Search results

1 – 10 of over 1000
To view the access options for this content please click here
Article
Publication date: 5 October 2015

Krishna Kumar and Lucy Lim

– This paper aims to examine whether Andersen’s audit quality in the five years preceding its collapse lagged that of other Big-Five auditors.

Abstract

Purpose

This paper aims to examine whether Andersen’s audit quality in the five years preceding its collapse lagged that of other Big-Five auditors.

Design/methodology/approach

This paper compares Andersen’s audit quality and the other Big-Five auditors using five methodologies, namely, earnings response coefficients, magnitudes of abnormal accruals, propensities to issue going-concern opinions, usefulness of going-concern opinions in predicting bankruptcy and the frequency of Accounting and Auditing Enforcement Releases. The comparisons are based on both pooled samples of all observations and propensity-score-based matched-pairs.

Findings

The preponderance of evidence shows that Andersen’s audit quality did not differ materially in audit quality from other Big-Five auditors prior to its failure. However, it was found that Andersen’s independence was compromised in the year leading to its collapse (2000), as indicated by the lower likelihood to issue going-concern opinions.

Originality/value

This paper complements and improves on Cahan et al. (2011) by using more measures of audit quality, as no one measure is perfect, showing that their results using discretionary accruals are sensitive to the model used and showing that there is a more powerful direct measure of audit quality, namely, going-concern opinions.

Details

Managerial Auditing Journal, vol. 30 no. 8/9
Type: Research Article
ISSN: 0268-6902

Keywords

To view the access options for this content please click here
Article
Publication date: 2 March 2015

Michael Crockett and Muhammad Jahangir Ali

The purpose of this paper is to examine the efficacy of the current legislative provisions that protect auditor independence in Australia. The collapses of several…

Abstract

Purpose

The purpose of this paper is to examine the efficacy of the current legislative provisions that protect auditor independence in Australia. The collapses of several high-profile companies (Enron and WorldCom in the USA, HIH insurance and OneTel in Australia) in the early 2000s has raised questions about audit quality and independence. In response, regulators have introduced new regulations and guidance to improve audit quality. In Australia, the Corporations Act 2001 (2001) was amended via the Corporate Law Economic Reform Program Act 2004. This study poses the question: do non-audit service fees influence the level of accounting conservatism?

Design/methodology/approach

The sample used in this analysis consists of all available Australian listed companies from the years 2006 till 2010.

Findings

Using multiple measures of accounting conservatism and the auditor-client economic bond, our results suggest that the level of the economic bond between the auditor and the client does not significantly influence the level of accounting conservatism.

Originality/value

Our results demonstrate that the combination of intrinsic market mechanisms and regulation in Australia sufficiently protect auditor independence.

Details

International Journal of Accounting & Information Management, vol. 23 no. 1
Type: Research Article
ISSN: 1834-7649

Keywords

To view the access options for this content please click here
Article
Publication date: 1 July 2006

Andrea Bather and Priscilla Burnaby

To investigate some unanswered questions and issues relating to the Public Company Accounting Oversight Board (PCAOB) and to consider the implications of this rule making…

Abstract

Purpose

To investigate some unanswered questions and issues relating to the Public Company Accounting Oversight Board (PCAOB) and to consider the implications of this rule making model that was created in an environment of corporate financial collapses for a jurisdiction without such an environment.

Methodology

This paper uses text analysis by the authors as a basis for commentary and opinion on the need for and reaction to The Sarbanes‐Oxley Act 2002 (SOX). It is a pragmatic approach to issues which the authors feel has not been sufficiently considered.

Findings

It is clear to the authors that significant questions arise with the creation of a regulatory framework designed with public perception in mind. The issues have been in existence long before the passage of SOX. There are more questions than answers at this stage, particularly in light of the international implications of SOX.

Practical implications

Changes in the practice of auditing and reporting issues for all companies that sell shares in US markets will be affected. New Zealand is provided as an example of the implications for international convergence of PCAOB like regulation boards that may be created as an alternative framework to the current self‐regulation of auditors. Much consideration should be given to the implications of the new regulatory framework before its imposition on jurisdictions where the environment does not call for such “drastic” change.

Originality/value

Much has been written on the PCAOB, but without consideration necessarily of the international implications. In particular, the tensions facing small countries such as New Zealand have not been discussed, which seek to be part of the international community of capital markets. This paper seeks to fill some of these gaps.

Details

Managerial Auditing Journal, vol. 21 no. 6
Type: Research Article
ISSN: 0268-6902

Keywords

To view the access options for this content please click here
Article
Publication date: 2 October 2017

She-Chih Chiu, Chin-Chen Chien and Hsuan-Chu Lin

The purpose of this paper is to investigate the extent to which the transition from self-regulation to heteronomy has changed the gap in audit quality between Big Four and…

Abstract

Purpose

The purpose of this paper is to investigate the extent to which the transition from self-regulation to heteronomy has changed the gap in audit quality between Big Four and non-Big Four auditors.

Design/methodology/approach

This study analyzes publicly held companies in the USA between 1999 and 2012 using univariate analysis, multivariate analysis and quantile regression analysis. Audit quality is measured with discretionary accruals.

Findings

This study shows an insignificant difference in audit quality between the clients of Big Four and non-Big Four auditors after Public Company Accounting Oversight Board (hereafter, PCAOB) began its operations. In the analysis of the effects of PCAOB inspections on the audit quality of audit firms that are inspected annually and triennially, the findings show that the inspections have more positive effects when carried out annually. This suggests that the frequency of inspection is positively associated with audit quality. Overall, these results provide evidence that recent improvements in audit quality have been caused by changes in regulatory standards.

Originality/value

The paper provides three major original contributions. First, the authors add to the literature on audit quality by further demonstrating a reduced gap in audit quality between Big Four and non-Big Four audit firms due to heteronomy. Secondly, this study contributes to the debate as to whether independent inspections on audit firms are beneficial or not and suggests that the PCAOB inspections help increase audit quality. Finally, the results of this work contribute to the growing literature examining discretionary accruals.

Details

Corporate Governance: The International Journal of Business in Society, vol. 17 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

To view the access options for this content please click here
Book part
Publication date: 1 December 2004

Bonnie Buchanan

Recent high profile U.S. corporate collapses have their counterparts in other international markets, such as Australia. The corporate governance failures that led to major…

Abstract

Recent high profile U.S. corporate collapses have their counterparts in other international markets, such as Australia. The corporate governance failures that led to major corporate collapses in both countries are strikingly similar, despite differences in their respective corporate governance systems. In this paper, I present an examination of the corporate governance failures that led to the demise of three prominent Australian firms in 2001 and illustrate that the corporate governance failures are not limited to the existing corporate governance system in the United States. I will also outline the various corporate governance reforms that were established to restore investor confidence.

Details

Corporate Governance
Type: Book
ISBN: 978-0-76231-133-0

To view the access options for this content please click here
Article
Publication date: 3 June 2019

Aida Sy and Anthony M. Tinker

This paper aims to investigate the financial crises and the role of auditors in those crises. The paper is concerned with the banking system, as the last financial crisis…

Abstract

Purpose

This paper aims to investigate the financial crises and the role of auditors in those crises. The paper is concerned with the banking system, as the last financial crisis in 2008 was provoked by the mortgage business and the big banks and risks management.

Design/methodology/approach

The paper choses to use data from corporations, practices and professional websites. The authors use interviews that were available and related to the subject matter. Academic works are also used to discuss the literature review and various issues.

Findings

The paper explores the auditors’ responsibilities and finds that there is a growing concern for auditing. This research is complex, as it discovers that corporate executives in the banking business should be more responsible; this is confirmed by the high risks in the financial area that still persists.

Research limitations/implications

This is a very complex topic; however, the authors designed it so that it can be read and used by non-accountants, that is to say, CEOs and governmental agencies that are in charge of the regulatory system. Further research studies are needed to ensure ongoing discussions about the financial crisis. The Word is not free from such bad economic events.

Practical implications

The contribution is important; this research can be used by organizations, governments and academics.

Social implications

The paper includes implications for the banking and auditing industries. It extends to the public interest.

Originality/value

This paper contributes to the literature for academic and can be used for teaching purposes. Students can understand the paper, as the authors did not use a regression model.

Details

Social Responsibility Journal, vol. 15 no. 4
Type: Research Article
ISSN: 1747-1117

Keywords

To view the access options for this content please click here
Article
Publication date: 10 October 2008

Philip Law

Perceived independence is one of the corner‐stones in auditing theory. Despite prior research on auditor independence, the results are inconclusive. The lack of research…

Abstract

Purpose

Perceived independence is one of the corner‐stones in auditing theory. Despite prior research on auditor independence, the results are inconclusive. The lack of research in the Hong Kong auditing environment motivates this study, particularly following the Enron débâcle. The purpose of this paper is to examine the non‐audit services (NASs), competition, rank and types of auditors, in respect of the independence problem as it relates to the practices of Hong Kong auditors in the post‐Enron environment.

Design/methodology/approach

Four independent variables identified from literature gaps are examined, namely NASs, levels of competition, auditors of different ranks and types of auditors. Mixed ANOVA are employed to analyze survey responses from 207 “Big 4” and 185 “non‐Big 4” auditors.

Findings

Results of the study show that the provisions of NASs and high competition could have a negative influence on auditors' perceptions of independence. Second, auditors' perceptions that the influence of NASs on independence depends on an individual auditor's rank are supported. Senior managers have the highest mean rating on perceptions, while partners have the lowest mean rating. Results support the agency theory that the agent (senior manager) may not always act in the best interests for the principal. Finally, there is no difference between Big 4 and non‐Big 4 auditors' perceptions of the influence of NASs and competition on independence.

Originality/value

The study revokes earlier US research that indicates that NASs provisions favorably influence auditors' perceptions of independence. It would be advantageous for a regulatory body to reconsider professional reforms such as prohibitions of NASs and the repercussions of non compliance of independence.

Details

Managerial Auditing Journal, vol. 23 no. 9
Type: Research Article
ISSN: 0268-6902

Keywords

To view the access options for this content please click here
Article
Publication date: 1 March 1998

Joanna Gray

Sir Brian Neill briefly set out the factual background to this litigation at the beginning of his judgment:

Abstract

Sir Brian Neill briefly set out the factual background to this litigation at the beginning of his judgment:

Details

Journal of Financial Regulation and Compliance, vol. 6 no. 3
Type: Research Article
ISSN: 1358-1988

To view the access options for this content please click here
Article
Publication date: 1 January 2006

Dayanath Jayasuriya

The purpose of this paper is to describe how corporate responsibility, at the best of times, is taken for granted, and at the worst of times, becomes a much maligned concept.

Abstract

Purpose

The purpose of this paper is to describe how corporate responsibility, at the best of times, is taken for granted, and at the worst of times, becomes a much maligned concept.

Design/methodology/approach

Describes how the regulatory landscape is rapidly changing and outlines several conditions that must exist or be achieved to ensure the stability of financial institutions through a better system of regulation and monitoring and rapid intervention, where intervention is called for.

Findings

There is a need for greater clarity as to the role of auditors and as to the expectations of regulators.

Originality/value

Highlights how, for regulators, auditors and stakeholders, the issue of the role of auditors in a changing regulatory climate is an important subject that deserves special consideration.

Details

Journal of Financial Crime, vol. 13 no. 1
Type: Research Article
ISSN: 1359-0790

Keywords

To view the access options for this content please click here
Article
Publication date: 1 April 2004

Pat Sucher and Katarzyna Kosmala‐MacLullich

A notion of auditor independence, envisaged as crucial to the credibility of the audit function, resides in professional Codes of Ethics in much of the western world…

Abstract

A notion of auditor independence, envisaged as crucial to the credibility of the audit function, resides in professional Codes of Ethics in much of the western world. Since the beginning of the 1990s, the auditor independence construct has been imported eastwards and incorporated into legislation and Code of Practices amongst central and eastern European economies (CEE), together with other requirements, as the countries prepare for their accession to the European Union. This study is aimed at ascertaining the meanings conveyed by the auditor independence construct and its state of realisation in one of the transition economies of the CEE region, the Czech Republic. Also, the study seeks to understand how local culture impacts upon a particular understanding of auditor independence. In order to examine the auditor independence in this part of the world, a framework for analysis incorporating structural conditions, local traditions and culture is proposed. The analysis is conducted first de jure, and is based upon a review of the Czech law and professional regulation. This is complemented with a de facto analysis based upon interviews with audit practitioners, regulators and financial statement users in the Czech Republic and on a review of Czech media coverage. What emerges from the study is a particular local understanding of the auditor independence construct, perceived primarily as an economic concept in the context of market instability and the immature legal framework. It appears that there is a tendency to follow the form of audit procedures without substantial rationalisation. We conclude that socio‐economic and cultural pressures appear to far outweigh any formal safeguards implemented to maintain professional integrity and competence in the CEE region.

Details

Accounting, Auditing & Accountability Journal, vol. 17 no. 2
Type: Research Article
ISSN: 0951-3574

Keywords

1 – 10 of over 1000