Do adjustments bring auditors peace of mind? The effect of previous audit adjustments on current-year audit pricing

IF 2.8 3区 管理学 Q2 BUSINESS, FINANCE Managerial Auditing Journal Pub Date : 2022-10-28 DOI:10.1108/maj-02-2022-3461
Songsheng Chen, M. Magnan, Zhi-liang Tian, L. Yao
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引用次数: 2

Abstract

Purpose This paper aims to investigate the effect of prior years’ audit adjustments, a proxy for auditors’ private information regarding the persistence of their clients’ audit risk, on audit pricing in the current year. Design/methodology/approach The authors use unique data sets of audit adjustments and audit fieldwork days from China, and a regression approach, to test their hypothesis. Findings The authors find that larger previous audit adjustments are associated with higher current-year audit fees, which is partially attributed to increased audit effort. The authors further document that the results are more pronounced when audit adjustments are consistently made in the same direction or more recent; in these cases, a larger percentage of the total effect is also attributable to the risk premium, instead of audit effort. Finally, the authors find that the effect of previous audit adjustments on current-year audit fees is stronger for firms with younger chief executive officers and specialist auditors. Originality/value To the authors’ best knowledge, they are the first to test the implication of auditors’ private information in setting audit fees. In addition to demonstrating that audit fees consist of a risk premium and a component to cover related costs, the authors further show variations in the relative importance between costs and risk premium under various contexts.
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调整是否能让审核员安心?以往审计调整对本年度审计定价的影响
目的本文旨在调查前几年的审计调整对本年度审计定价的影响,审计调整是审计师关于其客户审计风险持续性的私人信息的代理。设计/方法论/方法作者使用来自中国的审计调整和审计实地调查天数的独特数据集,以及回归方法来检验他们的假设。研究结果作者发现,以前较大的审计调整与本年度较高的审计费用有关,这在一定程度上归因于审计工作量的增加。作者进一步证明,当审计调整始终朝着同一方向或最近进行时,结果会更加明显;在这些情况下,总影响的较大百分比也归因于风险溢价,而不是审计工作。最后,作者发现,对于首席执行官和专业审计师较年轻的公司,以前的审计调整对本年度审计费用的影响更大。原创性/价值据作者所知,他们是第一个测试审计师私人信息在设定审计费用中的含义的人。除了证明审计费用由风险溢价和支付相关成本的组成部分组成外,作者还展示了在各种情况下成本和风险溢价之间的相对重要性的变化。
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来源期刊
CiteScore
5.40
自引率
13.80%
发文量
45
期刊介绍: The key areas addressed are: ■Audit and Assurance (financial and non-financial) ■Financial and Managerial Reporting ■Governance, controls, risks and ethics ■Organizational issues including firm cultures, performance and development In addition, the evaluation of changes occurring in the auditing profession, as well as the broader fields of accounting and assurance, are also explored. Debates concerning organizational performance and professional competence are also covered.
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