Overseeing the external audit function: Evidence from audit committees’ reported activities

Recently, in response to calls for more transparency, many firms have begun reporting the activities undertaken by their audit committees in overseeing the work of the external auditor. We use a composite measure of audit committees’ reported oversight activities for a sample of S&P 1500 firms and examine the extent to which these reported activities are associated with audit quality. We find that when firms’ audit committees report exerting strong oversight, they have higher audit quality as proxied by audit fees, discretionary accruals, the likelihood of meeting or beating earnings benchmarks, and restatements. We also find that the market reacts positively to reports indicating strong oversight, consistent with perceptions of higher audit quality. This study extends prior literature on audit committees by introducing a new comprehensive measure of audit committees’ reported oversight activities and sheds light on how these activities map into audit quality.

Factors influencing stakeholder’s judgment on internal audit function’s effectiveness and reliance

Purpose This study aims to explore the effectiveness and reliability of the performance of internal auditor by the stakeholders for their decision making. The absence of rules and regulations generates the debate that the non-standard reporting of the assessment of the internal controls system’s assessment by internal auditor and reliance by the external auditor. Design/methodology/approach The study used the mixed-method (triangulation) for the analysis quantitative data was used for regression with Smart PLS 3.2.8, and the qualitative data was used to prove and strengthen the results. The data is collected for five IVs (Objectivity of IAF, Work Performance, Competence, Internal Control System’s Assessment and Sourcing of IAF) and their impact on two DVs (Effectiveness and Reliance). This study used five areas as the target audience (Internal Auditor, External Auditor, Professional bodies, Shareholders, SECP and SBP). A total of 150 respondents were approached and received a valid response of 98 respondents. Findings The study explores the positive relationship between Objectivity of IAF, Work Performance, Competence, Sourcing of IAF on Effectiveness and Reliance. Internal Control System’s Assessment having significant relation with Effectiveness and non-significant with reliance because the absence of rules makes it unreliable for stakeholders. Originality/value The study found that the system for reporting the internal control needs rules and regulations advancement on the immediate basis for the betterment and safeguard of stakeholders to avoid the events like WorldCom and ENRON.

The Role of External Auditor Responsible in Examining and Assessing the Sustainability Dimensions of the Audited Companies

The study aims to identify the responsibility of the external auditor in examining and evaluating the dimensions of sustainability information from the perspective of the auditors who are working in Iraqi companies and auditing offices. To achieve this goal, a questionnaire was created and distributed to a random sample of the study population consisting of auditors working in Iraqi companies and auditing offices. 83 questionnaires were retrieved, and all were valid for statistical analysis, which indicates100% of the sample study. The results of the study show that there is awareness among the external auditors in Iraq about their responsibility to examine and evaluate information related to dimensions of economic, environmental and social and the governance rules for sustainability and their application of the standards on the global reporting initiative (GRI). Besides, the presence of high trend among the auditors causing them to be accountable to the society who are the stakeholders, causing problems that can hinder the performance of the auditors in fulfilling their professional responsibility. This study will highlight several pieces of evidence from the works of literature as references of information to the external auditor and the corporate sustainability in Iraq to the future empirical and theoretical researcher.

Fraud Pentagon and Fraudulent Financial Reporting: Evidence from Manufacturing Companies in Indonesia and Malaysia

Research aims: This study aims to examine the influence of fraud pentagon concept on fraudulent financial reporting.Design/Methodology/Approach: This study’s population was manufacturingcompanies listed in Indonesia Stock Exchange and Malaysia Stock Exchange. 120 manufacturing companies in Indonesia and 118 manufacturing companies in Malaysia were involved as samples. The data analysis method used in this study is multiple linear regression.Research findings: The results showed that financial target, financial stability, quality of external auditor, external pressure, and nature of industry variables influenced fraudulent financial reporting. In contrast, personal financial need, ineffective monitoring, change in auditor, change in director, and frequent number of CEO’s pictures variables had no effect on fraudulent financial reporting. For Indonesia, it was found that financial target, financial stability, and the quality of external auditor influenced fraudulent financial reporting. While, in Malaysia, the results showed that financial stability, external pressure, and nature of industry variables influenced fraudulent financial reporting in Malaysia.Theoretical contribution/Originality: These results support the financial target and quality of external auditor hypothesis in Indonesia, financial stability hypothesis in Indonesia and Malaysia, external pressure and nature of industry hypotheses in Malaysia, stating that fraud pentagon factors affect fraudulent financial reporting. It is also proved that there are different levels of fraudulent financial reporting in Indonesia and Malaysia. Indonesia has fraudulent financial reporting cases higher than Malaysia.

Does External Shariah Audit (ESA) Matter? Practitioners' Views from the Islamic Banking Industry

This paper investigates the possibility and feasibility of the Islamic banking industry in Malaysia to hire external Shariah audit (ESA) services in the audit fraternity as one of the Shariah governance mechanisms to strengthen Shariah compliance in the industry. Methodologically, the study employs a qualitative method by utilizing semi-structured interviews with nine (9) key industry players consists of few Shariah auditors, heads of Shariah audit, Shariah committee, and Chief of Shariah officer. Data gathered from the interviews have been transcribed and analyzed using Atlas.ti. The findings from the interview provide interesting mixed views in the sense that both parties have their justifications to support their arguments based on experience and observation. However, considering the current practices by the Islamic banking industry, it could be inferred that the Malaysian Islamic banking industry is not ready to exercise the ESA practices. The future study may consider other views from other relevant parties such as the regulator and external auditor to produce a more solid and robust result. Keywords: External Shariah Audit, Islamic Banks, Qualitative Method, Shariah Governance

AN ANALYSIS STUDENTS' WRITING OF USING GENERIC STRUCTURE OF HORTATORY EXPOSITION TEXT BY THE SECOND GRADE STUDENTS OF MAN 2 KEDIRI ACADEMIC YEAR 2019/2020

This research aimed 1) to know the generic structure written in the hortatory exposition text. 2) to know the quality of generic structure written in the hortatory exposition text, and 3) to know the problems are faced in using the generic structure of written hortatory exposition text. This research used the descriptive qualitative method and used students’ writing of Hortatory Exposition text to be analyzed. This research sample was 25 from 32 students of second-grade at MAN 2 Kediri, from XI-MIPA 3. Data collection was carried out by conducting writing test and interview. The data was analyzed by using contextual data which includes three procedures such as: reduction, data presentation, and drawing conclusions and verification. Furthermore, the researcher only used an external auditor to review the entire project's data validity. This result showed that there were five problems that are faced by students 1) developing the ideas into a paragraph, 2) translating the text into English, 3) determining the topic or title in accordance with the theme, 4) making recommendations, 5) making thesis and argumentation. The researcher suggested that the teacher should explain the materials step by step and intensively.

The impact of periodic change of the external auditor on the credibility of financial reports in Sudanese banks

This study aims to measure the impact of periodic change of the external auditor on the credibility of financial reports in Sudanese banks. The target population of the study were the employees in Sudanese banks in Khartoum State. The study used descriptive analytical approach where the questionnaire is used as a tool for data collection. 200 questionnaires were administered to the targeted sample, and 172 were completed and returned with a recovery rate of 86%. However, by using linear regression for analysis, the result found that there is a significant effect of the periodic change of the external auditor on the credibility of financial reports of the Sudanese banks, the results revealed that there is a need for moral obligations, integrity, and honesty in issuing high-quality of financial reports to gain trust among users.

Faktor-faktor yang mempengaruhi voluntary disclosure pada perusahaan yang terdaftar di Bursa Efek Indonesia

The purpose of this research is to examine the factors influencing the voluntary disclosure of a company and the level of disclosure made by the company. Secondary data in this study were obtained from the company's annual report on the Indonesia Stock Exchange (IDX). Purposive sampling is being used sampling method. The number of samples was 2.230 company annual reports. Data is being processed using Panel Regression Analysis through Eviews 10 and SPSS 22. This research led to the conclusion that the variables company size, leverage, managerial ownership, and board independence have the results of a positive significant effect on voluntary disclosure. Significantly negative results have an effect on voluntary disclosure owned by foreign ownership variables, while other variables namely profitability, state ownership, institutional ownership, the board size, and type of external auditor have no significant effect on voluntary disclosure variables.

The Fair Value Measurement Challenges Faced by the External Auditor: Kurdistan Region -Iraq

This study aimed to identify the most important challenges facing auditors when measuring fair value FVMs from three axes, namely identifying which challenges are most influencing auditors to direct attention towards them, and revealing the extent to which the inherent auditing risks are affected by fair value evaluation estimates. The third axis of this study raises discussions about the reliability of audit evidence relating to fair value and assures that disclosed and recognized fair values ​​are guiding values. The field study was applied to a sample of external auditors in the West Bank, where the researcher used the descriptive analytical approach in the field side and used the inductive approach to test the study hypotheses. The study found a set of results; the most important challenge facing the auditor in auditing fair value estimates is the lack of access to recent amendments to the international auditing standards for fair value accounting estimates. The study results also confirmed the impact of auditing risks with fair value estimates and measuring them at higher rates in many cases, including (the absence of active markets, the presence of significant misstatements, and the difference in the basis for measuring fair value).