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1 – 10 of 611Domenico Campa, Alberto Quagli and Paola Ramassa
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Abstract
Purpose
This study reviews and discusses the accounting literature that analyzes the role of auditors and enforcers in the context of fraud.
Design/methodology/approach
This literature review includes both qualitative and quantitative studies, based on the idea that the findings from different research paradigms can shed light on the complex interactions between different financial reporting controls. The authors use a mixed-methods research synthesis and select 64 accounting journal articles to analyze the main proxies for fraud, the stages of the fraud process under investigation and the roles played by auditors and enforcers.
Findings
The study highlights heterogeneity with respect to the terms and concepts used to capture the fraud phenomenon, a fragmentation in terms of the measures used in quantitative studies and a low level of detail in the fraud analysis. The review also shows a limited number of case studies and a lack of focus on the interaction and interplay between enforcers and auditors.
Research limitations/implications
This study outlines directions for future accounting research on fraud.
Practical implications
The analysis underscores the need for the academic community, policymakers and practitioners to work together to prevent the destructive economic and social consequences of fraud in an increasingly complex and interconnected environment.
Originality/value
This study differs from previous literature reviews that focus on a single monitoring mechanism or deal with fraud in a broadly manner by discussing how the accounting literature addresses the roles and the complex interplay between enforcers and auditors in the context of accounting fraud.
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Sara Trucco, Maria Chiara Demartini, Kevin McMeeking and Valentina Beretta
This paper aims to investigate the effect of voluntary non-financial reporting on the evaluation of audit risk from the auditors’ viewpoint in a post-crisis period. Furthermore…
Abstract
Purpose
This paper aims to investigate the effect of voluntary non-financial reporting on the evaluation of audit risk from the auditors’ viewpoint in a post-crisis period. Furthermore, this paper analyses whether auditors perceive that voluntary non-financial reporting impacts audit risk differently for old clients as compared with new clients.
Design/methodology/approach
This study is conducted on a sample of Italian audit firms through a paper-based questionnaire. Both Big4 and non-Big4 audit firms have been included in the sample.
Findings
Results show that integrated reporting is perceived to be the most relevant reporting method and intellectual capital statement the least relevant. Surprisingly, empirical findings over the sample period show that auditors do not perceive statistically significant differences between old and new clients.
Practical implications
Auditors can identify opportunities to adapt their assessment model to include voluntary non-financial report information. Moreover, they can use different assessment models regarding the research variables in the case of new and old clients.
Originality/value
Empirical findings highlight the growing role of voluntary non-financial reporting in the auditors’ perception of their client’s audit risk. All the observed voluntary non-financial reporting forms, except for intellectual capital, are considered as relevant by auditors in the evaluation of their client’s audit risk when compared to an indifference point. In addition, findings reveal that female auditors perceive a reduced gap in the relevance between integrated reports and intellectual capital reports compared to their counterparts.
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Azam Eshagniya and Mahdi Salehi
This paper aims to examine the effect of financial restatement on changing the auditor in the following years.
Abstract
Purpose
This paper aims to examine the effect of financial restatement on changing the auditor in the following years.
Design/methodology/approach
The study uses data of 105 companies (735 company-years) listed on the Tehran Stock Exchange collected during the period 2008-2014. Logistic regression is used to test the hypotheses.
Findings
The results of hypotheses present that restatement does not cause auditor changes and that as the severity of a restatement increases, the auditor change in the following year of restatement also does not increase. Restating companies having strong governance do not go for auditor changes as compared with other companies. In addition, in companies that are restating, non-big auditor changes are not more likely than a big auditor. Also, in companies restating simultaneous with a CEO turnover, there is no possibility of auditor change. Furthermore, multinomial logistic regression showed that the adjustments resulting from the correction of errors and changes in procedures and the amount of adjustments do not cause auditor change in the following year. So, the results have shown that the restatement is not an important factor in changing auditor the next year.
Originality/value
The current study analyses the impact of financial restatement on auditor changes in a deep manner in a developing country like Iran.
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This study examines whether and how a client's business strategy can affect the relationship between auditor characteristics and financial reporting quality.
Abstract
Purpose
This study examines whether and how a client's business strategy can affect the relationship between auditor characteristics and financial reporting quality.
Design/methodology/approach
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.
Findings
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.
Practical implications
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.
Originality/value
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.
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Dragomir Dimitrijevic, Biljana Jovkovic and Suncica Milutinovic
This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia…
Abstract
Purpose
This study aims to investigate what are the capabilities and limits of external audit in detecting frauds in companies operating in the territory of the Republics: Serbia, Croatia, Macedonia and Bosnia and Herzegovina.
Design/methodology/approach
In total, 51 certified auditors from Serbia, Croatia, Macedonia and Bosnia and Herzegovina were surveyed to analyze what are the most frequent warning signals of the existence of the frauds auditors encounter during the verification of company’s financial statements.
Findings
The study indicated that the auditors of the Republic of Serbia more often encountered groundless overstatement of revenues compared with other countries, while regarding manipulative representation of inventories, the largest mean value and median are still among the auditors of the Republic of Serbia.
Practical implications
Based on the research results, it can be concluded that it is necessary to expand the legal obligation and power of external auditors when, in financial statement auditing, they come to clear findings that indicate fraud. Expansion of external auditors’ powers would reduce their current limitations and expand the domain of action.
Originality/value
Limitations in external auditors’ work prevent the processing of frauds. However, auditors’ analysis of financial statements and pointing to potential irregularities can be a good manner for the early detection and prevention of frauds in company’s operations.
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Fatah Behzadian and Naser Izadi Nia
In this research, using an analytical framework on factors affecting the quality of auditing services, we consider factors that affect an expectations gap in providers and users…
Abstract
In this research, using an analytical framework on factors affecting the quality of auditing services, we consider factors that affect an expectations gap in providers and users of auditing services related to factors affecting auditing quality. Effective factors studied in this regard are professional features, including the professional role of individuals in the auditing process (auditors against preparers of financial statements), professional experience of individuals, professional rating and size of auditing firms. The first statistical society consists of certified public accountants (CPAs) working in the auditing organization and audit firms in Iran, and the second statistical society consists of all investment companies that operate under the supervision of the Tehran Stock Exchange Organization. Based on the results of the research, the role of professionals in the auditing process is not effective as an independent auditor or financial statements provider, as well as the professional experience of individuals in the expectations gap from factors affecting auditing quality, while the size and qualities of the auditing firms were influenced by the expectations gap of individuals in the field of auditing regulation.
Mahdi Salehi, Tamanna Dalwai and Arash Arianpoor
The present study aims to assess the impact of narcissism, self-confidence and auditor's characteristics on audit report readability for companies listed on the Tehran Stock…
Abstract
Purpose
The present study aims to assess the impact of narcissism, self-confidence and auditor's characteristics on audit report readability for companies listed on the Tehran Stock Exchange.
Design/methodology/approach
The study’s statistical population comprises firms listed on the Tehran Stock Exchange. The present research used a systematic elimination method, and 1,162 firm-year observations were obtained for seven years from 2012 to 2018. Three variables including auditor tenure, audit fee and audit specialization are used for measuring auditing features. The Fog index is used as a proxy for measuring audit report readability. In addition, in this paper, four regressions, including fixed effects, random effects, pooled and T+1, are used to estimate reliable coefficients.
Findings
The findings show a negative and significant relationship between auditor’s characteristics (tenure, fee and specialization) and audit report readability. Moreover, the variables of the auditor’s narcissism, self-confidence and mandatory auditor change have a positive and significant association with audit report readability. This study lends support to the theories of personality disorder and behavioral decision.
Originality/value
Since narcissism and self-confidence are two characteristics that shape an individual’s character and personality, some involved behavioral factors in auditors’ characteristics contribute to their decisions. The effects of these should be detected to enhance the decision-making process. The said factors significantly impact audit report readability. Hence, this paper attempts to assess the effect of the said factors on audit report readability.
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Marion Pauline Gauthier and Nathalie Brender
Blockchain is expected to impact reporting and auditing processes. Indeed, the increasing use of blockchain could affect the nature and extent of information available to auditors…
Abstract
Purpose
Blockchain is expected to impact reporting and auditing processes. Indeed, the increasing use of blockchain could affect the nature and extent of information available to auditors and how audits are performed. This paper aims to investigate how auditors are assessing the relevance of the current auditing standards in light of the emergent use of blockchain technology.
Design/methodology/approach
Based on qualitative content analysis, this paper analyzed semi-structured interviews with auditors to understand their shared perception of how the current auditing standards address blockchain’s emergence.
Findings
The findings reveal a growing demand for information technology (IT) auditing standards, as well as a mismatch in timing between the quickly changing IT environment and the regulators’ slowness in releasing new standards or updating standards.
Research limitations/implications
The findings reflect the external auditors’ points of view and cannot be generalized to all countries, but future studies should address the development of specific IT-related auditing standards to better fit the fast-evolving technology environment in ways that consider the other stakeholders’ points of view, including those of the standard setters.
Practical implications
The results of this study show that auditors consider the current auditing standards for IT to be too vague, and they need more guidance on both auditing blockchain and using technologies as audit tools.
Originality/value
The original contribution of this study lies in the in-depth understanding it provides of the adequacy of the current auditing standards to audit companies using blockchain, which is an under-researched topic.
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Mohammed Muneerali Thottoli, Essia Ries Ahmed and K.V. Thomas
The purpose of this paper is to explore the effects of emerging technology (technology adoption, perceived benefits, technological challenges and ease of use) and the auditing…
Abstract
Purpose
The purpose of this paper is to explore the effects of emerging technology (technology adoption, perceived benefits, technological challenges and ease of use) and the auditing practice of accounting professionals.
Design/methodology/approach
The primary method of data collection was a questionnaire directed to newly practicing chartered accountants who are partners of sole proprietorship or partnership firms in India. The data were analyzed by using partial least squares structural equation modeling (PLS-SEM).
Findings
The findings revealed that there is a positive and significant relationship between characteristics of emerging technology (technology adoption, technological challenges and ease of use) and auditing practice, while factors of the perceived benefits had a negative relationship with auditing practice.
Research limitations/implications
The study model would aid technology enabled audit research by giving a platform for a new study to investigate further detailed solutions to emerging information technology determinants.
Practical implications
This study illustrates how tools technique perceived benefit motivates sole proprietorship practicing auditors to adopt emerging technology- enabled auditing software for auditing client's financial statements. Further, this study has added to the information technology auditing literature and might add benefits to the numerous other audit firms to adopt in emerging technology tools their audit firm.
Social implications
Audit firms, generally sole proprietorship and partnership firms, should be given enough awareness about the latest audit software tools to carry out their audit tasks efficiently.
Originality/value
The study findings highlight benefits of emerging technology-enabled auditing practice among owners/partners of the sole proprietorship or partnership firms, which is not extensively discussed in the prior studies. Furthermore, it broadens knowledge of perceived benefit, technological challenges and ease of use in technology-enabled audit software in the auditing and accounting literature.
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Giorgia Mattei, Giuseppe Grossi and James Guthrie A.M.
Public sector auditing research has changed rapidly over the past four decades. This paper aims to reveal how the field has developed and identify avenues for future research.
Abstract
Purpose
Public sector auditing research has changed rapidly over the past four decades. This paper aims to reveal how the field has developed and identify avenues for future research.
Design/methodology/approach
The authors used a structured literature review following Massaro et al. The sample comprises papers on public sector auditing published in accounting and public sector management journals between 1991 and 2020.
Findings
The present analysis highlights that academic research interest in public sector auditing has grown and become more diverse. The authors argue this may reflect a transformation of the public sector in recent decades, owing to the developing institutional logics of public sector reforms, from traditional public administration to new public management and now new public governance.
Originality value
This paper offers a comprehensive review of the public sector auditing literature, discussing different perspectives over time. It also outlines the various public sector reforms introduced over the period of the study. In reviewing the existing literature, the authors highlight the themes for future research and policy settings.
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