Top PDF AUDIT AND NON-AUDIT SERVICES SUPPLIED BY AUDIT FIRMS

AUDIT AND NON-AUDIT SERVICES SUPPLIED BY AUDIT FIRMS

AUDIT AND NON-AUDIT SERVICES SUPPLIED BY AUDIT FIRMS

It principally covers the relationship with the current external auditors of LSEG plc and all its subsidiaries, but also considers the Group’s relationship with all of the “Big 4” audit firms (PwC, Deloitte, Ernst & Young and KPMG) who may provide audit services from time to time or provide consultancy services to the Group.

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Regulating the International Audit Market and the removal of barriers to entry: The provision of non audit services by audit firms and the 2006 Statutory Audit Directive

Regulating the International Audit Market and the removal of barriers to entry: The provision of non audit services by audit firms and the 2006 Statutory Audit Directive

This paper will focus on the facilitation of greater access to external financial capital as a means of increasing access to the audit market - even though other catalysts which could encourage more players to gain access to the international audit market exist. Catalysts on the supply side include: 10 the need for greater harmonisation through a harmonisation of the independence rules and other ethical requirements for auditing, the application at EU level of “more restrictive rules” on the provision of non audit services which could enable smaller firms to be more competitive (since the Big Four who provide a wide range of non audit services may be prohibited from placing bids in particular situations); consideration that harmonisation of rules associated with the limitation of auditors’ liability would provide an incentive for audit firms to access the international market; and the adoption of international auditing standards to facilitate harmonisation within the EU audit market. The sections within this paper are structured as follows: Section one will commence with an analysis which traces developments and legislation which have emerged in the EU in response to the collapse of Enron. Such an analysis will incorporate a description and an assessment of the extent to which prohibition of non audit services by audit firms and the disclosure of audit remuneration has occurred in Germany and in the UK. This will then lead to a discussion on audit independence within the context of the controversial debate on whether or not the provision of non audit services generates more benefits than risks for the audit of financial statements. The next section then considers not only how a more integrated single audit market at European level can be achieved, but also why this is necessary. Within this framework, the 2006 Statutory Audit Directive will be introduced.
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Economic Feasibility Assessment of Audit Firms in Bhutan

Economic Feasibility Assessment of Audit Firms in Bhutan

It is found out that there is immense scope for auditing firms in Bhutan because currently almost all the auditing services of corporations and private sector businesses are outsourced to foreign audit firms. Corporations and private sectors feel that there should be more national audit firms in the country, which is an indication of huge demand existing for audit services. There are prospects for sustainability of audit firms because the Bhutanese economy is growing and more Foreign Direct Investments (FDI) and private companies are coming up, which can further increase the demand for audit services in the country. Moreover, the lone national audit firm, Drami and Associates Private Ltd. was not affected by economic crisis.
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Audit data analytics : current practice and determinants among audit firms in New Zealand

Audit data analytics : current practice and determinants among audit firms in New Zealand

structuration theory (DeSanctis & Poole, 1994) into constructs from the theory of planned behaviour (Ajzen, 1991). Taking the individual as the unit of analysis, the study obtained data from auditors from the six largest international audit firms in Australia, and found system restrictiveness and audit review process effectiveness to be significant sources of external control, and perceived normative pressure to be determined by the audit team and firm consensus on appropriate use. While Dowling’s (2009) study is based in Australia, Abou-El- Sood, Kotb, and Allam (2015) examines the perceived usage and use of audit technology by auditors in Egyptian international audit firms. Collecting data around the types of audit technology tools used by the participating firms, the study found that despite the general perception shared among auditors that audit technology is important in enhancing audit quality, usage of audit technology in the Egyptian external audit market is under-utilised. In other work, addressing the lack of emphasis given to the inhibitors of IT usage in the audit IT usage literature, Henderson III, Bradford, and Kotb (2016) applied the dual factor theory (Cenfetelli, 2004) and performed a survey to examine the enablers and inhibitors of the actual use of generalised audit software (GAS) (which is a form of CAATs). Results of the study suggest that the inhibitors substantially affect usage, consequently implying that it may be necessary to overcome those inhibitors to allow enablers to significantly affect usage.
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IMPACT OF AUDIT PLANNING ON AUDIT QUALITY: CASE STUDY OF LOCAL AUDIT FIRMS IN UZBEKISTAN

IMPACT OF AUDIT PLANNING ON AUDIT QUALITY: CASE STUDY OF LOCAL AUDIT FIRMS IN UZBEKISTAN

Licensed under Creative Common Page 381 The key advantage of audit planning is seen in the quality of auditing results. Audit planning prevents errors which may occur in auditing process and frauds that may be face during the in the final auditing phase. Conclusively, it reduces error and fraud risk in auditing and enhances audit quality. However, audit planning possesses a significant power to mitigate high risks originated from diverse sources e.g. misstatement, inappropriate audit team building, lack of auditor’s competence and existence of need for external expert. In this paper, impact of audit planning on total quality of audit is examined in the sample of 16 auditors in Uzbekistan. Author specified an econometric model based on the questionnaire data and analysed the applicability and effect of audit planning by local audit firms of Uzbekistan.
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The views expressed in these slides are solely the views of the Investor Advisory Group members who prepared them and do not necessarily reflect the

The views expressed in these slides are solely the views of the Investor Advisory Group members who prepared them and do not necessarily reflect the

adopted the original independence rules the SEC had proposed, and which were more proscriptive. In addition, Congress (1) created the PCAOB and gave it powers to perform inspections of audit firms that audited public companies, write auditing and quality control

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Do Provision for Non -Audit Services (NAS) Give Rise to Audit Fees

Do Provision for Non -Audit Services (NAS) Give Rise to Audit Fees

Non audit services (NAS) fees refer to fees paid to auditor for tasks beyond certification audit. Such payment is for services rendered neither to improvised financial statement, nor to the review services that are adapted in line with generally accepted auditing standards (GAAS). NAS fees may comprise payment for consultancy, tax assistance, SEC filing services, mergers and acquisitions support, and others. In general, NAS is required to improve operational transparency. It is argued that the NAS performed by auditors and its fees have been increasing significantly contributing towards audit firms‟ revenue and deemed to have substantially impaired auditor independence. This statement is reflected in Dhaliwal‟s et. al.,(2008) argument that Securities and Exchange Commission (SEC) further claimed that acquiring NAS may deteriorate auditor independence. Specifically, regulators are alarmed about two effects of NAS fees; (i) auditors became financially dependent hence appear to more likely unable to stand up to management pressure for fear of losing their client; and (ii) the consulting nature of many non-audit services put auditors at managerial roles, which may risk the objectivity nature of audit itself (Defond, 2002). Due to the fact, the SEC outlines new rule that prohibit auditors from engaging in certain NAS and require audit fees to be disclosed. These concerns are summarized in the following quote from the SEC regulations mandating fee disclosures (SEC [2000]):
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AUDIT FIRM ATTRIBUTES AND AUDIT QUALITY IN NIGERIA

AUDIT FIRM ATTRIBUTES AND AUDIT QUALITY IN NIGERIA

Licensed under Creative Common Page 126 (1981, P.186) in his view sees “audit quality as the market assessed joint probability that a given auditor will both discover a breach in a client’s accounting system, and report the breach”. It is therefore reasonably logical to see it in the same light as Palmrose (1988) who sees the quality of audit as assurance level. External auditing that is of high quality is found to be of a component that is essential for capital markets to function well. According to Hennes, Leone and Miller (2012), auditors are likely to be changed by various corporations with the reputation for financial reporting that is credible when their quality of audit is questioned in other to avoid the consequences of capital market of unreliable financial reporting. Suyono (2012) explained in his study that the quality of an audit simultaneously depends on the characteristics of a number of audit firms such as auditor experience, auditor independence and auditor accountability. The quality of audit was also measured by using peer review result (Colbert & Murray, 1998).
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Transparency of Firms that Audit Public Companies

Transparency of Firms that Audit Public Companies

Additional transparency about these attributes, behaviors, and indicators of audit quality may provide the market with information necessary to create an environment where audit firms compete on, and thus raise, audit quality. For example, transparency may sharpen the focus on the importance of audit quality, which may impact how audit firms internally manage audit quality. As measures of quality enter the public domain, audit firms could compare measures against their competitors, which may create incentive to “be the best.” Also, financial statement users, such as investors and audit committees, will have information available to make comparisons among audit firms and inform their decision-making, creating pressure for audit firms to raise audit quality. Additionally, over time these disclosures may become more integrated within the culture of an audit firm. Thus, improvements to audit quality may result from increased transparency of audit firms.
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Boards of directors, audit committees and auditor provided non-audit services

Boards of directors, audit committees and auditor provided non-audit services

Also, another motivation for this study arises from increased contemporary debate regarding audit quality, one of the main points being the provision of APNAS. Debate over APNAS has particularly come to public attention in the U.S. in 2000 as the SEC sought to introduce a revised rule for auditor independence, with APNAS a frequent target in public speeches by the then SEC chainnan Arthur Levitt9. This was followed by very public corporate collapses in 2001 such as HIH in Australia and Enron in the U.S. (both of which are the largest collapses in the history of their respective jurisdictions). In both cases, auditor independence has been called into question and in particular, large spending on APNAS has drawn criticism of the accounting profession (see for example Thomson 2001; Weber et al. 2002; Byrnes et al. 2002; and Nussbaum 2002). As a result of these collapses, critics of APNAS have renewed calls for restrictions on audit firms providing other services to their clients. This research aims to enrich the debate by providing additional insights into the impact APNAS may have on audit quality.
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PROSPECTS FOR THE DEVELOPMENT OF A MULTILATERAL AUDITING SYSTEM IN CASE OF UZBEKISTAN

PROSPECTS FOR THE DEVELOPMENT OF A MULTILATERAL AUDITING SYSTEM IN CASE OF UZBEKISTAN

Currently, audit companies play a significant role in the economy of the Republic of Uzbekistan. Relying on the Statistical data, it can be observed the changes in the dynamics of the number of audit firms in Uzbekistan, in recent years. In fact, the following diagram represents yearly changes in the number of audit firms and auditors:

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Effects Of Moderating Variables On Audit Tenure And Audit Quality

Effects Of Moderating Variables On Audit Tenure And Audit Quality

Public Accountant and Public Accountant Firm, while audit firms who attend are chairmen of Price Waterhouse Coopers, Ernst & Young, Delloite from each country of ASEAN. Moreover, there is observer from Global Public Policy Committee-Regulatory Working Group (GPPC-RWG) that is a group of six leaders of global audit firms. In this meeting, the main issue is about Audit Quality Indicators that is an instrument to evaluate a qualified audit. This study analyzes the Effect of Contingency on Audit Tenure and Audit Quality. The problem investigated can be formulated as the: (a) does audit tenure affect audit quality? (b) does audit tenure have effect on audit quality through the size of public account firm as moderating variable? (c) does audit tenure have effect on audit quality through the amount of fee audit as moderating variable? The objective of study is to examine contingency effect (the size of PAF or fee audit) on audit tenure as well as its implication with audit quality. This study is addressed to give advantage to various parties, among others, companies, academicians, government, and community about contingency effect (the size of PAF or fee audit) on audit tenure as well as its implication with audit quality.
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City Level Audit Economies of Scale and Audit Fees

City Level Audit Economies of Scale and Audit Fees

It can be concluded as follows: First, it is the distance between customers and audit firms that has a big impact on fees needed, which can encourage many audit firms to establish lots of branches in the places where customers focus, like Peking and Shang- hai. Secondly, scale economy is one of the important reasons why audit fees decrease, besides, scale economy and audit service in the same city also have a synergistic effect on determining the final audit price. The results provide a further recognition in checking the relation among scale economy, geography and audit fees. Such audit firms benefit a lot from location advantage. And a familiar city is crucial for audit firms to provide audit services. In brief, the conclusions of this article play an important role in audit market researches.
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Audit Firm Size, Audit Fee, Audit Reputation and Audit Quality: The Case of Listed Companies in Vietnam

Audit Firm Size, Audit Fee, Audit Reputation and Audit Quality: The Case of Listed Companies in Vietnam

Several studies (e.g. DeAngelo, 1981; Lawrence et al., 2011; Rezaei and Shabani, 2014) have supported that larger audit firms provide higher quality-audit services than smaller ones. This is because larger auditors are less likely to depend on their particular clients’ economic (Rezaei and Shabani, 2014). Thus, they are less likely to agree with their client pressure for reporting misstatements than small audit firms (Choi et al., 2010). Further, they have higher motivation to deliver high-quality services in order to protect their brand name reputation (Rezaei and Shabani, 2014) as larger audit firms may have greater reputation losses in case of audit failures than small firms (DeAngelo, 1981). Further, big audit firms have higher technical competence and greater resources (Lawrence et al., 2010). They also have more experienced and competent auditors and greater expertise than small audit firms (Francis and Yu, 2009). Francis, Maydew and Sparks (1999), however, argued that high audit quality in larger audit firms may be not because of their excellent auditor's performance but mainly because of the large client effect (Francis et al., 1999). Given different perspectives on explaining the effect of the audit firm size on audit quality, several empirical studies have provided evidences supporting that the bigger audit firm size is positively associated with higher audit quality. Hence, the study proposes the next hypothesis as follows:
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The Impact Of The Joint Provision  Of Non-Audit Services On Audit Firm’s Tenure: A Kuwaiti Evidence

The Impact Of The Joint Provision Of Non-Audit Services On Audit Firm’s Tenure: A Kuwaiti Evidence

Concerns about the potential harm of the increased economic bond between the audit firm and the audit client resulting from the joint provision of audit and NAS have been investigated extensively in the audit literature. However, much of this research was conducted in developed countries’ settings, with very little, if any, carried out in the context of a developing country. The current study aims at filling this gap in audit research by investigating two important issues related to the joint provision using data from the Kuwaiti audit market. First, this study examines whether there is an association between the provision of NAS to the audit client and audit firm’s tenure as a surrogate of audit independence. Second, the current study aims at examining factors expected to influence clients’ purchase of NAS in the Kuwaiti audit market. Contrary to expectations, the results reveal a negative relationship between the joint provision and external audit firm’s tenure, suggesting that such a joint provision does not lead to the impairment of auditor independence. Results obtained from the NAS purchase logistic regression also show that audit client’s purchase of NAS from their audit firms is positively related to the amount of audit fees and client’s financial leverage.
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PROVISION OF NON-AUDIT SERVICES AND THEIR EFFECT ON AUDITORS’ INDEPENDENCE AND THE QUALITY OF AUDIT 

PROVISION OF NON-AUDIT SERVICES AND THEIR EFFECT ON AUDITORS’ INDEPENDENCE AND THE QUALITY OF AUDIT 

A survey was made to study the different services provided by auditors in the audit market in Sudan and study their perception the effect of provision of non-audit services on auditors' independence and the quality of audit. A questionnaire was disseminated to thirty audit firms. Analysis showed that only two types of services are provided regularly by auditors. Results have also shown that according to auditors' perceptions independence is not impaired by non- audit services however there are some areas that are controversial and need to be addressed. Equally important, evidence significantly showed that non-audit services do not adversely audit quality. Recommendations were made for policy and practice, of which: Governing bodies have to address the problems underlying auditors' independence and quality of financial reporting. Policy makers must have a rule that govern the provision of no-audit services and must establish a task force that address oversight issues when non-audit services are provides besides audit. In addition to that auditors must identify all threats to independence and must apply the necessary safeguards, and employ practices like peer reviews and mandatory rotations.
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PERCEPTIONS OF ACCOUNTANTS ON FACTORS AFFECTING AUDITOR’S INDEPENDENCE IN NIGERIA

PERCEPTIONS OF ACCOUNTANTS ON FACTORS AFFECTING AUDITOR’S INDEPENDENCE IN NIGERIA

Larger audit firms are often considered to be more able to resist pressures from management (i.e. higher auditor’s independence). This is proven by almost all of the empirical studies that attempted to find the relationship between audit firm size and auditor’s independence, whereby they found that there is a positive relationship between them (Alleyne et al., 2006; Abu-Bakar et al., 2005). In fact, it has been argued that certain characteristics inherent in small audit practices may increase the danger of impairment of independence, for example, the tendency toward a more personalized mode of service and close relationship with the client (Robert & Darryl, 2009)). However, one should not conclude that large firms are immune to pressures from their clients.
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Audit Fee and Audit Quality: An Empirical Analysis in Family Firms

Audit Fee and Audit Quality: An Empirical Analysis in Family Firms

Also, family shareholders may influence audit quality in two ways (Ho and Kang, 2010). Based on the agency theory, demand for audit quality has a direct relationship with agency costs. Francis (2004), after investigating the auditing literature, states that high- quality auditors (which usually include large audit firms) are used in areas with a high potential for agency cost (and therefore a greater need for monitoring) and with a high level of information asymmetry. This shows that family firms can use high-quality auditors to specify the validity of audit disclosures and to ensure the high quality of the disclosure. Consequently, the use of high- quality auditors may limit expropriation by majority shareholders. Since family ownership may improve internal monitoring and decrease conflicts of interest between managers and owners, family firms are less likely to use large audit firms due to decreased agency costs (Khan and Subramaniam, 2012). Also, it has been stated that family firms are greatly motivated to acquire personal benefits, such as their natural inclination to influence the process of financial reporting, which increases agency costs (Anderson and Reeb, 2003). Therefore, family firms are more likely to employ large audit firms to ensure high audit quality (Khan and Subramaniam, 2012).
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Pcaob Inspection Reports: Quality Control and Firms’ Characteristics

Pcaob Inspection Reports: Quality Control and Firms’ Characteristics

Offermanns and Peek (2011) examined market reactions to 224 first-round and 134 second-round PCAOB inspection reports issued between January 2005 and March 2010 and conclude that these reports were useful indicator of audit quality. They showed that shareholders care about the signals about audit quality contained in the inspection reports by documenting significant stock price reactions to these deficiency reports. They demonstrated that the magnitude of these stock price reactions is about 29 percent of market response to earnings announcements. Their findings strongly apply to small audit firms that audit less than 100 issuers. Landis, Jerris, and Brasswell (2011) examined 770 PCAOB inspection reports issued between 2005 and 2008. They argued that small audit firms have more opportunities to improve audit quality and suggested that the PCAOB inspection reports can be used to motivate triennial firms to remediate the defects. They also reported that the number of part I deficiencies identified decreased with time. This declining trend is consistent with either improved audit quality over time or a change in PCAOB inspection philosophy. Hermanson and Houston (2007) and Hermanson, Houston, and Rich, (2008) concluded that firms that received QC criticisms are smaller, have fewer audit resources and are understaffed.
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Rationale and risks of non-audit services

Rationale and risks of non-audit services

compromise. ‘Independence in appearance’ refers to the significance of the participation of the third party, because the third party is perceived as non-interest-related entity thus its objectivity and skepticism can be trusted by the public. It is commonly believed that accountancy firms are the third party standing between the authority and their clients, but NAS seems to disturb this perception, thus they are questioned on the ‘Independence in appearance’ issue. Papers that mentioned in the literature review are continually included in the research sample, to find opinions explicitly relating to strengths and weakness of NAS, the research does not consider sentences that do not show any particular tendency. The research process for this question can be recorded visually by tables below, which shows numbers of statements mentioned in previous articles, including their own statements, common sense approved by professions, and relative conclusions they found in previous studies. According to the frequency of statements about strengths and weakness of NAS, the study could finally get conclusions, and the amount of figures can show the extent of agreement held by academics for each strength or weakness. As for standpoints hold by professionals and authors are not suitable to be measured statistically, thus this study applies the sigh “✓” as the indication. But in favor of getting a visible result, each tendency of authors and professionals will stand for one vote for agreement of NAS’s advantages or disadvantages.
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