Audit committee oversight of external audit: an examination of structural power and behavioural tactics

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Noor Adwa Sulaiman ◽  
Fatimah Mat Yasin
Keyword(s):  
Audit Committee ◽  
Power Bases ◽  
Structured Interviews ◽  
External Audit ◽  
Personal Power ◽  
Structural Power ◽  
Content Type ◽  
Network Position ◽  
Bases Of Power ◽  
Power Base

PurposeThis study aims to examine the structural power wielded by the audit committee (AC) and the various bases of its power, whilst also exploring the behavioural tactics used by the AC to leverage its power in the oversight of the external audit. Design/methodology/approachEmpirical evidence was drawn from semi-structured interviews with external auditors and AC members in Malaysia. FindingsThe AC’s structural power is derived from its formal and network position in the organisation. The AC possesses three forms of organisational-based power (legitimate, coercive and informational) resultant from its formal position, and these combine with the AC’s personal power (will and expert). The AC uses its personal power base to develop trusting relationships and to promote the exchange of information with other key corporate governance actors in the network position. Furthermore, the AC applies at least four behavioural tactics (assertiveness, ingratiation, rationality and coalition formation) to exercise its bases of power. Originality/valueThis study attempts to describe the AC’s structural sources of power, its organisational and personal power bases, and the behavioural tactics it uses when exerting its power.

Mandatory audit firm rotation: a critical composition of practitioner views from an emerging economy

2020 ◽  
Vol 35 (7) ◽  
pp. 861-896
Author(s):  
Michael Harber ◽  
Warren Maroun
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Unintended Consequences ◽  
Policy Implications ◽  
Chief Financial Officers ◽  
Structured Interviews ◽  
Design Data ◽  
Content Type ◽  
Audit Firm ◽  
Mandatory Audit Firm Rotation

Purpose This study aims to address an acknowledged gap in the literature for the analysis of experienced practitioner views on the effects and implications of mandatory audit firm rotation (MAFR). Design/methodology/approach Using an exploratory and sequential design, data was collected from South African regulatory policy documents, organisational comment letters and semi-structured interviews of practitioners. These findings informed a field survey, administered to auditors, investors, chief financial officers (CFOs) and audit committee members of Johannesburg Stock Exchange (JSE) listed companies. Findings Practitioners expressed considerable pushback against the potential efficacy of MAFR to improve audit quality due to various “switching costs”, notably the loss of client-specific knowledge and expertise upon rotation. In addition, the cost and disruption to both the client and audit firm are considered significant and unnecessary, compared to audit partner rotation. The audit industry may suffer reduced profitability and increased strain on partners, leading to a decline in the appeal of the profession as a career of choice. This is likely to have negative implications for audit industry diversity objectives. Furthermore, the industry may become more supplier-concentrated amongst the Big 4 firms. Practical implications The findings have policy implications for regulators deciding whether to adopt the regulation, as well as guiding the design of policies and procedures to mitigate the negative effects of adoption. Originality/value The participants are experienced with diverse roles concerning the use, preparation and audit of financial statements of large exchange-listed multinational companies, as well as engagement in the auditor appointment process. The extant literature presents mixed results on the link between MAFR and audit quality, with most studies relying on archival and experimental designs. These have a limited ability to identify and critique the potential’s witching costs and unintended consequences of the regulation. Experienced participants responsible for decision-making within the audit, audit oversight and auditor appointment process, are best suited to provide perspective on these effects, contrasted against the audit regulator’s position.

An investigation into the roles, characteristics, expectations and evaluation practices of audit committees

2015 ◽  
Vol 30 (8/9) ◽  
pp. 727-755 ◽  
Author(s):  
Nonna Martinov-Bennie ◽  
Dominic S.B. Soh ◽  
Dale Tweedie
Keyword(s):  
Audit Committee ◽  
Active Role ◽  
Audit Committees ◽  
Regulatory Change ◽  
Structured Interviews ◽  
Regulatory Requirements ◽  
Content Type ◽  
Evaluation Practices ◽  
Primary Driver ◽  
And Performance

Purpose – This paper aims to investigate how the roles, characteristics, expectations and evaluation practices of audit committees have adapted to regulatory change and what practices are most conducive to effective audit committees. Design/methodology/approach – This paper uses semi-structured interviews with audit committee chairs and chief audit executives. Findings – While new regulation is a primary driver of changes in the roles of audit committees, the audit committee’s role has evolved beyond regulatory requirements. Audit committees are taking a more active role in organisational governance and performance in key areas such as risk management. However, while audit committees have a clear concept of what characteristics committee members require, conceptual frameworks and mechanisms for evaluating the performance of committees and their members remain underdeveloped. Research limitations/implications – The responses of audit committees in Australia to broader regulatory trends suggest that more research is required into how audit committees function in practice, and into developing new frameworks for evaluating the committees’ performance. This paper provides an in-depth exploration of key areas of audit committee performance, and identifies aspects that might be further investigated. Practical implications – The paper identifies key attributes of effective audit committees and especially the characteristics of audit committee members. The paper also identifies a need to improve – and in many cases create – performance evaluation frameworks and mechanisms. Given the international regulatory trend towards greater reliance on audit committees to improve governance, more policy attention is required on developing guidelines and assessment processes that evaluate whether audit committees are fulfilling their legislative mandate in practice. Originality/value – The paper contributes to the relatively new and more specific discussion on reviewing and evaluating the performance of the board and its subcommittees.

scholarly journals Stakeholder perception of the determinants of audit committee effectiveness in a developing economy: evidence from the Libyan banking sector

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Abdulhakim M. Masli ◽  
Musa Mangena ◽  
Ali Meftah Gerged ◽  
Donald Harradine
Keyword(s):  
Audit Committee ◽  
Banking Sector ◽  
Developing Economies ◽  
National Level ◽  
Institutional Setting ◽  
Structured Interviews ◽  
Firm Level ◽  
Content Type ◽  
Study Results ◽  
Survey Responses

PurposeThis study distinctively explores the firm-level and national-level determinants of audit committee effectiveness (ACE) in the Libyan banking sector (LBS).Design/methodology/approachA mixed-methods approach has been employed to enhance the quality of the collected data and reduce the risk of bias. Five groups of actors in the Libyan banking sector were surveyed, including board members, AC members, executive managers, internal auditors and external auditors, further to interviewing a representative sample of these groups. In total, 218 survey responses were gathered, and 20 semi-structured interviews were conducted.FindingsThe study results show that AC authority, financial expertise and diligence are positively and significantly attributed to ACE, although AC independence and resources are not significantly related to ACE. The authors find that the legal and regulatory environment, government intervention, and the accounting and auditing environment are perceived as important and associated with ACE regarding national-level factors. These findings are strongly supported by semi-structured interviews and suggest that both firm-level and national-level factors are essential in understanding ACE in Libya's banking sector.Research limitations/implicationsThe study’s evidence reiterates the vital need for more concentrated work to integrate governance, legislative and regulatory reforms to ensure the effectiveness of ACs as a key corporate governance (CG) mechanism in developing economies.Originality/valueThis study extends the literature relating measures of AC inputs and outputs by examining the perception of stakeholders to understand both the firm-level and national-level factors that affect ACE in a single institutional setting. Additionally, this work adds to the limited number of recent studies examining the role of ACs in the banking sector in developing economies.

Factors influencing external audit fees of companies listed on Dubai Financial Market

2016 ◽  
Vol 9 (3) ◽  
pp. 346-363 ◽  
Author(s):  
Kamal Naser ◽  
Yousef Mohammad Hassan
Keyword(s):  
Financial Market ◽  
Audit Committee ◽  
Negative Relationship ◽  
Audit Fees ◽  
Arab Countries ◽  
Annual Reports ◽  
External Audit ◽  
Content Type ◽  
Middle East Countries ◽  
The Impact

Purpose This study aims to examine the underlying determinants that may influence external audit fees paid by Emirati nonfinancial companies listed on Dubai Financial Market (DFM). Design/methodology/approach Data used in this study are mainly collected from the 2011 annual reports and corporate governance reports published by the Emirati nonfinancial companies listed on DFM. Backward regression analysis is used to measure the impact of a set of company characteristics on Emirati non-financial listed firm’s audit delays. Findings The findings pointed to a significant and positive association between audit fees and each of corporate size and audit committee independence variables. A significant and negative relationship has been detected between external audit fees and business complexity. The findings also revealed that audit fees are not significantly associated with company’s profitability, risk, industry type, status of audit firm and audit report lag. Originality/value The paper helps in expanding limited existing literature about the determinants of audit fees in the Arab and Middle East countries generally and in the UAE context particularly. No prior attempt had been made to investigate the determinants of audit fees paid by Emirati firms listed on DFM because the disclosure of audit fees services provided by external auditors only became effective after April 30, 2010. The findings of the study may be generalized to other Arab countries, particularly neighboring Gulf Cooperation Council states, that have a similar socio-cultural environment.

The way employees are treated predict power feelings

2019 ◽  
Vol 40 (1) ◽  
pp. 2-16
Author(s):  
Lucinda L. Parmer ◽  
John E. Dillard Jr
Keyword(s):  
Dyadic Relationship ◽  
Personal Power ◽  
Managerial Leadership ◽  
Content Type ◽  
Bases Of Power ◽  
Self Confidence ◽  
Perceptions And Attitudes ◽  
Managerial Perceptions ◽  
The Relationship ◽  
Practical Implications

PurposeThe purpose of this paper is to examine the relationship between the perceptions employees have regarding how they are treated in the workplace environment by their current or most recent supervisor, and how this predicted their feelings of power within themselves. The perceptions were measured utilizing the Managerial Leadership Perceptions Questionnaire (MLPQ) created by Parmer (2017). Employee power was measured utilizing the Power Instrument developed by Hinkin and Schriesheim (1989) which stemmed from French and Raven’s (1959) five original bases of power theory to include referent, expert, legitimate, reward, and coercive.Design/methodology/approachThe authors collected a sample of 199 participants gathered from Amazon’s Mechanical Turk digital labor pool. Participants completed a survey which measured their managerial perceptions, bases of power, and demographic characteristics. Statistical analysis was used, including a factor analysis, to explore the relationship between managerial perceptions, bases of power, and demographic characteristics.FindingsThis study demonstrated that there were no significant associations between the demographic associations and personal power. There were significant associations between the demographic associations and position power, managerial perceptions and personal power, managerial perceptions and position power, and managerial leadership style and power.Research limitations/implicationsFive bases of power were examined in this study to include referent, expert (i.e. personal power), legitimate, reward, and coercive (i.e. position power). There is a sixth power now, information power, as noted by Northouse (2016) that needs to be additionally examined. Self-confidence and empowerment feelings were not technically measured quantifiably in this study but were expected feelings based on what mindsets power can produce within a person. Researching these additional feelings of self-confidence and empowerment and how this relates to follower power is needed moving forward in this research area. Finally, ethnic differences need to be measured moving forward.Practical implicationsThe practical implications of this study show that employees do embody perceptions and attitudes regarding their current or most recent supervisor based on how they are being treated. This, in turn, can affect their own personal feelings of power within themselves and within the overall organization at large. Careers can be affected, both good and bad, organizational cultures can be impacted by both good and bad, workplace assumptions and norms, as well as, workplace relationships can be affected, both good and bad.Social implicationsThe social implications of this study indicated that employees’ perceptions and attitudes regarding their immediate supervisor can create positive or negative feelings toward the supervisor which can, in turn, affect the organization’s culture and workplace environment, both good and bad. Working at an organization is within a social environment that needs to be managed and cultivated appropriately for all parties involved.Originality/valueThe majority of the prior research examines leader–follower relationships. No prior research has utilized this particular perception and attitudinal model, the MLPQ developed by Parmer (2017), and the five bases of power model developed by Hinkin and Schriesheim (1989) together in one study. This study explored employee managerial perceptions and their feelings of power within the follower–leader dyadic relationship, as opposed to the leader–follower dyadic relationship which has been more commonly reported within the literature.

scholarly journals Commitment, Dominance, and Mate Value: Power Bases in Long-Term Heterosexual Couples

2021 ◽  
Vol 18 (4) ◽  
pp. 1914
Author(s):  
Jitka Lindová ◽  
Tereza Habešová ◽  
Kateřina Klapilová ◽  
Jan Havlíček
Keyword(s):  
Self Report ◽  
Relationship Power ◽  
Heterosexual Couples ◽  
Mate Value ◽  
Power Bases ◽  
Personal Power ◽  
Neo Personality Inventory ◽  
Relative Contribution ◽  
Neo Personality Inventory Revised ◽  
Power Base

We assessed the relative contribution of economic, personal, and affective power bases to perceived relationship power. Based on evolutionary studies, we predicted that personality dominance and mate value should represent alternative personal power bases. Our sample was comprised of 84 Czech heterosexual couples. We measured the economic power base using self-report scales assessing education, income and work status. Personal power bases were assessed using self-report measures of personality dominance (International Personality Item Pool Dominance and Assertiveness subscale from NEO Personality Inventory-Revised Extraversion scale), and partner-report measures of mate value (Trait-Specific Dependence Inventory, factors 2–6). The first factor of Trait-Specific Dependence Inventory, which measures agreeableness/commitment was used to assess the affective power base. Our results show that perceived relationship power is associated with a perception of partner’s high agreeableness/commitment. Moreover, women’s personality dominance and mate value are also linked with perceived relationship power, which supports our evolutionary prediction of dominance and mate value working as power bases for women. The stronger effect of women’s than men’s power bases may be due to gender differences in investment into relationships and/or due to transition to more equal relationships currently sought by women in the Czech Republic.

scholarly journals Audit committee roles and responsibilities in two English public sector settings

2016 ◽  
Vol 31 (8/9) ◽  
pp. 848-870 ◽  
Author(s):  
Karim Hegazy ◽  
Anne Stafford
Keyword(s):  
Public Sector ◽  
Institutional Theory ◽  
Audit Committee ◽  
Organizational Context ◽  
New Public Management ◽  
Comparative Case Study ◽  
Institutional Setting ◽  
Structured Interviews ◽  
Content Type

Purpose This paper aims to conduct a comparative study by examining the Audit Committee (AC) set-up, roles, responsibilities and developments in two distinct English public sector settings, namely, foundation trusts (FTs) and local authorities (LAs). Design/methodology/approach The paper is exploratory and explanatory in nature and uses a qualitative case study approach framed in institutional theory. It is based on semi-structured interviews with AC chairs, external and internal auditors and finance directors triangulated with meeting observations and documentation review. Findings The study finds that public sector ACs have a large and diverse role which extends beyond challenging/monitoring responsibilities. Influenced by the New Public Management ideology, the AC has developed more rapidly in FTs due to imposed regulation contrasting with the slower progress in LAs due to its still voluntary adoption. Nevertheless, in both environments, there is a developing understanding and growing competence within the AC in terms of their assurance role where the focus has shifted from an emphasis on function and on transacting business through following a manual, to a more strategic-looking approach. Research limitations/implications Due to the complexity of public sector settings, and by using an approach framed within institutional theory, the study contributes by challenging a simple notion of isomorphism as an explanation of AC roles, responsibilities and development in two distinct public sector environments. Furthermore, the study recognizes that there is a need to ensure ACs are appropriate to their institutional setting and organizational context. Originality/value Most AC studies have focused on private sector contexts. This paper explores the phenomenon in a different organizational context, namely, as a public sector comparative case study.

French and Raven's Power Bases: A Focus for Educational Researchers and Practitioners

1986 ◽  
Vol 30 (3) ◽  
pp. 256-265 ◽  
Author(s):  
Robert T. Tauber
Keyword(s):  
Power Bases ◽  
Educational Settings ◽  
Bases Of Power ◽  
Social Bases ◽  
Power Base ◽  
To Come ◽  
Effective Use

The paper argues that the effective use of power, a little-investigated concept, is crucial to providing leadership in educational settings. It then presents French and Raven's social bases of power—coercive, reward, legitimate, referent, and expert—and builds a case for power being a focus for both educational researchers and practitioners. The former, researchers, are encouraged to look upon power, its definition, its categories, its enhancement, and its application as untilled soil ripe with opportunities for investigation. The latter, practitioners, are asked to come to grips with the potential and limits of each power base in order more effectively to exercise such power in the classroom.

The role of stakeholders' perception in internal audit status: the case of Iran

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Bita Mashayekhi ◽  
Farzaneh Jalali ◽  
Zabihollah Rezaee
Keyword(s):  
Internal Control ◽  
Audit Committee ◽  
Internal Audit ◽  
Chief Executive ◽  
Audit Committees ◽  
Current Status ◽  
Structured Interviews ◽  
Audit Process ◽  
Content Type

PurposeThe purpose of this study is to explore the internal audit actors and stakeholders' perceptions of the IA status in Iranian companies, and those actors and stakeholders' roles in shaping the current situation of IA in Iran.Design/methodology/approachThis paper uses the interpretive qualitative method. Data comprises of semi-structured interviews with board of directors, audit committees, chief executive officers and chief audit executives. The paper analyzes internal audit policy documents, reports and legislations.FindingsThe results illustrate that the internal audit in Iran is perceived as a “perfunctory” practice among its stakeholders due to being recognized as an inefficient process. The key actors and stakeholders in internal audit process–including executive and board managers, audit committee members and chief audit executives–play important roles in shaping the current status of internal audit via their perceptions and actions.Practical implicationsThe fact that internal audit in Iran is perceived as an inefficient process and is used as a perfunctory practice highlights the importance of addressing this issue at the standardization and regulation level. The deficits in the roles of key actors and stakeholders need to be considered as the legislative guide in different levels.Originality/valuePrior studies mostly focus on the role of internal audit in organizations. In contrast, this study focuses on the role of key actors and stakeholders of internal auditing process in shaping the current perceived role of internal audit in organizations. Also, the study examines an emerging economy, which differs from advanced economies in important ways, including regulations, organizational culture, internal control structure and internal audit.

Impact of audit committee characteristics and external audit quality on firm performance: evidence from India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Waleed M. Al-ahdal ◽  
Hafiza Aishah Hashim
Keyword(s):  
Firm Performance ◽  
Financial Performance ◽  
Audit Committee ◽  
Audit Quality ◽  
Random Effect ◽  
Policy Formulation ◽  
External Audit ◽  
Content Type ◽  
Firm Financial Performance ◽  
The Impact

Purpose The purpose of this paper is to analyse the influence of audit committee characteristics and external audit quality on the performance of non-financial public limited companies listed on the National Stock Exchange 100. Design/methodology/approach One-way random effect panel data regression was applied to 74 non-financial firms in the Nifty 100 from 2014 until 2019. The overall audit committee index and external audit index were built based on the new Indian Companies Act, 2013 and on a review of the literature to capture the impact of the new Act on firm financial performance. Findings The outcome of the study revealed that there is lack of evidence to show that audit committee characteristics improve the performance of top Indian non-financial listed firms. However, external audit quality was found to have a significant positive impact on the financial performance of firms as measured by Tobin’s Q, while firm size and leverage were found to have a significant impact on the financial performance of firms as measured by return on assets and return on equity. Practical implications This paper will be greatly beneficial for financial practitioners and policymakers because it provides practical suggestions and recommendations about the types of external audit that are indispensable for the overall effectiveness and performance of firms. The study findings may also aid strategic policy formulation and execution for better corporate governance practices for the purpose of profit and wealth maximisation. Originality/value To the best of the authors’ knowledge, to date, no previous research has evaluated the effects of audit committee features and external audit quality on the financial performance of firms in India after the implementation of the new Companies Act, 2013. Hence, this study fills this void in the present literature by examining the overall features of the audit committee and external audit and their impact on firm performance in the setting of India.

Sign in / Sign up

Export Citation Format

Share Document