Abstract
To ensure the independence of auditors and the credibility of financial statements, this study investigates if Jordanian manufacturing companies change their external auditors. Moreover, assess if that change is influenced by the International Code of Ethics for Professional Accountants (ICEPA). The study figured out the viewpoints of external auditors and financial managers of public industrial companies listed on the Amman Stock Exchange. Auditor’s changing data is gathered from the annual reports of (59) manufacturing firms from 2006 to 2015. (280) questionnaires were collected from financial managers and auditors of manufacturing firms to assess if auditors comply with ICEPA. The binomial test and the logistic regression analysis were used. The study showed that the change of the external auditor in Jordanian companies is significantly affected by the ICEPA. However, external auditors and financial managers have different views of the effects of the ICEPA on the change of the external auditor in Jordan.
Highlights
Economic collapses and recent corporate scandals at the global and local levels have caused the public to conclude that the company’s financial statements, earnings quality, and auditing standards have abruptly and synchronously broken down
This study aimed to investigate the degree to which Jordanian industrial firms change their auditors and to analyze the impact of conformity with the International Code of Ethics for Professional Accountants (ICEPA) on the change of external auditors from the point of view of external auditors and financial managers of public industrial holding companies
The results show that during the study period, Jordanian public shareholding industrial firms listed on the Amman Stock Exchange changed their external auditors, and this is the first study to investigate the change of external auditor in Jordan, according to the researchers’ knowledge
Summary
Economic collapses and recent corporate scandals at the global and local levels have caused the public to conclude that the company’s financial statements, earnings quality, and auditing standards have abruptly and synchronously broken down. It is expected that this study will help provide Jordan’s accounting and audit profession regulators and policymakers with a consistent outlook that will lead to the organization and implementation of regulations and the enactment of new legislation accompanying the rapid development of the accounting and audit profession. This strengthens and encourages the independence of auditors, thereby improving the invulnerability and sustainability of the audit profession, which positively reflects on the coherence and protection of the national economy and the stock market from more shocks.
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