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1 – 10 of over 11000The purpose of this study is to provide fresh insights into whether there is an expectation gap between external auditors' and other stakeholders' perceptions of external auditors…
Abstract
Purpose
The purpose of this study is to provide fresh insights into whether there is an expectation gap between external auditors' and other stakeholders' perceptions of external auditors' responsibilities in an emerging economy, in light of recent changes to the global audit landscape.
Design/methodology/approach
A quantitative approach in the positivistic paradigm was adopted, and a structured questionnaire was used to gather data.
Findings
The findings suggested that there was a statistically significant discrepancy between external auditors' and social groups' perceptions of the responsibilities of external auditors. More than half of the gap was due to deficiency in standards, 19% due to unreasonable expectations by society, while 25% of the gap was found to be due to deficient performance.
Research limitations/implications
The study focused on the duties of external auditors and not on the duties of other types of auditors while examining the audit expectation-performance gap (AEG), and this was due to the drastic differences in the scope of their duties.
Practical implications
The findings of this study are likely to have direct policy implications for regulators, authorities, educators and auditing professionals, who should take immediate actions and measures to reduce the AEG in light of the current global audit landscape advancements and changes.
Originality/value
The present study used a substantially updated model to measure the AEG to suit the contemporary changes in the auditing landscape, and could be considered as a pioneering study that measures the AEG in an emerging economy amid recent changes.
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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…
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.
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Ahmed Atef Oussii and Neila Boulila Taktak
The purpose of this paper is to examine whether coordination between external auditors and the internal audit function affect the timeliness of audit reports as proxied by audit…
Abstract
Purpose
The purpose of this paper is to examine whether coordination between external auditors and the internal audit function affect the timeliness of audit reports as proxied by audit delay.
Design/methodology/approach
This study uses a survey of chief internal auditors from Tunisian listed companies to analyze the extent of coordination between IAFs and external auditors. Data spanning a four year period (2011-2014) was collected for 53 listed companies. Further, regression analysis was used to test the hypothesis.
Findings
Results indicate that greater coordination between internal and external auditors results in timelier financial reporting.
Practical implications
Overall, the study makes several important contributions. Findings provide important insights that an IAF acts as a valuable resource to external auditors. The results should be of interest to managers, external auditors and the Tunisian Financial Market Council.
Originality/value
This paper is one of few studies which have examined the association between internal-external audit coordination and timeliness of audit reports in an emerging market. The study makes a meaningful contribution to the corporate governance literature by investigating the influence of internal audit assistance on the delivery of timely audited financial information to the capital market. Results also have policy implications for Tunisian regulators with respect to the promotion of internal auditing best practices.
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Gaetano Matonti, Jon Tucker and Aurelio Tommasetti
This paper aims to investigate auditor choice in those Italian non-listed firms adopting the “traditional” model of corporate governance. In Italy, non-listed firms can choose…
Abstract
Purpose
This paper aims to investigate auditor choice in those Italian non-listed firms adopting the “traditional” model of corporate governance. In Italy, non-listed firms can choose between two types of auditor: the Board of Statutory Auditors (BSA), that is the statutory auditors, or an “external” auditor. At the same time, a BSA conducts the administrative auditing for all companies with equity exceeding €120,000.
Design/methodology/approach
The paper estimates a logistic regression model of firm auditor choice between an external auditor and the BSA, which incorporates variables proxying for both agency conflict and organizational complexity effects.
Findings
The results show that of the potential agency factors, only board independence drives auditor choice, whereas organizational complexity and risk factors including firm size, investment in inventories, subsidiary status and complexity drive auditor choice. These results may be explained in the administrative audit role of the BSA, which monitors both day-by-day firm operations and the financial statements preparation “project”. Stakeholders as a result are reassured that, in general, their interests are protected. Finally, it was found that legal form and voluntary International Financial Reporting Standards compliance exert an impact on auditor choice.
Originality/value
The paper provides support for an internal yet independent auditing body such as the Italian BSA as a wider model for corporate governance in European non-listed firms (OECD, 2004 and 2015). The BSA as an administrative and financial auditing body made up solely of independent highly qualified professionals can work within the firm on an operational basis, and in so doing can increase stakeholder protection.
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Tuan Mastiniwati Tuan Mansor, Akmalia Mohamad Ariff, Hafiza Aishah Hashim and Abdul Hafaz Ngah
This study aims to examine the roles of perceived organisational support (POS), attitude and self-efficacy in understanding the external whistleblowing intentions among senior…
Abstract
Purpose
This study aims to examine the roles of perceived organisational support (POS), attitude and self-efficacy in understanding the external whistleblowing intentions among senior auditors through the lens of stimulus–organism–response theory.
Design/methodology/approach
This study uses data from 119 senior auditors in audit firms in Malaysia. POS is predicted to be a stimulus factor from the external environment that affects the attitude and self-efficacy (organism) of the auditors and reassures them to act to whistleblow (response).
Findings
POS has a significant impact on self-efficacy and on attitude. Self-efficacy is shown as a significant mediator between POS and external whistleblowing intentions, but there is no statistical support for self-efficacy having a mediating effect on the relationship between the attitude of senior auditors and external whistleblowing intentions.
Practical implications
The findings can assist accounting professional bodies in understanding the psychological behaviours of auditors that contribute to their intention to shine a light on wrongdoing in audit firms and in providing a better insight into the critical factors that could influence auditors to whistleblow.
Originality/value
This study is among the earliest to investigate the application of stimulus–organism–response theory in whistleblowing, and hence it illustrates how the theory can be applied in studies on the ethical behaviours of actors in professional careers. The findings shed light on the role of self-efficacy as a significant mediator between POS and external whistleblowing intentions.
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Hasnah Haron, Andrew Chambers, Rozaldy Ramsi and Ishak Ismail
External auditors often rely on other professionals for the audit of the financial statements of their clients. Generally, external auditors rely on clients’ internal auditors…
Abstract
External auditors often rely on other professionals for the audit of the financial statements of their clients. Generally, external auditors rely on clients’ internal auditors. Reliance on internal auditors results in cost savings to the client. The objective of this study is to determine which of the criteria as mentioned by AI 610 will be used by the external auditors to evaluate the work of the internal auditors. Respondents of the study consist of those from the big four and non‐big four firms located in Kedah and Penang. A one‐quarter replicate of 28 Kempthorne's design was used to determine the experimental task. The findings of the study indicate that technical competence and scope of function are the two most important criteria that external auditors consider in their reliance on internal auditors. Malaysian Institute of Accountants (MIA), being the standard setter of the auditing standards in Malaysia, will have to develop precise and operational criteria for these factors in planning the audits. The study also shows that there was consistency in audit judgement.
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The purpose of this paper is to understand how external auditors communicate with audit committees (ACs).
Abstract
Purpose
The purpose of this paper is to understand how external auditors communicate with audit committees (ACs).
Design/methodology/approach
A total of 53 interviews were conducted with participants in the ACs of 22 French companies listed in the CAC 40 index, including external and internal auditors, CFOs, AC chairpersons, and members.
Findings
In multiple accountability relationships, external auditors sit in the middle. They therefore use impression management (IM). While AC members expect them to be transparent, they are also expected to preserve managers’ “face” by sustaining impressions of consistency. The construction of impressions of consistency and transparency takes place mainly backstage, through time-consuming teamwork shared by auditors and CFOs. External auditors have power to make things transparent, but the use of such power is tricky, because it can damage relationships with CFOs. External auditors have a difficult “discrepant role” (Goffman, 1959) to play.
Practical implications
This study provides insights into what occurs behind the scenes with ACs, which can help regulators think deeper about relationships between external auditors and ACs.
Originality/value
This research makes contribution to governance, IM, and AC literature. It analyzes the AC process from external auditors’ – rather than AC members’ – points of view. Highlighting the AC process backstage, it shows that IM can be carried out collectively toward an internal rather than external audience and demonstrates that external auditors practice rather than limiting IM.
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Examines the role of professional associations, governmental agencies, and international accounting and auditing bodies in promulgating standards to foster auditor independence…
Abstract
Examines the role of professional associations, governmental agencies, and international accounting and auditing bodies in promulgating standards to foster auditor independence domestically and abroad. Focuses specifically on the role played by the American Institute of Certified Public Accountants, the Institute of Internal Auditors (IIA), the Securities and Exchange Commission and the US Government Accounting Office. Also looks at other professional associations in banking, industry, and manufacturing sectors dealing with sensitive issues of auditors′ involvement in such matters as management advisory services, operating responsibilities, outsourcing, opinion shopping, auditor rotation, and other conflicts of interest which may impair auditor independence.
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The Dodd-Frank Financial Reform Act sets new whistleblowing standards for internal accountants and external auditors who fail to resolve differences internally with top management…
Abstract
The Dodd-Frank Financial Reform Act sets new whistleblowing standards for internal accountants and external auditors who fail to resolve differences internally with top management on financial reporting matters. Whistleblowers are eligible to receive a financial reward under Dodd-Frank if they “voluntarily” provide “original” information and meet other criteria. Interpretation 102-4 of the American Institute of Certified Public Accountants Code establishes reporting obligations for external auditors to meet the requirements of Dodd-Frank. The purpose of this paper is to critically evaluate the standards to better understand the whistleblowing process. A review of the literature identifies areas of concern in deciding whether to blow the whistle. The paper contributes to the literature by integrating thoughts, ideas, and issues raised by prior researchers and considerations specific to the whistleblowing process. The analysis results in the proposal of specific unanswered questions about the process that can guide future researchers.
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Mark Kohlbeck, Jomo Sankara and Errol G. Stewart
This paper aims to examine whether external monitors (auditors and analysts) constrain earnings strings, an indicator of earnings management, and whether this monitoring is more…
Abstract
Purpose
This paper aims to examine whether external monitors (auditors and analysts) constrain earnings strings, an indicator of earnings management, and whether this monitoring is more effective after the implementation of the Sarbanes-Oxley Act of 2002 (SOX), given the emphasis of SOX on improving auditing, financial reporting and the information environment.
Design/methodology/approach
Agency theory establishes the premise between external monitoring and earnings strings. Auditor tenure and number of analysts following provide measures for external monitoring quality. Using prior research, empirical models explaining the presence of an earnings strings and earnings strings trend are developed to test the hypotheses.
Findings
Pre-SOX, extreme auditor tenure, indicating lower quality external monitoring, is associated with greater earnings strings trend, and analyst coverage is associated with increased likelihood of earnings strings and greater earnings strings trend consistent with analyst pressure on management. More effective auditor and analyst monitoring occurs post-SOX in terms of reduced likelihood of earnings strings and earnings strings trend.
Originality/value
The authors provide evidence on how elements of external monitoring are associated with increased earnings strings pre-SOX. Further, they contribute to the debate on the impact of SOX on external firm monitoring and the overall financial information environment. By focusing on earnings strings, the outcome of earnings management, the authors provide a unique understanding of external monitoring that also provides insight on the overvaluation of equity and ultimate destruction of firm value. The evidence demonstrates how regulation has contributed to an improved financial reporting environment and external monitoring.
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