Impact of the COVID-19 Pandemic on Audit Quality: Lessons and Opportunities

Saddam A Hazaea,Saleh F A Khatib,Jinyu Zhu,H Gin Chong,Abdul Aziz Abdul Rahman,Mosab I Tabash

doi:10.28991/esj-2022-sper-06

Abstract

This study aims to identify the impact of COVID-19 on audit quality based on the investigation of three auditing aspects, namely: audit fees, audit procedures, and auditors' salaries in Saudi Arabia and Yemen. For data collection, fifty-five (55) questionnaires were distributed to internal auditors, external auditors, managers of audit offices, and financial managers. Eleven managers of audit offices and auditors were interviewed. A descriptive, regression analysis, and T-test were used. The study results reveal that the audit quality has been significantly affected due to the devastating effect of COVID-19 on audit fees, audit procedures, and audit staff salaries. In addition, the results show that Yemen is severely affected due to several factors, which include a lack of modern auditing systems. Also, private ownership of establishments and the absence of laws for determining audit fees negatively impacted the audit quality. Being the first of a practical kind, this study provides a significant contribution to the existing literature on the impact of COVID-19 on the quality of auditing. This would be useful for corporations, audit offices, auditors, and researchers. Moreover, this study can bridge the identified research gap on this topic and provide empirical evidence about the impact of COVID-19 on audit quality. Doi: 10.28991/esj-2022-SPER-06 Full Text: PDF

Highlights

The world faced and is still facing major health, social, and economic challenges due to the outbreak of COVID-19, causing an international crisis that affected several aspects of the world economy
Managers of audit offices recorded a slight increase of 62.5%, a percentage compared to the rest of the two categories (External auditors and financial managers)
We empirically examined the impact of COVID-19 on audit quality, and three auditing attributes were subjected to this investigation, namely audit fees, audit procedures, and auditors' salaries

Summary

Introduction

The world faced and is still facing major health, social, and economic challenges due to the outbreak of COVID-19, causing an international crisis that affected several aspects of the world economy. Its effects have surpassed expectations, and it poses health, economic, and social challenges. All institutions were affected, which led to an impact on all countries' economies because strict measures were taken by governments, including travel restrictions, social distancing policies, and the closure of institutions and centers of all kinds, in addition to orders to stay at home. The COVID-19 outbreak had significant financial and economic impacts in all countries [6]. The rapid spread of COVID-19 has led to the major economic turmoil that has resulted in investor distrust in the markets, which has caused financial pressures in all areas, affecting corporates’ financial performance [7]

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