International Journal of Auditing最新文献

Small charities in New Zealand are leading the way in service performance reporting and assurance, providing a unique context for exploring the existing practices and challenges. This study investigates small charities' assurance practices based on a content analysis of the performance reports of 120 small registered charities. We found that many small charities have complied with the assurance and reporting requirements of service performance information. However, their reported outcomes and outputs may not be significant, understandable, or sufficient. Auditors exhibit high tolerance towards these issues because of the subjectivity, auditability and materiality related to service performance information. Our study provides preliminary insights on service performance assurance for small charities, which presumably will continue evolving and hopefully improving. However, there is a concern that some charities and assurance practitioners view service performance assurance as a compliance exercise, which does little to improve accountability and transparency in the charity sector.

The audit profession has experienced a digital transformation over the last decade with a rapid shift towards remote auditing forced by the recent COVID pandemic. This shift has led to changes related to the way auditors work and perceive. Through a survey of external auditors, this study addresses how the changes from on-site audits to remote audits affect audit success (i.e., audit quality, audit efficiency, and auditors' job satisfaction); we also explore dispositional and situational factors that contribute to remote audit success. Our results show that working remotely leads to high audit efficiency. Auditors' flexibility management competency leads to high remote audit quality and efficiency; and a physical working environment conducive for concentrating on audit tasks is positively associated with audit efficiency and auditors' job satisfaction for remote audits. We also found that working remotely could enhance audit quality and efficiency when the audit firm provides sufficient support to auditors. Our study provides insights for audit firms, regulators, and other stakeholders as they evaluate the many challenges the audit profession faces in achieving remote audit success.

This paper investigates whether seasonal affective disorder (SAD) influences audit quality. On the one hand, a SAD-induced negative mood can render auditors risk-averse in auditing. On the other hand, SAD can lower their cognitive ability and efficiency at work. Our results show that absolute discretionary accruals and the likelihood of restatements are lower when the level of SAD is higher during the audit period, thus suggesting that SAD lowers auditors' willingness to accept aggressive reporting. Other tests show that the relationship between SAD and audit quality is not significantly different between the fall and winter or between industry expert and non-industry expert auditors. We also find that the association between SAD and audit quality is more pronounced for auditors located in northern states than southern states. Lastly, our results hold after controlling for management reporting choices, auditor busy season, auditor locality and other robustness tests. Overall, this paper contributes to the auditing literature by highlighting the effect of environmental factors on auditors' professional judgement from a psychological perspective.

We compare a group of firms switching auditors while their annual audit is underway (LateSwitches) with two control groups: firms switching their auditors during the fourth quarter of the fiscal year and firms switching their auditors during the first three quarters. First, we find that LateSwitches tend to be riskier with regard to litigation risk, audit risk and business risk. Second, we find that LateSwitches have a higher chance of announcing restatements and receiving going concern opinions in the first year of audit with the successor auditor. Despite the higher risks, we fail to find that LateSwitches disclose more adverse events in Forms 8-K than other groups. We also document that stock market returns following an auditor change are more negative for LateSwitches. These results indicate that LateSwitches stand to face significant negative consequences when the relationship with their auditor is terminated abruptly in the final phases of an audit.

Guided by a call for research on small entities using innovative methodologies, this study is the first to analyse small municipality audit fees on a per capita basis. The research utilises a complete dataset of all 92 Connecticut municipalities that meet the study criteria and does not rely on samples or survey results. The measure of per capita was utilised to account for differences between town populations allowing for a more accurate comparison of audit fees and audit fee determinants across municipalities of differing populations. Consistent with the premise that auditee characteristics are an important consideration in audit fees, we find that when examining audit fees on a per capita basis in the subset of small municipalities: (1) smaller towns pay considerably more for audit services than larger towns, (2) towns with an ethics committee oversight function and best practices financial reporting practices have lower per capita audit fees than those that do not and (3) audit firm size, audit firm tenure and existence of audit/finance committee oversight have no significant impact on per capita audit fees. The results of this study help fill a void in the audit literature by providing insights into audit fee determinants in small municipalities by considering the added feature of a per capita analysis. The authors also sought to provide additional information for consideration in the International Auditing and Assurance Standards Board (IAASB) efforts to streamline standards for auditing of less complex entities.

We investigate how investors perceive audit report lag. We argue that the cost of equity will be lower (higher) if a long audit report lag links positively to confidence (scepticism) among investors about the credibility of reported earnings. We find that the audit report lag is positively associated with the cost of equity. In the additional analyses, we report that the audit committee's effective monitoring, Big N auditors and industry-expert auditors moderate the positive association between audit report lag and the cost of equity. Lastly, the short window return-earnings association test suggests that investors perceive that long audit report lag reflects less credible financial reporting quality. In summary, our findings provide implications to the client firms, the practitioners and the regulators by showing that the firm's cost of raising equity capital is positively associated with the audit report lag.

The study aims to examine how changes in the Kuwait audit market following abolition of mandated joint-audit requirements impact audit reporting lag. Analysis tests whether joint-/solo-audit switches (following abolition mandated requirements) affected the level and change in audit reporting lag. The study also tests if the joint-audit pair combination is a decisive factor in determining the (a) level and change in audit reporting lag and (b) audit quality following a switch to a solo-audit. Data is collected from 132 Kuwait-incorporated, nonfinancial firms listed continuously on the Boursa Kuwait from 2015 to 2019 that provides 660 firm-year observations (528 firm-years main empirical tests). Analysis indicates that the following abolition of mandated joint-audit requirements, Kuwait listed firms swiftly switched to solo-audits, generally leading to a significant increase in audit reporting lag. Tests indicate that audit reporting lag was significantly less for joint-audits relative to solo-audits. Additional results show a significant negative association between the quality of joint-audit pair combinations and audit reporting lag. However, there is no significant association between audit reporting lag and the quality of solo-audit type. Test results indicate mixed support for the perception that a joint-audit pair combination significantly influences the level and change in audit reporting lag following the switch to a specific solo-audit type.

The purpose of this paper is to explore the prospects of blockchain technology (BCT) on audit practice. Semi-structured interviews were conducted with practitioners from the Big Four and non-Big Four firms; their responses were analysed thematically. The findings are significant regarding the three main themes identified: namely, audit practice, procedures and the challenges associated with the adoption of BCT. The adoption of BCT has the potential to impact audit procedures to a certain extent. The interviewees believed that BCT would transfer Audit 3.0 to Audit 4.0. For instance, external confirmations could be enhanced by the move towards a more automated verification process. In addition, the audit budget time could be decreased with the help of this technology in the long run. The need for physical observation could be diminished because of this technology, as it could track observations on a real-time basis. This technology could also facilitate analytical procedures, as it has the potential to incorporate other analytical tools simultaneously. Furthermore, it could reduce the costs associated with fraud detection to a great extent, as it provides a tamper-proof, immutable audit trail.

There is an ongoing debate among regulators and researchers about concerns that the provision of non-audit services (NAS) to audit clients may impair audit quality by reduced independence. In this context, there can be different perspectives on audit quality. Given recent regulatory changes in the European Union (EU) aimed to improve investor confidence in audited financial statements, it is critical to understand the association of NAS and audit quality perceptions by investors before and after the regulation. We investigate whether NAS affect shareholder and lender perceptions of audit quality, measured by the cost of debt and equity capital. For a sample of German firms, we find significant positive associations of NAS with both cost of debt and cost of equity. Other assurance and consultancy services drive this effect. We do not find this effect in the pre-regulation period, but in the transition period when the regulation was passed but NAS restriction did not yet apply. In the post-regulation period, it only persists for lenders. Thus, the EU regulation may have increased (or inadequately created) independence concerns for shareholders and lenders and curbed these concerns for shareholders only.