Auditor Selection and Audit Committee Characteristics

2000 ◽  
Vol 19 (2) ◽  
pp. 47-66 ◽  
Author(s):  
Lawrence J. Abbott ◽  
Susan Parker
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Audit Committees ◽  
Industry Specialization ◽  
The Subject ◽  
Auditor Selection ◽  
High Level ◽  
Industry Specialist

The role of the audit committee in corporate governance is the subject of increasing public and regulatory interest. We focus on one frequently noted function of the audit committee: auditor selection. We argue that independent and active audit committee members demand a high level of audit quality because of concerns about monetary or reputational losses that may result from lawsuits or SEC sanction. Auditors who specialize in the client's industry are expected to provide a higher level of audit quality than do nonspecialists. Thus, we predict that firms with audit committees that are both independent and active are more likely to employ an industry-specialist auditor. We find that firms with audit committees that do not include employees and that meet at least twice per year are more likely to use specialists. This study contributes to our understanding of audit committee functions and provides evidence that industry specialization is an important element of auditor selection.

scholarly journals An exploration of the role of records management in corporate governance in South Africa

2013 ◽  
Vol 15 (2) ◽  
Author(s):  
Mpho Ngoepe ◽  
Patrick Ngulube
Keyword(s):  
South Africa ◽  
Corporate Governance ◽  
Audit Committee ◽  
Corporate Citizenship ◽  
Internal Audit ◽  
Audit Committees ◽  
Records Management ◽  
Good Corporate Governance ◽  
Auditor General

Background: Corporate governance maybe approached through several functions such as auditing, an internal audit committee, information management, compliance, corporate citizenship and risk management. However, most organisations, including governmental bodies, regularly exclude records management from the criteria for a good corporate-governance infrastructure. Proper records management could be the backbone of establishing good corporate governance.Objectives: Utilising the King report III on corporate governance as a framework, this quantitative study explores the role of records management in corporate governance in governmental bodies of South Africa.Method: Report data were collected through questionnaires directed to records managers and auditors in governmental bodies, as well as interviews with purposively selected auditors from the Auditor-General of South Africa. Data were analysed using various analytical tools and through written descriptions, numerical summarisations and tables.Results: The study revealed that records management is not regarded as an essential component for corporate governance. Records management is only discussed as a footnote; as a result it is a forgotten function with no consequences in government administration in South Africa. The study further revealed that most governmental bodies have established internal audit units and audit committees. However, records-management professionals were excluded from such committees.Conclusion: The study concludes by arguing that if records management is removed as a footnote of the public-sector operations and placed in the centre of operational concern, it will undoubtedly make a meaningful contribution to good corporate governance.

Voluntary audit committees, auditor selection and audit quality: evidence from Taiwan

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mao-Feng Kao ◽  
Min-Jeng Shiue ◽  
Chien-Hao Tseng
Keyword(s):  
Audit Committee ◽  
Audit Quality ◽  
Audit Committees ◽  
Firm Level ◽  
Content Type ◽  
Audit Firm ◽  
Empirical Results ◽  
Initial Stage ◽  
Auditor Selection ◽  
The Individual

Purpose This study aims to examine the Taiwan setting, where audit partners’ names are presented in the audit report and where audit committee formation is voluntary in the initial stage of audit committee reform. This paper investigates the effects of the formation of voluntary audit committees on the selection of individual audit partners, and, in turn, the audit quality. This contrasts with previous studies investigating the relationship between audit committees and auditor selection at the audit firm level. Design/methodology/approach This paper samples all of Taiwan’s publicly listed firms for the period 2007–2012 and uses Heckman’s (1979) two-stage estimation model to achieve our objectives. Findings Using different characteristics of individual engagement partners as proxies for a higher quality auditor, the main empirical results show that voluntary audit committee formation is positively related to an industry specialist lead partner and a lead partner that has a larger number of clients. In addition, this paper also finds that voluntary audit committee formation has a positive impact on audit quality (proxied by discretionary accruals). The results suggest that the voluntary formation of an audit committee contributes positively to both auditor selection and audit quality. Furthermore, an additional test shows that the main empirical results are robust to a validity threat that firms that have good corporate governance prior to the formation of voluntary audit committees tend to select high-quality audit partners. Originality/value The paper contributes to the audit committee literature in the following ways: this paper takes advantage of Taiwan’s unique setting, where forming an audit committee is not compulsory in the initial stage of audit committee reform, to investigate the voluntary audit committee, auditor selection and audit quality; this paper expands on Abbott and Parker’s (2000) study of audit committee characteristics and auditor selection at the audit firm level by examining this relationship at the individual audit partner level; this paper responds to the call by Church et al. (2008) and DeFond and Francis (2005) who propose more studies on audit quality at the individual engagement partner level.

scholarly journals The Relationship between Audit Committee Characteristics, Audit Firm Quality and Companies’ Profitability

2015 ◽  
Vol 7 (2) ◽  
pp. 215
Author(s):  
Laith A Aryan
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Financial Statements ◽  
Industrial Sector ◽  
Committee Meeting ◽  
Audit Firm ◽  
The Relationship

<p>Jordan displayed keen interest in corporate governance in terms of enhancing the quality of financial statements and to restore the investors’ confidence. This study aimed to highlight the role of audit committee and external audit in enhancing companies’ profitability. Since there are contradictions in previous studies results, there is a need to test these relationships in Jordanian context to provide empirical evidence on this issue,especially after the corporate governance application became mandatory since 2009. This study has used industrial sector, which include 91 companies, only 69 companies were included in this study, the other 22 companies were excluded either newly listed or delisted during the study period (2009-2014). Multiple regression were used to analyze the data, the result showed positive relationships between audit committee meeting, audit committee size and companies profitability, while no significant relationship between audit committee composition, audit committee members literacy, audit quality and companies profitability. Such results would be beneficial to companies’ corporate governance committees to play their supervisory role. </p>

scholarly journals KEBIJAKAN KEUANGAN DAN GOOD CORPORATE GOVERNANCE TERHADAP AGRESIVITAS PAJAK

2019 ◽  
Vol 9 (3) ◽  
pp. 327
Author(s):  
Setu Setyawan ◽  
Endang Dwi Wahyuni ◽  
Ahmad Juanda
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Manufacturing Sector ◽  
Capital Intensity ◽  
Audit Committees ◽  
Financial Policies ◽  
Tax Aggressiveness ◽  
Good Corporate Governance

This research aims to analyse the effect of financial policy and good corporate governance (GCG) on tax aggressiveness. Financial policies are prokated with leverage, capital intensity and inventory intensity. The GCG used are the institutional ownership, independent Board of Commissioners, audit committees and audit quality. The population is manufacturing sector companies listed on the Indonesia Stock Exchange (IDX) period 2016-2017. Sampling method is used purposive sampling and obtained as much as 56 samples. Data analysis techniques use multiple linear regression using the SPSS 23. The results show that financial policies have an effect on tax aggressiveness. While the GCG on the independent Proxy Commissioner and Audit Committee has an effect on tax aggressiveness, while the other proxies are the ownership of the insitution and audit quality does not affect the aggressiveness of the tax.

scholarly journals Analisis Pengaruh Corporate Governance dan Kualitas Audit terhadap Integritas Laporan Keuangan pada Perusahaan Manufaktur Sub Sektor Otomotif dan Komponen yang Terdaftar di Bursa Efek Indonesia Periode 2012-2017

2021 ◽  
Vol 1 (1) ◽  
pp. 33-43
Author(s):  
Ambar Purwantiningsih ◽  
◽  
Desy Anggaeni ◽  
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Linear Regression Analysis ◽  
Institutional Ownership ◽  
Financial Statements ◽  
Audit Committees ◽  
Actual Condition ◽  
Managerial Ownership ◽  
Manufacturing Companies

Abstract Purpose: The integrity of financial statements is the correctness of the information contained in financial statements that describe the actual condition of the company. This study examined the influence of Corporate Governance, which was proxied by Institutional Ownership, Managerial Ownership, Independent Commissioners, Audit Committees and the effect of Audit Quality on the Integrity of Financial Statements. Research methodology: The population in this study were 13 Manufacturing and Automotive Sub Sector Manufacturing companies listed on the Indonesia Stock Exchange (IDX) for the 2012-2017 period. The sample selection technique used was purposive sampling and obtained six companies that met the researcher's criteria. The data analysis method used in this study is multiple linear regression analysis using SPSS version 25.0 for windows. Results: The results show that institutional ownership, managerial ownership, independent commissioners, and audit quality have a positive and significant effect on the integrity of financial statements, while the audit committee has no effect on the integrity of financial statements.

scholarly journals The role of an audit committee in bank solvency: An emerging market case

2019 ◽  
Vol 8 (1) ◽  
pp. 38-46 ◽  
Author(s):  
Hussein Salia ◽  
Emmanuel Budu Addo ◽  
Nicholas Adoboe-Mensah
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Banking Sector ◽  
Emerging Market ◽  
Audit Committees ◽  
Regulatory Body ◽  
Effective Functioning ◽  
Governance Systems ◽  
The Impact

Recent discourse on corporate failures gives prominence to the impact of weak corporate governance systems in most corporate entities, hence reasons for investors and creditors pessimism. This literature review article seeks to articulate how audit committee could strengthen corporate governance in organizations. The paper reviews the guidelines developed by the Bank of Ghana to curb the degeneration of the Banking sector in Ghana following the collapse of seven indigenous banks between 2017 and 2018. The objective of this paper is to underscore the effective functioning of audit committees as a panacea to the corporate governance weaknesses in Ghana. The paper observes that albeit the Bank of Ghana, as a regulatory body, underscored weak corporate governance systems – it failed to emphasize mechanisms for strengthening audit committees in its guidelines to regulate the sector. The paper, therefore, promotes the presence and effective functioning of the audit committees as an additional layer to strengthen the monitoring and supervisory functions within corporate bodies. It recommends that the Bank of Ghana must emphasize the establishment of audit committees as a core part of corporate governance systems of all banks to ensure that the interest of all stakeholders is protected adequately through the oversight role of the audit committees.

scholarly journals Corporate governance, ownership, company structure and environmental disclosure: Evidence from Saudi Arabia

2015 ◽  
Vol 4 (4) ◽  
pp. 460-470 ◽  
Author(s):  
Murya Habbash
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Audit Committee ◽  
Audit Committees ◽  
Annual Reports ◽  
Environmental Disclosure ◽  
Iso 26000 ◽  
Main Determinants ◽  
One Year

This study examines the Environmental Disclosure (ED) practices in Saudi Arabia and the potential relationship with Corporate Governance (CG) , ownership and company structure, following the application of the Saudi 2006 CG code in 2007. The study deepens the understanding of ED and its main determinants in one of the largest economies in the Middle East. A self-constructed ED checklist, based on ISO 26000, is used. We employ regression and content analyses to examine a sample of 267 annual reports covering the period 2007-2011. The analysis finds that the average ED has improved following the application of the Saudi 2006 CG code to 30%, more than double the 14.61% found by Al-Janadi et al. (2013) during 2006-2007. The analysis also finds that audit committee effectiveness, role duality, state and institutional ownerships, firm profitability, and industry sensitivity positively affect ED. However, board independence, family ownership, and firm size are found not to be significant determinants, while a negative significant correlation was found with firm leverage. The results imply that CG regulators and stakeholders should acknowledge the importance of active audit committees comprising relevant experts and independent directors, in addition to the role of state and institutional ownership in enhancing ED. The study covers a five-year period, contrary to the majority of ED studies which focus on only one year. The study helps to fill the gap in ED literature in developing countries. Finally, the study provides a recent evaluation for the Saudi CG code recently applied in 2007.

scholarly journals THE EFFECT OF GOOD CORPORATE GOVERNANCE ON TAX AVOIDANCE: EMPIRICAL STUDY OF THE INDONESIAN BANKING COMPANY

2019 ◽  
Vol 2 (02) ◽  
Author(s):  
Waluyo Waluyo
Keyword(s):  
Corporate Governance ◽  
Tax Evasion ◽  
Quantitative Research ◽  
Audit Committee ◽  
Audit Quality ◽  
Stock Exchange ◽  
Tax Avoidance ◽  
Institutional Ownership ◽  
Least Square ◽  
Audit Committees

The purpose of this study aims to examine the effect of corporate governance on tax evasion. Corporate governance is proxied represented by the audit committee, the proportion of independent board of commissioners, institutional ownership and audit quality. Tax evasion is measured by the size of the gap of an effective tax rate. This study uses quantitative research design and data from the Finance Authority Service / OJK listed on the Indonesia Stock Exchange. By using purposive sampling in the observation period of 2013-2016, it has obtained 92 observations. The Data has been analyzed by using ordinary least square regression model. Regression results has identified that the proportion of independent board of commissioners and corporate performance have negatively affected tax evasion. Audit committees, audit quality and the size of company positively affected tax evasion. However, the institutional ownership has had no significant effect on tax evasion. These results have indicated that some of the mechanisms of corporate governance in Indonesia have been effective according to its function for the shareholders.

scholarly journals THE MODERATING ROLE OF FIRM SIZE ON FINANCIAL CHARACTERISTICS AND ISLAMIC FIRM VALUE AT INDONESIAN EQUITY MARKET

2020 ◽  
Vol 21 (1) ◽  
pp. 391-401
Author(s):  
Perdana Wahyu Santosa
Keyword(s):  
Corporate Governance ◽  
Firm Size ◽  
Firm Value ◽  
Audit Committee ◽  
Equity Market ◽  
Audit Committees ◽  
Financial Characteristics ◽  
Positive Effect ◽  
Moderating Role

This study aims to understand the moderating role of firm size on financial characteristics and Islamic firm value. Then study how the influence of firm size moderation on the relationship of financial characteristics and corporate governance with firm value. This study uses secondary data from financial statements and analyzed by the panel data method for six years. The sample selection is arranged by the purposive sampling method with Islamic index constituent population. Conclusion: leverage, profitability, and efficiency have a significant positive effect on Islamic firm value, but the liquidity and audit committee do not affect. Firm size moderators provide a reinforcing effect for all independent variables so that liquidity and audit committees have a positive effect on firm value. Implications: Islamic firm investors in the equity market should consider the crucial variable, namely firm size, in addition to firm and corporate governance characteristics. These conclusions provide important implications for managers and relevant authorities to enhance financial market information related to firm value and further attention to corporate governance mechanisms.

scholarly journals The impact of industry specialist audit firms on pricing of discretionary accruals and earnings management: Australian evidence

2012 ◽  
Vol 9 (2) ◽  
pp. 158-177
Author(s):  
Harjinder Singh ◽  
May Sze Khoo
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Negative Relationship ◽  
Discretionary Accruals ◽  
Audit Committees ◽  
Firm Level ◽  
Audit Firms ◽  
The Impact ◽  
Industry Specialist

This paper examines the relationship between the capital market pricing of Australian publicly listed firms and earnings management (proxied by discretionary accruals) during a three-year pooled time-frame of 2008 to 2010. More importantly, the role of industry specialist audit firms on market returns and earnings management relationship is investigated. Main results indicate a significant negative relationship between firm returns and earnings management. However, there is no significance in the role of industry specialist audit firms on the firm returns and earnings management linkage. On the other hand, sensitivity tests indicate that industry specialist audit firms play in significant monitoring role for audit committees with less than fifty percent of their members classified as independent. One major contribution is for regulators (aiming to improve audit quality) to strengthen key firm-level corporate governance mechanisms. Specifically, by placing the consequences from this paper into perspective, there may be a greater likelihood of increased audit quality by altering audit committee’s structure, composition and authority levels.

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