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.

Disclosure effects of the PCAOB part II reports

2017 ◽  
Vol 13 (4) ◽  
pp. 568-580
Author(s):  
Ifeoma Udeh
Keyword(s):  
Design Methodology ◽  
Audit Quality ◽  
Financial Statements ◽  
First Year ◽  
Dominant Focus ◽  
Content Type ◽  
Investor Confidence ◽  
Related Literature ◽  
Audit Firms ◽  
Practical Implications

Purpose The purpose of this paper is to examine the effect of the PCAOB part II report disclosures on US triennially inspected audit firms’ deregistration decisions, the likelihood and the timing of audit firms’ dismissals and resignations. Design/methodology/approach The paper anchored on US regulations used 158 publicly available records of disclosed PCAOB part II reports from 2004 to 2012. Findings The number of the quality control deficiencies disclosed in the part II report affects US triennially inspected audit firms’ decisions to deregister from the PCAOB. Additionally, audit firms’ dismissals and resignations, both occur mostly within the first year after the part II report disclosure, although audit firms that subsequently deregister are more likely to be dismissed. Practical implications The paper provides support that the disclosure of the PCAOB part II inspection report motivates audit quality improvement. Social implications The PCAOB inspection and subsequent disclosure of the part II inspection report enhances audit quality, which in turn, enhances investor confidence in the accuracy and reliability of audited financial statements. Originality/value The paper provides insights about the effect of the disclosures of PCAOB part II report, over and above any benefits from the PCAOB part I report disclosures, which is the dominant focus of related literature.

Female CEO succession and audit fees: evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ammar Ali Gull ◽  
Muhammad Atif ◽  
Ayman Issa ◽  
Muhammad Usman ◽  
Muhammad Abubakkar Siddique
Keyword(s):  
Stock Exchange ◽  
Audit Fees ◽  
Favorable Effect ◽  
Ceo Succession ◽  
Content Type ◽  
Negative Effect ◽  
Male To Female ◽  
Practical Implications ◽  
Gender Change

Purpose This paper aims to examine whether CEO succession with gender change (male to female) affects audit fees in the Chinese setting. In addition, this study examines whether the relationship exists in both types of ownership, i.e. non-state-owned enterprises (SOEs) and SOEs. Design/methodology/approach This study uses data from all A-share non-financial firms listed on both the Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) for the period 2009 to 2015. To draw inferences, this study uses pooled ordinary least squares regression as a baseline technique. This study performs sub-sample analyzes for robustness. To account for endogeneity, this study uses three techniques including firm fixed-effects regression, the two-step Heckman model and the system generalized method of moments (GMM). Findings This study documents a significantly negative relationship between CEO succession with gender change and audit fees. However, the negative effect of CEO succession on audit fees is more pronounced in non-SOEs than SOEs. This study also finds, in additional analyzes, a strong negative effect of female CEO succession on audit fees in sub-sample of large, high-risk, high-performance and firms audited by non-big auditors. The main finding is robust across three endogeneity techniques. Practical implications The findings add to the ongoing debate about the underrepresentation of women in key executive positions such as CEO. The results suggest that CEO succession from male to female has a favorable effect on the quality of internal monitoring mechanisms (due to the superior monitoring skills of women) and enhances the quality of financial reporting. The study has practical implications for regulatory bodies and corporate decision-makers; this study encourages them to look into considering women in the executive succession framework. Originality/value This study contributes to the literature by exploring the effect of CEO succession with gender change (male to female) on audit fees in the context of China and the existence of this relationship in non-SOEs and SOEs.

New insights into underreporting of time: the audit partner context

2015 ◽  
Vol 28 (4) ◽  
pp. 494-514 ◽  
Author(s):  
Itsaso Barrainkua ◽  
Marcela Espinosa-Pike
Keyword(s):  
Design Methodology ◽  
Detrimental Effect ◽  
Audit Quality ◽  
Content Type ◽  
Audit Firms ◽  
Behavioural Patterns ◽  
Ethical Conflicts ◽  
Ethical Acceptability ◽  
The Relationship ◽  
Practical Implications

Purpose – The purpose of this paper is to provide evidence on underreporting of time (URT) by audit partners and the factors that drive URT at their level. In particular the study tests the relationship between URT and the following variables: pressures perceived by auditors related to audit budgets, the ethical acceptability of URT, the influence of peers and superiors on the resolution of ethical conflicts, and organisational ethical culture. A deeper analysis of URT practices is necessary, as failing to correctly report the total hours worked by audit partners poses a threat to audit quality, and can have a detrimental effect on individual auditors, audit firms, and even the auditing profession itself. Design/methodology/approach – A multiple regression data analysis was conducted, based on 84 responses from Spanish audit partners working in small- and medium-sized audit firms. Findings – The results reveal that URT is affected by the pressures perceived by auditors related to audit budgets, the ethical acceptability of URT, and the influence of peers and superiors on the resolution of ethical conflicts. Originality/value – This study contributes to international literature on the organisational context of audit firms by analysing URT from the perspective of audit partners. It also has practical implications, as it focuses on understanding the beliefs and behavioural patterns of audit partners, which is critical to proposing mechanisms for avoiding dysfunctional behaviour at all levels of audit firms.

scholarly journals Accounting for the messiness of the research process: the fieldpath approach

2018 ◽  
Vol 13 (4) ◽  
pp. 315-332 ◽  
Author(s):  
Perttu Salovaara
Keyword(s):  
Qualitative Research ◽  
Design Methodology ◽  
Research Process ◽  
Content Type ◽  
Environmental Consequences ◽  
Human Ethics ◽  
Conceptual Paper ◽  
The Common ◽  
Practical Implications

Purpose It has recently become more acknowledged that there is a quality of “messiness” to the qualitative research process. The purpose of this paper is to introduce the fieldpath approach—a hermeneutically inspired framework—to account for the non-linearity, uncertainty and ambiguity of the research process. Design/methodology/approach This conceptual paper reviews how the scope of hermeneutics has been partly misunderstood. The paper discusses how the scope of hermeneutics has lately been expanded by works such as Günter Figal’s (2010) Objectivity: The Hermeneutical and Philosophy. Findings The fieldpath approach proposes that a heightened relation to materiality enables the messiness of the process to be preserved, while at the same time offering a way to find one’s footing in the midst of ontologically incomplete phenomena that are still—in a processual fashion—forming and becoming. Research limitations/implications This is a conceptual paper. In addition to the research mentioned here, more studies would be needed to legitimise, test and refine the approach. Practical implications Objectivity provides an additional criterion for researchers to lean on when facing the non-linearity and unexpected turns inherent in the qualitative research process. Social implications The stress on materiality involves an ethical dimension. Post-human ethics are concerned with the future environmental consequences and sustainability of the material world. The way that matter matters in our methodologies is of primary importance. Originality/value First, the paper emphasises that hermeneutics, contrary to the common perception, does offer criteria for evaluating between interpretations. Second, it introduces the notion of hermeneutic objectivity, which stresses the importance of materiality for interpretations. Third, it introduces the fieldpath approach, which, based on the previous criterion of hermeneutic objectivity, allows for the messiness of the research process, while also preserving a tight grip on the hermeneutic imperative of “understanding in a new way”.

scholarly journals Sustainability level, corruption and tax evasion: a cross-country analysis

2016 ◽  
Vol 23 (2) ◽  
pp. 328-348 ◽  
Author(s):  
Hichem Khlif ◽  
Achraf Guidara ◽  
Khaled Hussainey
Keyword(s):  
Tax Evasion ◽  
Design Methodology ◽  
Policy Implications ◽  
Content Type ◽  
Global Competitiveness ◽  
Country Analysis ◽  
Cross Country ◽  
The Relationship ◽  
Global Competitiveness Report

Purpose This paper aims to examine the relationship between the level of sustainability and tax evasion and test whether the level of corruption moderates such a relationship. Design/methodology/approach The sample consists of 65 developed and developing countries. Tax evasion is measured using a macro indirect approach used by Schneider et al. (2010). The sustainability level and corruption variables are collected from The Global Competitiveness Report for 2012-2013. Findings This study finds that the level of tax evasion is negatively associated with the level of sustainability (overall score and social and environmental score) and the quality of infrastructure. When we distinguish between low- and high-corruption countries, we find that this negative association is significant for low-corruption countries and insignificant for high-corruption countries. These results imply that the level of corruption may reduce the tendency of individuals in a given state to accept and trust their government in general and comply with the tax rules in particular. Originality/value Our empirical findings have policy implications for governments with high levels of tax evasion, as they highlight the importance of states’ engagements towards their citizens in reducing tax evasion.

What are the interpersonal antecedents of women’s network satisfaction?

2016 ◽  
Vol 31 (4) ◽  
pp. 266-280
Author(s):  
Maryline Bourdil ◽  
Mickael Géraudel
Keyword(s):  
Women Entrepreneurs ◽  
Design Methodology ◽  
Network Performance ◽  
Strong Ties ◽  
Content Type ◽  
Negative Effect ◽  
Common Interests ◽  
Women's Networks ◽  
Practical Implications

Purpose The purpose of this study is to determine whether women entrepreneurs are satisfied with belonging to a women’s network, as this issue is crucial for network performance and legitimacy. Design/methodology/approach The authors tested the hypotheses on a sample of 127 French women entrepreneurs who belonged to women’s networks using multiple regression analysis. Findings The authors showed that these women entrepreneurs were satisfied when they developed strong ties and when cliques in the network were limited. Education had a negative effect: the higher the educational level, the less satisfaction with their networks the women reported. Research limitations/implications The sample was small and composed only of women entrepreneurs who were members of women’s networks and not women who had left them. Practical implications The survey findings suggest ways that managers can optimize network satisfaction to keep current members while continuing to add new ones: create an environment with no cliques where members can develop strong ties. This means connecting members with similar values or status and common interests, while making sure that cliques do not develop. Originality/value To the authors’ knowledge, satisfaction with professional women’s networks has never been studied. The authors’ highlight the role of strong ties in these networks and identify the contingent effect of cliques.

scholarly journals Audit Quality and Disclosures of Less-Experienced Participating Audit Firms in PCAOB Filings

2020 ◽  
Vol 14 (2) ◽  
pp. P1-P8
Author(s):  
Carol Callaway Dee ◽  
Ayalew Lulseged ◽  
Tianming Zhang
Keyword(s):  
Audit Quality ◽  
Audit Fees ◽  
Future Research ◽  
Subsequent Increase ◽  
Market Prices ◽  
Quarterly Earnings ◽  
Audit Firms ◽  
Reported Earnings ◽  
The Universe

SUMMARY In “Who Did the Audit? Audit Quality and Disclosures of Other Audit Participants in PCAOB Filings” (Dee, Lulseged, and Zhang 2015), we examine quality for issuer audits disclosed as involving less-experienced “participating auditors.” We find that market prices of these issuers reacted negatively at the time of disclosure, and investors' valuations of their post-disclosure quarterly earnings declined; investors have greater uncertainty in the numbers reported. In addition, the quality of the reported earnings is lower. However, we do not see a subsequent increase in audit fees, which suggests clients do not increase demands for higher quality to counteract the uncertainty in investors' perceptions of audit quality. Since our sample is limited to less-experienced participating auditors, the results are not readily generalizable to the universe of participating auditors. Future research using Form AP data can explore if our findings are generalizable to issuer audits involving the wider population of participating auditors.

Hiring Auditors with a Part II Quality Control Report: An Opportunity for Increased Earnings Management or Lower Audit Fees?

2020 ◽  
Vol 5 (1) ◽  
pp. 73-93
Author(s):  
Jared Eutsler ◽  
D. Kip Holderness ◽  
Megan M. Jones
Keyword(s):  
Quality Control ◽  
Audit Quality ◽  
Audit Fees ◽  
Data Availability ◽  
Fiscal Year ◽  
The Public ◽  
Audit Firms ◽  
Public Company ◽  
General Demand ◽  
Systemic Quality

ABSTRACT The Public Company Accounting Oversight Board's (PCAOB) Part II inspection reports, which disclose systemic quality control issues that auditors fail to remediate, signal poor audit quality for triennially inspected audit firms. Auditors that receive a Part II inspection report typically experience a decrease in clients, which demonstrates a general demand for audit quality. However, some companies hire auditors that receive Part II inspection reports. We examine potential reasons for hiring these audit firms. We find that relative to companies that switch to auditors without Part II reports, companies that switch to auditors with Part II reports have higher discretionary accruals in the first fiscal year after the switch, which indicates lower audit quality and a heightened risk for future fraud. We find no difference in audit fees. Our results suggest that PCAOB Part II inspection reports may signal low-quality auditors to companies that desire low-quality audits. Data Availability: Data are available from the public sources cited in the text.

“Give it a Try”: experiences of black, Asian and minority ethnic young men in a prison-based offender personality disorder service

2019 ◽  
Vol 21 (1) ◽  
pp. 14-26
Author(s):  
Stephanie Hunter ◽  
Eleanor Craig ◽  
Jake Shaw
Keyword(s):  
Personality Disorder ◽  
Thematic Analysis ◽  
Design Methodology ◽  
Policy Implications ◽  
Future Research ◽  
Content Type ◽  
The Uk ◽  
Minority Ethnic ◽  
Practical Implications ◽  
Insight Into

Purpose Within the current offender personality disorder (OPD) pathway in the UK, black, Asian and minority ethnic (BAME) populations are underrepresented. Fewer BAME offenders are engaging with services despite being proportionately identified for inclusion and referred on to the pathway. The paper aims to discuss this issue. Design/methodology/approach This qualitative study explored the experiences of 11 BAME men engaged in a prison-based OPD service for young offenders to identify the highlights and challenges of engagement within the service and to what extent they experienced a sense of inclusion/belonging. Findings Thematic analysis was used to identify three overarching themes and sub-themes. Why am I going to be an Outcast? describes the barriers to engagement encountered by the participants; and Give it a Try and Nothing but Respect describe the process of overcoming these barriers. Barriers revolved around the experiences of judgement, alienation and hopelessness. These were overcome through peer encouragement, developing relationships with staff and freedom to regulate levels of engagement. Practical implications Practice and policy implications are considered to support similar services in addressing the barriers to engagement faced by BAME individuals. Areas for future research are also recommended. Originality/value Currently, no research has directly explored the under-representation of young BAME offenders with emerging personality disorder in the OPD pathway. The findings provided an insight into some of the difficulties these young BAME offenders faced when accessing this service, alongside aspects which maintained their engagement.

Copa America: a resource-based theory of football talent

2019 ◽  
Vol 25 (3/4) ◽  
pp. 176-191
Author(s):  
Peter Omondi-Ochieng
Keyword(s):  
Logistic Regression ◽  
Design Methodology ◽  
Binary Logistic Regression ◽  
Content Type ◽  
Independent Variables ◽  
Football Team ◽  
Practical Implications ◽  
Resource Based Theory

Purpose Guided by the resource-based theory, the purpose of this study was to predict the role of football talent in the Federation Internationale de Football Association (FIFA) rankings of the men’s national football teams in the Copa America zone. Design/methodology/approach The study used archival data of Copa American national football teams. The dependent variable was FIFA rankings, and the independent variables were football talent (measured by the stocks of amateur footballers, professional footballers and football officials). Statistical analysis was performed using Kendall tau statistic and binary logistic regression. Findings The binary logistic regression results indicated that FIFA rankings were statistically and significantly associated with the stock of football officials and professional footballers – but not amateur footballers. The predictive model explained 80 per cent of the variance. Research limitations/implications The study focused exclusively on the stock of football talent in each nation, and not alternative determinants of national football team competitiveness as economic power and quality of professional football leagues, among others. Practical implications The stocks of professional footballers and football officials are valuable sources of competitive advantage (CA) in national football team rankings. Originality/value The study highlighted the uniqueness and distinctiveness of a nation possessing large stocks of professional footballers which can boost the CA and rankings of Copa American national football teams.

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