scholarly journals Performance appraisal and premature sign-offs and underreporting of chargeable time of external auditors – internal benchmarking of experience and gender

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rabih Nehme ◽  
Amir Michael ◽  
Alcheikh Edmond Kozah
Keyword(s):  
Performance Appraisal ◽  
Performance Appraisals ◽  
Content Type ◽  
External Auditors ◽  
Audit Firms ◽  
Internal Benchmarking ◽  
And Gender ◽  
The Uk ◽  
Level Of Experience ◽  
Big Four

PurposeThe research paper investigates auditors' dysfunctional behaviors in relation to performance appraisals. It explores the dysfunctional audit behavior (DAB) differences among experienced/inexperienced and male/female auditors when expecting performance appraisals, how their perception of DAB changes and how their reactive-outcomes vary.Design/methodology/approachThe survey comprises statements pulled from performance appraisal templates used by the Big Four audit firms in the UK. The sample has been tested during two different periods to highlight variations in the perception of DAB.FindingsExperienced auditors become more tolerant of DAB compared to their perception when they were inexperienced. Inexperienced male auditors are generally more accepting of DAB compared to their inexperienced female counterparts. Experienced female respondents continue to be less accepting of DAB.Originality/valueThe study associates performance appraisal procedures with DAB. The analysis examines the perception of dysfunctional behavior according to the level of experience auditors (males and females) accumulate over time.

Performance evaluation of auditors: a constructive or a destructive tool of audit output

2017 ◽  
Vol 32 (2) ◽  
pp. 215-231 ◽  
Author(s):  
Rabih Nehme
Keyword(s):  
Performance Appraisal ◽  
Performance Appraisals ◽  
Content Type ◽  
Dysfunctional Behavior ◽  
Accounting Scandals ◽  
Audit Firms ◽  
The Uk ◽  
Big Four ◽  
Evaluation Techniques

Purpose The purpose of this paper is to investigate factors leading to dysfunctional behavior. The role of auditors has been under scrutiny during recent accounting scandals. Auditors, among other parties, are sometimes to be blamed as a result of economic crisis periods. The paper highlights certain auditors’ behavior leading to dysfunctional acts. Design/methodology/approach The survey of this paper is made up of statements extracted from the performance appraisal templates used at the Big Four firms in the UK. Big Four auditors are expected to be under pressure more than non-Big Four auditors. The sample is stratified into non-experienced/experienced auditors to highlight any changes in the perception of dysfunctional behavior when the experience factor exists. Findings The paper finds that certain performance appraisal procedures are leading to dysfunctional acts. Accordingly, audit firms should develop other evaluation techniques that should serve their goals without pushing auditors for dysfunctional behavior. Originality/value This study links procedures embedded in the performance appraisals at the Big Four audit firms to dysfunctional behavior. Also, the study covers all lines of auditors to understand how the perception toward dysfunctional behavior differs when auditors gain experience.

Evaluating the performance of auditors: a driver or a stabilizer of auditors’ behaviour

2019 ◽  
Vol 69 (9) ◽  
pp. 1999-2019
Author(s):  
Rabih Nehme ◽  
Christelle AlKhoury ◽  
Abdullah Al Mutawa
Keyword(s):  
Performance Evaluation ◽  
Performance Appraisal ◽  
Developing Country ◽  
Design Methodology ◽  
Developed Countries ◽  
Developed Country ◽  
Content Type ◽  
External Auditors ◽  
The Uk ◽  
Big Four

Purpose The purpose of this paper is to identify differences in auditors’ dysfunctional behaviour when expecting performance appraisal. Its main aim is to examine variances across countries; UK vs Kuwait. Also, it identifies differences between experienced and inexperienced auditors. Design/methodology/approach The paper focuses on dysfunctional audit behaviour (DAB) where premature sign-off and under-reporting of chargeable time are chosen as the two main signalling proxies. A survey made up of statements included in performance appraisal templates is distributed among auditors working for the Big Four firms in both, the UK and Kuwait. Findings The paper shows how performance evaluation of external auditors affects their behaviour in the workplace. From a cultural standpoint, assessing the performance of auditors whilst working in a competitive market in a developed country is regarded as a potential driver for DAB variations. Evaluating auditors’ performance in a developing country is seen as a stabiliser of DAB. This research paper demonstrates that experienced auditors have a greater tendency to behave dysfunctionally as compared to inexperienced auditors. Originality/value Prior studies have been conducted to assess auditors’ performance through using internal and external attributes (Kaplan, 1985), offshoring basic steps of audit work (Downey, 2018), and the perception of audit clients about auditors’ performance (Reheul et al., 2013). Such studies were conducted mostly on developed countries on a standalone basis. In this study, the focus has been shifted from focusing on one country to comparing two different countries. The paper examines DAB between experienced and inexperienced auditors in the UK and in Kuwait when expecting performance evaluation.

IFRS adoption/reporting and auditor fees: the conditional effect of audit firm size and tenure

2020 ◽  
Vol 28 (4) ◽  
pp. 639-666
Author(s):  
Medhat N. El Guindy ◽  
Nadia Sbei Trabelsi
Keyword(s):  
Audit Fees ◽  
Content Type ◽  
Audit Firm ◽  
Ifrs Adoption ◽  
Audit Firms ◽  
Conditional Effect ◽  
The Uk ◽  
The Cost ◽  
First Time ◽  
Big Four

Purpose This paper aims to investigate the impact of International Financial Reporting Standards (IFRS) adoption on audit and non-audit fees in the UK setting. The study investigates whether UK firms adopting IFRS for the first time or reporting under IFRS, in general, are being charged higher audit and non-audit fees and whether this impact is conditional on audit firm size and tenure. Design/methodology/approach Using empirical data for UK listed firms from 2003-2007, the paper uses a regression model that explains audit and non-audit fees by independent variables measuring auditors’ and auditees’ characteristics including IFRS adoption and reporting. Additional regressions with interaction terms were performed to test the hypothetical conditional impact of auditor size and audit firm tenure on the above-mentioned association. Findings Audit and non-audit fees increase significantly for companies adopting IFRS for the first time and this increase is persistent during later years. In addition, results suggest that both Big four and non-Big four auditors charge higher audit and non-audit fees to their clients adopting or reporting under IFRS in a similar manner. Furthermore, findings indicate that audit firms increase audit and non-audit fees for old and new clients using IFRS which suggests no low-balling effect is detected. Research limitations/implications Results reported in this study provide insights to regulators in jurisdictions similar to the UK regarding the cost of IFRS adoption which includes higher audit and non-audit fees imposed by both Big four and non-Big four audit firms. In addition, this study argues, to some extent, against the notion that auditors may charge lower fees in the early years of the audit engagement to win new audit clients. Originality/value To the best of the knowledge, the findings are unique at two levels. First, the paper provides evidence on the cost of using IFRS in the UK jurisdiction which was not explored by previous research. Second, the paper investigates the potential conditional effect of auditor size and audit tenure on the association between IFRS adoption and auditors’ fees.

scholarly journals The impact of time budget and time deadline pressures on audit behaviour: UK evidence

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rabih Nehme ◽  
Amir Michael ◽  
Jim Haslam
Keyword(s):  
Ethical Issues ◽  
Time Budget ◽  
Content Type ◽  
Internal Auditors ◽  
Personal Time ◽  
Accounting Scandals ◽  
Audit Firms ◽  
The Uk ◽  
The Impact ◽  
Big Four

Purpose A survey is here systematically conducted to analyse auditors’ perceptions of dysfunctional auditing behaviour (DAB). As a result of many accounting scandals and litigations faced by audit firms, this paper aims to assess whether factors leading to DAB are embedded in audit firms’ practices. Design/methodology/approach The sample used in this study comprises auditors at all levels of employment with the big four audit firms in the United Kingdom (UK). DAB is analysed using two signals/indicators: premature sign-off and under-reporting of chargeable time. Time budget pressure and time deadline pressure are the factors considered here as potentially pushing auditors to exhibit DAB. A careful and considered analysis and interpretation is here articulated. Additionally, the sample individuals are divided into audit trainees and experienced auditors to assess any potential differences in the perception of DAB that reflect the experience factor. Findings Coordination with internal auditors, different perceptions between audit trainees and experienced auditors of dysfunctional behaviour, working during their personal time and the box-ticking exercise are amongst the findings that may help practitioners to understand the reasons behind dysfunctional behaviour and identify measures to mitigate it. Originality/value The study can aid concerned executives and audit partners to minimise DAB related to different time pressures by casting light on the key ethical issues. The study is conducted on a sample of the big four firms in the UK covering all organisational structure. It assesses if experience plays a role in the perception of DAB.

Is Hong Kong ready for accounting education reform: an analysis of tri-partite views

2014 ◽  
Vol 27 (3) ◽  
pp. 249-265 ◽  
Author(s):  
Theodore T.Y. Chen
Keyword(s):  
Hong Kong ◽  
Education Reform ◽  
Financial Reporting ◽  
Accounting Education ◽  
Accounting Firms ◽  
Content Type ◽  
The Usa ◽  
Accounting Practitioners ◽  
The Uk ◽  
Big Four

Purpose – The purpose of this study is to determine whether Hong Kong is ready for accounting education reform. Design/methodology/approach – The approach for this study is using a Likert-scale questionnaire for the academic institutions, the Hong Kong Institute of Certified Public Accountants and the big four accounting firms, followed by detailed follow-up interviews with each. Findings – There is general agreement among accounting academics and the profession that the Accounting Education Change Commission initiatives should be adopted in Hong Kong. Hong Kong accounting academics in public institutions do not oppose to a balance between teaching and research, but would oppose to an emphasis of teaching over research. This is important as an overemphasis on research could mean less time for teaching and curriculum development. The big four accounting firms are either happy with the way Hong Kong universities have been educating the accounting graduates or have no complaints against them. This is also important as an urge for accounting education reform usually comes from the practitioners as in the USA. Originality/value – The USA was the first country that saw the need for accounting education reform as accounting practitioners felt that curriculum and pedagogical considerations placed heavy emphasis on the technical aspects of accounting at the expense of a general, broad-based education. Similar needs for change were also found in the UK and Australia. As Hong Kong is one of the world’s major financial centres with a large securities exchange, there is a great deal of emphasis on accounting standards, financial reporting, corporate governance, etc., and hence the importance of accounting education. Is Hong Kong ready for the change?

Technology in audit engagements: a case study

2014 ◽  
Vol 29 (4) ◽  
pp. 350-365 ◽  
Author(s):  
Miklos A. Vasarhelyi ◽  
Silvia Romero
Keyword(s):  
Cross Sectional ◽  
Content Type ◽  
Support Teams ◽  
External Auditors ◽  
Use Of Technology ◽  
Audit Firms ◽  
Integration Of Technology ◽  
Employee Competencies ◽  
Audit Team ◽  
Tools And Techniques

Purpose – The audit of corporations is now dependent on the examination of corporate computer systems. Although tools and techniques have been available for decades, there are major limitations on the audits of corporate systems by external auditors. This paper aims to examine external auditor usage of technology benefiting from a unique opportunity of reviewing a large CPA firm's audit work papers and interviewing their audit staff to examine the following questions: are auditors using the available technological tools? What are the difficulties they face in using these tools? Are there mediators to enhance usability? Why and what circumstances surround their absence? Design/methodology/approach – The authors use a cross-sectional, case-based field study comparing four engagements in a major audit firm. Findings – This paper concludes that the characteristics of the audit team largely determine the levels of technology utilization. Furthermore, the integration of technology support teams and auditors may improve usability, and, consequently, increase technology adoption. Research limitations/implications – The paper includes information about four audit engagements. Given that audit firms have different cultures, practices and employee competencies, and hence emphasize the use of technology to varying degrees, it would be desirable to expand this study to reflect these variations. Practical implications – The paper presents a discussion of the reasons why auditors do not fully use technology and provide tools to increase its usability. Originality/value – The paper benefits from a unique opportunity of interviewing audit teams of a large firm, as well as through reviewing their work papers.

Performance evaluations and junior auditors’ attitude to audit behavior: a gender and culture comparative study

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sandra Khalil ◽  
Rabih Nehme
Keyword(s):  
Performance Appraisal ◽  
Statistical Tests ◽  
Developed Countries ◽  
Developed Country ◽  
Content Type ◽  
The Usa ◽  
And Gender ◽  
Internship Programs ◽  
Educational Path ◽  
The Impact

Purpose The purpose of this paper is to shed light on factors leading to unethical acts committed by auditors from a cultural and gender perspectives. It investigates differences in junior auditors’ attitudes towards audit behavior when a performance evaluation (PE) is anticipated. The objective of this study is to aid academicians and audit executives in developing new models of PE and internship programs that should mitigate dysfunctional behavior. Design/methodology/approach A survey adapted from Big Four companies’ performance appraisal templates was administered to junior accountants who have completed their internship programs and their external audit course at accredited universities in Lebanon and the USA. Several statistical tests were conducted to analyze the relationship between the different variables. Findings This paper shows how PE affects junior auditors’ attitudes to dysfunctional audit behavior (DAB). From a cultural standpoint, American auditors express more negative views towards DAB than their Lebanese counterparts. This paper also demonstrates that female auditors are less inclined towards DAB than male auditors. Originality/value Previous studies on the topic have been mostly conducted in developed countries with a scarcity of studies examining multiple countries. This study focuses on two different cultural contexts, a developed country, the USA and an emerging country, poorly represented in the literature, Lebanon. This paper also observes variances between male and female auditors in DAB when expecting a PE. The originality of this paper stems from its concurrent examination of the impact of gender and culture on DAB by using a sample of less-experienced auditors at the end of their educational path.

Narratives of the Big-4 transparency reports: country effects or firm strategy?

2019 ◽  
Vol 34 (8) ◽  
pp. 951-985
Author(s):  
Ana Zorio-Grima ◽  
Pedro Carmona
Keyword(s):  
Content Analysis ◽  
Voluntary Disclosure ◽  
Methodological Approach ◽  
Firm Strategy ◽  
Future Research ◽  
Content Type ◽  
Country Effects ◽  
Big 4 ◽  
Audit Firms ◽  
The Uk

Purpose The purpose of this paper is to examine whether audit firms use transparency reports (TRs) as a tool to standardize their brand image or whether the semantic and content analysis in these reports indicates a higher importance of country effects. Design/methodology/approach The sample includes 28 TRs published in English by the Big-4 audit firms from five EU countries (the UK, Ireland, Luxemburg, Hungary and Malta), as well as in the USA and Australia. Findings Using content analysis, this research finds that there is variation in the language used in TRs both across audit firms and jurisdictions. Most TRs from different countries of the same firm tend to be clustered, suggesting that audit firms use transparency reporting as a strategy to differentiate themselves from their competitors. In fact, EY and KPMG seem to have more standardized internal procedures and standardized information. Regarding country effects, the results indicate that TRs in the UK are longer and show more detailed information. Originality/value Overall, this research is innovative in the sense that it applies a new methodological approach to an emerging topic such as audit transparency reporting. It identifies emerging topics of voluntary disclosure, such as financial data of the firm, gender and ethnic origin of employees, community involvement or sanctions, among other topics of interest which might be explored in detail by future research to understand the construction of the profession.

Commercialization of audit firms and auditors’ subjective well-being

2020 ◽  
Vol 28 (4) ◽  
pp. 565-585 ◽  
Author(s):  
Yilia Ponomareva ◽  
Timur Uman ◽  
Pernilla Broberg ◽  
Emmy Vinberg ◽  
Karoline Karlsson
Keyword(s):  
Design Methodology ◽  
Empirical Support ◽  
Well Being ◽  
Conservation Of Resources ◽  
Subjective Well Being ◽  
Ongoing Debate ◽  
Content Type ◽  
Audit Firms ◽  
Big Four ◽  
Positive Effect

Purpose The purpose of this study is to explore how the commercialization of audit firms relates to the subjective well-being (SWB) of auditors. Drawing on the conservation of resources and social identity theories, the authors argue that the commercialization of audit firms enhances auditors’ subjective well-being in its overall happiness and job-related dimensions through two theoretical mechanisms. First, it constitutes a valuable resource for an auditor, and second, it reinforces the auditor’s identification with a firm. The authors subsequently contend that this relation is contingent on whether auditors are used in Big four or non-Big four audit firms. Design/methodology/approach The authors test our hypotheses-based data obtained from a survey of 166 Swedish auditors. The data are explored by means of descriptive statistics, correlation matrixes and linear moderating multiple regression analyzes. Findings The authors show that commercial orientation can have a positive effect on auditors’ SWB. The authors also find that the positive relationship between commercialization and SWB is stronger for auditors employed by one of the Big four firms. Originality/value The results contribute to the ongoing debate about the normalization of commercialization within the audit profession by theorizing on and providing empirical support for the positive consequences of commercialization.

scholarly journals Non-audit fees and auditor independence: Nigerian evidence

2019 ◽  
Vol 34 (8) ◽  
pp. 1029-1049
Author(s):  
Paul Nnamdi Onulaka ◽  
Moade Fawzi Shubita ◽  
Alan Combs
Keyword(s):  
Audit Fees ◽  
Auditor Independence ◽  
Structured Interviews ◽  
Content Type ◽  
Face To Face ◽  
External Auditors ◽  
Fund Managers ◽  
Expectation Gap ◽  
Audit Firms ◽  
Economic Necessity

Purpose This study aims to investigate the extent to which the provision of non-audit services (NAS) by external auditors to audit clients affects auditors’ independence and the audit expectation gap in Nigeria. Design/methodology/approach The study adopts an interpretivist approach. In total, 30 semi-structured, face-to-face interviews were conducted to explore the views expressed by audit partners and pension fund managers in Nigeria; group responses were evaluated and presented separately. After transcribing the interview audio recordings, a thematic data analysis of the two groups’ responses was performed. Findings Interpretation of the interview responses indicates that the provision of NAS by audit firms to their audit clients is regarded by auditors as a matter of economic necessity. Nevertheless, it is also perceived as impeding auditors’ independence and increasing the gap between the auditor and public expectations. Practical implications This study contributes to the debate surrounding the need for an independent body to oversee auditing standard setting distinct from the current practice to enhance transparency. Originality/value A qualitative analysis of the nuanced responses obtained from the semi-structured interviews reveals starkly the perceived economic pressures on auditors to accept non-audit work. Moreover, it endorses the regulation to restrict non-audit work in support of a sustainable fee level for an independent audit.

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