Auditquality and the factors that affect quality have been the subject of interest in academic, practitioner and regulatory debates about auditing following a series of corporate collapses. As a result, there have been considerable developments in the auditing, financial reporting and governance regimes by regulators and professional bodies in the name of enhancing auditquality. Regulators, such as the International Auditing and Assurance Standards Board (IAASB), have published a framework for auditquality, which discusses various pertinent factors affecting auditquality in practice (IAASB, 2014). Earlier, the Financial Reporting Council (FRC) released a discussion paper identifying the drivers for auditquality (FRC, 2008). In like manner, the Institute of Chartered Accountants in England and Wales (ICAEW) (2002) issued a report to frame concepts and various factors affecting audit performance. Similarly, research in the academic domain has examined the concepts and various factors affecting quality differentiation between audit firms and auditors (see Watkins, Hillison & Morecroft, 2004; Francis, 2011; Knechel, Krishnan, Pevzner, Shefchik & Velury, 2013; Simnett, Carson & Vanstraelen, 2016) for a review of the literature). 1
existence of material uncertainty is also something that is also done based on the professional judgment of the auditor. On the other hand, GCO can be detrimental to management because it can lead to losses such as decreasing stock prices (Jones FL, 1996), difficulties in finding loans (Firth, 1980), even accelerating bankruptcy (Mutchler, 1986; Hopwood, McKeown, & Mutchler 1989), so that management has an incentive to avoid any conditions that as much as possible suggests problems related to business continuity assumptions. One of the things that management can do to get a favorable opinion is to put pressure on the auditor (Barnes & Renart, 2013). This pressure can be especially massive when auditors come from relatively small KAPs that carry out audits of companies with very large size and/or influence. The large company can use its influence to put pressure on the auditor to provide an opinion that benefits management so that the auditor is not independent in conducting audits. The auditor's ability to provide GCO when there is material uncertainty related to the business continuity of the audit client is evidence that the auditor is independent in conducting the audit. Auditor independence is one indicator of qualityaudit (Indonesian Institute of Certified Public Accountants, 2018). The results of the GCO Model testing of this study found that the reputation of the KAP influenced the decision to give GCO negatively and significantly. Testing using matched samples to handle selection bias problems also shows similar results. The regression results support the statement that the Big 4 KAP is more likely not to give GCO to the audited company. These findings indicate that on average, audits conducted by Big 4 in Indonesia do
The probability of the effect of balance in family firms, concentration on the long-term survival and reputation of a family firm, and personal relationships with creditors and other shareholders may decrease agency costs, because the sustainable and long-term presence of family members in the firm and their willingness to keep the family name may cause family firms to have a good, long-term relationship with non-family shareholders and creditors (Anderson and Reeb, 2003). This indicates that family members are less likely to act opportunistically and influence the financial reporting process (Wang, 2006). From the perspective of the demanding party, it is expected that firms with controlling shareholders, in particular family control, require less auditing, which is related to low audit fees. It can also be argued that the presence of family members in the board of directors and management team and the firm’s reputation can have a positive effect on the firm (Khan and Subramaniam, 2012). Such circumstances may decrease audit risk evaluation, with auditors regarding the unit under investigation; from the perspective of suppliers, auditors may in turn use less auditing effort to minimize auditing risk, which results in lower audit fees (Khan and Subramaniam, 2012). Ho and Kang (2010) showed that low audit fees in family firms accompany their low demand for audit services, which is due to the lower intensity of agency problems (between owners and managers) and higher intensity of another
This paper investigates the relationships between non-audit services, audit fee, audit hours and accounting quality. Previous studies have not provided consistent results for how simultaneous provision of audit and non-audit services by an independent auditor to a client company affects the auditquality. In addition, further studies have identified endogeneity in research method as the primary reason. Therefore, this study analyzed auditquality comprehensively using empirical analysis on data specific to Korea. This study employs research methods contrasting with existing studies in order to present a solution for the controversy related to the endogeneity from the effects of non-audit service provided by an independent auditor on auditquality. This study used audit compensation and abnormal accruals variables simultaneously, and audit time variable includes empirical data from Korean clients for comprehensive analysis. Study results found that the non-audit service significantly affects audit service quality before controlling for endogeneity. However, after controlling for endogeneity, even when the same independent auditor provides audit and non-audit services together, it did not affect the accounting quality.
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 auditquality. 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.
related with firm performance. Also, Kirshnan and Yang (2009) investigated recent trends in audit report and earnings disclosure lags on listed companies in USA. Using OLS regression method, the study found that the likelihood that companies disclose earnings before the audit report date increased considerably over the period of the study, particularly when Section 404 of the SOX was in effect. In like manner, Ahmed and Hossain (2010) examined the audit report lag on Bangladesh listed companies; using OLS regression, the results showed that type of auditor, financial company, profitability and company size significantly decreased the time taken to prepare audit report. On the other hand, type of audit report and leverage significantly increase the time taken to conclude the audit. Similarly, Turel (2010) conducted a study on the timeliness of financial reporting in emerging capital markets on listed companies in Turkey. Using OLS regression, the multivariate regression analysis indicates that income, audit opinion, auditor firm and industry affect timeliness. More so, McGee and Yuan (2011) compare the timeliness of financial reporting in Republic of China, USA and European Union (EU) on the basis of audit firm to determine whether companies audited by one of the Big 4 firms are timelier in their financial reporting. Using comparative analysis T-test, results indicate that Chinese companies took significantly longer time to report financial results than either the EU or US companies. EU companies took longer time to report financial results than US companies. Modugu, Eraghe, and Ikhatua (2012), in their study of determinants of audit delay in Nigeria. The results found that the panel data which employed Ordinary Least Square regression showed that the major determinants of audit delay in Nigeria include multi-nationality connections of companies, company size, and audit fees paid to auditors. Vuko and Cular (2014) examined the determinants of audit delay on Croatian listed companies. Using pooled OLS regression analysis, the results indicate that audit committee existence, profitability and leverage are statistically significant determinants of audit delay in Croatia.
Purpose of this paper: This study aims to contribute to the de- bate in service marketing literature concerning the operationali- sation of service quality measurement. To this effect, we tested two service quality measurement models by adapting them to the audit service context. These models are the gap model (SERVQUAL) developed by Parasuraman, Berry, and Zeithaml (1985) and the performance-only (SERVPERF) model developed by Cronin and Taylor (1992). Design/methodology/approach: The models are quantitatively analysed and evaluated for construct validity and predictive power using OLS models. In line with mar- keting literature (Gronroos 1984), service quality dimensions are classified into technical and functional dimensions. Construct validity is measured in terms of whether the technical and func- tional dimensions of audit service quality are significantly posi- tively correlated with an overall measure of service quality in the audit service market. Predictive power is measured in terms of the strength of adjusted R2. Findings: The results indicate that both the performance-only model and the gap model have done quite well in predicting determinants of overall auditquality. The argument by Cronin and Taylor (1992) that the gap model has low explanatory power compared to the performance-only model did not materialise in our study. Research limitations/implications: Our results are limited by the low response rate that did not allow us to conduct factor analysis on all the functional and technical variables at the same time. What is original/value of paper: The paper shows that the service marketing models for the measure- ment of quality would be improved when core outcome (technical) variables are incorporated.
The term „persistence‟ is widely used interchangeably with sustainable earnings in the literature. Earnings that reflect a steady growth trend are seen desirable (Wild, Subramanyam, Halsey, 2014). Thus, in financial statements analysis unusual, non-operating or non-recurring items reported on the income statement require more attention than others in terms of quality of earnings as these items have negative effect on the sustainability of earnings (i.e. accruals are negatively related with earnings persistence). Penman and Zhang (2002) indicate that earnings before extraordinary on the income statement that viably predict future earnings are regarded as being of quality. Thus, high quality of earnings is sustainable or persistent earnings as often referred in financial analysis. Okpa (2018) indicates that earnings performance attributable mainly to the accrual in the UK, exhibits lower persistence than earnings performance mainly attributable to the cash flow components. The subjectivity and errors inherent in the measurement of accruals create noisy earnings, which do have the power to persist. The greater the measurement noise, the greater the downward bias in the persistent coefficient. Thus, I hypothesize that:
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 auditquality 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 auditquality, several empirical studies have provided evidences supporting that the bigger audit firm size is positively associated with higher auditquality. Hence, the study proposes the next hypothesis as follows:
The sample period of this research is 2004-2014, using data from the Compustat North America database as well as the Audit Analytics database. This time frame was chosen because it only became mandatory to report audit fees from 2000 onward, and the databases are not complete until 2004. Moreover, the databases are not completely updated beyond fiscal year 2014 yet. Compustat North America supplies general client information, while Audit Analytics provides information on auditor change data, audit fees, restatements and audit opinions. From these databases, a sample of all U.S. auditing firms with clients in the United States was drawn. Excluded from the sample are clients operating in the financial services industry, as characteristics of firms in this industry differ significantly from other firms. After excluding observations with missing data on any of the control variables, a sample of 22,014 client-year observations was left. For the regression analysis, fiscal years 2004 and 2014 have to be excluded as these years served as bases for the leading and lagging variables. Due to outliers, additional client-year observations were excluded in the regression analysis. This leaves a sample of 17,555 client- year observations for the analysis of models (1) and (2). For model (3), observations without available data on the audit opinion have to be excluded as well, leaving a sample of 16,317 client-year observations for this analysis. An overview of the sample selection can be found in Table 2.
Due to this problematic distribution, it becomes subjective whether the amount of abnormal working capital accruals is small, medium or large. Especially the extreme outliers of the data will substantially influence the process of determining the scales. Also, since the number of identified audit firm rotation is relatively small in this sample, the influence of one extreme observation will have substantial effects on the outcomes, which is not favorable for the reliability of the results. Performing non-parametric tests which don’t require certain distribution conditions, does provides some evidence on the effects of audit firm rotation on auditquality. However, due to the fact that non-parametric tests provide less powerful results than parametric tests, testing the hypotheses will not yield results which are reliable enough to confirm or reject the stated hypotheses about the effect of audit firm rotation on auditquality, let alone provide generalizability of the results. Although the current regime of audit firm rotation is not yet able to provide suitable data for performing a regression analysis, in order to provide future researchers with a format on how to examine the relationship between audit firm rotation and auditquality, this paragraph will discuss and exemplify the initially intended statistical research methods for this thesis and thus for future research.
Licensed under Creative Common Page 383 Before running OLS analysis, an author run descriptive statistics test to examine the range and power of responses (Table 2). Descriptive statistics shows that error prevention function of audit planning is found at least useful in rare occasions with 1 point minimum. However, auditors confidently agreed for the positive impact of audit planning with 0.004828 of probability coefficient.
To investigate the perceptions of audit clients on the factors influencing audit service quality, semi- structured interview method was applied to collect the qualitative data from the staff of Libyan listed companies (e.g.. Chief Executive Officers, Chair of the Board of Directors, members of the Board of Directors, accounts managers, Chief Finance Officers, internal auditors and accountants). The reason for the selection of these groups of respondents is due to the fact that the literature in auditing indicates that the external auditor usually has more contact with these groups than any other groups. This qualitative approach was selected because of the lack of in-depth data obtained directly from audit clients. We based our questions on our research objectives and informed by our theoretical framework. The purposeful sampling method was used to select the the sample of this study, which is recommended when certain criteria for participation are required and when the purpose of the research is an in-depth understanding as opposed to generalization (Patton, 2002). The sample criteria were that each participant must have academic qualifications in the field of accounting and auditing, have many years of experience in the field, and have dealt with external auditors during company audits. After identifying the sample size, the data collection was stopped after conducting 10 interviews as saturation had occurred - as recommended by Saunders et al. (2009). The data obtained from the interviews were analyzed using content analysis.
Table 1 provides the summary statistics of the dependent and independent variables in order to effectively appreciate the nature of the results. It provides a basic insight into the nature of the data upon which analysis is done. The summary statistics include measures of central tendency, such as mean, measures of dispersion (the spread of the distribution) such as the standard deviation, minimum and maximum of both the dependent variable and explanatory variables. From Table 1, discretionary accruals show a mean of 0.6287985, a standard deviation of .036685which is an indication that the firms may not differ on the extent of their earnings management. The mean of audit firm size is .6875 and a standard deviation of .4684174.
) has developed a frame work for `AuditQuality `, that gives a clear guideline and describes the “Input-Process-and-Output” factors that contribute to auditquality. According to IAASB, as such there is no clear definition for “AuditQuality”, however, as a term frequently used as a debate and recognised as a very complex subject in nature. For the purpose of the study, the author(s) has identified a model for the auditquality. Force Field Theory (Kurt Lewin’s, 1948) is adopted and used in this study as `investigative tool` in order to improve the understanding of the revolution that is affecting the auditing profession. It will assist in creating a simplified image to show the forces involved in it and build knowledge around the current shift of the profession. So, there is an indication that the purpose and the quality of audit is to boost the degree of confidence of intended users 1 . The structure of the paper follows primarily with the introduction to the “Digitization of Audit Profession”, objective of the study and hypothesis. The second section brings out related literature, third section highlights on methodology and last section on data analysis, findings and suggestions.
common practice for companies operating in different sectors and have to take decision that involves different sectors expertise or skills. As economists are often quick to point out. In the move toward increased efficiency, it is part of the natural economic process to try to find better, more efficient and less costly ways to do things. Outsourcing is the process in which the management purchases the services of internal auditing from outside. By outsourcing, a company can depute the auditing tasks that can be performed in a small amount of time and an internal audit structure can be too expensive to maintain. There is a wide range of literature that discusses numerous factors that influence outsourcing decisions, including products or professional services that can affect the quality and the cost of this products. 7 As the well
Analysis of the existing AT in Portuguese hospitals The AT was analysed according to the standard ISO 25012. To improve the quality of logs, we suggest 1) the existence of a well-defined structure for readability; 2) that every field is completed and 3) that the fields always use the same format. Not using a standard to record audit trails represents a major drawback when analysing data and therefore makes it very difficult to use AT to improve HIS. The use of ISO 25012, ISO/TS 18308:2004, ISO/IEC 27001:2006, XES Standard  and IHE-ATNA should be used to define requirements. We also recommend performing a periodical audit access to all data of a ran- dom sample of patients.
This study aims at examining the influence of audit committee attributes on the quality of financial reporting (QFR) in Nigerian banks. The study adopts a content analysis method in realizing the above objectives. The researcher-constructed measurement check-list was used in extracting data from audited annual reports of ten selected banks for the period 2006 to 2013. The dependent variable of study was the QFR, which was measured using the IFRS qualitative characteristics model. The independent variables consist of audit committee attributes and control variables (board attributes) were gleaned from the corporate governance section of the annual reports. Inferential statistics, namely; correlations and regression analyses were used in analyzing the data and testing the hypotheses raised in the study. The regression analysis result shows a t-value of 1.861 at 5% probability level, against the t-cal of 2.111. Specifically, the result shows that audit committee independence (p= .017), meeting attendance (p= .040), audit committee size (p= .059) and the existence of a written charter (p= .007) significantly influence the QFR in Nigerian banks. Accordingly, we conclude that certain audit committee attributes namely; independence, meeting attendance, size and the existence of a written charter exert significant influence on the QFR than other attributes.
effect of audit fees, audit tenure of auditquality and information assymetry as intervening variable. Auditquality variables are measured using the KAP size included big four and non big four group of auditor. Audit fee measured by log n, tenure measured by calculate how long the auditor cooperation relationship with the auditee and information assymetry measured by altman z score. The population used in this study is a manufacturing company listed on Indonesia Stock Exchange with the 2013-3017 research year. The results of the tests carried out in this study show that audit fee and audit tenure have significant influenced of auditquality while audit fee do not affect on information assymmetry, audit tenure have significant influenced of information assymmetry and information assymmetry also have significant influenced on auditquality.