scholarly journals Deficiencies in Auditing Related-Party Transactions: Insights from AAERs

2008 ◽  
Vol 2 (2) ◽  
pp. A10-A16 ◽  
Author(s):  
Timothy J. Louwers ◽  
Elaine Henry ◽  
Brad J. Reed ◽  
Elizabeth A. Gordon
Keyword(s):  
Professional Skepticism ◽  
Related Party Transactions ◽  
High Profile ◽  
Related Party Transaction ◽  
Auditing Standards ◽  
Professional Care

SUMMARY: After several high-profile frauds involving related-party transactions, regulators have raised questions as to whether current auditing standards remain appropriate. In this study, we examine 43 SEC enforcement actions against auditors related to the examination of related-party transactions. We conclude that the audit failures in these fraud cases were more the result of a lack of auditor professional skepticism and due professional care than any deficiency in current auditing standards. In other words, revised auditing standards would likely not have prevented these auditing failures, raising questions about the need for auditing standard revision for related-party transactions at this time. Despite this finding, we conclude with some suggestions to improve the auditing of related-party transactions, such as including the discussion of related-party transaction abuse during SAS No. 99 mandated fraud awareness “brainstorming” sessions.

The SEC’s Case against California Micro Devices: A Lesson in Using Professional Skepticism and Obtaining Sufficient Appropriate Evidence

2011 ◽  
Vol 26 (1) ◽  
pp. 145-154 ◽  
Author(s):  
Jill M. D’Aquila ◽  
Kim Capriotti
Keyword(s):  
Securities And Exchange Commission ◽  
Professional Skepticism ◽  
Accounts Receivable ◽  
Adequate Level ◽  
Auditing Standards ◽  
Professional Care ◽  
Analytical Procedures

ABSTRACT: This instructional case involves charges by the Securities and Exchange Commission (SEC) against Michael Marrie, an audit partner, and Brian Berry, a manager, for recklessly failing to comply with auditing standards relating to three areas: a $12 million write-off of accounts receivable, confirmation of accounts receivable, and sales returns and allowances. The SEC believed Michael and Brian did not exercise due professional care, nor did they employ an adequate level of professional skepticism when performing the audit. The SEC also believed that there was insufficient appropriate evidence to express an opinion. This case addresses the following auditing content: Generally Accepted Auditing Standards, professional skepticism, analytical procedures, estimates, fraud risks, confirmation of accounts receivable, and work papers.

scholarly journals Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on International Auditing and Assurance Standards Board Exposure Draft, Proposed International Standard on Auditing 315 (Revised): Identifying and Assessing the Risks of Material Misstatement and Proposed Consequential and Conforming Amendments to Other ISAs

2018 ◽  
Vol 13 (1) ◽  
pp. C1-C9 ◽  
Author(s):  
Veena Looknanan Brown ◽  
Paul J. Coram ◽  
Sean A. Dennis ◽  
Denise Dickins ◽  
Christine E. Earley ◽  
...  
Keyword(s):  
Information Technology ◽  
Financial Reporting ◽  
Data Availability ◽  
Professional Skepticism ◽  
International Standard ◽  
Auditing Standards ◽  
Explicit Recognition ◽  
Automated Tools ◽  
Tools And Techniques

SUMMARY On July 16, 2018, the International Auditing and Assurance Standards Board (the Board or IAASB) issued a request for comment on its Exposure Draft, Proposed International Standard on Auditing 315 (Revised): Identifying and Assessing the Risks of Material Misstatement and Proposed Consequential and Conforming Amendments to Other ISAs (ED-315). Major enhancements proposed include explicit recognition of the auditor's use of automated tools and techniques, requiring an understanding of an auditee's use of information technology relevant to financial reporting, acknowledging the influence of an entity's complexity on the audit plan, and increasing the emphasis on the need for professional skepticism. The comment period ended on November 2, 2018. This commentary summarizes the participating committee members' views on selected questions posed by the IAASB. Data Availability: ED-315, including questions for respondents, is available at: https://www.ifac.org/publications-resources/exposure-draft-isa-315-revised-identifying-and-assessing-risks-material.

scholarly journals Related Party Transaction Berpengaruh Terhadap Biaya Audit

2020 ◽  
Vol 4 (1) ◽  
pp. 1-11
Author(s):  
Senato Erasandi
Keyword(s):  
Regression Analysis ◽  
High Risk ◽  
Multiple Regression Analysis ◽  
Multiple Regression ◽  
Stock Exchange ◽  
Audit Fees ◽  
Analysis Model ◽  
Related Party Transactions ◽  
Related Party Transaction

The purpose of this study is to analyze the effect of related party transactions on audit fees. This study uses 67 samples listed on the Indonesia Stock Exchange for the period 2017 to 2018. The analysis used in this study is the Multiple Regression analysis model that is processed with SPSS 20 software. This study found that related party transactions were positively and significantly related to audit fees. The results show that related party transactions can cause the company to have a high risk so that it can increase the audit fees paid by the company

scholarly journals PENGARUH CORPORATE GOVERNANCE DAN KARAKTERISTIK PERUSAHAAN TERHADAP LUAS PENGUNGKAPAN TRANSAKSI PIHAK BERELASI DI INDONESIA

2016 ◽  
Vol 4 (1) ◽  
pp. 36 ◽  
Author(s):  
Hani Werdi Apriyani
Keyword(s):  
Corporate Governance ◽  
Annual Report ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Multiple Linear Regression Analysis ◽  
Ownership Concentration ◽  
Corporate Diversification ◽  
Related Party Transactions ◽  
Related Party Transaction ◽  
Independent Variable

The purpose of this study is to examine the influence of corporate governance and firms characteristics to the extent of disclosure of related party transactions. The independent variable in this study is the level of ownership concentration, independent commissioners, the level of corporate diversification, and profitability. The dependent variable is the related party transactions disclosure. In analyzing the effect of independent variables on the dependent variable, included two control variables in our model, the type of industry and company size. The sample used in this study is annual report of non-financial companies listed in the Indonesia Stock Exchange 2008 -2011. Purposive sampling use to determine sample. There are 25 companies that meet the criteria as the sample in this study, and finally 90 annual report used in this analysis. Statistical methods using multiple linear regression analysis. The analysis showed that profitability have significant effect in Related Party Transaction disclosure. Level of ownership concentration, the level of corporate diversification , and independent commissioners did’t significantly influance the related party transaction disclosure.

scholarly journals Pengaruh Skeptisisme Profesional, Due Professional Care, dan Tekanan Anggaran Waktu pada Kualitas Audit

2020 ◽  
Vol 30 (3) ◽  
pp. 624
Author(s):  
Ni Putu Ayu Nikita Sari Wulan ◽  
Ketut Budiartha
Keyword(s):  
Sampling Method ◽  
Audit Quality ◽  
Time Budget ◽  
Survey Method ◽  
Negative Effects ◽  
Professional Skepticism ◽  
Quality Audit ◽  
Positive Effects ◽  
Professional Care ◽  
Time Budget Pressure

Audit quality is one important aspect, because quality audit will reflect the actual conditions on the field. This research is to give the empirical fact of the effect of professional skepticism, due professional care, and time budget pressure on quality audit. The research is taking place at the BPK RI Perwakilan Provinsi Bali. The quantity of the sample is 52 auditors, using of non probability sampling method with the sampling sapurated technique. Questioner technique from the survey method used to collects the datas. Analisys technique that used in this research is multiple linear regression analisys technique. The result of the research showed that the professional skepticism and due professional care significantly give positive effects to the quality audit, meanwhile time  budget pressure significantly give negative effects to the quality audit. Keywords: Professional Skepticism; Due Professional Care; Time Budget Pressure; Quality Audit.

Study on Related Party Transactions and Decision-Making Behavior of Controlling Shareholder Based on SPSS Software Technology

2014 ◽  
Vol 519-520 ◽  
pp. 1560-1563
Author(s):  
Bo Xu ◽  
Kai Li
Keyword(s):  
Decision Making ◽  
Controlling Shareholder ◽  
Controlling Shareholders ◽  
Related Party Transactions ◽  
Software Technology ◽  
Concentrated Ownership ◽  
Related Party Transaction ◽  
Close Relationship ◽  
Spss Software ◽  
Decision Making Behavior

This paper uses SPSS software regression technology to analyze whether controlling shareholder employs related-party transaction to damage the performance of enterprises. The study selects samples in Chinese metal and nonmetal enterprise. We find that the enterprises with controlling shareholders have more related party transactions. The enterprises with president coming from controlling shareholder have more related party transactions than the enterprises with president coming from non-controlling shareholders. We also find the more the number of independent director, the less the number of related party transactions. The result suggests that related party transactions have close relationship with controlling shareholders. If the enterprise have concentrated ownership, the probability of the largest shareholder pursuing more benefit from tunneling activities will be greater.

scholarly journals Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association on PCAOB Rulemaking Docket Matter No. 37: PCAOB Release No. 2011-006, Concept Release on Auditor Independence and Audit Firm Rotation

2012 ◽  
Vol 6 (1) ◽  
pp. C15-C27 ◽  
Author(s):  
Keith L. Jones ◽  
Jagadison K. Aier ◽  
Duane M. Brandon ◽  
Tina D. Carpenter ◽  
Lisa M. Gaynor ◽  
...  
Keyword(s):  
Exposure Period ◽  
Auditor Independence ◽  
Data Availability ◽  
Professional Skepticism ◽  
Audit Firm ◽  
The Public ◽  
Public Comment ◽  
Public Company ◽  
Auditing Standards ◽  
Mandatory Audit Firm Rotation

SUMMARY In August 2011, 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 means to enhance auditor independence, objectivity, and professional skepticism. The Concept Release sought comments on and explores in detail the possibility of mandatory audit firm rotation. The PCAOB provided for a 121-day exposure period (from August 16 to December 14, 2011) for interested parties to examine and provide comments on the concept release. The Auditing Standards Committee of the Auditing Section of the American Accounting Association provided the comments in the letter below (dated December 13, 2011) to the PCAOB on PCAOB Rulemaking Docket Matter No. 37: PCAOB Release No. 2011-006, Concept Release on Auditor Independence and Audit Firm Rotation. Data Availability: Information about and access to the release are available at: http://pcaobus.org/Rules/Rulemaking/Docket037/Release_2011-006.pdf

scholarly journals PENGARUH TATA KELOLA, TINGKAT PENGUNGKAPAN, DAN KUALITAS AUDIT TERHADAP BESARAN TRANSAKSI PIHAK BERELASI

2020 ◽  
Vol 1 (1) ◽  
pp. 1
Author(s):  
Felix Felix ◽  
Hanna Hanna
Keyword(s):  
Corporate Governance ◽  
Empirical Evidence ◽  
Audit Quality ◽  
Stock Exchange ◽  
Total Sample ◽  
Governance Mechanism ◽  
Related Party Transactions ◽  
Related Party Transaction ◽  
Manufacturing Company ◽  
Corporate Governance Mechanism

This research is intended to get the empirical evidence related to the effect of corporate governance mechanism, related party disclosures and audit quality through related party transactions.  This research is conducted by using all listed manufacturing company in Indonesian Stock Exchange from 2015 – 2017 with total sample of about 270 firm years. The result shows that the corporate governance has positive and significant effect to related party transactions which is proxied by assets and liabilities related party transactions. While related party transaction disclosures has no significant effect to the related party transactions itself. Whereas, audit quality has negative significant effect to related party transactions which is proxied by assets and liabilities related party transactions. Keywords: Related party transactions, corporate governance, related party disclosure, audit quality Penelitian ini bertujuan untuk memperoleh bukti empiris mengenai pengaruh tata kelola perusahaan, tingkat pengungkapan transaksi pihak berelasi, dan kualitas audit terhadap besaran transaksi pihak berelasi. Penelitian ini dilakukan pada perusahaan sektor manufaktur yang terdaftar di Bursa Efek Indonesia (BEI) pada tahun 2015 – 2017 dengan jumlah sampel sebanyak 270. Hasil penelitian ini menemukan bahwa tata kelola perusahaan berpengaruh signifikan positif terhadap besaran transaksi pihak berelasi yang diproksikan dengan transaksi pihak berelasi terkait aset dan liabilitas. Tingkat pengungkapan transaksi pihak berelasi terbukti tidak berpengaruh signifikan terhadap besaran transaksi pihak berelasi yang diproksikan dengan transaksi pihak berelasi terkait aset dan liabilitas. Sedangkan, kualitas audit terbukti berpengaruh signifikan negatif terhadap besaran transaksi pihak berelasi yang diproksikan dengan transaksi pihak berelasi terkait aset dan liabilitas. Kata kunci: Besaran transaksi pihak berelasi, corporate governance, tingkat pengungkapan transaksi pihak berelasi, kualitas audit        

Diamond Foods, Inc.: A Comprehensive Case in Financial Auditing

2015 ◽  
Vol 32 (1) ◽  
pp. 95-112 ◽  
Author(s):  
Mahendra R. Gujarathi
Keyword(s):  
Financial Statements ◽  
Internal Controls ◽  
Learning Objectives ◽  
Problem Solving Skills ◽  
Professional Skepticism ◽  
Capstone Course ◽  
Accounting Curriculum ◽  
Auditing Standards ◽  
External Auditor ◽  
The Cost

ABSTRACT Diamond Foods is a comprehensive case that provides an opportunity for students to apply several financial auditing concepts and professional auditing standards to a real-world context. Diamond overstated its earnings of fiscal 2010 and 2011, by 38 percent and 47 percent, respectively, by delaying recognition of the cost of walnuts acquired to later accounting periods. The case requires students to determine whether Diamond's external auditor—Deloitte & Touche, LLP (Deloitte)—fulfilled its responsibility to obtain reasonable assurance that the financial statements were free of material misstatement. Students need to determine whether Deloitte's issuance of an unqualified opinion on Diamond's financial statements and internal controls violated professional auditing standards. In addition, students are required to evaluate whether Deloitte obtained sufficient understanding of Diamond's business and industry, exercised the needed professional skepticism, and used appropriate analytical procedures to discharge its professional responsibilities. The case presents an opportunity to achieve several learning objectives, including the development of research, critical-thinking, communication, and problem-solving skills. The case is appropriate for use in a graduate or undergraduate course in financial auditing. It can also be used in a fraud examination course, or in a capstone course in the accounting curriculum.

scholarly journals Comments of the Auditing Standards Committee of the Auditing Section of the American Accounting Association on Proposed Statement on Auditing Standards (SAS), Audit Evidence

2019 ◽  
Vol 14 (1) ◽  
pp. C1-C9
Author(s):  
Veena Looknanan Brown ◽  
Denise Dickins ◽  
Dana R. Hermanson ◽  
Julia L. Higgs ◽  
J. Gregory Jenkins ◽  
...  
Keyword(s):  
Data Analytics ◽  
Information Sources ◽  
Data Availability ◽  
External Information ◽  
Certified Public Accountants ◽  
American Institute ◽  
Professional Skepticism ◽  
Audit Data ◽  
Audit Evidence ◽  
Auditing Standards

SUMMARY On June 20, 2019, the American Institute of Certified Public Accountants Auditing Standards Board (the Board or ASB) issued a request for comment on its Exposure Draft, Proposed Statement on Auditing Standards, Audit Evidence. Enhancements in the proposed SAS include the use of emerging technologies by both preparers and auditors, audit data analytics, the application of professional skepticism, and the expanding use of external information sources as audit evidence. The comment period ended on September 18, 2019. This commentary summarizes the participating committee members' views on selected questions posed by the ASB. Questions not addressed by the committee are listed at the end of this manuscript. Data Availability: Proposed Statement on Auditing Standards (SAS), Audit Evidence, including questions for respondents, is available at: https://www.aicpa.org/content/dam/aicpa/research/exposuredrafts/accountingandauditing/downloadabledocuments/20190620a/20190620a-ed-sas-audit-evidence.pdf

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