financial statement audit
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2021 ◽  
Vol 1 (11) ◽  
pp. 674-685
Author(s):  
Darwen Juanta ◽  
Suklimah Ratih

Audit Delay is the duration needed for completion of the financial statement audit performed by the auditor measured from the date of the company's annual financial statements, to the date of the issuance of the independent audit report. The longer an Audit Delay will have a negative impact and will delay the publication of financial statement information which can affect economic decision making. The purpose of this study is to examine and determine the effect of Profitability, Company Size, Auditor Opinion, and Company Age on Audit Delay in retail trade sector companies in 2017-2019. This study uses data from retail trade sector companies in 2017-2019. After selecting the sample, there were 21 companies selected in this study. The statistical test used in this research is a descriptive statistical test. While the hypothesis test used multiple linear regression tests. The results of this test indicate that (1) Profitability and Auditor Opinion have negative effect on Audit Delay. (2) based on the conducted research, it can be seen that company size and company age have no effect on audit delay.


2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hyeesoo (Sally) Chung ◽  
Sudha Krishnan ◽  
John Lauck ◽  
Jinyoung Wynn

PurposeThis paper aims to investigate whether the stock market reacts to presentation options available to auditors under AS 2 (providing separate financial statement audit and internal control over financial reporting [ICOFR] audit reports, or presenting a combined report with both audit opinions). Design/methodology/approachDrawing on psychology theory, the authors hypothesize that presenting material weaknesses in ICOFR with an unqualified financial statement audit in a combined report effectively dilutes the weight placed on the material weaknesses perceived by investors. The authors further hypothesize the presentation format effect to vary by type of material weaknesses since some material weaknesses are considered more serious than others. The authors examine ICOFR and audit reporting and cumulative abnormal return data from 2007 to 2017 using two-stage least squares regression analysis. FindingsThe results show that a combined report of ineffective ICOFR and unqualified financial statement audit reduces the negative impact of material weakness disclosures on stock price reactions, but only when the weaknesses involve more serious entity-wide controls, as opposed to controls over specific accounts. Practical implicationsThe findings help inform preparers, auditors, regulators and investors about the potentially unintended consequences of reporting format choice. Originality/valueThe findings contribute to the literature on internal control disclosures by demonstrating that market reactions to these disclosures depend not only on the types of material weaknesses disclosed but also on their presentation format.


Author(s):  
Tammie J Schaefer ◽  
Veena L Brown ◽  
Matthew S. Ege ◽  
Noel Harding ◽  
Dana R. Hermanson ◽  
...  

We commend the International Auditing and Assurance Standards Board (the Board) on its efforts to determine “whether the auditing standards related to fraud and going concern need to be updated to reflect the rapidly evolving external reporting landscape.” We especially commend the Board on the timeliness of the call for input into these issues in that there is sufficient time to conduct research to further inform questions raised in the Discussion Paper and the questions that will inevitably arise as deliberations continue and progress is made on the project. We note below insights from the extant research literature as they relate to the questions posed in the Discussion Paper, but there remain many unanswered questions. We believe that many members of the Auditing Section of the American Accounting Association stand ready to work with the Board and other stakeholders to inform deliberations in this area.


Author(s):  
Stephen Errol Blythe, Ph.D., Ph.D, J.D.

Auditors are occasionally sued for their failure to detect fraud in the client firm during an audit. These lawsuits are typically grounded in professional negligence, negligent misrepresentation, fraud, aiding and abetting fraud, or federal securities fraud. The PCAOB recently promulgated AS 2401, “Consideration of Fraud in a Financial Statement Audit,” which contains fraud-related Generally Accepted Auditing Standards (GAAS) applicable to audits of publicly-traded entities. An auditor’s failure to comply with GAAS may be evidence of professional negligence. U.S. states are divided as to whether an auditor’s averment of compliance with GAAS in an audit report is a statement of opinion or a statement of fact. An auditor’s failure to investigate evidence indicating potential fraud is one factor used to determine an auditor’s legal liability. An auditor may be able to use the doctrine of in pari delicto as a defense if the plaintiff is also a wrongdoer.


2021 ◽  
Vol 15 (2) ◽  
pp. 38-55
Author(s):  
Ying Deng ◽  
Graham Bowrey ◽  
Greg Jones

There has been an ongoing concern with the quality of financial audit reports issued by registered public accounting firms in relation to financial accountability and transparency of the financial statements. In July 2009 the Public Accounting Oversight Board (PCAOB) released a concept paper outlining changes to the requirements of financial audit activities such as the inclusion of the engagement partner’s signature on the financial audit reports. The aim of these new requirements was to improve the accountability of engagement partners as well as enhance the perception of transparency of the audit reports. However, the contribution and effectiveness of these requirements to improve accountability and transparency of audit reports for various stakeholders relying on the audited financial information is questionable. This study explores the impact and effectiveness of changes to auditing regulation and processes through the application of Archer’s (1995) morphogenetic approach which is based on social conditioning, social interaction, and social elaboration where the structural influences provides the environment for agents to differentiate themselves. In addition, this study demonstrates how proposed regulation changes mould the qualities of audit regulation, the profession and the auditor whose perspectives deserved to be noticed from the dominant constituencies structured by the propositions of a morphogenetic analysis.


2020 ◽  
Vol 3 (2) ◽  
pp. 53-62
Author(s):  
Jeremiah Osida Onunga

There are some similarities between Financial Statement Audit (FSA) and Information System Audit (ISA). FSA is an examination of the reliability and integrity of financial statement records whereas ISA is a review and evaluation of the controls, risks, and system development within an Information system infrastructure to determine if the information systems are safeguards to protect against abuse, safeguards assets, maintains data integrity, and operates effectively to achieve the organization's going concern objective. Decision makers need to ensure that the process of collecting and evaluating evidence of an organization's information systems, practices, and operations are reliable. Data manipulation can be caused by external or internal threat. Internal manipulation threat is the most dangerous one because it is committed by authorized personnel which make it very difficult to be detected. In particular, the framework introduces an anomaly detection technique, one of the data mining methods, to determine the suspected transactions arise from both internal and external threat. Once the suspected transactions are identified, procedures and monitoring control will be in place to minimize each threat. The proposed framework is expected to help both universities and ministry of higher education managers at all levels to make a vital decision based on reliable and accurate information in East Africa.


Author(s):  
Lorraine S. Lee ◽  
Gretchen Casterella ◽  
Barry Wray

It is challenging for auditors to effectively and efficiently use data analytics in audit procedures and general ledger testing when the data acquired from clients is often incomplete and not in a usable format. Considerable time must be spent cleansing, transforming, standardizing, and validating the data prior to analyzing it. This problem motivated the AICPA task force to develop a set of Audit Data Standards for streamlining the exchange of data.  This paper describes an extensive exercise where students: 1) develop a Microsoft Access database that complies with the Audit Data Standards (ADS) for general ledger data; 2) cleanse and transform non-standardized client data for import into an ADS-compliant database; and 3) write queries for general ledger testing and journal entry testing. The exercise strengthens students’ database and query-writing skills while introducing the ADS in the context of realistic tasks to support a financial statement audit.


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