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Open Access
Article
Publication date: 4 September 2019

Rahmat Akbar Simamora and Hendarjatno Hendarjatno

The going concern audit opinion is an audit opinion issued by an auditor to evaluate the company’s ability in maintaining the business continuity. The purpose of this paper is to…

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Abstract

Purpose

The going concern audit opinion is an audit opinion issued by an auditor to evaluate the company’s ability in maintaining the business continuity. The purpose of this paper is to discover the effects of audit client tenure, audit lag, opinion shopping, liquidity ratio and leverage on the going concern audit opinion.

Design/methodology/approach

The study used secondary data obtained from financial reports and independent audit reports published by Indonesian Stock Exchange (ISE) as well as Indonesian Capital Market Directory. Besides, the population of the study included manufacturing companies registered in ISE from 2009 to 2013. Further, the present study applied purposive sampling technique which resulted in 16 companies used as the sample of the study. Then the hypothesis was examined by applying logistic regression.

Findings

Results of the hypothesis examination indicated that the variables of opinion shopping and leverage affected the going concern audit opinion, whereas the variables of audit client tenure, audit lag and liquidity ratio did not affect the going concern audit opinion.

Originality/value

Results of the hypothesis examination indicated that the variables of opinion shopping and leverage affected the going concern audit opinion, whereas the variables of audit client tenure, audit lag and liquidity ratio did not affect the going concern audit opinion.

Details

Asian Journal of Accounting Research, vol. 4 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 4 December 2020

Thomas Averio

It is argued that the going concern opinion is issued if auditors have a doubt about financial condition of a company. Provision of the going concern audit opinion may worsen the…

11592

Abstract

Purpose

It is argued that the going concern opinion is issued if auditors have a doubt about financial condition of a company. Provision of the going concern audit opinion may worsen the company in terms of gaining public trust and may even indicate bankruptcy. This study aims to determine the factors that affect the auditor's going concern opinion.

Design/methodology/approach

This research used secondary data obtained from annual reports and independent audit reports published by the Indonesia Stock Exchange. The population of this research included manufacturing firms registered in the Indonesia Stock Exchange from 2015 to 2019. The sample after the purposive sampling technique being applied consisted of 33 companies. The data were analyzed using logistic regression performed in the statistical analysis software, SPSS 24.0.

Findings

The results indicated that leverage positively affected the going concern audit opinion, then the audit quality, profitability and liquidity negatively affected the going concern audit opinion, whereas firm size and audit lag did not affect the going concern audit opinion.

Originality/value

This study is in contrast to several existing studies on the determinants of the auditor's going concern opinion and provides knowledge on developing more factors affecting the auditor's going concern opinion.

Details

Asian Journal of Accounting Research, vol. 6 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 31 August 2017

Ni Nyoman Alit Triani, Made Dudy Satyawan and Merlyana Dwinda Yanthi

The research aims to address the Going Concern Audit Opinion published by the auditor with an ISA 570 basis. The application of ISA 570 will help to facilitate the auditor in…

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Abstract

The research aims to address the Going Concern Audit Opinion published by the auditor with an ISA 570 basis. The application of ISA 570 will help to facilitate the auditor in publishing the Going Concern Audit Opinion. The Going Concern Audit Opinion is the opinion which is released by the auditor to assure whether the company is enabled to maintain its viability. The difference between SA 341 and ISA 570 will to contribute effective impact to the management for elucidating the management plan undertaken to overcome any difficulty they may encounter. The ISA 570 will represent that the auditor intensely guides the management in plan or strategy development for upgrading the finance and non-finance performance. The research approach is the Non-Positivistic approach from an Interpretive Perspective. The researcher obtains the source and type of data from key persons consisting of all auditors working in Public Accountant Firms (PAF) in Surabaya. The data collecting technique uses observation, interview and documentation. The result of the research shows the ISA 570 application gives the facility for the auditors in publishing a Going Concern Audit Opinion. In the audit execution, the auditor will accentuate the strategic plan for resolving the problems with which the company deals.

Details

Asian Journal of Accounting Research, vol. 2 no. 2
Type: Research Article
ISSN: 2459-9700

Open Access
Article
Publication date: 30 November 2023

Domenico 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.

1563

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.

Details

Journal of Accounting Literature, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0737-4607

Keywords

Open Access
Article
Publication date: 5 December 2023

Carlotta Magri and Pier Luigi Marchini

This study aims to investigate the link between audit quality and in-court debt restructuring. The aim is to understand whether the confirmation of debt restructuring plans is…

Abstract

Purpose

This study aims to investigate the link between audit quality and in-court debt restructuring. The aim is to understand whether the confirmation of debt restructuring plans is affected by audit quality, which, in the light of agency theory, reduces information asymmetries between outsiders (creditors and the court) and insiders (shareholders and managers) of the debtor company.

Design/methodology/approach

A logistic regression is performed to test whether higher audit quality is associated with an increased probability of successfully completing a debt restructuring proceeding (RP). Consistent with the literature, audit quality is assessed ex ante based on auditor size, which is used as a proxy for independence. The analysis considers private Italian companies.

Findings

Audit quality positively affects debt restructuring. Among financially distressed companies, those audited by an audit company are more likely to succeed in RPs than those audited by a single practitioner. There is no evidence of a Big N effect.

Originality/value

This study fills a gap in literature as, in contrast to other financial and governance characteristics, audit quality has never been studied before as a determinant of efficient restructuring. It contributes to the literature on auditing and governance by highlighting the importance of audit quality in complex situations such as RPs, and it expands on debt restructuring literature by considering the importance of the information exchanged during RPs.

Details

Managerial Auditing Journal, vol. 39 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Open Access
Article
Publication date: 24 August 2021

Wan Zurina Nik Abdul Majid, Effiezal Aswadi Abdul Wahab, Hasnah Haron, Dian Agustia and Mohammad Nasih

The study examines the relationship between nonaudit services (NAS) and accruals quality in Malaysia. The study also considers several important characteristics of audit committee…

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Abstract

Purpose

The study examines the relationship between nonaudit services (NAS) and accruals quality in Malaysia. The study also considers several important characteristics of audit committee as the determinant for accruals quality. Next, the study examines whether these characteristics mitigate the relationship between NAS and accruals quality.

Design/methodology/approach

The study employs descriptive analysis, univariate tests and multivariate regression to investigate the potential effect of NAS on acruals quality. Data for audit committee characteristics were hand collected from annual reports downloaded from Bursa Malaysia's website.

Findings

Based on 1,118 firm-year observations for the period 2009–2011, the study finds that NAS negatively impact accruals quality. This empirical result indicates that the economic bond that is created between auditors and clients restricts the auditors from performing their duty objectively. A fully independent audit committee weakens the negative relationship between NAS and auditor independence.

Research limitations/implications

The sample period represents a limitation since it only covers three years of data. This limitation is largely driven by the nature of data collection of NAS fees.

Practical implications

These results contribute to Malaysia's policy deliberation to account for the effects of NAS on auditor independence and the oversight role of an audit committee. This study contributes to theoretical perspectives on accruals quality and corporate governance in Malaysia.

Originality/value

The novelty of this research, coupled with institutional data in Malaysia, claims the originality of this research.

Details

Asian Journal of Accounting Research, vol. 7 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 27 September 2022

Indra Abeysekera

A sustainability reporting framework must demonstrate that resources are fairly bought and used to support diverse life on earth within habitable ranges. The purpose of this paper…

9545

Abstract

Purpose

A sustainability reporting framework must demonstrate that resources are fairly bought and used to support diverse life on earth within habitable ranges. The purpose of this paper is to propose a principle-based sustainability reporting framework that measures, audits and reports based on sustainability outcomes and impacts as part of the corporate reporting framework.

Design/methodology/approach

This paper draws on the United Nations Sustainable Development Goals (UN SDGs) and targets for preparing a reporting framework. It uses Gaia Theory and the Theory of Distributive Justice constructs that align with sustainable development principles to delineate a reporting approach.

Findings

Frameworks that promote sustainability reporting have increasingly embraced UN SDGs but overly focus on performance promoting inter-firm comparisons. This framework introduces principle-based sustainability reporting where firms demonstrate their chosen contribution to sustainable development using 17 UN SDGs as goal posts.

Research limitations/implications

This conceptual paper presents theoretical constructs that future research can empirically validate to enhance sustainability reporting.

Practical implications

This principle-based sustainability reporting framework is implementable for corporate reporting, where sustainability reporting integrates with the financial and economic intellectual capital reporting frameworks.

Social implications

This framework highlights the importance of acquiring and using resources to distribute justice and fairness. It is a joint project between firms and stakeholders.

Originality/value

This framework promotes integrated thinking for firms to engage in principle-based sustainability reporting and provides a roadmap for sustainability reporting using the SDG Compass logic model.

Details

Sustainability Accounting, Management and Policy Journal, vol. 13 no. 6
Type: Research Article
ISSN: 2040-8021

Keywords

Open Access
Article
Publication date: 25 February 2020

Dagwom Yohanna Dang, James Ayuba Akwe and Salisu Balago Garba

Credit relevance of financial reporting can be influenced by change in financial reporting framework. This study aims to examine the effect of mandatory international financial…

2002

Abstract

Purpose

Credit relevance of financial reporting can be influenced by change in financial reporting framework. This study aims to examine the effect of mandatory international financial reporting standards (IFRS) adoption on credit relevance quality of financial reporting of deposit money banks (DMBs) in Nigeria.

Design/methodology/approach

This study uses difference-in-differences (D-in-D) design for its modelling. Panel data regression analysis based on the D-in-D model is used in analysing the data collected from secondary sources.

Findings

The findings of this study are that based on the D-in-D approach, there is a significant and positive effect of mandatory IFRS adoption on credit relevance quality of financial reporting of DMBs in Nigeria, and that there is also a significant difference in the credit relevance quality of financial reporting of mandatory adopting banks in the post-mandatory IFRS adoption period compared to pre-mandatory IFRS adoption period.

Research limitations/implications

To the best of this study's review, there is inadequacy of literature within the credit relevance research in Nigeria. In the light of this, this study intends to fill the gap.

Practical implications

This study is specifically important to regulatory authorities, both primary and secondary regulators. Specifically, this study has implications in the regulatory roles of Central Bank of Nigeria (CBN) and Financial Reporting Council of Nigeria (FRC). However, the study recommends that regulatory authorities should encourage DMBs to avail their financial reports annually to credit rating agencies (local and international) for proper evaluation for subsequent ratings.

Originality/value

The peculiarities in this study, that is the utilisation of the D-in-D design and the use of credit relevance metric as the dependent variable, made this study important and novel to push the frontier of existing knowledge.

Details

Asian Journal of Accounting Research, vol. 5 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 19 July 2022

Afsaneh Soroushyar

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

4017

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.

Details

Asian Journal of Accounting Research, vol. 8 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 1 July 2020

Jani Saastamoinen, Arsen Djatej, Kati Pajunen and M. David Gorton

Accounting standards for goodwill may intensify the agency conflict. Since auditors evaluate intangible asset valuations, this study examines to what extent being an auditor…

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Abstract

Purpose

Accounting standards for goodwill may intensify the agency conflict. Since auditors evaluate intangible asset valuations, this study examines to what extent being an auditor (including Big 4 auditors) and being female as indicators of professional skepticism and conservatism predict accounting professionals' critical views of goodwill accounting under US GAAP.

Design/methodology/approach

Statistical analyses of a survey of accounting professionals in the Pacific Northwest region of the United States.

Findings

The respondents' views are dispersed from trust in GAAP to views reflecting management opportunism in goodwill accounting. While being an auditor (including Big 4 auditors) does not predict a critical perception, being a female auditor is correlated with critical views to some extent.

Research limitations/implications

The survey was carried out in a limited geographical area and personal contacts were used to maximize the response rate, which may limit generalizability.

Practical implications

Standard setters can use the results to learn how practitioners perceive the current accounting standards for goodwill. The results provide users and preparers knowledge about potential pitfalls of goodwill accounting. Preparers could increase transparency to alleviate user concerns regarding managerial opportunism in goodwill accounting.

Originality/value

This paper extends the IFRS-based literature exploring practitioners' perceptions of accounting standards by focusing on goodwill accounting in the US GAAP environment. This study also contributes to the auditing literature by providing further evidence on how gender moderates an auditor's perception of accounting standards.

Details

Journal of Applied Accounting Research, vol. 21 no. 4
Type: Research Article
ISSN: 0967-5426

Keywords

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