Corporate governance, public accounting firms and multinational corporations: The US Sarbanes-Oxley Act perspective

The purpose of this paper is to review US corporate governance systems and to highlight the mandated roles of audit committee and external auditor within the SOX Act. In addition, it discusses requirements and implications of the SOX Act for the foreign accounting firms and multinational corporations. Finally this paper provides a perspective on improvement of corporate governance and financial integrity. In order to regain trust from the financial market, the SOX Act mandates (1) to improve auditor’s independence by reducing conflicts of interest; (2) to increase corporate financial reporting responsibility by requiring a CEO or a CFO certify accuracy of annual report; and (3) to enhance financial disclosures. It also significantly increase criminal penalty for non-compliance. The authors believe that the combination of strengthening auditor’s independence, increased corporate responsibility and severe penalty and restored corporate governance would create an environment that is intended by the SOX Act. Volker and Levitt (2004) put it very forceful way: “While there are direct money costs involved in good corporate governance, we believe that an investment in good corporate governance, professional integrity and transparency will pay dividends in the form of investor confidence, more efficient markets and more market participation for years to come.” We concur with them and believe that the SOX Act will help in restoring trust in corporate governance and improve financial integrity and quality of financial information. We also agree that the benefits of the SOX Act will outweigh the costs of compliance in the long-run.

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Corporate Governance Factors and Auditor Going Concern Assessments

Review of Accounting and Finance ◽

10.1108/eb043428 ◽

2005 ◽

Vol 4 (3) ◽

pp. 5-29 ◽

Cited By ~ 9

Author(s):

Susan Parker ◽

Gary F. Peters ◽

Howard F. Turetsky

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Financial Distress ◽

Audit Committee ◽

Future Research ◽

Going Concern ◽

Sarbanes Oxley ◽

Auditing Standards ◽

Distressed Firms ◽

The Impact

When making going concern assessments, Statement on Auditing Standards No. 59 (Auditing Standards Board 1988) directs auditors to consider the nature of management's plans and ability to mitigate periods of financial distress successfully. Corporate governance factors reflect attributes of control, oversight, and/or support of management's plans and actions intended to overcome financial distress. Correspondingly, this study investigates the impact of certain corporate governance factors on the likelihood of a going concern modification. Using survival analysis techniques, we examine a sample of 161 financially distressed firms for the time period 1988–1996. We find that auditors are twice as likely to issue a going concern modification when the CEO is replaced. We also find that going concern modifications are inversely associated with blockholder ownership. We also confirm Carcello and Neal's (2000) findings with respect to the association between an independent audit committee and an increased likelihood of modification. In a repeated events setting, we find that insider ownership and board independence are inversely associated with repeated going concern modifications. Our study concludes by proposing implications for the current financial reporting environment (including the Sarbanes‐Oxley Act of 2002) and future research avenues.

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Good Corporate Governance: Does The Timeliness of Financial Reporting Has an Effect to The Investors’ Reaction?

Jurnal Bisnis dan Kewirausahaan ◽

10.31940/jbk.v17i1.2320 ◽

2021 ◽

Vol 17 (1) ◽

pp. 11-23

Author(s):

Reni Furwanti ◽

◽

Slamet Haryono ◽

Dini Maulana Lestari ◽

◽

...

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Audit Committee ◽

Audit Quality ◽

Financial Statements ◽

Foreign Ownership ◽

Good News ◽

Good Corporate Governance ◽

Negative Effect

This research aims to find out the influence of independent committee boards, audit committee repats, foreign ownership, and audit quality on the timeliness of financial reporting and their impact on investors' reactions both directly and indirectly. This research uses a quantitative method with population and sample of companies registered in Jakarta Islamic Index (JII). Data will be processed using path analysis using IMB SPSS Statistic 22 software. Based on the results of this research, it is known that directly, independent commissioner variables and audit quality have a positive effect on investor reactions, while foreign ownership variables and audit committee meetings have a negative effect on investors’ reactions. While the indirect influence can be known that only audit committee meetings, foreign ownership, and audit quality can have a significant impact on investors' reactions through the timeliness of disclosure of financial statements as intervening variables. The implication of this research is to prove that the existence of corporate governance in terms of determining the intensity of audit committee meetings, foreign ownership, and determination of KAP selection in improving the quality of audits can make the company more efficient and timely in disclosing its financial statements in order make positive reactions from investors that indicates good news for the company.

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Corporate Governance and Internal Control over Financial Reporting: A Comparison of Regulatory Regimes

The Accounting Review ◽

10.2308/accr.2009.84.3.839 ◽

2009 ◽

Vol 84 (3) ◽

pp. 839-867 ◽

Cited By ~ 288

Author(s):

Udi Hoitash ◽

Rani Hoitash ◽

Jean C. Bedard

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Internal Control ◽

Audit Committee ◽

Section 404 ◽

Sarbanes Oxley ◽

Material Weaknesses ◽

Financial Expertise ◽

Financial Expert ◽

Section 302

ABSTRACT: This study examines the association between corporate governance and disclosures of material weaknesses (MW) in internal control over financial reporting. We study this association using MW reported under Sarbanes-Oxley Sections 302 and 404, deriving data on audit committee financial expertise from automated parsing of member qualifications from their biographies. We find that a lower likelihood of disclosing Section 404 MW is associated with relatively more audit committee members having accounting and supervisory experience, as well as board strength. Further, the nature of MW varies with the type of experience. However, these associations are not detectable using Section 302 reports. We also find that MW disclosure is associated with designating a financial expert without accounting experience, or designating multiple financial experts. We conclude that board and audit committee characteristics are associated with internal control quality. However, this association is only observable under the more stringent requirements of Section 404.

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Optimizing good Corporate Governance Mechanism to Improve Performance: Case in Indonesia’s Manufacturing Companies

Global Business Review ◽

10.1177/0972150920919875 ◽

2020 ◽

pp. 097215092091987

Author(s):

Ilham Hidayah Napitupulu ◽

Anggiat Situngkir ◽

Ferry Hendro Basuki ◽

Widyo Nugroho

Keyword(s):

Corporate Governance ◽

Board Of Directors ◽

Financial Reporting ◽

Audit Committee ◽

Audit Committees ◽

Managerial Ownership ◽

Company Performance ◽

Governance Mechanism ◽

Manufacturing Companies ◽

Good Corporate Governance

The application of good corporate governance (GCG) aims to improve company performance. In implementing GCG, a mechanism is needed, namely a procedure and a clear relationship between the decision-maker and the party overseeing the decision. The mechanism of GCG can be measured by the numbers of board of directors, independent board of commissioners, audit committees, and also managerial ownership. This research is conducted at manufacturing companies listed on the Indonesia Stock Exchange, with a total sample of 52 companies determined by purposive sampling technique. Data are analyzed by using multiple regression analysis with statistical package for the social sciences (SPSS) tools. The findings show that the board of directors and independent commissioners have an influence on company performance, while audit committees and managerial ownership do not affect the company’s performance. The company’s performance is improved by the existence of an independent board of commissioners that provides guidance and direction as well as supervision to the company management. Meanwhile, the audit committee has no influence, because the audit committee is only responsible for assisting the board of commissioners in monitoring the financial reporting process by the management to improve the credibility of financial statements, and managerial ownership does not affect the company’s performance because the number of management shares is quite low, because of which the management cannot influence the decisions taken at the general meeting of shareholders to improve the company’s financial performance. Thus, if the GCG mechanism goes well, then the company’s performance will increase.

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CORPORATE SOCIAL RESPONSIBILITY DAN AGRESIVITAS PELAPORAN KEUANGAN TERHADAP AGRESIVITAS PAJAK DENGAN GOOD CORPORATE GOVERNANCE SEBAGAI PEMODERASI (Studi pada Perusahaan Manufaktur di Bursa Efek Indonesia)

Jurnal Ilmiah Akuntansi ◽

10.23887/jia.v2i1.9610 ◽

2017 ◽

Vol 2 (1) ◽

Author(s):

Vina Yunistiyani ◽

Afrizal Tahar

Keyword(s):

Corporate Governance ◽

Corporate Social Responsibility ◽

Social Responsibility ◽

Financial Reporting ◽

Audit Committee ◽

Stock Exchange ◽

Manufacturing Companies ◽

Purposive Sampling ◽

Good Corporate Governance ◽

Corporate Social

ABSTRAK Penelitian ini bertujuan untuk menguji pengaruh corporate social responsibility dan agresivitas pelaporan keuangan terhadap agresivitas pajak dengan good corporate governance sebagai variabel pemoderasi. Variabel Good Corporate Governance yang digunakan pada penelitian ini diproksikan dengan proporsi komisaris independen dan komite audit. Penelitian ini berfokus pada perusahaan manufaktur yang terdaftar di Bursa Efek Indonesia tahun 20142015. Metode sampling yang digunakan adalah purposive sampling dengan sampel dari 64 perusahaan selama periode pengamatan 2 tahun berturut-turut, sehingga menghasilkan 128 sampel. Teknik analisis yang digunakan untuk pengujian adalah regresi linier berganda berbantuan aplikasi statistika SPSS 22.0. Hasil penelitian menunjukkan bahwa corporate social responsibility dan agresivitas pelaporan keuangan berpengaruh positif terhadap agresivitas pajak. Sementara itu, proporsi komisaris independen dan komite audit tidak berpengaruh dalam memoderasi hubungan agresivitas pelaporan keuangan dengan agresivitas pajak.Kata kunci: corporate social responsibility; agresivitas pelaporan keuangan; agresivitas pajak; komisaris independen; komite audit ABSTRACT This study aimed to examine the effect corporate social responsibility and financial reporting aggressiveness towards tax aggressiveness with good corporate governance as moderating variable. Good corporate governance which is proxied by board of independence commissioner proportion and audit committee. This study are focusing on manufacturing companies listed in Indonesia Stock Exchange in the period 2014-2015. The sampling method used was purposive sampling with a sample of 64 companies during the observation period of 2 years in a row so as to produce a total of 128 samples. Analysis technique used was multiple regression analysis by SPSS 22.0. The result reveal corporate social responsibility and financial reporting aggresiveness degree of tax aggresiveness. Board of independence commissioners and audit committee as the moderating variable have no influence between financial reporting aggresiveness and tax aggresiveness. Keywords: corporate social responsibility, financial reporting aggresiveness, tax aggresiveness, board of independence commissioner, audit committee

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The Influence of Financial Distress And Audit Committee On Fraudulent Financial Reporting Moderating By Good Corporate Governance

International Journal of Economics and Management Studies ◽

10.14445/23939125/ijems-v8i7p107 ◽

2021 ◽

Vol 8 (7) ◽

pp. 59-70

Author(s):

Annisa Salsabilla Rainingtyas ◽

Haryono Umar ◽

Agustina Indriani

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Financial Distress ◽

Audit Committee ◽

Fraudulent Financial Reporting ◽

Good Corporate Governance

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Corporate Governance on the Performance of Internal Auditors in Thailand Public Limited Company

Journal of Business Theory and Practice ◽

10.22158/jbtp.v6n2p118 ◽

2018 ◽

Vol 6 (2) ◽

pp. 118

Author(s):

Sutana Narkchai ◽

Faudziah Hanim Binti Fadzil ◽

Sompon Thungwha

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Internal Control ◽

Audit Committee ◽

Internal Auditing ◽

Internal Auditor ◽

Internal Auditors ◽

Sarbanes Oxley ◽

Accounting Scandals ◽

The Relationship

The issue of performance of internal auditors is important since Thailand was also affected by the accounting scandals. The expanded scope in the definition of internal auditing and new regulatory requirements such as the Sarbanes-Oxley Act 2002 has increased the demands on internal auditing. This study was conducted to examine the relationship between the corporate governance on the performance of internal auditors in Thailand public limited companies. In this study, corporate governance relates to the board of directors size and audit committee size to the performance of the internal auditor. To achieve this objective, two hypotheses were developed based on previous studies and the agency theory. Survey questionnaires were sent to the Chief Audit Executives (CAEs) to determine the effectiveness on their performance based on the professional standards issued by the IPPF (2017) indicators. A total of 520 questionnaires were distributed, but only 146 were usable. Multiple regressions were used to test the relationship between the variables. The result showed that there is insignificant relationship between board of director’s size and internal auditors’ performance. This study however found that audit committee size has a positive relationship on the performance of internal auditors. Therefore, audit committee need to increase higher responsibility with regard to corporate governance by overseeing financial reporting and internal control matters.

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Dynamic Data: Corporate Governance and Auditors' Evaluation of Accounting Estimates

Issues in Accounting Education ◽

10.2308/iace.2005.20.1.119 ◽

2005 ◽

Vol 20 (1) ◽

pp. 119-128 ◽

Cited By ~ 10

Author(s):

Jeffrey R. Cohen ◽

Ganesh Krishnamoorthy ◽

Arnold M. Wright

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

House Of Representatives ◽

Audit Committee ◽

High Tech ◽

Audit Process ◽

Dynamic Data ◽

Sarbanes Oxley ◽

Accounting Scandals ◽

Reporting Process

Corporate governance issues have grown more salient in light of alleged corporate accounting scandals and the subsequent enactment of the landmark Sarbanes-Oxley Act (U.S. House of Representatives 2002). However, even in cases where no fraud has occurred and management is completely aboveboard, the role of various players in the corporate governance framework in maintaining a high-quality financial reporting process cannot be overlooked. This case presents facts surrounding the valuation of inventory at Dynamic Data, a high-tech firm. You will be asked to consider, from an auditor's perspective, whether inventory should be carried at cost in light of changing market conditions. Further, you will be asked to consider the role, if any, that the Audit Committee and Board of Directors might play in the financial reporting process. Special consideration will also be given to examining the implications of the Sarbanes-Oxley Act in the audit process.

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PENGARUH KONVERGENSI IFRS, MEKANISME GOOD CORPORATE GOVERNANCE DAN REPUTASI KANTOR AKUNTAN PUBLIK TERHADAP PENYAMPAIAN LAPORAN KEUANGAN TAHUNAN PADA PERUSAHAAN PUBLIK PERAIH CGPI AWARDS PERIODE 2011-2012

Jurnal Akuntansi Bisnis ◽

10.30813/jab.v8i1.808 ◽

2017 ◽

Vol 8 (1) ◽

Author(s):

Kurniawati Kurniawati

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Lead Time ◽

Audit Committee ◽

Governance Mechanism ◽

Font Size ◽

Public Accounting ◽

Accounting Firm ◽

Good Corporate Governance ◽

Corporate Governance Mechanism

This research aimed to examine the effect of IFRS Convergence, Good Corporate Governance mechanism and the reputation of public accounting firm to submission of financial statements (measured by Financial Reporting Lead Time - FRTL). Board of commissioner size and audit committee used as a proxy from good corporate governance mechanism, as well as IFRS Convergence and the reputation of public accounting firm are used as independent variables in this research. The sample used in this research were company listed at Indonesia Stock Exchange that obtained scores in the ranking as Indonesia Most Trusted Companies 2011-2012 by Corporate Governance Perception Index (CGPI). Samples are collected by purposive sampling and resulted in 20 firms as the final sample. The statistic method used was multiplied analysis linear regression, with hypotheses testing of statistic t tests (α = 5%).The results of this research showed that the board of commissioner size and the reputation of public accounting firm has a significant influence to the financial reporting lead time, while IFRS Convergence and audit committee has no significant influence to the financial reporting lead time. Keyword: International Financial Reporting Standards (IFRS) Convergence, Financial Reporting Lead Time, Board of commissioner size, reputation of public accounting firm, audit committee.

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Bank Financial Distress Condition Based on Ownership Structure, Audit Committee Characteristic, and Internet Financial Reporting Effect

Jurnal Akuntansi ◽

10.33369/j.akuntansi.10.2.165-182 ◽

2020 ◽

Vol 10 (2) ◽

pp. 165-182

Author(s):

Permata Ayu Widyasari ◽

Evelyn Christina Kurniawan

Keyword(s):

Corporate Governance ◽

Financial Reporting ◽

Firm Size ◽

Ownership Structure ◽

Financial Literacy ◽

Financial Distress ◽

Audit Committee ◽

Audit Quality ◽

State Ownership ◽

Good Corporate Governance

The research objective is to identify ownership structure, audit committee characteristics, and internet financial reporting impact on banking financial distress. Populations of this study are the banking sector which is registered in Indonesia Stock Exchange 2010-2018. This study use logistic regression method, which is done twice for the period 2010-2018 and the period 2018. Dependent variable in this study is financial distress (FD). Independent variables in this study are state ownership (SO), ownership concentration (OC), blockholder ownership (BO), management ownership (MO), director ownership (DO), audit committee structure (ACS), audit committee composition (ACC), audit committee meeting frequency (ACMF), audit committee financial literacy (ACFL), dan internet financial reporting (IFR). Control variables in this study are firm age (AGE), firm size (SIZE), dan Audit Quality (AQ). The result shows a positive significant impact on audit committee financial literacy in is financial distress. The state ownership has a negative significant impact on financial distress for 2010-2018 data. This result is not supported by 2018 data, due to changes in government priority. Firm size as control variable has negative significant impact on financial distress. This research emphasizes that good corporate governance and internet financial reporting roles need to be evaluated in banking sector.Keywords: Ownership Structure, Audit Committee Characteristic, Internet Financial Reporting, Financial Distress, Good Corporate Governance

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