Audit Report Lags after Voluntary and Involuntary Auditor Changes

2010 ◽  
Vol 24 (4) ◽  
pp. 671-688 ◽  
Author(s):  
Paul Tanyi ◽  
K. Raghunandan ◽  
Abhijit Barua
Keyword(s):  
Empirical Evidence ◽  
Fiscal Year ◽  
Future Research ◽  
First Year ◽  
Audit Report ◽  
Cost Component ◽  
Big 5 ◽  
Audit Firm ◽  
Auditor Rotation ◽  
Second Year

SYNOPSIS: We find that the audit report lag is significantly higher for former Andersen clients (that did not follow their Andersen partner to the new audit firm) than for clients voluntarily changing auditors from another Big 5 predecessor for the fiscal year ended December 31, 2002 (the first year with the new auditor for ex-Andersen clients). The differences in audit reporting lags between the two groups are not significant for fiscal years ended December 31, 2000 (the last year before Andersen’s Enron related problems surfaced), or 2003 (the second year with the successor auditor). We also find that clients with voluntary (i.e., non-Andersen) auditor changes have only marginally higher audit reporting lags compared to clients without auditor changes. Our results, focusing on a cost component of involuntary auditor changes, thus provide relevant empirical evidence for debates surrounding mandatory auditor rotation. We also find that ex-Andersen clients that followed the Andersen partner to the new audit firm had shorter audit report lags than ex-Andersen clients that did not follow their Andersen partner. Our findings highlight the importance of individual relationships in the auditing process, and suggest new avenues for future research.

scholarly journals Relative Influences of Review and Engagement Auditor Rotation on Audit Quality: Evidence from China

2021 ◽  
Vol 14 (1) ◽  
pp. 171-206
Author(s):  
Sang Ho Kim ◽  
Jianqun Xi
Keyword(s):  
Regression Model ◽  
Logit Model ◽  
Audit Quality ◽  
Discretionary Accruals ◽  
Shared Responsibility ◽  
First Year ◽  
Audit Firm ◽  
Auditor Rotation ◽  
Audit Partner Rotation ◽  
The Relationship

Manuscript type: Research paper Research aims: This study focuses on the effects of audit partner rotation on audit quality (AQ) in China. In particular, we examine the effects of review auditors (RAs) and engagement auditors (EAs) on AQ when they voluntarily and mandatorily rotate. Design/Methodology/Approach: The data in this study are retrieved from the Chinese Stock Market and Accounting Research (CSMAR) database. We develop an OLS regression model and logit model respectively to test the hypotheses developed. Finally, we have 13,856 firm-year observations collected for the first regression model, and 16,893 firm-year observations gathered for the second logit model from 2003 to 2015. Research findings: Findings show that RAs are more likely to behave opportunistically to retain clients by weighing up the benefits and costs of compromising audit quality in the first year after a rotation. The results imply that RAs may have an incentive to acquiesce the clients’ accounting irregularities in their first year of audit engagement when they are mandatorily rotated. However, we do not find this trend in terms of EAs’ rotation, suggesting that EAs are less affected by the auditor-client relationship compared to RAs. In addition, we find that RAs are less likely to issue modified audit opinions (MOPI) as the magnitude of negative discretionary accruals (DA) increases when they are voluntarily rotated. Theoretical contribution/Originality: Previous studies have investigated the relationship between mandatory audit partner rotation and audit quality. The results are mixed and inconclusive. Our study contributes to the extant literature by considering RAs’ opportunistic behaviour after mandatory rotation, which has not been explored in previous studies. In China, only a few studies have examined the relationship between mandatory audit partner rotation and audit quality. Our study is one of the first study focusing on the RA’s influence on AQ. Practitioner/Policy implication: The findings of our study can help Chinese authorities, listed firms and academics gain more understanding on whether mandatory audit partner rotation improves audit quality in practice. Since RAs have greater incentive to retain the existing client, we propose that RAs should bear more responsibility for the audit work, instead of the equally shared responsibility with EAs. Research limitation/Implications: Our study is subject to some limitations. First, our study adopts the performance-adjusted discretionary accruals as a proxy for audit quality. However, there can be a measurement error in estimating discretionary accruals. Second, we focus on the auditor rotation and exclude the case of audit firm rotation. Since the AQ can be affected by various factors, audit firm rotation can also affect AQ. Third, although we test the relative effects of RAs and EAs in audit work, we do not examine the effect of RAs’ characteristics such as their professional experience, educational background, and years of service. AQ can be affected by RAs’ characteristics.

scholarly journals The Social Origins of Human Prosociality

2019 ◽  
Vol 28 (3) ◽  
pp. 274-279 ◽  
Author(s):  
Audun Dahl ◽  
Celia A. Brownell
Keyword(s):  
Prosocial Behavior ◽  
Social Interactions ◽  
Early Development ◽  
Future Research ◽  
First Year ◽  
Social And Emotional ◽  
Caregiver Behavior ◽  
The Social ◽  
Second Year ◽  
First Year Of Life

From early in life, children help, comfort, and share with other people. Recent research has deepened scientific understanding of the development of prosociality—efforts to promote the welfare of others. In this article, we discuss two key insights about the emergence and early development of prosocial behavior, focusing on the development of helping. First, children’s motivations and capabilities for helping change in quality as well as quantity over the opening years of life. Specifically, helping begins in participatory activities without prosocial intent in the first year of life, becoming increasingly autonomous and motivated by prosocial intent over the second year. Second, helping emerges through bidirectional social interactions starting at birth: Caregivers and other individuals support the development of helping in a variety of ways, and young children play active roles that often influence caregiver behavior. The question now is not whether but how social interactions contribute to the development of prosocial behavior. Recent methodological and theoretical advances provide exciting avenues for future research on the social and emotional origins of human prosociality.

The Association between Audit Partner Rotation and Audit Fees: Empirical Evidence from the Australian Market

2015 ◽  
Vol 35 (1) ◽  
pp. 181-197 ◽  
Author(s):  
Jenny Stewart ◽  
Pamela Kent ◽  
James Routledge
Keyword(s):  
Empirical Evidence ◽  
Positive Association ◽  
Audit Fees ◽  
First Year ◽  
Significant Positive Association ◽  
Audit Market ◽  
Second Year ◽  
Audit Partner Rotation

SUMMARY We examine the relation between audit partner rotation and audit fees for a sample of Australian firms from 2007 to 2010. We find a significant positive association between audit fees and partner rotation in the year of rotation. The association persists in the first year post rotation and to a lesser extent in the second year post rotation. Our analysis suggests that higher audit fees are associated with both mandatory and voluntary partner rotation. However, when we divide the sample into large global clients, mid-level clients, and small local clients, we find that mandatory and voluntary rotation are associated with higher audit fees for large global clients, while only voluntary rotation is associated with higher audit fees for small local clients. We do not find an association between partner rotation and audit fees for mid-level clients. Our study suggests that the extent to which firms are able to pass on the costs of partner rotation varies across different segments of the audit market.

Office-Level Characteristics of the Big 4 and Audit Report Timeliness

2014 ◽  
Vol 33 (3) ◽  
pp. 129-152 ◽  
Author(s):  
James D. Whitworth ◽  
Tamara A. Lambert
Keyword(s):  
Financial Reporting ◽  
Low Cost ◽  
Fiscal Year ◽  
Audit Report ◽  
Audit Firm ◽  
Big 4 ◽  
Office Size ◽  
Reporting Environment ◽  
The Impact ◽  
Industry Expertise

SUMMARY: Recent changes in the audit and financial reporting environment have resulted in longer audit report lags and have increased the importance of identifying factors associated with a timely audit. We examine timeliness implications of office-specific attributes of the audit firm. Specifically, we examine whether office-specific industry expertise, office size, and the importance of the client to the local office are associated with audit delay (i.e., the time between fiscal year-end and the audit report date). We explore the sensitivity of our results to various measures and consider the impact of earnings quality. We examine two types of industry expertise and whether the aforementioned audit firm attributes are associated with a propensity to issue an early earnings announcement. We find that office-specific industry expertise is negatively associated with audit delay (for all but the largest quartile of firm offices) while office size and client importance are both positively associated with audit delay; however, the most important clients are associated with a more timely audit. Office-specific industry expertise is positively associated with the propensity to announce earnings substantially early and such expertise garnered via a product-specialist strategy is positively associated with audit delay relative to a low-cost specialist strategy. Our study provides further support for the importance of office-specific characteristics on audit and financial reporting outcomes and provides evidence of the benefit of office-specific industry expertise.

The determinants of audit report lag: a meta-analysis

2019 ◽  
Vol 34 (1) ◽  
pp. 44-75 ◽  
Author(s):  
Giselle Durand
Keyword(s):  
Meta Analysis ◽  
Fiscal Year ◽  
Future Research ◽  
Audit Report ◽  
Key Factors ◽  
Content Type ◽  
Audit Opinion ◽  
Earnings Information ◽  
Financial Condition ◽  
Audit Efficiency

Purpose The purpose of this paper is to further the understanding of the determinants of audit report lag, which is the number of days from a company’s fiscal year-end to the date of its auditor’s report, by synthesizing extant literature. Audit report lag has been a variable of interest in many studies due to its use as a proxy for the occurrence of auditor-client management negotiations and audit efficiency and because long audit report lags delay the release of earnings information to the market. Design/methodology/approach The author uses meta-analysis to examine commonly identified predictors of audit report lag to determine if the prior research provides a consistent portrayal of audit report lag drivers. Findings The author finds that a number of variables relating to client profitability and financial condition, client complexity and audit opinion modifications increase audit report lag. In addition, audit report lag decreases with client size, when clients have positive earnings news to report and when the auditor has long tenure and provides non-audit services. Several variables, such as those relating to corporate governance and various auditor characteristics, have been little explored and would benefit from future research. Originality/value These results will be useful to researchers when selecting control variables for future audit report lag studies and provide insights into the key factors that contribute to the delay in audit reporting.

scholarly journals Nosema ceranae Infections in Honey Bees (Apis mellifera) Treated with Pre/Probiotics and Impacts on Colonies in the Field

2021 ◽  
Vol 8 (6) ◽  
pp. 107
Author(s):  
Shane S. Klassen ◽  
William VanBlyderveen ◽  
Les Eccles ◽  
Paul G. Kelly ◽  
Daniel Borges ◽  
...  
Keyword(s):  
Honey Bee ◽  
Honey Bees ◽  
Nosema Ceranae ◽  
Future Research ◽  
First Year ◽  
Winter Mortality ◽  
Treatment Frequency ◽  
Honey Production ◽  
Sugar Syrup ◽  
Second Year

Alternatives to the antibiotic fumagillin for the control of Nosema ceranae, a gut parasite of the honey bee, are needed. The prebiotics eugenol, chitosan, and naringenin and the probiotic Protexin® (Enterococcus faecium) provided in sugar syrup or protein patty either in spring or fall were evaluated for their effects on N. ceranae infection, colony population, honey yield and winter survivorship using field colonies. In the first year, spring treatments with eugenol, naringenin, and Protexin® significantly reduced N. ceranae infection and increased honey production, while Protexin® also increased adult bee populations and chitosan was ineffective. Fall treatments increased survivorship and decreased N. ceranae infection the following spring. In the second year, selected compounds were further tested with a larger number of colonies per treatment and only protein patty used in the spring and sugar syrup in the fall. Protexin® and naringenin significantly decreased N. ceranae infections and increased the population of adult bees after spring treatment, but did not affect honey yields. There were no differences between treatments for colony winter mortality, but surviving colonies that had been treated with Protexin® and naringenin were significantly more populated and had lower N. ceranae spore counts than control, non-treated colonies. Protexin® and naringenin were the most promising candidates for controlling N. ceranae and promoting honey bee populations, warranting further investigation. Future research should investigate the optimal colony dose and treatment frequency to maximize colony health.

scholarly journals PENGARUH FEE AUDIT, ROTASI KAP, DAN REPUTASI AUDITOR TERHADAP KUALITAS AUDIT DI BURSA EFEK INDONESIA

2012 ◽  
Vol 16 (1) ◽  
pp. 84
Author(s):  
Bambang Hartadi
Keyword(s):  
Audit Quality ◽  
Statistical Tests ◽  
Financial Statements ◽  
Future Research ◽  
Fundamental Analysis ◽  
Audit Firm ◽  
Market Participants ◽  
Auditor Rotation ◽  
Audit Fee ◽  
Taking Action

This study aimed to analysis the effect of audit fee, auditor rotation, and reputation of audit firm. Based on literature revie, it was hypothesized that audit fee, auditor rotation, and Reputation of audit firm have significant effect on audit quality. The data was financial statement from manufacturing firmof LQ-45 from 2004-2010 year. The results of statistical tests using multiple linear regression, there are evidences that Fee audit significant effect on audit quality, while the rotation and the reputation of the audit no significant effect on audit quality. There are several reasons why rotation and reputation did not affect audit quality. First possibility, caused by the reluctance of market participants to explore further whether the auditor who issued the opinion on the audited financial statements had actually experienced the rotation or not. Second possibility, market participants also never pay attention to whether the financial statements audited by an auditor who has a certain reputation or not. There are many things that need to consider for future research. Basically the market in Indonesia was largely considered capital gain, so it is less likely to use fundamental analysis (financial report) for consideration by taking action to sell or buy shares. If the market does not consider fundamental analysis exhibited significantly above, the actual market can also be said to be less attention to the audited (audit opinion).

scholarly journals Are Course Withdrawals a Useful Student Success Strategy?

2020 ◽  
Vol 40 (1) ◽  
pp. 80-93
Author(s):  
Patrick Akos ◽  
Scott James
Keyword(s):  
Student Success ◽  
Contextual Factors ◽  
Future Research ◽  
First Year ◽  
Academic Advisors ◽  
Negative Consequences ◽  
Significant Cost ◽  
First Year Students ◽  
Second Year

Course withdrawals have significant cost and curricular implications for both students and institutions. Yet within the retention literature, little is known about the context or impact of course withdrawals. This study examines course withdrawals of first year students from a sample of nine universities. Data reveal that demographic and contextual factors differentially influence the use of course withdrawals. Further, these data suggest that course withdrawals have negative consequences for second year retention, with nuanced significance when compared to making grades of D or F. We discuss implications for academic advisors, retention specialists, and faculty leaders, as well as policy and future research considerations.

Determinants of Bifurcated Local Government Reporting Lag: The Potential for XBRL to Improve Timeliness

2018 ◽  
Vol 15 (1) ◽  
pp. 121-140 ◽  
Author(s):  
Shannon N. Sohl ◽  
Tammy R. Waymire ◽  
Thomas Z. Webb
Keyword(s):  
Local Governments ◽  
Financial Information ◽  
Fiscal Year ◽  
Audit Report ◽  
Audit Process ◽  
Financial Reports ◽  
Audit Firm ◽  
Recent Developments ◽  
Release Of Information ◽  
Pdf Format

ABSTRACT Government financial reports are often released six months or more after the reporting government's fiscal year-end, and this lag limits usefulness. In a sample of 1,693 Illinois local governments, we examine the determinants of total reporting lag, bifurcating it into two distinct components: (1) audit report lag (ARL), i.e., fiscal year-end to the audit report date, and (2) regulatory reporting lag (RRL), i.e., the audit report date to submission with the State of Illinois Office of the Comptroller. These governments are required to provide regulatory filings in both PDF format and as digital financial information within 180 days of fiscal year-end. We find that prior year ARL is the biggest determinant of current year ARL and that audit firm expertise is associated with shorter ARL. In contrast, audit firm expertise is associated with longer RRL, as is slack, i.e., the number of days left in the 180-day reporting window, suggesting that balancing the demands of multiple government clients is a factor in filing time. Given recent developments in government reporting taxonomies, XBRL is well positioned as a tool to eliminate the RRL by automating the post-audit process, resulting in the timelier release of information in a consumable format to external users.

Freshman Orientation, Persistence, and Achievement: A Longitudinal Analysis

2008 ◽  
Vol 10 (3) ◽  
pp. 235-263 ◽  
Author(s):  
John E. Burgette ◽  
Susan Magun-Jackson
Keyword(s):  
White Students ◽  
Positive Impact ◽  
Future Research ◽  
First Year ◽  
Freshman Orientation ◽  
Orientation Course ◽  
High School Gpa ◽  
Black And White ◽  
Second Year ◽  
The Impact

This longitudinal study (2001–2005) considers the impact of a freshman orientation course on the persistence of black and white students at a mid-southern university, as well its relationship with college achievement (GPA). Controlling for gender, race, high school GPA, and decided on major, logistic regression was used to assess persistence; multiple regression for evaluating college GPA. Though the orientation course had a positive impact on persistence to the second year and first year GPA (particularly for black students), it failed to have impact beyond the second year. Topical gaps in the course's content are considered as a possible influence in the lack of long-term persistence. Possible future research is discussed.

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