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This study aims to test the effect of individual audit quality on career advancement the audit labour market.

This paper uses data on auditors from two collapsed audit firms in China, namely, Ruihua and Zhengzhong Zhujiang, and tests the effect of individual audit quality on career advancement in the audit labour market.

The baseline results show that high-quality audits promote auditors’ career advancement. Our results hold after a battery of robustness tests. Further analyses support our hypothesis, indicating that client retention and audit fees are positively related to auditors’ prior audit quality. The effect of audit quality on career advancement does not hold for auditors from sanctioned branch offices or for auditors with prior culpable clients, as shared reputation damage can weaken the effect of high audit quality. Furthermore, this paper investigates whether the reputation enhancement effect of high audit quality can be strengthened by auditor experience, the title of “senior auditor” and IPO auditing experience. We also show that clients and audit firms place more weight on the quality of audits conducted by auditors in competitive markets and auditors with engagements matched with industries.

Together, these findings indicate the vital role of individual audit quality in auditors’ career development in the audit labour market, consistent with the reputation rationale for audit quality.

Anecdotal evidence indicates the internal audit function may be crucial in supporting the implementation of ESG practices and reporting. However, thus far, no study has been empirically conducted to check how and why internal audit function might affect ESG performance. This study aims to address this gap by examining whether the internal audit budget is positively related to the ESG performance of Malaysian listed firms. It also explores whether the sourcing arrangement of the internal audit function can moderate the internal audit budget – ESG nexus.

The secondary data for the paper is extracted from two main sources, namely, the Thomson Reuters Eikon database and firms’ annual reports that were downloaded from the Bursa Malaysia website. The final sample consists of public firms listed on Bursa Malaysia over the period 2010 to 2019. Multivariate tests are used to examine the linkage between the variables.

The results show that the relationship between the annual internal audit budget and ESG performance is contingent on the sourcing arrangement of the internal audit function. Specifically, the results show that the annual internal audit budget has a positive impact on ESG performance for firms with an in-house internal audit function but not for firms outsourcing an internal audit function to external providers. Overall, the results suggest that the annual internal audit budget promotes ESG performance for firms performing their internal audit activities internally.

The findings of this paper provide a strong motivation for authorities in Malaysia to develop new policies and rules aiming at ensuring that internal audit departments are adequately resourced to function effectively, thereby promoting corporate ESG performance. Moreover, the findings may be useful in informing the board of directors and other policymakers that establishing an in-house internal audit department assists in advancing corporate sustainability performance.

The findings of this paper suggest that investors, creditors and other stakeholders should link ESG reporting with the attributes of the internal audit function and outsourcing arrangement when evaluating firm performance. The total annual costs allocated to the internal audit function coupled with the outsourcing arrangement by an external provider should be considered for the overall assessment of the ESG performance and provide additional warranty towards corporate goals’ achievement and sustainability for the society.

This study extends previous studies on the determinants of ESG performance by focusing on two crucial aspects of the internal audit function: the annual budget and the outsourcing arrangement, a hitherto largely unexplored mechanism by the existing literature.

This paper aims to examine the impact of the auditor's characteristics on bank's earnings management (EM) through loan loss provisions (LLP) for African banks.

This study is based on 360 bank-year observations from 14 African countries for the period 2011–2016, discretionary LLP is used as proxy for EM. Panel regressions have been conducted.

The authors' findings reveal that auditor's industry specialization and tenure exert a negative and significant influence on the extent of LLP-based EM. The results also show that total fees paid to the banks' auditors are positively related to the extent of EM. In a further analysis, the authors find that industry specialist auditors are more effective in reducing the incoming-increasing. Similarly, the positive relationship previously found between EM and total fees still holds only for income-increasing. Moreover, auditor tenure negatively impacts both income-increasing and income-decreasing EM. As for auditor change, results reveal differential effect on EM.

The current research extends prior literature and provides an understanding of an important external monitoring mechanism, the external audit, within African banks. To the best of the authors' knowledge, there is a paucity of cross-country studies that has addressed the influence of auditors' attributes on banks' EM in Africa.

This paper aims to better understand auditing practices as a social phenomenon and management practice through a comparative historical analysis of the emergence of statutory auditing in three European countries, namely, France, Great Britain and Germany between 1844 and 1935.

The authors’ approach is a comparative history relying on a literature review, books pertaining to the period of interest and relevant archives.

The three countries’ trajectories were similar. All featured the promulgation of acts at the second half of the 19th century, the development of the accounting profession and the introduction of new acts to further strengthen statutory auditing around the Great Depression. However, each country took a different path because of the degree of regulation. For instance, the regulation strength and the degree of professionalism differed considerably by country. Business secrecy was also a departure point; it ranged from the rejection of auditors as intruders in France to Germany’s exclusively internal auditing and the UK’s peer auditing. The countries also differed on perceptions of the auditor’s role. Auditors were seen through the lens of a general interest mission in France, as advisors to internal governance bodies in Germany and as shareholders’ agents in Great Britain.

This paper compares three main European countries in the specific context of the introduction of statutory auditing. The findings of this paper are helpful for the international harmonization of auditing standards, as the derived insights provide a better understanding of the differences in the standards’ implementation.

The purpose of this study is to provide a systematic review of research development on auditing in the European Union over the past decade and suggest future research directions.

Following the PRISMA protocol, the authors systematically reviewed the relevant literature and conducted a qualitative content analysis of 107 studies on auditing in the European Union published between 2012 and 2023.

The results indicate increased auditing literature in the European Union from 2012 to August 2023. Around 40% of the papers were focused on six nations: Germany, Spain, Italy, the UK, Sweden and France. Additionally, 35.5% of papers have been published in three major journals: Accounting in Europe, International Journal of Auditing and the European Accounting Review. Moreover, 82.24% of papers used quantitative methods, with a few using qualitative or mixed methods. Also, most of the studies in the sample endorsed the European Union’s auditing reforms, which included implementing a cap on nonaudit fees and enhancing the independence of audit committees. Contrary to this viewpoint, multiple studies have expressed disagreement with enforcing a total prohibition on nonaudit services, as certain services can enhance auditing quality. Similarly, other studies have contested the necessity of mandatory auditor rotation every 10 years, citing the significant additional expenses associated with this practice. Finally, further studies supported the European Union’s decision to make the joint audit voluntary, as it is related to high audit fees and low audit quality.

The limitations of this research primarily stem from the authors’ choices in selecting the database and defining the criteria for searching the studied papers.

This paper offers valuable insights into the future research prospects in the European Union’s auditing field. Hence, this analysis can be helpful for researchers and practitioners in developing this field based on future research recommendations and the identified themes.

To the best of the authors’ knowledge, this paper is the first study to systematically review the developments of the European Union auditing literature over the past decade.

This paper aims to analyze what Samarco and Brazilian magazines speak and say about Mariana’s environmental crime. Discover their doxa in this subject. Interpret the speakings, sayings and doxas through the theories of the treadmills of production, crime and law.

It is a qualitative and documental research and a narrative analysis. Regarding the documents: 45 were from public authorities, 14 from Samarco Mineração S.A. and 73 from Brazilian magazines. Theoretically, the authors resorted to Bourdieusian sociology (speaking, saying and doxa) and the treadmills of production, crime and law theories.

Samarco: speaking – mission statements; saying – detailed information and economic and financial concerns; doxa – assistance discourse. Brazilian magazines: speaking – external agents; saying – agreements; doxa – attribution, aggravations, historical facts, impacts and protests.

The absence of discussions that addressed this fatality, with its respective consequences, from an agenda that exposed and denounced how it exacerbated race, class and gender inequalities.

Regarding Mariana’s environmental crime: Samarco Mineração S.A. speaks and says through the treadmill of production theory and supports its doxa through the treadmill of crime theory, and Brazilian magazines speak and say through the treadmill of law theory and support their doxa through the treadmill of crime theory.

To provoke reflections on the relationship between the mining companies and the communities where they settle to develop their productive activities.

Concerning environmental crime in perspective, submit it to a theoretical interpretation based on sociological references, approach it in a debate linked to environmental criminology, and describe it through narratives exposed by the guilty company and by Brazilian magazines with high circulation.

This study examines the effect of non-audit fees (NAF) provisions on interest payments classification shifting. In addition, we investigate to what extent the NAF economic bonding and interest payments classification shifting is contingent on internal governance and firm financial well-being.

This study employed probit regression using a sample of UK non-financial firms indexed in FT UK (500) over the period from 2009 to 2017.

We find evidence that the economic bonding of NAF between external auditors and their clients is more likely to encourage managers in UK firms to manipulate operating cash flows through interest payment classification shifting. In addition, and interestingly, our results evince that classification-shifting may be the less costly and soft choice of managers in firms with strong governance and charging higher NAF. Furthermore, we show that financially distressed firms associated with their auditors in purchasing non-audit services are more prone to attempting to manipulate and engage in interest payments classification-shifting. Our result did not provide a significant effect of external auditor tenure on the interest payments classification shifting.

Our findings are subject to the following limitations: First, this study uses a composite index to measure the quality of internal corporate governance. It focuses only on the board of directors, but this index does not reflect other internal governance mechanisms. Second, this study is subject to limited study time due to the implementation of key IFRS standards (IFRS 9 Financial Instruments and IFRS 15 Revenue from Contract with Customers) from 2018–2019.

This study was motivated by the UK’s Financial Reporting Council regulators' pressure on the Big 4 audit firms to move more audit time into main auditing activities, reduce cross-selling to audit clients and separate their audit practices by 2024. Overall, we provide new evidence that directs a close spotlight on the threats of NAF that are potentially useful to regulators, shareholders and investors.

It is motivated by the UK’s Financial Reporting Council regulators' pressure on the Big 4 to move more audit firm time into main auditing activities, reduce cross-selling to audit clients and separate their audit practices by 2024. Overall, we provide new evidence that directs a close spotlight on the threats of NAS that are potentially useful to regulators, shareholders and investors.

The purpose of this study is to explore how the risk of management motives for fraud can be assessed in external audits.

Semi-structured interviews were conducted with 26 experienced external auditors to explore their perspectives on the methods they employ to assess the risk of management motives for fraud.

The study identifies six methods external auditors can use to assess management motives for fraud. It emphasises that assessing management motives requires auditors to go beyond understanding these motives and necessitates a sceptical and analytical mindset. Auditors need to identify the accounts most vulnerable to management manipulations, observe management attitudes and assess the credibility of management assertions. The auditors in this study highlight specific accounts frequently manipulated by management. Still, manual year-end journal entries are the most vulnerable to management manipulations as they are subject to fewer controls. They recommend increasing the sample size to 100% and assigning more experienced staff, particularly, those with qualifications in fraud examination or anti-fraud training, to audit these vulnerable accounts thoroughly. They also provided examples of how auditors can identify management motives for fraud, observe management attitudes and assess the credibility of management assertions.

Audit standards (e.g. ISA 240, SAS99) lack explicit guidance on assessing management motives for fraud, but auditors are required to consider it in fraud risk assessment. This study proposes guidance recommendations to improve auditors' ability to assess this risk, which could be integrated into professional audit standards and training materials to improve auditors' professional scepticism, ability to challenge management and skills in fraud risk assessment.

Assessing the risk of management motives for fraud in external audits has received limited attention in the literature. To the best of the authors’ knowledge, this study is the first to address this knowledge gap.

In this study the authors examine the nature and contents of key audit matters (KAMs), and the consequences of KAMs reporting on audit quality in the context of a developing country, Bangladesh. The authors’ proxies of audit qualities are discretionary accruals, small positive earnings surprise, audit report lag, earnings management via below the line items and audit fees.

The authors use content analysis of the KAMs for the period 2018–2021 to understand the nature and extent of KAMs reported by auditors in Bangladesh. The authors then use multivariate regression analysis to examine the effect of the number and content characteristics of KAMs on audit quality by using multivariate regression analysis.

Auditors in Bangladesh disclose a higher number of KAMs compared to other countries, disclose short descriptions of KAMs and industry generic KAMs. The authors document significant cross-sectional variations in the number and content characteristics of KAMs reported by auditors in Bangladesh. The authors’ pre-post analysis suggest that audit quality has improved after the adoption of KAMs. Cross-sectional analysis suggests that KAMs number and content characteristics are related to audit quality.

The authors’ findings imply that the KAMs reporting has the potential to play significant monitoring role in reducing the opportunistic behavior of managers. Hence, KAMs reporting can play a significant role in reducing the agency problem. For regulators, shareholders and corporate managers, the authors’ findings imply that if the audit quality is to be increased, the audit effort should be supported by an appropriate amount of audit fee.

The content characteristics of KAMs significantly influence managerial reporting behavior and affect the level of audit efforts.

Unlike developed countries (Gutierrez et al., 2018; Lennox et al. 2022), this study supports that KAMs reporting improves audit quality and control opportunistic behavior of managers in developing countries. The authors show that even though the KAMs disclosure quality is poor, it has the potential to improve financial reporting quality.

Motivated by concerns and the ongoing debate regarding auditors’ independence and impartiality, this paper aims to examine the impact of the financial crisis on non-audit services (NAS) provision and audit quality (main and robust variables) in the four largest Eurozone countries together during the global financial crisis (GFC).

The authors used a time trend OLS model with a dummy variable as well as a baseline model with a dummy and control variables accounting for multicollinearity, considering the characteristics of the GFC.

It documented a positive (negative) relationship between NAS provision (audit quality) and crisis in four Eurozone countries, Germany, France, Italy and Spain, in the context of a baseline approach, supporting the hypotheses that there are higher non-audit fees and a lower audit quality. Moreover, it is revealed that NAS provision and audit quality behave similarly, using a time trend approach, during the GFC. Considering the role of the auditor specialization or not (Big4 vs non-Big4) in companies, a significant effect from crisis on non-audit fees and audit quality for the four countries under the baseline approach is found. In general, the findings persist for NAS provision and audit quality using the robust methods of the time trend and panel OLS approaches. Multicollinearity was not found to affect the findings of the regressions.

The study provides important implications for firm managers, auditors and regulatory authorities.

To the best of the author’s knowledge, it is the first time that the impact of the crisis on non-audit fees and audit quality is investigated during the GFC with two sets of OLS models (a time trend OLS with a dummy and a panel OLS with a dummy and control variables) in four largest Eurozone countries together.