Client Deadline Concentration in Audit Offices and Audit Quality

2019 ◽  
Vol 38 (4) ◽  
pp. 55-75 ◽  
Author(s):  
Keith Czerney ◽  
Daun Jang ◽  
Thomas C. Omer
Keyword(s):  
Audit Quality ◽  
Data Availability ◽  
Financial Statement ◽  
Relevant Research ◽  
Quality Outcomes ◽  
Audit Failure ◽  
Public Company ◽  
Negative Effect ◽  
Prior Literature

SUMMARY This research investigates the effect on audit quality of concentrated public company financial statement filing deadlines in audit offices. Audit offices must effectively manage their resources to meet clients' audit service requirements. When an audit office has deadlines that are more concentrated in time, effective resource management is of greater importance to reduce the likelihood of audit failure. Drawing on relevant research from the auditing and management literatures, we hypothesize and find that audit quality is lower when an audit office's clients' financial statement deadlines concentrate in time, which we term client deadline concentration. The significant, negative effect of client deadline concentration on audit quality is incremental to the effects of other resource-based constraints from the prior literature and to controls for unobservable differences in audit offices that explain a significant amount of the variation in audit quality outcomes. JEL Classifications: M40; M41; M42; M48. Data Availability: Data are available from public sources identified in the text.

scholarly journals Integration of Internal Control and Financial Statement Audits: Are Two Audits Better than One?

2018 ◽  
Vol 94 (2) ◽  
pp. 53-81 ◽  
Author(s):  
Lori Shefchik Bhaskar ◽  
Joseph H. Schroeder ◽  
Marcy L. Shepardson
Keyword(s):  
Financial Reporting ◽  
Internal Control ◽  
Audit Quality ◽  
Internal Controls ◽  
Data Availability ◽  
Financial Statement ◽  
Auditor Judgment ◽  
Public Company ◽  
Better Than

ABSTRACT The quality of financial statement (FS) audits integrated with audits of internal controls over financial reporting (ICFR) depends upon the quality of ICFR information used in, and its integration into, FS audits. Recent research and PCAOB inspections find auditors underreport existing ICFR weaknesses and perform insufficient testing to address identified risks, suggesting integrated audits—in which substantial ICFR testing is required—may result in lower FS audit quality than FS-only audits. We compare a 2007–2013 sample of small U.S. public company firm-years receiving integrated audits (accelerated filers) to firm-years receiving FS-only audits (non-accelerated filers) and find integrated audits are associated with higher likelihood of material misstatements and discretionary accruals, consistent with lower FS audit quality. We also find evidence of (1) auditor judgment-based integration issues, and (2) low-quality ICFR audits harming FS audit quality. Overall, results suggest an important potential consequence of integrated audits is lower FS audit quality. Data Availability: Data are publicly available from the sources identified in the text.

scholarly journals Pengaruh Workload, Spesialisasi Auditor, Rotasi Auditor, Dan Komite Audit Terhadap Kualitas Audit

2021 ◽  
Vol 3 (2) ◽  
pp. 279-301
Author(s):  
Risti Fadhilah ◽  
Halmawati Halmawati
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Code Of Ethics ◽  
Point Of View ◽  
Manufacturing Companies ◽  
Audit Failure ◽  
Negative Effect ◽  
Evidence Collection ◽  
Auditor Specialization

Abstract: This research will explain and show the effect of workload, auditor specialization, auditor rotation, audit committee as an independent variable on audit quality which is the dependent variable in manufacturing companies listed on the Bursa Efek Indonesia from 2015 to 2019. This research is important to do because the slow growth of competent public accountants is an important matter that must be considered, given the growing growth of investment activities which has an impact on the increasing need for public accounting services. Seeing from various phenomena of audit failure due to not being an independent auditor and seeing from the point of view of failures based on violations of the code of ethics in the form of inadequate evidence collection so that it is related to the level of workload experienced requires further study. The results of the research and testing of the hypothesis conducted show that the first hypothesis is accepted where there is a significant negative effect between the workload and the quality of the audit results. The second hypothesis is accepted where there is a significant positive effect of auditor specialization on audit quality. The third hypothesis is rejected where there is no significant effect of audit rotation on the audit results. The fourth hypothesis is rejected, where there is no influence from the audit committee on the quality of the audit results.

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on the PCAOB Rulemaking Docket Matter No. 34: PCAOB Release No. 2011-003, Concept Release on Possible Revisions to PCAOB Standards Related to Reports on Audited Financial Statements.

2011 ◽  
Vol 5 (2) ◽  
pp. C1-C14 ◽  
Author(s):  
Joseph F Brazel ◽  
Paul Caster ◽  
Shawn Davis ◽  
Steven M Glover ◽  
Diane J Janvrin ◽  
...  
Keyword(s):  
Audit Quality ◽  
Exposure Period ◽  
Financial Statements ◽  
Data Availability ◽  
Financial Statement ◽  
The Public ◽  
Additional Information ◽  
Public Company ◽  
Auditing Standards ◽  
Auditor Reporting

SUMMARY Recently, the Public Company Accounting Oversight Board (PCAOB or Board) issued a concept release to solicit public comment on the potential direction of a proposed standard-setting project on the content and form of reports on audited financial statements. The objective of the concept release was to discuss several alternatives for changing the auditor's reporting model that could increase its transparency and relevance to financial statement users, while not compromising audit quality. To that end, the alternatives included (1) a supplement to the auditor's report, in which the auditor would be required to provide additional information about the audit and the company's financial statements (an “Auditor's Discussion and Analysis”), (2) required and expanded use of emphasis paragraphs in the auditor's report, (3) auditor reporting on information outside the financial statements, and (4) clarification of certain language in the auditor's report. The PCAOB provided for a 102-day exposure period (from June 21 to September 30, 2011) for interested parties to examine and provide comments on the conceptual approaches to rulemaking that might complement the application of Section 105(c)(6). The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below to the PCAOB on the PCAOB Release No. 2011-003, Concept Release on Possible Revisions to PCAOB Standards Related to Reports on Audited Financial Statements. Data Availability: Information about and access to the release is available at: http://pcaobus.org/Rules/Rulemaking/Docket034/Concept_Release.pdf

scholarly journals A Discussion of the Individual Auditor Who Have Been Punished and Audit Quality

2018 ◽  
Vol 3 (1) ◽  
pp. 68
Author(s):  
Haohao He
Keyword(s):  
Audit Quality ◽  
Personal Characteristics ◽  
Financial Statement ◽  
Relevant Research ◽  
High Quality ◽  
The Individual ◽  
The Cost ◽  
Special Case ◽  
Independent Audit

<p><em>High quality independent audit can enhance the reliability of financial statement information, reduce the cost of principal-agent and improve the efficiency of market resource allocation. In China, the audit report should be signed and sealed by </em><em>auditor</em><em>. This means that audit liability can be traced directly to signed </em><em>auditor</em><em> individuals</em><em>, it is even more important to carry out the research on individual audit behavior and audit quality of signed auditor. The research contribution of this paper is to expand the relevant research on auditor discipline, and to deduce from “prior research” through theory. It is found that the low-quality audit behavior is a special case caused by the chartered accountant</em><em>’</em><em>s personal characteristics.</em></p>

scholarly journals Uji Model Kualitas Audit: Studi Empiris Perusahaan yang Melakukan IPO di Bursa Efek Indonesia

2020 ◽  
Vol 16 (2) ◽  
pp. 44-52
Author(s):  
T. Husain ◽  
Melani Quintania ◽  
Nedi Hendri
Keyword(s):  
Initial Public Offerings ◽  
Public Perception ◽  
Audit Quality ◽  
Financial Statement ◽  
Public Offerings ◽  
Public Company ◽  
Quality Modeling ◽  
Profitability Ratios ◽  
Weak Influence

Various financial statement scandals lead to a low public perception of audit quality. The quality of the audit itself can be studied from various perspectives. This research uses the paradigm of thinking to test audit quality modeling in predicting financial ratios consisting of liquidity ratios, activity ratios, solvency ratios, profitability ratios, and market prospect ratios. The type of research is causality with a quantitative approach. The subject of this research uses a public company that does Initial Public Offerings (IPO) in 2019. Data analysis methods use logistic regression analysis. This study's findings show that it meets the model's specifications, with nagelkerke r square score of 0.151, which means it has a weak influence in explaining the model. Besides that, does not yield influence simultaneously with omnibus tests of model coefficients and only one proof of the hypothesis of the Financial Ratio's viz price-to-book value proxy test that has a partially significant effect with the wald testing.

Do PCAOB Inspection Reports Influence Corporate Executives' Perceptions of Audit Quality and the Likelihood of Switching Auditors?

2014 ◽  
Vol 14 (1) ◽  
pp. 48-71 ◽  
Author(s):  
Jesse C. Robertson ◽  
Chad M. Stefaniak ◽  
Richard W. Houston
Keyword(s):  
Financial Reporting ◽  
Response Pattern ◽  
Audit Quality ◽  
Data Availability ◽  
Response Patterns ◽  
Auditor Switching ◽  
Corporate Executives ◽  
Public Company ◽  
Mixed Responses

ABSTRACT The PCAOB conducts inspections of public company auditors to improve audit quality and build investors' confidence in the quality of financial reporting (PCAOB 2010f). While there is some evidence that the inspection reports could be improving actual audit quality (e.g., Gramling et al. 2011; Carcello et al. 2011), their impact on perceptions of audit quality remains largely unexplored. We investigate the effects of inspection reports, which consistently disseminate negative information in the form of audit deficiencies (and in some cases, quality control criticisms) on perceived audit quality and potential auditor switching. We report the results of an experiment in which 90 corporate executives considered one of three response patterns that firms typically offer across multiple inspection reports: consistently provide concessions, consistently provide denials, or provide mixed responses that consist of both concessions and denials. We find that PCAOB inspection reports generally decrease perceived audit quality, regardless of response pattern, which, in turn, is generally associated with an increased likelihood that executives will consider switching auditors. We offer implications for audit policy and research, including the possibility that, while PCAOB inspections could be improving actual audit quality, the reports could be imposing costs by reducing perceived audit quality and, in turn, increasing the likelihood of auditor changes. Data Availability: Contact the first author.

Vocation Education Quality from Demand Side’s Perspective: The Case of Transport Technology Universities in the North of Vietnam

2019 ◽  
Vol 10 (11) ◽  
pp. 1089-1097
Author(s):  
Nguyen Quynh Hoa ◽  
◽  
Phung Chu Hoang ◽  
Keyword(s):  
Vocational Training ◽  
Vocational Education And Training ◽  
Quality Outcomes ◽  
The North ◽  
Job Opportunities ◽  
Management Capacity ◽  
Negative Effect ◽  
Training Quality ◽  
And Training

Quality outcomes from vocational education and training (VET) are fundamental to ensuring a skilled workforce and supporting a productive economy. The quality of vocational training from the demand’s perspective is defined as meeting the customer specification, needs or requirements. Using the method of Exploratory Factor Analysis (EFA) and Multiple Regression Analysis to get the analytical results of 275 respondents as graduates of University of Transport and Communication, University of Transport Technology (the two universities training on transportation in the North of Vietnam), the results show that factors are measured by the observed variables in the study that ensure reliability and relevance. The descriptive statistics result of vocational training quality is 3.28, while all independent variables are at average level (between 3.1 to 3.48) with the highest value related to the quality of the teacher and the lowest are facilities and training programs and management capacity of university. However, the regression results show that the qualification of the teacher, material facilities and training program, management capacity and job opportunities at the training school do not affect the quality of the training while “Learners-NH” have a great positive effect and the labor market information has a negative effect on the training quality of the school significantly. Base on those data, some policy recommendations have been given out in order to improve the training quality of transport technology universities in the north of Vietnam in particular and the vocational training quality of Vietnam in general.

Workplace Mindfulness and its Effect on Staff Auditors' Audit Quality-Threatening Behavior

2018 ◽  
Vol 31 (1) ◽  
pp. 55-64 ◽  
Author(s):  
David N. Herda ◽  
Nathan H. Cannon ◽  
Randall F. Young
Keyword(s):  
Indirect Effect ◽  
Audit Quality ◽  
Review Process ◽  
Effective Means ◽  
Data Availability ◽  
Financial Statement ◽  
Work Setting ◽  
Effective Technique ◽  
Staff Level

ABSTRACT This study investigates the effect of staff auditors' workplace mindfulness on premature sign-off—a serious audit quality-threatening behavior that can go undetected through the review process. We also examine whether supervisor coaching is an effective means to engender workplace mindfulness. Using a sample of 115 auditors, we predict and find that (1) auditors who are coached by supervisors to appreciate the importance of their work to external financial statement users are more likely to be mindful in their work setting, and (2) greater workplace mindfulness about financial statement user considerations is associated with a reduced likelihood of auditor sign-off on an audit procedure not completed. We also find that supervisor coaching has an indirect effect on premature sign-off through workplace mindfulness. The results underscore the importance of workplace mindfulness in reducing audit quality-threatening behavior and indicate that supervisor coaching may be an effective technique in eliciting mindfulness among staff-level auditors. Data Availability: Contact the authors.

An Examination of Partner Perceptions of Partner Rotation: Direct and Indirect Consequences to Audit Quality

2012 ◽  
Vol 31 (1) ◽  
pp. 97-114 ◽  
Author(s):  
Brian E. Daugherty ◽  
Denise Dickins ◽  
Richard C. Hatfield ◽  
Julia L. Higgs
Keyword(s):  
Quality Of Life ◽  
Audit Quality ◽  
Negative Impact ◽  
Survey Instrument ◽  
Unintended Consequence ◽  
Data Availability ◽  
Structured Interviews ◽  
Partner Perceptions ◽  
New Industry

SUMMARY Using structured interviews and surveys of practicing audit partners, this study examines their perceptions with regard to mandatory partner rotation and cooling-off periods, and how recently enacted, more stringent rules, may negatively impact auditors' quality of life to the detriment of audit quality. Results suggest rotation, in general, increases partners' workloads and the likelihood of relocation. Additionally, results suggest that in response to accelerated rotation (and an extended cooling-off period), partners would rather learn a new industry than relocate. Importantly, partners perceive audit quality suffers from retraining, but not from relocating. Thus these results suggest an indirect, negative impact, and unintended consequence, of accelerated rotation/extended cooling-off periods on audit quality. Data Availability: The survey instrument is available upon request. Individual audit partner responses are confidential.

Financial Reporting, Auditing, Analyst Scrutiny, and Investment Efficiency

2021 ◽  
Author(s):  
Derek Chan ◽  
Nanqin Liu
Keyword(s):  
Financial Reporting ◽  
Audit Quality ◽  
Financial Statement ◽  
Investment Efficiency ◽  
Strategic Interactions ◽  
Financial Reports ◽  
Audit Failure ◽  
Economic Framework ◽  
Ex Post ◽  
Ex Ante

This paper presents an economic framework to study strategic interactions along the analyst-auditor-owner disciplinary chain, in which the auditor examines the financial reports prepared by the owner, and the analyst uncovers financial misreporting as well as audit failure. We find that although analyst scrutiny ex post detects misreporting, it ex ante aggravates the owner's misreporting behavior and further impairs financial statement reliability if the legal penalties for the auditor and the owner are small. We also show how the effects of a regulation depend on its target's disciplinarian(s). Specifically, (i) although enhancing the auditor's legal liability always increases audit quality and financial statement reliability, it decreases investment efficiency if and only if the analyst is highly independent; and (ii) increasing the owner's misreporting penalty decreases investment efficiency if and only if either of (but not both) the regulations on the auditor and the analyst is strict.

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