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This paper aims to examine how the allocation of audit hours to the year-round procedures, based on the risk of material misstatements in financial statements, impacts audit quality.

Using a data set on audit hours spent on year-round and year-end procedures, the authors build an empirical model for testing the effectiveness of year-round auditing of Korean public firms during the period of 2014–2018.

The initial tests do not show that proportionate increases in year-round procedures increase audit quality. However, after the authors control for the risk of material misstatements, the authors find that proportionate increases in year-round audit hours generally increase audit quality, except for high-risk firms where audit quality increases only as year-end hours proportionately increase. For high-risk firms, the results suggest that increases in year-round audit procedures occur at the cost of the essential year-end work. Similarly, except for high-risk firms, the authors find that the allocation of more audit effort to year-round procedures improves audit efficiency.

To the best of the authors’ knowledge, this study provides some of the first empirical evidence showing how a risk-based approach to allocating audit effort over the duration of an audit can impact audit quality and efficiency. Regulatory bodies, such as the International Auditing and Assurance Standards Board and Public Company Accounting Oversight Board, which consider the proper allocation of audit hours as a key audit quality indicator, should find the results useful.

Extant studies propose music sentiment as a novel measure of individuals’ sentiment. These studies argue that individuals’ choice of music reflects their emotional condition in real time and influences their cognitive ability, making it a powerful tool for assessing their mood. This study aims to use music sentiment as a proxy for auditors’ mood and explore its impact on audit quality.

A sample of the US firms from 2017 to 2020 is used in the study. The authors apply the ordinary least squares regressions and the logit regressions to the audit quality models. The authors use absolute discretionary accruals and the propensity to meet or beat earnings forecasts as proxies for audit quality and calculate a stream-weighted average sentiment measure for Spotify’s Top-200 songs of each day during the audit period of a client firm to capture the sentiment of auditors.

The authors find that music sentiment is positively associated with audit quality. The result is consistent with the mood maintenance hypothesis, which suggests that a positive mood can induce auditors to be more careful in risky situations. Furthermore, the result is robust to various sensitivity analyses.

The study contributes to the scarce literature that focuses on auditors’ emotional state and highlights the importance of monitoring auditor mindset during the audit period.

Financial statement fraud has become a global concern, and auditors are increasingly focused on identifying and investigating it. Auditors may play a crucial role in investigating and reducing financial statement fraud, and this is particularly important in developing countries where fraudulent practices are more prevalent due to the lack of strict regulations and oversight. This study investigates whether enhanced audit quality has an impact on reducing financial statement fraud. The primary aim is to recognize whether a higher level of audit quality relates with a decrease in fraudulent activities in Indonesia, which is one such country that has not yet adopted IFRS.

This study investigates the effect of audit quality, as measured by audit tenure, audit fee, and audit size, on the dependent variable of financial statement fraud, as indicated by Dechow F-value. The sample for this study comprises 951 observations from 2015 to 2020, and the research design utilizes a panel data approach. To test the main hypothesis, OLS, and GMM estimation techniques are employed.

The analyses reveal a negative relationship between audit tenure and financial statement fraud. This suggests that shorter audit tenure may be associated with an increased risk of financial statement fraud. This heightened risk could stem from auditors having limited time to thoroughly understand the company's operations and internal controls, potentially making it more challenging to detect and prevent fraudulent activities perpetrated by the client. Conversely, a positive relationship is identified between audit fees and financial statement fraud, suggesting that companies paying higher fees may be engaging auditors less adept at detecting fraudulent activities. Furthermore, a negative relationship is observed between Big-5 and financial statement fraud, which may be due to the greater resources, expertise, quality control, scrutiny, reputation, and ethical conduct of Big-5 audit companies.

This study only focused on listed companies in Indonesia, therefore, caution should be exercised when generalizing the findings to other developing and Muslim countries such as Malaysia. The findings may differ due to the adoption of IFRS in Malaysia. As such, it is important for future studies to include Malaysia as a sample and compare the results with those of Indonesia. This comparison would demonstrate the impact of IFRS adoption on the relationship between audit quality and financial statement fraud and provide insights for policy makers in Indonesia.

The findings of this study have important implications for developing countries that have been shown to be more susceptible to fraud than developed countries. This study contributes to the existing research on the role of audit quality in reducing financial statement fraud and emphasizes the need for auditors and accountants to take a proactive approach in detecting and investigating financial fraud.

This study is a new study because it investigates the relationship between audit quality and financial statement fraud in Indonesia, a developing Muslim country that has not yet adopted International Financial Reporting Standards (IFRS). The study provides valuable evidence on the unique factors that influence fraud in Indonesia and fills a gap in the literature as previous studies on this topic have largely focused on developed countries. Additionally, the study recommends that policymakers in Indonesia consider implementing IFRS to improve the reliability of financial reporting and strengthen the effectiveness of the auditing process, thus reducing the incidence of fraud.

This paper aims to examine the effects of the 2014 European regulatory reform on auditors’ activity, the audit outcome and the audit market, with a focus on the Spanish market.

The research is based on in-depth, semistructured interviews with partners of the main audit firms operating in the Spanish market. This qualitative approach provides a precise identification of the cause-effect relationships of the new measures introduced by the European audit regulation.

The findings indicate that, based on auditors’ opinions, the costs of the main regulatory changes outweigh the benefits. The European Union (EU) Audit Regulation imposes more demanding provisions, such as an extended auditor’s report, mandatory audit firm rotation, more banned nonaudit services and stricter quality controls, resulting in substantial side effects on audit activity and the audit market. This could undermine the objective of enhancing the quality of audit services.

To the best of the authors’ knowledge, this is the first study to analyze the effect of the 2014 EU regulatory reform on audit activity, audit market and audit outcome based on auditors’ perceptions. The findings may be of interest to academics, professionals and regulators alike, as they offer valuable insights for assessing the effectiveness of the new audit provisions. Additionally, the qualitative methodology used facilitates a causal analysis of the key elements introduced by the regulations, potentially paving the way for future research avenues.

This study aims to investigate why and how shared service centres (SSCs) are implemented as well as how they affect audit firm practice and audit quality.

In this qualitative study guided by the theoretical framework of institutional theory, the authors conducted 25 semi-structured interviews in seven European countries, including 16 interviews with audit partners from Big 4 firms, 6 with audit team members, 2 with interviewees from second-tier audit firms and 1 with a member of an oversight body.

The authors show that the central rationale for audit firms to implement SSCs is economic rather than external legitimacy. The authors find that SSC implementation has substantial effects on audit practices, particularly those related to standardisation, coordination and monitoring activities. The authors also highlight the potential impacts on audit quality.

By exploring the motivation for and effects of SSC implementation amongst audit firms, the authors offer insights into the best practices related to subsequent change processes and audit quality.

This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.

Leveraging a hand-collected data set of listed family firms from 2014 to 2020, this study uses regression analyses to investigate the impact of family ownership, family involvement on the board, family CEO and the generational stage of the family business on the quality of internal auditing.

The results provide evidence that family ownership is positively associated with the quality of internal auditing, while later generational stages of family businesses have the opposite effect. Additional analyses reveal that the presence of a sustainability board sub-committee moderates the relationship between generational stages of family businesses and the quality of internal auditing function.

This paper does not consider country-institutional factors and other potentially family-related antecedents or governance factors that may affect the quality of internal auditing.

The results are informative for investors and non-family stakeholders interested in understanding under which conditions family-related factors influence the quality of internal auditing functions.

This study offers fresh evidence regarding the relationship between family-related factors and the quality of internal auditing and board sub-committees that moderate such a relationship in family businesses.

The purpose of this study is to provide a systematic review of research development on auditing in the European Union over the past decade and suggest future research directions.

Following the PRISMA protocol, the authors systematically reviewed the relevant literature and conducted a qualitative content analysis of 107 studies on auditing in the European Union published between 2012 and 2023.

The results indicate increased auditing literature in the European Union from 2012 to August 2023. Around 40% of the papers were focused on six nations: Germany, Spain, Italy, the UK, Sweden and France. Additionally, 35.5% of papers have been published in three major journals: Accounting in Europe, International Journal of Auditing and the European Accounting Review. Moreover, 82.24% of papers used quantitative methods, with a few using qualitative or mixed methods. Also, most of the studies in the sample endorsed the European Union’s auditing reforms, which included implementing a cap on nonaudit fees and enhancing the independence of audit committees. Contrary to this viewpoint, multiple studies have expressed disagreement with enforcing a total prohibition on nonaudit services, as certain services can enhance auditing quality. Similarly, other studies have contested the necessity of mandatory auditor rotation every 10 years, citing the significant additional expenses associated with this practice. Finally, further studies supported the European Union’s decision to make the joint audit voluntary, as it is related to high audit fees and low audit quality.

The limitations of this research primarily stem from the authors’ choices in selecting the database and defining the criteria for searching the studied papers.

This paper offers valuable insights into the future research prospects in the European Union’s auditing field. Hence, this analysis can be helpful for researchers and practitioners in developing this field based on future research recommendations and the identified themes.

To the best of the authors’ knowledge, this paper is the first study to systematically review the developments of the European Union auditing literature over the past decade.

This study aims to explore the auditors’ responses to the COVID-19 pandemic in Egypt, with a focus on how their demographic characteristics – specifically gender, work experience and audit firm size – affect their ability to identify key audit matters (KAMs).

The study used exploratory factor analysis to develop an index for evaluating auditors’ proficiency in distinguishing KAMs from non-KAMs, followed by multivariate regression analysis to analyze the impact of auditors’ demographics on this ability.

The study’s findings are significant as they highlight the influence of auditors’ gender and work experience on their capability to correctly classify KAMs. However, the size of the audit firm showed no significant effect on the auditors’ decision-making efficacy in identifying KAMs.

While the study illuminates critical aspects of audit judgment during unprecedented times, it acknowledges limitations, including its geographical focus on Egypt and reliance on self-reported data. The implications stress the need for audit firms and regulators to consider auditors’ demographic characteristics when formulating policies to enhance audit quality and reliability during crises.

This research breaks new ground in the auditing literature by shedding light on the distinct role of auditor demographics in shaping audit opinion during crises. It is one of the pioneering studies to quantitatively assess the impact of auditors’ gender, experience and firm size on KAM identification in a global health crisis. It provides a unique perspective on audit practices in emerging economies.

In recent times, stakeholders have called on corporate organizations especially those charged with governance to embrace full disclosure on non-financial issues, especially sustainability reporting. Based on this premise, this study aims to examine the influence of corporate board and assurance on sustainability reporting practices (SRP) of selected 80 firms from 8 countries in sub-Saharan Africa.

To measure the corporate board, the authors use both board variables and audit committee variables. Also, the authors adapted the sustainability score model as used by previous authors in the field of sustainability disclosure to measure SRPs. The analysis was done using both ordered logistic regression and probit regression models.

The results show that the combination of board corporate and assurance has a positive and significant impact on the sustainability reporting practice of selected firms in sub-Saharan Africa.

The study places emphasis on the need for strong collaboration between the corporate board and external assurance in evaluating and enhancing the quality of sustainability disclosure.

The study bridged the gap in the literature in the area of corporate board, assurance and SRP of corporate firms which has received little attention within sub-Saharan Africa.

This study examines the effects of board members’ compensation on the voluntary establishment of an internal audit function in publicly listed firms. While previous studies have identified some individual determinants related to the voluntary establishment of an internal audit function, the existing evidence on how board members’ compensation affects voluntary use of internal audit is, at best, ambiguous, scarce and incoherent.

Board compensation is a central incentive instrument in the classic principal–agent relationship between the owners and board members. The theme is empirically examined by using data compiled from Finnish publicly listed companies for the period 2015 to 2018. Since the dependent variable of the study is a binary variable, the logistic regression method was chosen as the statistical method of the study.

Our results unequivocally show that generous compensation of the board members increases the likelihood of establishing an internal audit function. Thus, we conclude that good corporate governance can be improved through generous compensation of board members.

Identifying the determinants of internal audit is vital to better understand the mechanisms that facilitate firms' improvement of internal control and risk management in terms of voluntarily adopting an internal audit function, and the implementation of good governance in general. Although numerous determinants of internal audit have been identified in previous studies, this study showed that one of the key determinants has so far been overlooked; namely, the remuneration of board members.