Did the SEC administrative proceedings against Chinese auditors affect audit quality?

Purpose The purpose of this study is to examines whether clients’ share prices responded to three events, including the Securities and Exchange Commission (SEC) launch of administrative proceedings against five Chinese accounting firms on December 3, 2012, for their failure to hand over audit work papers due to conflict of jurisdiction; the issuance of SEC Administrative Law Judge Elliot’s ruling on January 22, 2014; and the settlement of the administrative proceedings on February 6, 2015. Design/methodology/approach This study uses the Schipper and Thompson approach. Findings It is found that share prices responded negatively around December 3, 2012, for USA-listed Chinese companies who were audited by Chinese auditors. Originality/value This study provides evidence on how share prices reacted to SEC enforcement actions against an affair of non-audit failure.

Download Full-text

Does the use of honorific appellations in audit reports connote higher financial misstatement risk? Evidence from China

Asian Review of Accounting ◽

10.1108/ara-08-2017-0128 ◽

2018 ◽

Vol 26 (2) ◽

pp. 154-181 ◽

Cited By ~ 2

Author(s):

Feng Chen ◽

Xingqiang Du ◽

Shaojuan Lai ◽

Mary Ma

Keyword(s):

Audit Quality ◽

Positive Association ◽

Auditor Independence ◽

Accounting Firms ◽

Content Type ◽

Public Firms ◽

Financial Misstatements ◽

Financial Misstatement ◽

Chinese Auditors ◽

Audit Reports

Purpose From the sociolinguistic perspective, the purpose of this paper is to examine whether the honorific and actual-name appellations that Chinese auditors use to address clients in audit reports connote differential financial misstatement risk. Specifically, the authors hypothesize that auditors’ use of honorifics signals their inferior social status relative to their clients, thereby leading to compromised auditor independence, lower audit quality, and higher financial misstatement risk. Design/methodology/approach The authors use a sample of manually coded appellation data from audit reports of Chinese public firms between 2003 and 2012 to conduct the research. Findings The authors find significantly greater financial misstatements, both in terms of likelihoods and magnitudes, for companies addressed by honorifics than for those addressed by actual names. Moreover, compared to auditors’ consistent honorific usage, discretionary honorific usage has a stronger positive association with misstatements. The authors further show that the positive association between honorific usage and client misstatement risk weakens when the audit firm is a Top 10 accounting firms in China, is an industry specialist, is formed as a partnership, or resides in a more concentrated audit market. Originality/value This study contributes to the sociolinguistics literature in accounting and provides evidence supporting the reform proposed by the International Auditing and Assurance Standards Board to enhance the usefulness of audit reporting.

Download Full-text

Quality Determinants of Independent Audits of Banks

Revista Contabilidade & Finanças ◽

10.1590/1808-057x201400030 ◽

2015 ◽

Vol 26 (67) ◽

pp. 43-56 ◽

Cited By ~ 1

Author(s):

José Alves Dantas ◽

Otavio Ribeiro de Medeiros

Keyword(s):

Audit Committee ◽

Audit Quality ◽

Financial System ◽

Loan Loss ◽

Loan Loss Provision ◽

Savings Banks ◽

Banking Institutions ◽

Administrative Proceedings ◽

Audit Activity

Since DeAngelo's study (1981) on audit quality, the latter has been a topic well discussed in the international accounting literature; however, there is little evidence about audit quality in the financial market. In Brazil, studies on audit quality began only in the 2000s, although without a specific focus on banks. The purpose of this study was to identify the quality determinants of audit work in Brazilian banking institutions. Using the practice of earnings management as a proxy for audit quality - more specifically, the discretionary accruals related to the process of the constitution of the Loan Loss Provision (LLP) - tests were performed based on the quarterly information of commercial and multipleservice banks and savings banks from 2001 to 2012. Empirical tests have shown that the quality of audit work has several types of relationships as follows: negative with the client importance level for the auditor; negative with the works after the sixth year of the contract; positive with the establishment of the Audit Committee by the banks; positive with the judgment of punitive administrative proceedings against independent auditors; and positive with the level of rigor of the regulatory environment. Of the tested hypotheses, three were not confirmed empirically. The first hypothesis predicted an association between audit quality and the auditor degree of specialization in the banking industry. The second hypothesis predicted that audit quality would be negatively correlated with the degree of concentration of audit activity within the National Financial System (Sistema Financeiro Nacional - SFN). The third hypothesis predicted that audit quality would be lower when the auditorclient relationship is of a short term. The results of the study contribute to the debate concerning the role of auditors in the transparency and solidity of the financial system, including their role as a complementary or auxiliary supervisor.

Download Full-text

Medicaid & Medicare: D.C. Appellate Court Denies Claim for Medicare Reimbursement of GME Cost

The Journal of Law Medicine & Ethics ◽

10.1017/s1073110500012997 ◽

1999 ◽

Vol 27 (2) ◽

pp. 205-205

Author(s):

choeffel Amy

Keyword(s):

Medical Center ◽

Federal District ◽

Federal Court ◽

University Of Pennsylvania ◽

District Court ◽

Appellate Court ◽

Court Of Appeals ◽

Department Of Health ◽

Administrative Proceedings ◽

Summary Judgment

The U.S. Court of Appeals for the District of Columbia upheld, in Presbyterian Medical Center of the University of Pennsylvania Health System v. Shalala, 170 F.3d 1146 (D.C. Cir. 1999), a federal district court ruling granting summary judgment to the Department of Health and Human Services (DHHS) in a case in which Presbyterian Medical Center (PMC) challenged Medicare's requirement of contemporaneous documentation of $828,000 in graduate medical education (GME) expenses prior to increasing reimbursement amounts. DHHS Secretary Donna Shalala denied PMC's request for reimbursement for increased GME costs. The appellants then brought suit in federal court challenging the legality of an interpretative rule that requires requested increases in reimbursement to be supported by contemporaneous documentation. PMC also alleged that an error was made in the administrative proceedings to prejudice its claims because Aetna, the hospital's fiscal intermediary, failed to provide the hospital with a written report explaining why it was denied the GME reimbursement.

Download Full-text

FAKTOR-FAKTOR YANG MEMPENGARUHI KUALITAS AUDIT

eBA Journal: Journal Economics, Bussines and Accounting ◽

10.32492/eba.v5i1.712 ◽

2019 ◽

Vol 5 (1) ◽

pp. 50-63

Author(s):

Heru Heryanto ◽

Nur Laela ◽

Riana R Dewi

Keyword(s):

Linear Regression ◽

Multiple Linear Regression ◽

Audit Quality ◽

Positive Influence ◽

T Test ◽

Coefficient Of Determination ◽

Analysis Tool ◽

Validity And Reliability ◽

Test Analysis ◽

Analysis Technique

This study aims to determine the significance of the influence of competence, independence, professionalism, auditor experience, accountability, and auditor's knowledge of audit quality. This study uses a questionnaire with a population and sample, namely all auditors who work at the Public Accounting Office (KAP) in the Special Region of Yogyakarta and Surakarta. Sampling techniques using Convenience Sampling with a sample of 61 respondents. The data used in this study is a questionnaire using a Likert scale 1 to 5. The data analysis technique used in this study is multiple linear regression using the SPSSprogram for Windows. The analysis tool in this study using validity and reliability, the classical assumption (normality test, multicollinearity, heteroscedasticity test and autocorrelation test) while the data were analyzed using multiple linear regression test, t test, F test and the coefficient of determination (R2).Based on the results of the t-test analysis performed, it shows that there is a positive influence of competence, independence, professionalism, auditor experience, accountability, and auditor's knowledge of audit quality and simultaneously competency, independence, professionalism, auditor experience, accountability, and auditor knowledge variables affect quality audit

Download Full-text

Pengaruh Hubungan Politik Terhadap Manajemen Laba Pada Perusahaan Sektor Jasa Dengan Variabel Kontrol Ukuran Perusahaan Dan Kualitas Audit

Jurnal Keuangan dan Bisnis ◽

10.32524/jkb.v16i2.408 ◽

2018 ◽

Vol 16 (2) ◽

pp. 30

Author(s):

Dwikky Darmawan ◽

Weny Putri

Keyword(s):

Earnings Management ◽

Firm Size ◽

Significant Influence ◽

Service Sector ◽

Audit Quality ◽

Stock Exchange ◽

Secondary Data ◽

Annual Reports ◽

Political Connection ◽

Discretionary Accrual

The purpose of this study is to determine the effects of political connection toward the earnings management of service sector companies with control variables firm size and audit quality. Firm�s political connection measured by using dummy variable. Earnings management is proxied by discretionary accrual which is measured by using Modified Jones Model. The research data applied in this study are the secondary data which are taken from the annual reports of service sector companies that listed in Indonesian Stock Exchange of 2016-2017 periods. There are 330 observations fit as sample, which are taken by using purposive sampling method. Data are processed by applying the multiple linear regression test. The result show that the political connection had positive but not significant influence to earnings management. Firm size had negative but not significant influence to earnings management. Whereas the audit quality had a negative and significant influence to earnings management.

Download Full-text