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Presents the results of a survey of the auditors of a number of large certification bodies carried out to investigate the opinions, methods and problems of auditors responsible for registering companies to ISO 9000. Finds that auditors consider certain quality system activities, such as internal audits and corrective and preventive actions, are strong indicators of a compliant quality system. Other activities, such as monitoring purchaser supplied product, appear to provide less insight to auditors. Auditor opinion varies about the main function and “customer” of the registration process, which may reflect a wider discussion in the quality community. In general, auditors have had considerable previous relevant experience before joining a certification body and believe they have few major problems with the current auditing process.

Auditors of quality assurance systems contribute to technological excellence in many important ways. They gain much insight into modern technology through their various audits and induce managers to make valuable improvements that raise quality and productivity. More specifically, computer‐based technology is transferred and disseminated through auditors. The interrelationship between the computer and quality auditing is analysed. Innovative and integrative auditing of quality assurance systems is shown to be instrumental in attaining technological improvements. The American Society for Quality Control (ASQC) Guideline for Quality System Auditing also has an important role to play in this respect.

This study aims to examine whether the newly available auditor tenure information is associated with non-GAAP earnings, as the recent requirement to disclose the initial year of auditor-client relationship in audit reports may give the impression that longer auditor tenure may be related to lower audit quality.

Using a sample of firm-quarters from 2017 to 2020, the authors conduct both univariate and regression analyses. We use hand-collected data for auditor tenure, SEC comment letters, and non-GAAP variables.

First, the authors find that the likelihood of disclosing non-GAAP earnings monotonically increases with auditor tenure on a univariate basis. Second, auditor tenure is negatively associated with aggressive non-GAAP reporting. Third, the authors document evidence of aggressive reporting in general; that is, items excluded in calculating non-GAAP earnings are associated with future performance. However, the association declines with longer auditor tenure. Finally, the authors report evidence that the likelihood of receiving an SEC comment letter that contains non-GAAP comments decreases with longer auditor tenure.

The results show that regulators need to consider both GAAP and non-GAAP disclosures’ costs and benefits when enacting auditor tenure regulation. Investors can benefit from the findings in evaluating the quality of non-GAAP earnings. The findings are also relevant to the SEC when allocating limited resources in monitoring non-GAAP reporting.

To the best of the authors’ knowledge, this is the first study showing that auditor tenure is associated with the quality of non-GAAP earnings. Given that financial reporting quality should be understood as a comprehensive system comprising both mandatory and voluntary disclosures, this study complements the literature that examines the effect of auditor tenure on financial reporting quality using GAAP reporting.

The study of the relationship between external auditing services and investment deviation in a French setting has received relatively little research attention thus far. There are insufficient indicators to measure audit quality and then have a measurable link to investment efficiency. This study is motivated by such a research gap as well as the important role of auditing services in assuring investment efficiency. The purpose of this study is to test whether a good audit quality service improves corporate investment awareness in French-listed companies and contributes to establishing a comprehensive analysis framework for inefficient investment and how audit services have become an important tool to reduce the investment deviation of listed companies in France.

Based on a sample of 89 non-financial French firms listed on the Stoxx 600 Index from 2015 to 2021, this study uses feasible generalised least squares (FGLS) regressions to study the relationship between investment deviation and auditing service quality.

After running an FGLS regression model for two firm groups (overinvestment and overinvestment groups) and testing for a set of control variables, especially COVID-19, the findings show a non-linear correlation between audit service and corporate investment deviation. Both underinvestment and overinvestment decisions are negatively and statistically significantly impacted by audit indicators. Furthermore, involving a high-quality specialised auditor may enhance overall monitoring and lead to a lower investment deviation level. Overall, the empirical results show that a high-quality audit service enhances the investment efficiency of French-indexed companies.

This study offers crucial information that audit regulators can use to better appreciate the advantages of high audit quality and to take seriously the policy issues that affect it. Board members are urged to provide excellent audit quality that improves investment efficiency with careful consideration.

This study contributes to the existing audit literature by illuminating the effect of audit quality services on investment deviation to show a deeper understanding of the factors that contribute to the differences in prior studies’ findings in the field of audit quality impacts.

This study aims to examine the effect of professional commitment, commitment to ethics, internal locus of control and emotional intelligence on the ability to detect fraud through reduced audit quality behaviors.

The analysis unit is the internal auditor in internal control unit at state Islamic religious higher education in Indonesia. Data processing used covariance-based structural equation modeling using Lisrel Software and the Sobel test to verify the direct and indirect effects.

This study found empirical evidence that professional commitment and emotional intelligence positively impact the ability to detect fraud. Commitment to ethics and emotional intelligence has a negative effect on reduced audit quality behaviors. Furthermore, this study also provides that commitment to ethics and emotional intelligence indirectly impacts on the ability to detect fraud through reduced audit quality behaviors.

The organization periodically monitors auditors’ behaviors, especially reduced audit quality behaviors, during the audit process and encourages regulators to formulate policies related to increasing the ability to detect fraud.

This study provides knowledge regarding the driving force of internal auditors to mitigate reduced audit quality behaviors and increase the ability to detect fraud.

This study aims to examine whether a firm's demand for high-quality auditors is influenced by multiple large shareholders (MLS). As one type of ownership structure, MLS have gained popularity in China recently and have different types of large shareholders, including large institutional shareholder, large foreign shareholder and large state shareholder. The authors also examine whether different types of MLS have heterogeneous impacts on appointing high-quality auditors.

With a sample of 27,131 firm-year observations from Chinese public companies from 2003 to 2018, the authors use multivariate regressions to examine the effect of MLS on auditor choice. Heckman two-stage analysis, a firm fixed effects model, propensity score matching and difference-in-differences test are used as robustness checks.

This paper finds that the presence and power of MLS increase the likelihood of appointing high-quality auditors. With regard to the types of MLS, large institutional shareholders and foreign shareholders have significant positive effects on appointing high-quality auditors, while the presence of state-owned large shareholders has no effect on auditor choice. Further analyses reveal that the positive effect of MLS on high-quality auditor choice is more pronounced in firms with severe agency problems and information asymmetry. Taken together, these results suggest that MLS play a monitoring role by demanding high-quality auditors.

This paper contributes to the literature on the determinants of auditor choice. While prior studies primarily focus on the impact of concentrated ownership structure, corporate governance and the pressure from stakeholders on auditor choice, this paper complements the literature by providing evidence from the heterogeneous effects of different types MLS. This paper also extends the literature on the consequences of MLS from the perspective of auditor choice.

This study investigates how the timeliness of financial reporting by listed companies in the United Arab Emirates (UAE) is influenced by the interaction effect between industry-specialist auditors and board governance.

The Emirati capital markets – the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) – were used to obtain the data, which covered the seven-year period between 2011 and 2017. In total, 385 observations were obtained. Descriptive statistics and multiple regression were the principal statistical tests employed using the panel data method.

The results of the direct effect tests reveal that board independence and industry-specialist auditors have no significant influence on financial reporting timeliness. Nevertheless, the results also show that the timeliness of financial reporting by listed companies in the UAE is influenced by the interaction effect between auditors' industry specialisation and the governance of firm boards. More specifically, the results reveal that financial reporting timeliness is positively associated with board independence for companies audited by industry-specialist auditors. This finding is consistent with the notion that industry-specialist auditors complement the role of effective board governance.

This study only focuses on secondary data from non-financial companies listed in the UAE markets. Therefore, the outcomes may not be generalisable to sectors related to finance. Future researchers are recommended to examine financial sectors and apply alternative measurements such as surveys or interviews with directorial boards and external auditors. Furthermore, this study used only one measure of industry-specialist auditors, while board governance was limited to board independence. Future studies could utilise different measurements for industry-specialist auditors and more board governance measures to obtain more robust findings.

The evidence provided indicates that when a company listed in the UAE has a high-quality board, it benefits by engaging auditors who specialise in the industry in terms of improving the timeliness of financial reporting. The findings also indicate the need for closer monitoring of management to safeguard their reputation. This might attract the attention of the Big Four audit firms and industry–specialist auditors to continuously re-evaluate their audit work, professional training and staff skills, while they might also try to differentiate their performance and monitoring capabilities from the non-Big Four audit firms and non-industry specialist auditors.

The main contribution of this study to the overall body of research is the concept that having independent directors is associated with improved reporting timeliness because financial reports are monitored with greater efficiency by industry–specialist auditors. This study provides evidence for the interaction effect between internal and external governance mechanisms on financial reporting quality, which has not been the focus of prior studies on financial reporting quality.

The paper aims to examine the corporate social responsibility (CSR) activity of audit firms.

Using hand-collected data on all Chinese audit firms’ CSR activities from 2007 to 2020, this study constructs two measures to proxy for audit firms’ CSR engagement: a dummy variable to indicate whether an auditor engages in CSR activities in year t and the frequency with which auditors conduct CSR activities in year t. The authors use ordinary least squares regression as a baseline methodology, along with the entropy balancing method and instrumental variable approach to alleviate potential endogeneity concerns.

The baseline results show that socially responsible audit firms provide higher quality audit services than their counterparts. In particular, the authors find that clients audited by socially responsible audit firms are less likely to receive an aggressively clean opinion. Moreover, the findings suggest that CSR activities related to community and employees are more relevant in improving audit quality compared with those related to other dimensions of CSR. Further analyses show that capital markets and audit clients react positively to audit-firm CSR activity. Audit firms engaging in CSR increase their audit inputs in response to risky clients, as compared with their counterparts. Finally, cross-sectional analyses show that the positive relationship is more pronounced for non-Big 4 and non-industry experts and is attenuated by within-firm geographic dispersion. In terms of client characteristics, the positive effect of audit-firm CSR is stronger when their clients face the higher financial risk or have lower CSR awareness than others. Taken together, these findings are consistent with the ethical view of audit-firm CSR engagement.

The study advances investors’ understanding of audit-firm CSR engagement and helps them evaluate the credibility of audited financial reports. Besides, the findings may also help guide the audit firms to conduct more CSR activities and help guide the audit clients to choose CSR audit firms.

To the best of the authors’ knowledge, this study provides the first large-sample evidence by empirically examining the association between audit-firm CSR activity and audit service performance. Besides, this paper also explores audit-firm CSR activity from two competing perspectives, thereby providing a comprehensive understanding of this issue. Finally, this work responds to the call for more CSR research in emerging markets.

This study examines whether and how a client's business strategy can affect the relationship between auditor characteristics and financial reporting quality.

In this study, auditor industry specialization and tenure were used as proxies for auditor characteristics. The client business strategy was measured using the resource allocation index method. Finally, discretionary accruals are used to assess financial reporting quality. This study includes 1,450 firm-year observations and 145 companies listed on the Tehran Stock Exchange (TSE) over a ten-year period from 2011 to 2020. The research hypotheses were analyzed using a multivariate regression model and panel data.

The results show that auditor industry specialization increases financial reporting quality. This relationship improves when the client's business strategy deviates from the industry–normal strategy. The research findings state that auditor tenure has a positive association with financial reporting quality, and this relationship is strengthened when the company's business strategy deviates from the normal industry strategy.

The findings of this study provide important evidence for investors, firm management, and auditing firms. Investors must consider the auditor characteristics when selecting companies listed on the TSE. Managers of Iranian companies are advised to consider the auditor's characteristics when choosing an audit firm to increase financial reporting quality. Audit firms should evaluate their business strategies in audit planning to increase the quality of financial reporting.

To the best of the authors’ knowledge, this is the first empirical study to examine the relationship between auditor characteristics and the financial reporting quality in the emerging capital market by considering the clients' business strategy.

Changes in structure and conceptual underpinnings of ISO 9001 mean that quality management system (QMS) auditors require a wide knowledge base and skill set to effectively evaluate contemporary QMS and add value to the process. Hence, this study presents an open curriculum framework of the knowledge, skills and attributes for quality auditor education.

This study describes the first two phases of a three-phase study examining the educational requirements for external quality auditors (EQAs). Phase 1 involved a review of relevant international literature on auditor competence and education; Phase 2 involved the collection of qualitative data from a panel of experts, combined with the initial round of a Delphi study. A thematic analysis was used to analyze the findings from the questionnaire.

The findings of this study suggests there is a need to improve EQAs education, as most experts reported the quality of audit to be variable, inconsistent, poor and diminishing in value. The most important improvements to auditor education are to update and improve the auditors' knowledge on the requirements of the ISO 9001 standard and technology in business and skills such as report writing, communication, IT understanding and analytical ability. Some of the attributes reported as being desirable to instill in EQAs include the following: objectivity, integrity, ethics and professionalism; being observant, perceptive, articulate and confident; having good judgment; flexibility, adaptivity and diplomacy, fairness and open-mindedness.

This study highlights the need for wider EQA education based on the gap identified in its performance. The resulting framework can be adopted by accreditation and certification bodies to evaluate and improve their auditors' audit performance.