor and prior success of auditing organization in detecting fraud are constantly significant variables in detecting fraud for each audit cycle and combined cycle estimates. Certified public accountant certification, peer review, and organizational size have impact only on certain specific audit cycles. This study surveyed two types of auditor: first, certified public accountants specialized in auditing publicly held corporations (external); and second, government entities, and internal auditors specialized in auditing publicly held corporations (internal). The respondent auditors evaluated the degree of effectiveness of 218 auditing techniques in detecting fraud. These techniques were associated with four different audit cycles: acquisition and payment, inventory and warehousing, payroll and personnel and sales and collection.

Details

Managerial Auditing Journal, vol. 11 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 April 2005

Christie L. Comunale and Thomas R. Sexton

To explore the effects of mandatory auditor rotation and retention on the long‐term market shares of the accounting firms that audit the members of the Standard and Poor's…

3600

Abstract

Purpose

To explore the effects of mandatory auditor rotation and retention on the long‐term market shares of the accounting firms that audit the members of the Standard and Poor's (S&P) 500.

Design/methodology/approach

A Markov model is constructed that depicts the movements of S&P 500 firms in the period 1995 to 1999 among Big 5 accounting firms. Auditor rotation and retention are reflected in the transition probabilities. The impacts of mandatory auditor rotation and retention policies are evaluated by examining the state probabilities after two, five, and nine years.

Findings

The paper finds that mandatory auditor rotation will have substantial effects on long‐term market shares, whereas mandatory auditor retention will have very small effects. It shows that a firm's ability to attract new clients, as opposed to retaining current clients, will be the primary factor in determining the firm's long‐term market share under mandatory auditor rotation.

Research limitations/implications

The paper assumes that S&P 500 firms will continue their reliance on Big 5 firms and that the estimated transition probabilities will remain stable over time.

Practical implications

Excessive market share concentration resulting from such policies should not be a concern of regulators. The paper conjectures that, under mandatory rotation, accounting firms will reallocate resources to attract new clients rather than retain existing clients. This may result in lower audit quality.

Originality/value

Interestingly, over the past 25 years, several bodies have considered mandatory auditor rotation and retention. Surprisingly, the authors have found no studies of the effects of mandatory auditor rotation and retention on audit market share.

Details

Managerial Auditing Journal, vol. 20 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

1 – 10 of over 15000