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Article
Publication date: 28 March 2018

Wan Nordin Wan Hussin, Hasan Mohamad Bamahros and Siti Norwahida Shukeri

Motivated by a recent call from DeFond and Zhang (2014) for auditing scholars to use “a richer set of audit firm, auditor office, and individual auditor characteristics to…

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1399

Abstract

Purpose

Motivated by a recent call from DeFond and Zhang (2014) for auditing scholars to use “a richer set of audit firm, auditor office, and individual auditor characteristics to capture competency”, this study aims to extend the related line of research by examining the association between lead engagement partner workload, defined as the number of public listed clients the partner is in charge of, and audit lag. The moderating effects of partner tenure on the partner workload–audit lag relationship have also been examined.

Design/methodology/approach

The association between auditor workload and financial reporting timeliness on 651 non-financial firms listed on Bursa Malaysia is tested in this study. Data to compute the partner workload are based on 222 lead engagement partners who signed off the audit reports for all 892 public listed firms in 2013.

Findings

The busy auditors are observed to prolong audit lags, and the effect is more acute for non-Big 4 clients, busy season clients and a short partner tenure. The engagement partners with heavy workload can also mitigate the adverse effects of reduced audit report timeliness when they have a longer partner–client tenure.

Research limitations/implications

This study may understate the level of engagement partner workload when partners have private firms in their client portfolios. Notwithstanding that, this study reiterates the growing importance of examining accounting and auditing outcomes at the individual partner level.

Practical implications

The findings that over-burdened engagement partner takes a longer time to complete the audit add to the current debate, where audit regulators and various stakeholders are actively promoting discussions on potential indicators of audit efficiency and quality.

Originality/value

This study provides new evidence on the association between partner workload and audit reporting lag, which has hitherto been unexplored. This study also extends the research carried out by Gul et al. (2017) and Sharma et al. (2017) by providing additional evidence on the relationship between partner tenure and audit delay.

Details

Managerial Auditing Journal, vol. 33 no. 3
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 30 August 2021

Yun Cheng, Christine M. Haynes and Michael D. Yu

Auditing studies have shifted the research focus from the audit firm level to the individual audit partner level in recent years. Motivated by the call from Lennox and Wu…

Abstract

Purpose

Auditing studies have shifted the research focus from the audit firm level to the individual audit partner level in recent years. Motivated by the call from Lennox and Wu (2018) to explore the effect of audit partners’ characteristics on audit quality in the US, this study aims to develop a new measure of engagement partner workload (EPW), which includes both the size and number of clients audited to test the effect of EPW on audit quality. This study also examines the moderating effect of the partner firm size on audit quality.

Design/methodology/approach

To test the effect of the EPW on audit quality, this study runs multivariate regressions of EPW on each specific client’s discretionary accruals and audit report delays. This study also runs a logistic regression of EPW on clients’ probability of having small profit increases to meet performance benchmarks.

Findings

Results of the hypotheses show that partner workload is positively related to audit quality. The results indicate that partners with larger, but fewer, clients conduct higher quality audits. Further analysis indicates that the relationship between partner workload and audit quality only holds for partners from the non-Big 4 firms.

Originality/value

This study contributes to the literatures of both audit quality and audit partner characteristics, and the results complement initial research aimed at identifying US partner-related characteristics that influence audit quality.

Details

Managerial Auditing Journal, vol. 36 no. 8
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 13 January 2022

Yosra Mnif and Imen Cherif

The paper aims to investigate the relation between the auditor's workload (LogAPW) and audit quality. Further, it explores whether the presence of a female audit partner

Abstract

Purpose

The paper aims to investigate the relation between the auditor's workload (LogAPW) and audit quality. Further, it explores whether the presence of a female audit partner (hereafter FEM) influences the LogAPW effect on audit quality.

Design/methodology/approach

A dataset of 1,629 firm-year observations from 181 companies listed in the NASDAQ OMX Stockholm for the years 2010–2018 has been analyzed. The testable hypotheses have been tested using least squares regressions clustered at the Swedish public-listed companies (client-firm) level.

Findings

The research findings first indicate that overburdened audit partners (APS) are associated with lower-quality audits, consistent with the “busyness hypothesis.” Nevertheless, the adverse association turns to be positive for FEMs, supporting the thesis that FEMs have more tendency, as compared to their male counterparts, to preserve their partnership's position in the public-audit firms. Collectively, these results seem sound, as the results hold unchanged after controlling for the endogeneity concerns and provide the same conclusion for a host of additional measures for both the client-firms' discretionary accruals and the LogAPW.

Research limitations/implications

Even though a lower magnitude of the client-firms' discretionary accruals corresponds to a lower-opportunistic behavior of managers, the research is limited to by which lower values of earnings management reflect a better-quality financial reporting. Given that the empirical analysis has been confined to the Swedish Corporation, the regression results might not be generalizable for other countries with different contextual features.

Practical implications

The study might participate to the ongoing debate about the introduction of more women to the public-audit firms' elite positions (e.g. partnership) by providing evidence for the favorable female auditor effect on the quality of the client-firms' financial reporting.

Originality/value

The regression results provide a preliminary evidence on how does the presence of a FEM mitigate the inverse relation between the LogAPW and audit quality, which is an issue that has not been examined before.

Details

Journal of Applied Accounting Research, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 19 October 2020

Kanyarat (Lek) Sanoran

This study aims to examine whether audit partner public-client specialization and busyness impact the cost of debt.

Abstract

Purpose

This study aims to examine whether audit partner public-client specialization and busyness impact the cost of debt.

Design/methodology/approach

This paper uses data from companies in Thailand for the 1998–2016 period. To measure the cost of debt, this study uses the realized interest cost, measured as the total interest expense for the one year ahead divided by the average value of total debt outstanding during that year.

Findings

The results show a positive association between the cost of debt and two measures of public-client specialization and busyness, which are the number of public clients audited by an individual audit partner in each year and the proportion of the number of public clients divided by the number of total clients in an individual audit partner’s portfolio.

Originality/value

In the literature, there is a lack of research on whether a higher number of public clients in an audit partner’s portfolio leads to better or worse perceived audit quality. This study extends prior literature by examining whether creditors’ perception of audit quality depends on the audit partner specialization or busyness and specifically, on the number of public clients of the auditor. The findings indicate that public-client busyness of a particular audit partner, rather than the audit partner public-client specialization, matters in the cost of debt.

Details

Managerial Auditing Journal, vol. 35 no. 9
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 13 November 2017

C. Janie Chang, Yan Luo and Linying Zhou

The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial…

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1173

Abstract

Purpose

The purpose of this study is to examine the impact of workloads at public accounting firms on the likelihood of an audit deficiency being identified during a triennial inspection by the Public Company Accounting Oversight Board (PCAOB).

Design/methodology/approach

Using the human resource information disclosed in PCAOB inspection reports, this study constructs two firm-specific workload measures: the ratio of issuer clients to audit partners; and the ratio of issuer clients to professional staff. Firm-level audit deficiency is measured at three levels of severity: Do any of the audit engagements inspected by the PCAOB reveal an audit deficiency? Are any of the identified audit deficiencies directly related to the auditors’ failure to identify a departure from GAAP in the client’s financial statement? Are any of the identified audit deficiencies associated with a significant adjustment or restatement in the client’s subsequent period financial statements? This study uses logistic regression to examine the association between audit deficiency and the workload of public accounting firms.

Findings

The empirical evidence suggests that the workload of public accounting firms is positively associated with the likelihood of a deficient audit, auditor’s failure to identify client’s GAAP departure and/or an audit deficiency resulting in a significant adjustment or even a restatement of the client’s financial statements in the subsequent period.

Originality/value

This study is among the first to investigate the impact of firm workload on deficient audits.

Details

Review of Accounting and Finance, vol. 16 no. 4
Type: Research Article
ISSN: 1475-7702

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Article
Publication date: 10 January 2022

Chu Chen, Hongmei Jia, Yang Xu and David Ziebart

This study aims to examine the effects of audit firm attributes on audit delay associated with financial reporting complexity (FRC).

Abstract

Purpose

This study aims to examine the effects of audit firm attributes on audit delay associated with financial reporting complexity (FRC).

Design/methodology/approach

The authors use regression models with a sample of public firms with distinct monetary eXtensible Business Reporting Language tags to test the research hypotheses.

Findings

The authors find that two audit firm attributes (audit firm tenure and non-audit services performance) moderate the effect of FRC on audit delay.

Practical implications

The study provides insights to regulators, practitioners and investors into how firms may reduce audit delay from FRC by keeping their long-tenured auditors and allowing their auditors to gain more knowledge about the firms by providing non-audit services. The results, therefore, have implications for mandatory audit firm rotation.

Originality/value

To the best of the knowledge, this study conducts the first comprehensive analysis of this topic, exploring the impact of three audit firm attributes on audit delay caused by FRC. It attempts to illustrate the impact of external audit firms on reducing the adverse consequences of FRC.

Details

Managerial Auditing Journal, vol. 37 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 29 July 2019

David Mutua Mathuva, Venancio Tauringana and Fredrick J. Otieno Owino

The nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. The purpose of this paper is to argue that the…

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2633

Abstract

Purpose

The nature of corporate governance (CG) mechanisms in an entity may influence the timeliness of the audited annual report. The purpose of this paper is to argue that the “quality” of CG in a firm has a significant association with the time it takes the audited annual report and financial statements to be released.

Design/methodology/approach

Using a set of 543 firm-year observations over the period 2007–2016, the authors examine whether a validated CG-Index is associated with audit report delay (ARD). The authors employ both granular as well as aggregated approaches to the analyses. In addition, the authors include control variables known to have an association with ARD in the panel data regressions.

Findings

The findings, which are robust for self-selection among other checks, reveal that financial expertise in the audit committee, board size, board meetings and independence in the board are associated with longer ARDs. Some CG attributes such as board diversity (i.e. women and different nationalities in the board) are associated with improved timeliness of the annual reports. The results also reveal that a longer tenure for independent directors in the board is associated with a shorter ARD. Overall, the authors find that the composite CG score has a positive influence on the timeliness of annual reports.

Research limitations/implications

The study focuses on listed companies in one developing country. Additional studies focusing on other jurisdictions could yield more results.

Practical implications

The study is useful in highlighting those CG characteristics firms should focus on toward the attainment of timely corporate reporting to aid in decision making by users.

Originality/value

The study is unique since it emphasizes the importance of focusing on an aggregate CG-Index, and the contribution of the CG-Index toward the timeliness of annual reports.

Details

Journal of Accounting in Emerging Economies, vol. 9 no. 4
Type: Research Article
ISSN: 2042-1168

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Article
Publication date: 27 March 2009

Arnold B. Bakker, Mina Westman and I.J. Hetty van Emmerik

The central aim of this paper is to give an overview of theory and research on the crossover of (work‐related) wellbeing from employees to their partners at home. In…

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3904

Abstract

Purpose

The central aim of this paper is to give an overview of theory and research on the crossover of (work‐related) wellbeing from employees to their partners at home. In addition, it seeks to discuss studies on the crossover of wellbeing from employees to their colleagues in the workplace. It aims to discuss possible moderators of the crossover effect and delineate a research agenda.

Design/methodology/approach

The paper takes the form of a literature review.

Findings

The review of the literature shows that strain may spillover from work to home, and consequently influence, the wellbeing of one's partner. Additionally, the paper discusses recent studies documenting that the enthusiasm for one's work may cross over to the partner as well. Furthermore, research has shown that employees influence one another in the workplace. Several conditions may facilitate such crossover, including the frequency of interactions, empathy, susceptibility to contagion, and similarity. The paper outlines a research agenda, and indicates what the gaps in the literature are.

Originality/value

The literature review reveals which advancements can be made in crossover theory. One way would be to further validate the spillover‐crossover model. This model postulates that job demands lead to work‐family conflict, which, in turn, leads to conflict with the partner (social undermining). Thus, job strain (or work engagement) first spills over from work to home, and then crosses over to the partner. This interaction sequence consequently influences the partner's wellbeing.

Details

Journal of Managerial Psychology, vol. 24 no. 3
Type: Research Article
ISSN: 0268-3946

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Article
Publication date: 24 May 2019

Brandon Ater, Christine Gimbar, J. Gregory Jenkins, Gabriel Saucedo and Nicole S. Wright

This paper aims to examine the perceptions of auditor roles on the workpaper review process in current audit practice. Specifically, the paper investigates how an…

Abstract

Purpose

This paper aims to examine the perceptions of auditor roles on the workpaper review process in current audit practice. Specifically, the paper investigates how an auditor’s defined role leads to perceived differences in what initiates the workpaper review process, the preferred methods for performing reviews and the stylization or framing of communicated review comments.

Design/methodology/approach

A survey was administered in which practicing auditors were asked about workpaper review process prompts, methods and preferences. The survey was completed by 215 auditors from each of the Big 4 accounting firms and one additional international firm. The final data set consists of quantitative and qualitative responses from 25 audit partners, 33 senior managers, 30 managers, 75 in-charge auditors/seniors and 52 staff auditors.

Findings

Findings indicate reviewers and preparers differ in their perceptions of the review process based on their defined roles. First, reviewers and preparers differ in their perspectives on which factors initiate the review process. Second, the majority of reviewers and preparers prefer face-to-face communication when discussing review notes. Reviewers, however, are more likely to believe the face-to-face method is an effective way to discuss review notes and to facilitate learning, whereas preparers prefer the method primarily because it reduces back-and-forth communication. Finally, reviewers believe they predominantly provide conclusion-based review notes, whereas preparers perceive review notes as having both conclusion- and documentation-based messages.

Research limitations/implications

This paper advances the academic literature by providing a unique perspective on the review process. Instead of investigating a single staff level, it examines the workpaper review process on a broader scale. By obtaining views from professionals across all levels, this work intends to inspire future research directed at reconciling differences and filling gaps in the review process literature. The finding that reviewers and preparers engage in role conformity that leads to incongruent perceptions of the review process should encourage the consideration of mechanisms, with the potential to be tested experimentally, by which to reconcile the incongruities.

Practical implications

Results support recent regulator concerns that there are breakdowns in the workpaper review process, and the findings provide some insight into why these breakdowns are occurring. Incongruent perceptions of review process characteristics may be the drivers of these identified regulatory concerns.

Originality/value

This is the first study to examine current workpaper review processes at the largest accounting firms from the perspective of both preparers and reviewers. From this unique data set, one key interpretation of the findings is that workpaper preparers do not appear to recognize a primary goal of the review process: to ensure that subordinates receive appropriate coaching, learning and development. However, workpaper reviewers do, in fact, attempt to support preparers and work to create a supportive team environment.

Details

Managerial Auditing Journal, vol. 34 no. 4
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 14 October 2014

Lara Middleditch and Trish Bradbury

The purpose of this paper is to explore how multiple partners could be managed to ensure the successful delivery of the World Masters Games (WMG), 2017. Specifically, its…

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1460

Abstract

Purpose

The purpose of this paper is to explore how multiple partners could be managed to ensure the successful delivery of the World Masters Games (WMG), 2017. Specifically, its objectives are to understand how event organisers manage relationships with multiple delivery partners, what tools and practices are used to ensure consistency and what risks and benefits exist.

Design/methodology/approach

An applied, qualitative, exploratory method used thematic analysis to obtain findings from seven semi-structured interviews of senior managers involved in five international sports event held in Australasia.

Findings

Findings were interpreted into nine themes related to event delivery partnerships such as reducing inconsistency, localising delivery through specialists, managing stakeholder relationships, managing workloads and taking an athlete-centred approach. Recommendations include establishing relationship strategies for each partner, determining the degree of control over delivery, crafting contracts appropriate to each partner, creating a suite of tools to aid consistency, recruiting an executive team with Games/mass participation event experience and a senior management team with sport or venue operations experience, centralising knowledge and planning, up-skilling partners as necessary and fully engaging local communities.

Research limitations/implications

The sample was restricted to five event organisations and only a small number of participants per organisation were interviewed. This study collected the experiences and opinions from the event organisers’ point of view and did not capture the same from delivery partners.

Originality/value

The literature revealed little specifically on operational delivery methods adopted by sport events; therefore this study adds to the conversation on sport event delivery models from an outsourcing perspective.

Details

International Journal of Event and Festival Management, vol. 5 no. 3
Type: Research Article
ISSN: 1758-2954

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