Audit report qualification/modification

2017 ◽  
Vol 7 (4) ◽  
pp. 468-485 ◽  
Author(s):  
Hanen Moalla
Keyword(s):  
Financial Crisis ◽  
Positive Relationship ◽  
Audit Report ◽  
Content Type ◽  
Audit Opinion ◽  
Publicly Traded Companies ◽  
Financial Variables ◽  
Audit Reports ◽  
Qualified Audit Opinion ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the influence of financial variables and especially profitability, loss in current year, loss in previous year, leverage and liquidity in predicting audit report qualifications (qualified audit opinion) and audit report modifications (qualified opinion or unqualified but with an explanatory paragraph). Design/methodology/approach The authors used hand-collected data from financial statements and from auditors’ general reports of 76 non-financial publicly traded companies over a period of 11 years (2005-2015). A total of 545 audit reports were analyzed. Findings The results of panel logistic regression reported a positive relationship between liquidity, loss in the current year, loss in the previous year and a qualified audit report. A positive relationship was found between leverage and audit report modification. Also, the findings show that the Tunisian revolution did not affect the qualification or the modification of the audit report but qualifications decreased significantly during the period of the financial crisis. Practical implications The research has practical implications and can help auditors in identifying factors motivating audit report qualification or audit report modification, mainly in periods of instability. Originality/value This study contributes to auditing research, since the authors know very little about the determinants of audit opinion in emerging and African markets. It constitutes an addition to previous knowledge about audit opinion in the context of Tunisia during two important periods: the financial crisis and revolution. This research is one of the rare studies analyzing qualifications and audit report modifications by considering both qualifications and explanatory paragraphs.

Predicting auditors' opinions using financial ratios and non-financial metrics: evidence from Iran

2020 ◽  
Vol 10 (3) ◽  
pp. 425-446
Author(s):  
Hamid Zarei ◽  
Hassan Yazdifar ◽  
Mohsen Dahmarde Ghaleno ◽  
Ramin azhmaneh
Keyword(s):  
Emerging Economies ◽  
Data Access ◽  
Financial Ratios ◽  
Content Type ◽  
Audit Opinion ◽  
Audit Firm ◽  
Financial Variables ◽  
Financial Metrics ◽  
Audit Reports ◽  
Practical Implications

PurposeThe purpose of the paper is to investigate the extent to which a model based on financial and non-financial variables predicts auditors' decisions to issue qualified audit reports in the case of companies listed on the Tehran Stock Exchange (TSE).Design/methodology/approachThe authors utilized data from the financial statements of 96 Iranian firms as the sample over a period of five years (2012–2016). A total of 480 observations were analysed using a probit model through 11 primary financial ratios accompanying non-financial variables, including the type of audit firm, auditor turnover and corporate performance, which affect the issuance of audit reports.FindingsThe results demonstrated high explanatory power of financial ratios and type of audit firm (the national audit organization vs other local audit firms) in explaining qualifications through audit reports. The predictive accuracy of the estimated model is evaluated using a regression model for the probabilities of qualified and clean opinions. The model is reliable, with 72.9% accuracy in classifying the total sample correctly to explain changes in the auditor's opinion.Research limitations/implicationsThis study contains some limitations. First, it is likely that similar researches in developed countries set a large sample (e.g. over 1,000 firms) including more years, but the authors cannot follow such a trend due to data access restrictions. Second, banks and financial institutions, investment and holding firms are removed from the sample, because their financial structure is diverse. The third limitation of the study represents the different economic and cultural conditions of Iran compared to other countries. Future studies could focus on internal control material weaknesses or earnings management to predict audit opinion in emerging economies including Iran.Practical implicationsThe paper has practical implications and can assist auditors in identifying factors motivating audit report qualifications, mainly in emerging economies.Originality/valueThe paper contributes to auditing research, since very little is known about the determinants of audit opinion in emerging markets including Iran; it also constitutes an addition to previous knowledge about audit opinion in the context of TSE. The paper is one of the rare studies predicting auditor opinions using both financial variables and non-financial metrics.

The impact of accelerated filing requirements on meeting audit report deadlines

2017 ◽  
Vol 30 (01) ◽  
pp. 58-72 ◽  
Author(s):  
Magdy Farag
Keyword(s):  
Audit Report ◽  
Public Accounting ◽  
Control Variables ◽  
Accounting Firms ◽  
Indicator Variable ◽  
Content Type ◽  
Audit Reports ◽  
Measuring Tool ◽  
The Impact ◽  
Practical Implications

Purpose The purpose of this study is to examine audit report lags and audit report deadline margins. It specifically examines whether audits of large accelerated filers are completed within a shorter period as compared with regular accelerated filers due to the introduction of new deadline filing requirements by the SEC. The paper also examines whether large accelerated filers have shorter audit report deadline margins. Design/methodology/approach Using a sample of 7,129 firm-year observations over the period 2007-2013, an OLS regression model is applied by regressing audit report lags and audit report deadline margins on an indicator variable for large accelerated filers and a set of control variables. Findings Results indicate that audits of large accelerated filers have shorter audit report lags as compared with regular accelerated filers. Also, large accelerated filers have shorter audit report deadline margins as compared with regular accelerated filers. These results suggest that even though large accelerated filers’ audits are more complex by nature, auditors of these firms are under more pressure to complete their audits and issue their clients’ audit reports on time. Research limitations/implications While the control variables included in the models are all based on established theories and validated in prior research, there may still be some control variables that were excluded from the study’s models. Also, these results cannot be generalized beyond firms that are categorized as large accelerated filers or accelerated filers. Practical/implications Public accounting firms should be prepared to devote more resources to large accelerated filers’ clients. Also, regulators might need to reconsider revising the filing deadline requirements for the new category of large accelerated filers by weighing the pros against the cons of these new deadlines, as it appears that auditors of large accelerated filers need more time to complete their audits. Originality/value This study uses a new measuring tool in addition to audit report lags, which is the ‘audit report deadline margin’.

An empirical examination of the determinants of audit report delay in France

2018 ◽  
Vol 33 (8/9) ◽  
pp. 700-714 ◽  
Author(s):  
Nouha Khoufi ◽  
Walid Khoufi
Keyword(s):  
Ordinary Least Squares ◽  
Least Squares Regression ◽  
Audit Report ◽  
Empirical Examination ◽  
Content Type ◽  
Audit Opinion ◽  
Audit Firm ◽  
Explanatory Variables ◽  
Qualified Audit Opinion ◽  
International Audit

Purpose This study aims to investigate the determinants of delay in publishing audited reports. Design/methodology/approach The research is conducted on a sample of French listed companies, covering the period of five years (from 2010 to 2014). The authors use pooled ordinary least squares regression analysis, modeling audit delay as a function of the following explanatory variables relating to the attributes of companies and their auditors. Findings A statistically significant association is found between audit delay and type of audit firm, audit opinion, firm size, the month of year-end and profitability. The results suggest that audit delay lag is reduced by appointing an international audit firm but is extended by aspects of qualified audit opinion. Originality/value The contribution of this paper is to investigate audit report in a developed capital market by taking advantage of access to proprietary data on audit timing and audit opinion. This allowed to overcome some of the problems of data quality that inhibit importing research methods from France to other advanced capital markets.

The blame game

2020 ◽  
Vol 36 (7) ◽  
pp. 11-13
Keyword(s):  
Supply Chain ◽  
Financial Crisis ◽  
Case Studies ◽  
Design Methodology ◽  
Reading Time ◽  
Global Market ◽  
Content Type ◽  
Corporate Failure ◽  
Pertinent Information ◽  
Practical Implications

Purpose Reviews the latest management developments across the globe and pinpoints practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Why do firms fail? The reasons behind given for corporate failure vary widely. During the financial crisis, firms failed because of the financial crisis, or during the Coronavirus pandemic firms failed due to the Coronavirus pandemic. When there are global market problems, those problems tend to get the blame for most things, including firms going under. But other reasons are sometimes given as well – that a firm is carrying too much debt to be sustainable, or a hypercompetitive market, or there are unsurmountable problems in the supply chain. Very often, these reasons are not scrutinized very closely as everyone moves on to invest in another company or try and find work elsewhere. Practical implications Provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Original/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Abnormally long audit report lags and future stock price crash risk: evidence from China

2019 ◽  
Vol 15 (4) ◽  
pp. 611-635
Author(s):  
Ahsan Habib ◽  
Hedy Jiaying Huang
Keyword(s):  
Internal Control ◽  
Stock Price ◽  
Large Scale ◽  
Crash Risk ◽  
Research Database ◽  
Audit Report ◽  
Content Type ◽  
Audit Opinion ◽  
Listed Firms ◽  
International Investors

PurposeAlthough a substantial body of literature investigates the determinants of audit report lag (ARL), scant empirical evidence exists on the consequences of ARL. The purpose of this paper is to examine the association between abnormally long ARL and future stock price crash risk.Design/methodology/approachThis quantitative study employed a large scale (14,445 firm-year observations) of annual financials, audit and ownership information for the Chinese listed companies during 2002–2013 which were retrieved from the China Stock Market and Accounting Research database.FindingsThis study finds evidence that abnormally long ARL increases the risk of a future stock price crash. Furthermore, the study finds that this adverse consequence is more pronounced for firms with a poor internal control environment.Practical implicationsRecently literature started to explore the consequences of abnormal ARL such as going concern audit opinion and restatements in the subsequent periods. This paper reveals that abnormal ARL has consequences for investor wealth losses as well. This is relevant in China, where the ongoing economic growth has attracted, and will continue to attract, a growing body of domestic and international investors. Understanding what factors could expose investors to wealth losses is of paramount importance for allocating their scarce capital.Originality/valueThis study extends the scant literature on the consequences of ARL, and provides useful insights for the Chinese regulatory authorities when considering the appropriateness of the current filing deadline for listed firms.

Wall Street women: professional saviors of the global economy

2015 ◽  
Vol 11 (2) ◽  
pp. 137-155 ◽  
Author(s):  
Melissa Fisher
Keyword(s):  
Financial Crisis ◽  
Global Economy ◽  
First Generation ◽  
Field Work ◽  
Financial Policy ◽  
Wall Street ◽  
Content Type ◽  
Cultural Power ◽  
The 2008 Financial Crisis ◽  
Practical Implications

Purpose – This paper aims to, by drawing on two decades of field work on Wall Street, explore the recent evolution in the gendering of Wall Street, as well as the potential effects – including the reproduction of financiers’ power – of that evolution. The 2008 financial crisis was depicted in strikingly gendered terms – with many commentators articulating a divide between masculine, greedy, risk-taking behavior and feminine, conservative, risk-averse approaches for healing the crisis. For a time, academics, journalists and women on Wall Street appeared to be in agreement in identifying women’s feminine styles as uniquely suited to lead – even repair – the economic debacle. Design/methodology/approach – The article is based on historical research, in-depth interviews and fieldwork with the first generation of Wall Street women from the 1970s up until 2013. Findings – In this article, it is argued that the preoccupation in feminine styles of leadership in finance primarily reproduces the power of white global financial elites rather than changes the culture of Wall Street or breaks down existent structures of power and inequality. Research limitations/implications – The research focuses primarily on the ways American global financial elites maintain power, and does not examine the ways in which the power of other international elites working in finance is reproduced in a similar or different manner. Practical implications – The findings of the article provide practical implications for understanding the gendering of financial policy making and how that gendering maintains or reproduces the economic system. Social implications – The paper provides an understanding of how the gendered rhertoric of the financial crisis maintains not only the economic power of global financial elites in finance but also their social and cultural power. Originality/value – The paper is based on original, unique, historical ethnographic research on the first generation of women on Wall Street.

Bank officers’ perceptions and uses of qualified audit reports

2014 ◽  
Vol 11 (3) ◽  
pp. 215-237 ◽  
Author(s):  
Nina Sormunen
Keyword(s):  
Financial Statements ◽  
Structured Interviews ◽  
Content Type ◽  
Factors Affecting ◽  
Going Concern ◽  
Other Information ◽  
Audit Reports ◽  
Going Concern Reports ◽  
Practical Implications

Purpose – The purpose of this study is to provide insights into the perceptions and uses of qualified audit reports in financial statements of small- and medium-sized enterprises (SMEs). As there is a long-standing debate on the usefulness of auditor’s going-concern reports, this study aims to provide insights into the factors that affect how banks perceive and use going-concern reports. Design/methodology/approach – Semi-structured interviews with bank officers were conducted. Findings – The study findings demonstrated that bank officers considered that the going-concern report provided information, although they did not regard the information as being particularly useful. The main factors affecting the usefulness of information are use of other information sources and bank officers’ perceptions of auditing. Other factors are also presented and discussed in the current research paper. Practical implications – Regulators have taken the action to improve the auditor’s reporting model, and the findings provided by this study are important because they provide a deeper understanding of the perceptions and uses of audit reports from smaller companies. The study also contributes knowledge about the role of audit reports in the context of SMEs finance. Originality/value – This is one of the first studies to use a qualitative approach to examine factors that affect the use of going-concern reports.

Return and co-movement of major public real estate markets during global financial crisis

2017 ◽  
Vol 35 (5) ◽  
pp. 489-508 ◽  
Author(s):  
Kim Hiang Liow ◽  
Shao Yue Angela
Keyword(s):  
Financial Crisis ◽  
Real Estate ◽  
Global Financial Crisis ◽  
Content Type ◽  
Real Estate Markets ◽  
The Public ◽  
Movement Dynamics ◽  
The Usa ◽  
Short Run ◽  
Practical Implications

Purpose The purpose of this paper is to investigate the volatility spectral of five major public real estate markets, namely, the USA, the UK, Japan (JP), Hong Kong (HK), and Singapore (SG), during the pre- and post-global financial crisis (GFC) periods. Design/methodology/approach First, univariate spectral analysis is concerned with discovering price cycles for the respective real estate markets. Second, bivariate cross-spectral analysis seeks to uncover whether any two real estate price series share common cycles with regard to their relative magnitudes and lead-lag patterns of the cyclical variations. Finally, to test the contagion effects, the authors estimate the exact percentage change in co-spectral density (cyclical covariance) due to high frequencies (short run) after the GFC. Findings The authors find that whilst none of the public real estate markets examined are spared from the crisis, the three Asian markets were less severely affected by the GFC and were accompanied by a reversal in volatility increase three years post-global financial crisis. Additionally, the public real estate markets studied have become more cyclically linked in recent years. This is particularly true at longer frequencies. Finally, these increased cyclical co-movements measure the outcomes of contagion and indicate fairly strong contagious effects between the public real estate markets examined due to the crisis. Research limitations/implications The implication of this research is that benefits to investors from international real estate diversification may not be as great during the present time compared to previous periods because national public real estate markets have become more correlated. Nevertheless, the findings do not imply the complete absence of diversification benefits. This is because although cyclical correlations increase in the short run, many of the correlation values are still between low and moderate range, indicating that some diversification benefits may still be realized. Practical implications Given the significant market share and the highest levels of securitization in Asia-Pacific markets including JP, HK/China, and SG, this cyclical research including major public real estate markets has practical implications for ongoing international real estate investment strategies, particularly for the USA/UK and Asian portfolio managers. Originality/value This paper contributes to the limited research on the cyclical return and co-movement dynamics among major public real estate markets during financial/economic crisis in international finance. Moreover, the frequency-domain analysis conducted in this paper adds to better understanding regarding the impact of GFC on the cyclical return volatility and co-movement dynamics of major developed public real estate markets in international investing.

Operational efficiency evaluation of restaurant firms

2018 ◽  
Vol 30 (3) ◽  
pp. 1959-1977 ◽  
Author(s):  
Pilar Alberca ◽  
Laura Parte
Keyword(s):  
Efficiency Index ◽  
Operational Efficiency ◽  
Growth Potential ◽  
Tobit Regression ◽  
Content Type ◽  
Financial Variables ◽  
Production Technologies ◽  
Restaurant Firms ◽  
New Perspective ◽  
Practical Implications

Purpose The purpose of this study is to examine the operational efficiency of restaurants in a dynamic context, over the period 2011-2014. The paper also analyzes efficiency with respect to several frontiers and production technologies dependent on restaurant size. Finally, it provides a new perspective by examining financial and non-financial variables that can directly affect the efficiency of restaurant firms. Design/methodology/approach The study applies metafrontier data envelopment analysis (DEA) methodology to investigate differences in production technologies, dynamic Tobit regression models and bootstrap procedure. Findings The results reveal that operational efficiency in the restaurant industry is affected by firm size, showing that large restaurants perform better than medium-sized and small restaurants Moreover, the evidence suggests a link between the efficiency index and financial variables, such as credit ratings, probability of default or bankruptcy, leverage and cash flow, as well as a link with non-financial variables, such as type of auditor. Practical implications The strength of restaurant firms has practical implications for managers and entrepreneurs, linked to the investment possibilities and growth potential of companies in that industry. Originality/value This study provides exploratory insights into operational efficiency as well as restaurant efficiency determinants. Performance and operational efficiency are key factors to restaurant firms’ survival in the economies that have been most severely affected by the financial crisis. Furthermore, this study confirms the relevance of financial and non-financial variables, which are associated with firm efficiency in this industry.

Examining the dynamics of industry–university collaborations in Ghana

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Albertina Muparadzi ◽  
Livingstone Divine Caesar
Keyword(s):  
Knowledge Sharing ◽  
Positive Relationship ◽  
National Policy ◽  
Institutional Factors ◽  
Multivariate Techniques ◽  
Industry Funding ◽  
Content Type ◽  
Moderating Variables ◽  
University Industry ◽  
Practical Implications

PurposeUniversity–industry (UI) collaborations are now a crucial issue as universities explore innovative means to secure industry funding for research and improve the employability content of existing curricula. This paper explores the dynamics of the antecedents of UI collaborations in management education. It further investigates the moderating variables (motivation, national policy and institutional factors) that are likely to influence the positive relationship between the antecedents of collaboration and the intention to collaborate.Design/methodology/approachA quantitative survey sent to 300 participants in academia and industry in Ghana achieved an 83% response rate. The data was analysed using bivariate and multivariate techniques.FindingsThe results revealed a positive relationship between knowledge sharing, trust, communication and motivation for UI collaborations. Motivation did not have a moderating effect on the positive relationship between any of the five independent variables and UI collaborations. Institutional factors were found to moderate the positive relationship between knowledge sharing and collaboration.Practical implicationsPolicy to encourage UI collaborations should build on reputational and intrinsic rather than purely financial motivations as academics are motivated by a complex mix of monetary and non-monetary factors.Originality/valueThis paper highlights the need for an intricate alignment of the interests of academia and practitioners to encourage UI collaboration efforts.

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