scholarly journals Assessment of transparency of audit reports based on presentation of key audit matters

2021 ◽  
Vol 34 (2) ◽  
pp. 459-470
Author(s):  
Mirjana Hladika ◽  
Jelena Poljašević ◽  
Josipa Grbavac
Keyword(s):  
Developing Countries ◽  
Statistical Methods ◽  
Bosnia And Herzegovina ◽  
Listed Companies ◽  
Research Results ◽  
Audit Firms ◽  
Audit Reports ◽  
Big Four

Purpose: One of the ways to enhance transparency and usefulness of audit reports is to include information on key audit matters (KAMs). In this paper, based on the presented KAMs, we investigate transparency of audit reports of listed companies in Bosnia and Herzegovina and in Croatia. Methodology: For the purposes of this research, we collected and systematised data from published audit reports and then analysed them by means of descriptive statistical methods. Results: The research results show that in Croatia only a few audit reports lack a section on KAMs and there is no difference between the audit reports issued by the Big Four and the reports of other audit firms. In Bosnia and Herzegovina, most audit reports do not include a section on KAMs, but, unlike the Big Four, who disclose at least one KAM, other audit firms generally do not present any. Additionally, the research results show differences in the number of communicated KAMs between the audit reports prepared by the Big Four in Croatia and their reports for Bosnia and Herzegovina. There are also differences in the type of KAMs used in the two observed countries. Conclusion: Having analysed the situation in the two developing countries, we obtained different results. The discrepancies mainly stem from the varying degrees of transparency of the audit profession in each country.

How a Shared Auditor Affects Firm-Pair Comparability: Implications of Both Firm and Individual Audit Styles

2020 ◽  
Vol 39 (3) ◽  
pp. 133-160
Author(s):  
Lili Jiu ◽  
Bin Liu ◽  
Yuanyuan Liu
Keyword(s):  
Accounting Standards ◽  
Financial Statement ◽  
Professional Judgment ◽  
Audit Process ◽  
Personal Style ◽  
Audit Firm ◽  
Market Participants ◽  
Audit Firms ◽  
Audit Reports ◽  
Practical Implications

SUMMARY In this study, we examine the roles of audit firms and individual auditors in improving financial statement comparability. We conduct the study in the Chinese setting, in which the identities of signing auditors are revealed in audit reports and accounting standards are principle based. After controlling for audit firm style, we find that firm pairs with shared signing auditors have incrementally greater comparability. Our results indicate that individual auditors exhibit their own personal style in implementing accounting standards and exercising professional judgment in the audit process. Overall, our study underscores the association between individual auditors and comparability, with practical implications for market participants and policymakers.

Enhancing Auditors’ Reliance on Data Analytics under Inspection Risk Using Fixed and Growth Mindsets

2021 ◽  
Author(s):  
Tongrui Cao ◽  
Rong-Ruey Duh ◽  
Hun-Tong Tan ◽  
Tu Xu
Keyword(s):  
Data Analytics ◽  
Growth Mindset ◽  
Psychology Research ◽  
Fixed Mindset ◽  
Audit Firms ◽  
Audit Evidence ◽  
Big Four

Audit firms have invested significantly in data analytics (DA). However, evidence shows that auditors are often reluctant to rely on DA. A major auditor concern is that inspectors will second-guess the audit evidence gathered using DA. Drawing on psychology research, we examine how the effect of inspection risk on auditors’ reliance on DA is moderated by a fixed mindset (a belief that one’s ability is fixed) versus a growth mindset (a belief that one’s ability is malleable). In an experiment with Big Four auditors as participants, we find that, relative to low inspection risk, high inspection risk reduces auditors’ reliance on DA when auditors are prompted with a fixed mindset, but increases it when auditors are prompted with a growth mindset. Our findings contribute to auditing literature on DA, inspection risk, and mindsets, and have implications for auditors, audit firms, and regulators.

Foreword / Uvodnik

2021 ◽  
Vol 23 (1) ◽  
Author(s):  
Tomislav Topolovčan
Keyword(s):  
South Korea ◽  
Bosnia And Herzegovina ◽  
Original Research ◽  
Research Papers ◽  
High Quality ◽  
Great Pleasure ◽  
Research Results ◽  
Scientific Explanations ◽  
And Control

Dear readers!It is our great pleasure to present to you the first regular issue of the Croatian Journal of Education in 2021. This issue brings ten papers by authors from Bosnia and Herzegovina, Croatia, South Korea, Serbia, Spain and Turkey. Regarding the categorisation of the papers, this time we present four original research papers, three preliminary communications and three review papers. As previously, the featured papers advocate the thematic diversity of the concerns in the field of education. Furthermore, the papers present innovative, creative and multidisciplinary approaches to researching the issues of education. Through the research results and their interpretation, the presented works offer scientific explanations and understandings as well as predictions and control of the research phenomena in the field of education. Thereby we further develop the interdisciplinary and multidisciplinary direction of the Croatian Journal of Education. In this regard, we still wish you much success in your creative and innovative scientific projects, and we are looking forward to many more of your high-quality papers in 2021. --- Dragi čitatelji!Veliko nam je zadovoljstvo predstaviti vam prvi redovni broj Hrvatskog časopisa za odgoj i obrazovanje u 2021. godini. U ovom broju donosimo deset radova autora iz Bosne i Hercegovine, Hrvatske, Južne Koreje, Srbije, Španjolske i Turske. U pogledu kategorizacije radova, ovaj put predstavljamo četiri izvorna znanstvena rada te tri prethodna priopćenja i tri pregledna rada. Kao i do sada, u prikazanim radovima zastupamo tematsku različitost problematike odgoja i obrazovanja. Također, u radovima su zastupljeni inovativni, kreativni i multidisciplinarni metodološki pristupi istraživanja problematike odgoja i obrazovanja. Rezultatima istraživanja i njihovim interpretacijama, u predstavljenim prilozima ovoga broja, ponuđene su nove i inovativne deskripcije, klasifikacije, definicije, znanstvena objašnjenja i razumijevanja te predikcija i kontrola istraživanih fenomena odgoja i obrazovanja. Time i dalje razvijamo interdisciplinarnost i multidisciplinarnost Hrvatskog časopisa za odgoj i obrazovanje. Stoga nam je iznimno drago što na ovaj način predstavljamo nove znanstvene doprinose istraživanja autora predstavljenih priloga. U tom pogledu, i dalje vam želimo mnogo uspjeha u vašim kreativnim i inovativnim istraživanjima i znanstvenim projektima te se radujemo vašim novim kvalitetnim radovima u 2021. godini.

The relationship between audit components and audit expectation gap in listed companies on the Tehran stock exchange

2019 ◽  
Vol 18 (1) ◽  
pp. 199-222 ◽  
Author(s):  
Mahdi Salehi ◽  
Fariba Jahanbin ◽  
Mohammad Sadegh Adibian
Keyword(s):  
Regression Model ◽  
Multiple Regression ◽  
Stock Exchange ◽  
Audit Fees ◽  
Listed Companies ◽  
Multiple Regression Model ◽  
Content Type ◽  
Expectation Gap ◽  
Audit Firms ◽  
The Relationship

Purpose The expectation gap between auditors and users has recently been the topic of many controversies. This paper aims to evaluate the relationship between auditor’s characteristics and audit expectation gap among information users in listed companies on the Tehran stock exchange market. In other words, the study attempts to find whether there is a significant relationship between audit components and the audit expectation gap or not. Design/methodology/approach The multiple regression model is used to test the hypotheses. Research hypotheses are tested using a sample of 78 listed companies on the Tehran stock exchange during 2012-2016, by using integrated data technique of the multiple regression model. Findings The findings show that standard audit fees are not significantly associated with the audit expectation gap. Furthermore, audit fees are negatively associated with the audit expectation gap, which provides that allocated audit price in financial statements gives useful information for external and internal individuals. Predictably, it is recommended that audit opinion significantly determines the level of the audit expectation gap. The authors also find that the independence of the director boards and audit committee members fulfill the expectation gap of individual users. Moreover, finding the negative impact of audit firms ranking on the expectation gap, supports the idea of higher ranked audit firms provide high quality services, and consequently, more reliable information. Finally, the results show that the audit record is positively associated with the audit expectation gap. Originality/value As all recent studies on the expectation gap were qualitative, the present study is the first paper, which measures the expectation gap quantitatively through the statistical method.

Commercialization of audit firms and auditors’ subjective well-being

2020 ◽  
Vol 28 (4) ◽  
pp. 565-585 ◽  
Author(s):  
Yilia Ponomareva ◽  
Timur Uman ◽  
Pernilla Broberg ◽  
Emmy Vinberg ◽  
Karoline Karlsson
Keyword(s):  
Design Methodology ◽  
Empirical Support ◽  
Well Being ◽  
Conservation Of Resources ◽  
Subjective Well Being ◽  
Ongoing Debate ◽  
Content Type ◽  
Audit Firms ◽  
Big Four ◽  
Positive Effect

Purpose The purpose of this study is to explore how the commercialization of audit firms relates to the subjective well-being (SWB) of auditors. Drawing on the conservation of resources and social identity theories, the authors argue that the commercialization of audit firms enhances auditors’ subjective well-being in its overall happiness and job-related dimensions through two theoretical mechanisms. First, it constitutes a valuable resource for an auditor, and second, it reinforces the auditor’s identification with a firm. The authors subsequently contend that this relation is contingent on whether auditors are used in Big four or non-Big four audit firms. Design/methodology/approach The authors test our hypotheses-based data obtained from a survey of 166 Swedish auditors. The data are explored by means of descriptive statistics, correlation matrixes and linear moderating multiple regression analyzes. Findings The authors show that commercial orientation can have a positive effect on auditors’ SWB. The authors also find that the positive relationship between commercialization and SWB is stronger for auditors employed by one of the Big four firms. Originality/value The results contribute to the ongoing debate about the normalization of commercialization within the audit profession by theorizing on and providing empirical support for the positive consequences of commercialization.

scholarly journals Development Level of Brand Management at Banks in Bosnia and Herzegovina

2017 ◽  
Vol 11 (1) ◽  
pp. 66
Author(s):  
Beriz Civic
Keyword(s):  
Bosnia And Herzegovina ◽  
Systematic Approach ◽  
Ad Hoc ◽  
Brand Management ◽  
Management Development ◽  
Management Decisions ◽  
Research Results ◽  
Development Level ◽  
High Level ◽  
Very High

The paper analyzes the development level of the brand management at the banks operating on the market of Bosnia and Herzegovina (BiH). The aim of the research was to establish to what extent certain elements of brand management are present and whether the brand management decisions are made based on the systematic or the ad hoc approach. The research results indicate that five banks in BiH have a very high level of brand management development. Making brand management related decisions for these banks is based on the systematic approach. It has been established that other banks in BiH have a lower level of brand management development and that for most banks in this group the process of making brand management decisions is characterized by the ad hoc approach.

scholarly journals Risk Disclosure Preceding Negative Outcomes: The Effects of Reporting Critical Audit Matters on Judgments of Auditor Liability

2016 ◽  
Vol 10 (2) ◽  
pp. P1-P10 ◽  
Author(s):  
Kelsey Brasel ◽  
Marcus M. Doxey ◽  
Jonathan H. Grenier ◽  
Andrew Reffett
Keyword(s):  
Negative Outcomes ◽  
Risk Disclosure ◽  
Audit Report ◽  
Auditor Liability ◽  
Audit Firms ◽  
Audit Reports

SUMMARY The PCAOB and the IAASB recently proposed several significant changes to the audit reporting model, including requiring auditors to disclose critical audit matters (CAMs) in their audit reports. While investors appear to support such additional disclosures, some audit practitioners, academics, and attorneys contend that requiring auditors to disclose CAMs will make it easier for plaintiffs' attorneys to successfully sue auditors when audits fail to detect material misstatements. A recent study, “Risk Disclosure Preceding Negative Outcomes: The Effects of Reporting Critical Audit Matters on Judgments of Auditor Liability” (Brasel, Doxey, Grenier, and Reffett 2016), reports results of an experiment that inform this issue. Contrary to the above concerns, results of the study indicate that disclosing CAMs, either related or unrelated to an undetected material misstatement, likely will not increase, and could decrease (depending on the type of misstatement), the probability of jurors holding auditors liable when audits fail to detect material misstatements. Further, results indicate that explicitly stating in the audit report that there were no CAMs, an option allowed within the PCAOB's proposal, would increase negligence verdicts against audit firms. The following article summarizes the study's motivation, method, results, and implications for both audit reporting and risk disclosure in general.

Audit quality following the Public Company Accounting Oversight Board’s operation

2017 ◽  
Vol 17 (5) ◽  
pp. 927-946
Author(s):  
She-Chih Chiu ◽  
Chin-Chen Chien ◽  
Hsuan-Chu Lin
Keyword(s):  
Audit Quality ◽  
Univariate Analysis ◽  
Self Regulation ◽  
Discretionary Accruals ◽  
Content Type ◽  
Positive Effects ◽  
Audit Firms ◽  
Public Company ◽  
The Usa ◽  
Big Four

Purpose The purpose of this paper is to investigate the extent to which the transition from self-regulation to heteronomy has changed the gap in audit quality between Big Four and non-Big Four auditors. Design/methodology/approach This study analyzes publicly held companies in the USA between 1999 and 2012 using univariate analysis, multivariate analysis and quantile regression analysis. Audit quality is measured with discretionary accruals. Findings This study shows an insignificant difference in audit quality between the clients of Big Four and non-Big Four auditors after Public Company Accounting Oversight Board (hereafter, PCAOB) began its operations. In the analysis of the effects of PCAOB inspections on the audit quality of audit firms that are inspected annually and triennially, the findings show that the inspections have more positive effects when carried out annually. This suggests that the frequency of inspection is positively associated with audit quality. Overall, these results provide evidence that recent improvements in audit quality have been caused by changes in regulatory standards. Originality/value The paper provides three major original contributions. First, the authors add to the literature on audit quality by further demonstrating a reduced gap in audit quality between Big Four and non-Big Four audit firms due to heteronomy. Secondly, this study contributes to the debate as to whether independent inspections on audit firms are beneficial or not and suggests that the PCAOB inspections help increase audit quality. Finally, the results of this work contribute to the growing literature examining discretionary accruals.

The effect of CEO tenure and specialization on timely audit reports of Iranian listed companies

2018 ◽  
Vol 56 (2) ◽  
pp. 311-328 ◽  
Author(s):  
Mahdi Salehi ◽  
Mahmoud Lari Dasht Bayaz ◽  
Mohamadreza Naemi
Keyword(s):  
Significant Relationship ◽  
Design Methodology ◽  
Stock Exchange ◽  
Listed Companies ◽  
Audit Report ◽  
Content Type ◽  
Natural Logarithm ◽  
Ceo Tenure ◽  
Financial Expertise ◽  
Audit Reports

Purpose The purpose of this paper is to examine whether the characteristics of a CEO, that is, tenure and financial expertise, could affect the timeliness of an audit report. Design/methodology/approach Research data gathered from listed companies on the Tehran Stock Exchange during the four-year period 2013-2016. Findings The results obtained from model fittings indicated that there is only a negative and significant relationship between CEO financial expertise and natural logarithm of audit report lag and no significant relationship observed between the former and two other indices of timely audit report. Moreover, no significant relationship was found between the CEO tenure and other three indices of timely audit report. Originality/value This paper is the first study, which developed the literature of timely audit report using CEO tenure effect and financial expertise tests for timely audit reports in Iran.

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