The effect of academic education on employers’ satisfaction and audit quality in Iran

2016 ◽  
Vol 48 (5) ◽  
pp. 249-256
Author(s):  
Mahdi Salehi ◽  
Mostafa Bahrami ◽  
Fatemeh Alizadeh
Keyword(s):  
Internal Control ◽  
Design Methodology ◽  
Audit Quality ◽  
Accounting Standards ◽  
Financial Statements ◽  
Academic Education ◽  
Content Type ◽  
Audit Firm ◽  
Audit Reports

Purpose – The purpose of this paper is to examine the effect of academic education of auditors on the satisfaction of employees and the quality of audit reports. Design/methodology/approach – In order to collecting data a questionnaire designed and developed among the auditors, managers, and professors in Iran during November 20, 2014. Findings – The results of the study reveal that the inability to fully understand the audit report is one of the major problems of customers. For the audit firm, issues such as observation of accounting standards in financial statements, preparation of sufficient documents for the auditor, strong internal control, and understanding the limitations and problems of auditors were considered important. Originality/value – To the best of the authors’ knowledge the current paper is the first study which deals with the topic of the study in developing countries, especially Iran.

The perceived impact of the KAM reforms on audit reports, audit quality and auditor work practices: stakeholders’ perspectives

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Lan Anh Nguyen ◽  
Michael Kend
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Content Type ◽  
Stakeholder Groups ◽  
Key Stakeholders ◽  
Assurance Services ◽  
Perceived Impact ◽  
Audit Reports ◽  
Big Four

Purpose The purpose of this study is to understand how the new reforms related to key audit matters (KAM) disclosures in Australia may have impacted audit quality by eliciting the perceptions of key stakeholders in the audit and assurance services market. Design/methodology/approach The study uses a qualitative approach and New Institutional Sociology (NIS) to explain how auditors have responded to the KAM reforms. Interviews were conducted with 20 individuals representing identified groups of stakeholders in the market for audit and assurance services in Australia. Findings The study finds there is little consensus between some stakeholder groups on whether the KAM reforms may have improved audit quality, based on the perceptions shared. The findings conveyed that the auditors and regulators, standard setters acknowledge that KAM disclosures are either costly and/or time-consuming to implement. The Big Four auditors indicate these reforms led to changes mainly around internal consultations and independent reviews, whereas the non-Big Four auditors highlighted increased interactions with audit clients. Originality/value This is one of the first studies to examine the perceived post-implementation impacts on audit quality of the KAM reforms (ISA 701) after the initial two years of implementation and how auditors have responded, explored through the lens of institutional logic.

Assessment of the quality of the audits of Vietnamese commercial banks financial statements

2021 ◽  
pp. 232-238
Author(s):  
Thi Thu Ha Le ◽  
Thanh Thuy Pham
Keyword(s):  
Quality Control ◽  
Internal Control ◽  
Commercial Banks ◽  
Audit Quality ◽  
Financial Statements ◽  
Base System ◽  
Internal Control System ◽  
Level Of Knowledge ◽  
Audit Reports

The aim of the research is to assess the quality of the audits of Vietnamese commercial banks’ fi nancial statements in recent years. Two audit quality indicators are used in the assessment: fi rstly, the quality of the audit reports and the audited fi nancial statements; and secondly, the quality of the factors aff ecting audit quality. One of the factors aff ecting audit quality the characteristic of audit organizations such as the scale of the organizations, the level of knowledge in the fi eld of banking audit, Qualifi cations and experience of auditors, Independence of the auditor and the audit organization, Cost of the audit, Audit procedures, Audit quality control. Other factors are quality control of audit of fi nancial statement of commercial banks; communication between banking supervisors; legislative base (system of accounting standards, standards on auditing); and the eff ectiveness of the internal control system (ICS) of commercial banks. To study and assess the quality of the audits of commercial banks’ fi nancial statements, the authors conducted questionnaires, interviews on audit and study of audited accounting (fi nancial) statements. The result of the research indicates that the audits of Vietnamese commercial banks’ fi nancial statements have basically met the quality required by the current auditing standards. However, there are still some shortcomings in audit methodology and procedures, audit reports and audited fi nancial statements. The authors also suggest some measures to the audit fi rms and government bodies to improve the audit quality.

Measuring goodwill and noncontrolling interest under the new consolidation accounting standards

2017 ◽  
Vol 15 (2) ◽  
pp. 198-207
Author(s):  
James G.S. Yang ◽  
Frank J. Aquilino
Keyword(s):  
Financial Reporting ◽  
Design Methodology ◽  
Accounting Standards ◽  
Financial Statements ◽  
Consolidated Financial Statements ◽  
Accounting Standard ◽  
Content Type ◽  
Net Assets ◽  
Practical Implications

Purpose The accounting standards for consolidated financial statements have been updated recently. The change involves the measurement of goodwill and noncontrolling interest. Under the new accounting standards, goodwill consists of not only the parent company’s portion but also the noncontrolling interest’s share. The noncontrolling interest comprises both the subsidiary’s identifiable net assets and goodwill. In addition, it further changes the treatment of noncontrolling interest from liability to equity. The change indeed has far-reaching consequences on financial statements. This paper formulates an equation to measure goodwill and noncontrolling interest. It also provides some examples for illustrative purposes. The purpose of this paper is to update the financial reporting to the current standards. Design/methodology/approach New accounting standards under FASB #141R and 160. Findings New accounting standards in measuring goodwill and noncontrolling interest in financial reporting. Research limitations/implications The knowledge is useful for accountants and financial analysts. Practical implications Improve the quality of financial statements. Social implications Investors will be better informed. Originality/value This new accounting standard was not explored before.

Individual auditor characteristics and audit quality: evidence from nonprofits in the US

2020 ◽  
Vol 32 (4) ◽  
pp. 551-575
Author(s):  
Nancy Chun Feng
Keyword(s):  
Nonprofit Organizations ◽  
Internal Control ◽  
Audit Quality ◽  
Quality Measures ◽  
Content Type ◽  
Audit Firm ◽  
Audit Firms ◽  
The Impact ◽  
Auditor Characteristics

PurposeUsing a sample of US nonprofit organizations, where the identity of the auditor in charge of the audit is revealed, I investigate whether individual auditor characteristics (gender, engagement size and tenure) are associated with audit quality.Design/methodology/approachTo investigate how individual audit partner characteristics affect audit quality, I follow Petrovits et al. (2011) and Fitzgerald et al. (2018) who investigate client characteristics and partner tenure as determinants of ICDs in nonprofits. I add three characteristics of the auditor in charge – gender, engagement size and tenure – to their models. In additional analyses, I use subsamples partitioned by client risk and audit firm size, and find that individual auditor characteristics generally play a more significant role in the issuance of ICDs and QAOs for riskier clients than for less risky clients.FindingsMy results show that female auditors are more likely to report internal control deficiencies and issue qualified audit opinions (QAOs) to nonprofits. I also find that auditors with more Single Audit engagements within the same year are less likely to report ICDs. In addition, auditor tenure is negatively associated with the likelihood of issuing an ICD report, suggesting that auditors become complacent as the length of the auditor–client relationship lengthens or, alternatively, that they are better able to assist their clients in correcting ICDs and in maintaining stronger internal control environments as they gain client-specific knowledge over time. Additional analysis suggests tenure and engagement load results are sensitive to the sample specification employed.Research limitations/implicationsOne caveat of this study is that self-selection bias may be present when a client chooses an audit firm, the audit firm selects a client, and the audit firm assigns a partner to the engagement. Future study with more advanced econometric models is needed to mitigate self-selection bias. Another limitation is that my sample consists of nonprofit organizations and may not be generalizable to for-profit firms. Another caveat of this study is that the tenure variable is truncated compared to prior literature (e.g. Fitzgerald et al., 2018). Also given the rarity of audit quality measures in the nonprofit setting, internal control deficiencies and qualified opinions are used as proxies for audit quality because they reflect both the quality of audit work and the quality of organizations' internal control and financial reporting. Future studies with data including additional audit quality measures could shed more light on the topic.Originality/valueThis study contributes to the literature in several ways. First, this study offers a more comprehensive examination on the impact that a broader set of individual auditor characteristics on audit quality in the nonprofit setting, compared to Fitzgerald et al.'s (2018) study. Second, the findings should be of interest to policymakers who recently mandated engagement partner disclosures from US audit firms (PCAOB, 2015b). Finally, another distinctive feature of this study is that I examine the impact of individual auditor characteristics on audit quality in a setting where Big 4 audit firms are not dominant.

The Auditor as a Determining Factor on Derivative Financial Instrument Disclosures

2019 ◽  
pp. 70-93
Author(s):  
Kátia Lemos ◽  
Sara Serra ◽  
Amidel Barros
Keyword(s):  
Financial Reporting ◽  
Audit Quality ◽  
Accounting Standards ◽  
Financial Instruments ◽  
Financial Instrument ◽  
Audit Firm ◽  
Academic Literature ◽  
Number Of Factors ◽  
Determining Factor

Based on the premise that the quality of the audit is related to the quality of the financial reporting, the purpose of this chapter is to verify if the audit is a determining factor in derivative financial instruments disclosures. However, the academic literature has revealed that audit quality is influenced by a number of factors, such as gender, experience, and auditor's fees, as well as the type of audit firm (Big4 or not Big4). In order to achieve the proposed objective, a disclosure index was prepared, based on the requirements of the International Accounting Standards Board (IASB), applied to companies listed on Euronext Lisbon, excluding the sports corporations. The results revealed that the level of disclosure is influenced by the size of the audited company and by the auditor's gender, being greater in the larger companies and in the companies audited by a male auditor.

Consequences of the implementation of expanded audit reports with key audit matters (KAMs) on audit quality

2020 ◽  
Vol 35 (8) ◽  
pp. 1095-1119
Author(s):  
Weerapong Kitiwong ◽  
Naruanard Sarapaivanich
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Discretionary Accruals ◽  
Regression Analyses ◽  
Content Type ◽  
Weak Evidence ◽  
Financial Restatements ◽  
Audit Reports ◽  
The Impact ◽  
Made In

Purpose This paper aims to ask whether the implementation of the expanded auditor’s report, which included a requirement to disclose key audit matters (KAMs) in Thailand since 2016, has improved audit quality. Design/methodology/approach To answer this question, the authors examined audit quality two years before and two years after its adoption by analysing 1,519 firm-year observations obtained from 312 companies. The authors applied logistic regression analyses to the firm-year observations. Findings The authors found some weak evidence that KAMs disclosure improved audit quality because of auditors putting more effort into their audits and audits being performed thoroughly after the implementation of KAMs. Interestingly, the number of disclosed KAMs and the most common types of disclosed KAMs are not associated with audit quality. Only disclosed KAMs related to acquisitions are more informative because the presence of this type of disclosed KAMs signals the greater likelihood of financial restatements being made in a later year. Originality/value Unlike previous studies on the impact of KAMs disclosure on audit quality, which used discretionary accruals as proxy for audit quality, this study used the occurrence of financial restatements.

scholarly journals Penerapan Standar Akuntansi Pemerintahan, Sistem Pengendalian Internal dan Kualitas Pegawai Pada Kualitas Laporan Keuangan

2021 ◽  
Vol 31 (5) ◽  
pp. 1331
Author(s):  
I Made Hendra Setiawan ◽  
Ni Ketut Rasmini
Keyword(s):  
Control Systems ◽  
Internal Control ◽  
Accounting Standards ◽  
Financial Statements ◽  
Probability Sampling ◽  
Government Accounting ◽  
Systems Quality ◽  
Finance Department

This research aims to determine the application of government accounting standards, internal control systems and quality of employees on the quality of financial statements. This research was conducted at Udayana University. The sample used was the staff of the finance department of Udayana University with a total of 31 respondents. Non-probability sampling is a method of determining the sample used, namely saturation sampling. The results of this study indicate the application of government accounting standards, internal control systems and employee quality affect the quality of financial statements. The variable implementation of government accounting standards, internal control systems and employee quality influences the quality of financial statements by 83.1 percent while 16.9 percent is influenced by other variables.   Keyword: Implementation Of Government Accounting Standards; Internal Control Systems; Quality Officers And Quality Of Financial Statements.

The effect of changing fiscal year-ends on audit fees and audit quality

2019 ◽  
Vol 12 (3) ◽  
pp. 365-382
Author(s):  
Angel Arturo Pacheco Paredes ◽  
Clark Wheatley
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Audit Fees ◽  
Policy Implications ◽  
Fiscal Year ◽  
Content Type ◽  
Audit Firms ◽  
Negative Effect ◽  
Practical Implications

Purpose This study aims to extend recent research analyzing the effect of auditor busyness on audit quality. Specifically, this study explores the effect on audit quality of a change of fiscal year-end to or from an audit firm’s busy period. Design/methodology/approach Empirical archival. Findings When firms change their fiscal year-end to a period when the auditor is less busy, client firms are rewarded with lower audit fees and auditors are rewarded with a reduction in required effort. This study finds no difference in the level of audit quality after a change in fiscal year-end. Practical implications There are significant implications for audit firms as they may gain cost advantages by successfully promoting off-season fiscal year-ends, and reduce the negative effect on employees associated with “busy season” stress. Similarly, client firms may find that audit costs are reduced when they adopt a less “busy” fiscal year-end. Social implications These results have policy implications for regulators because regulators often dictate the fiscal year-end for certain industries or traded securities. Such dictates may thus introduce inefficiencies into the market for audit services. Originality/value These results should guide regulators in their decisions to dictate fiscal year-ends and firms in their choice of reporting periods.

scholarly journals The Relationship between Audit Committee Characteristics, Audit Firm Quality and Companies’ Profitability

2015 ◽  
Vol 7 (2) ◽  
pp. 215
Author(s):  
Laith A Aryan
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Financial Statements ◽  
Industrial Sector ◽  
Committee Meeting ◽  
Audit Firm ◽  
The Relationship

<p>Jordan displayed keen interest in corporate governance in terms of enhancing the quality of financial statements and to restore the investors’ confidence. This study aimed to highlight the role of audit committee and external audit in enhancing companies’ profitability. Since there are contradictions in previous studies results, there is a need to test these relationships in Jordanian context to provide empirical evidence on this issue,especially after the corporate governance application became mandatory since 2009. This study has used industrial sector, which include 91 companies, only 69 companies were included in this study, the other 22 companies were excluded either newly listed or delisted during the study period (2009-2014). Multiple regression were used to analyze the data, the result showed positive relationships between audit committee meeting, audit committee size and companies profitability, while no significant relationship between audit committee composition, audit committee members literacy, audit quality and companies profitability. Such results would be beneficial to companies’ corporate governance committees to play their supervisory role. </p>

Should PCAOB Disciplinary Proceedings Be Made Public? Evidence from Sanctions against a Big 4 Auditor

2012 ◽  
Vol 6 (2) ◽  
pp. P18-P24 ◽  
Author(s):  
Carol Callaway Dee ◽  
Ayalew Lulseged ◽  
Tianming Zhang
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Audit Quality ◽  
Financial Statements ◽  
Audit Firm ◽  
Stock Market Reaction ◽  
Big 4 ◽  
Audit Firms ◽  
Price Effects

SUMMARY: In our paper “Client Stock Market Reaction to PCAOB Sanctions against a Big 4 Auditor” (Dee et al. 2011), we examine stock price effects for clients of a Big 4 audit firm when news of sanctions imposed by the PCAOB against the audit firm was made public. These PCAOB penalties were the first against a Big 4 auditor, and they revealed information about quality-control problems at the audit firm that were not publicly known until the sanctions were announced. Our analysis of stock prices suggests that investors in clients of the penalized Big 4 firm reevaluated their perceptions of the quality of the firm's audit work after learning of the sanctions. The negative stock price effects for the firm's clients were consistent with investors inferring that the financial statements were of lower quality. In the paper, we conclude that investors find information about PCAOB sanctions against audit firms to be relevant in assessing audit quality and use that information in setting stock prices for audit firms' clients. This finding has relevance for the debate on the proposed legislation in Congress (H.R. 3503), which would allow the PCAOB to disclose proceedings against auditors before the investigations are concluded. Our results suggest that, although investors may find early disclosure of this information useful, public disclosure of Board disciplinary proceedings before they are completed could unfairly harm an audit firm's reputation if the firm is ultimately vindicated of wrongdoing.

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