Audit Quality Attributes Research Articles

KARAKTERISTIKE REVIZIJE I KVALITETA FINANCIJSKOG IZVJEŠTAVANJA MEĐU LISTANIM NEFINANCIJSKIM TVRTKAMA U NIGERIJI

This study is set up with the purpose of examining the effects of audit attributes on financial reporting quality of quoted Nigeria non-financial firms. The study also reviewed the moderating effect of external audit quality on the connection between internal audit characteristics and the quality of financial reporting (FRQ). Longitudinal panel research design was used in this study. The population of the study comprises of 112 non-financial firms quoted on the Nigeria Exchange Group (NGX). The study make use of secondary data obtained from 72 listed non-financial firms in Nigeria over the period covering 2013 - 2020. Analysis of the data collected for the study was done using panel regression, correlation analysis and descriptive statistics. The results revealed that AC meetings and AC gender diversity has significant positive impact on the FRQ report while AC independence and AC size have no significant influence. In addition, the study found significant moderating effect of audit report lag on the link between AC meeting and FRQ, as well as on the link between AC gender diversity and FRQ implying that audit report timeliness strengthens the positive and significant impact of AC meetings and gender diversity on FRQ. The study concluded that audit quality attributes are significant in improving the FRQ of the listed non-financial firms in Nigeria. Hence, the study recommends that regulators and decision makers of the firms should ensure higher female representation in the AC. Also, AC of the firms in Nigerian non-financial sector should be encouraged to meet regularly.

Audit Quality Attributes and Firm Profitability: Empirical Evidence

Audit Quality Attributes and Firm Profitability: Empirical Evidence

Internal Audit Function Quality and Audit Committees’ Practices: Survey Evidence from Jordan

The current study examines the extent to which audit committees comply with the requirements of corporate governance in Jordan and describes the current status of internal audit function. In addition, the study examines empirically the relationship between the internal audit quality and the compliance of audit committees with the governance requirements. The results from 49 respondents indicate that audit committees comply with the requirement of corporate governance and no significant difference is found in such compliance due to sector. In addition, the internal audit quality attributes are met among Jordanian companies to a considerable extent. Further, the independence and objectivity dimension of internal audit quality has a positive and significant relationship with the compliance of audit committees with governance requirements. Internal audit competence and due professional care have no significant relationship with audit committees compliance. One important implication of the current study is the development of a scale to measure the compliance level of audit committees with the governance requirements that can be used by both academics and decision-makers in firms.

PENGARUH ATRIBUT-ATRIBUT KUALITAS AUDIT TERHADAP KEPUASAN KLIEN (Studi Empiris Pada Perusahaan Perbankan di Kota Medan)

This research is a study about attributes of audit quality. The purpose of this research is to re-examine the effect of attributes of audit quality to client satisfaction as Bhen et al (1997).
 This research conducted with survey on perception of financial managers or controller, that distributed by mail survey to 100 financial manager of banking in Medan City. Unit analysis are the financial managers or controller of banking. There are fifty five questionaires (55%) received and analyzed by Ordinari Least Square supported by SPSS 10.00 program.
 The results showed that some of attributes of audit quality effected client satisfaction. The results showed that there were some different result between this study and Bhen et al. (1997).

PEOPLE AND AUDIT PROCESS ATTRIBUTES OF AUDIT QUALITY: EVIDENCE FROM MALAYSIA

This study seeks to add to understanding of the concept and attributes of audit quality from the perspective of those responsible for delivery audit services, the auditors, as a key constituent group in the auditing system. The study surveyed two groups of external auditors (group 1- audit partners and managerial level and, group 2 - senior auditors and junior auditors), as a basis to compare their perceptions on important of auditors and audit process attributes in achieving audit quality in practice. The study was conducted in the form of a survey, with data being gathered via questionnaire. Returned surveys from external auditors yielded a 37% response rate. Overall, top 5 highest rated attributes of audit quality reported to be most important in determining audit quality are: compliance with the International Standard Quality Control (ISCQ) 1, obtaining credible and sufficient audit evidence, technical expertise of audit team, audit work meeting the audit firms’ quality standards, and competency of the audit team. Further analysis shows that the two groups of respondents have differential views on attributes of audit quality in practice. Group 1 perceived attributes of audit quality are related to auditor’s assessment of risk and internal quality review procedures within the audit firm. In comparison, group 2 perceived auditors’ competency and compliance with relevant standards as indicators of audit quality. This study suggests differences in underlying view about attributes audit quality in practice by the two groups of auditors. Public accounting firms might be interested to understand such underlying differences so that efforts in improving audit quality in practice would be focusing on the key attributes that perceived to be important on delivery high-quality audit services. This study is significant by extending the literature on audit quality and also provides useful input to public accounting firms in improving audit quality in practice.

FRAUD CONFIRMATION, CLIENT SATISFACTION AND CLIENT LOYALTY

This study aims to find evidence, the influence of Audit Quality Attributes, Client Satisfaction and Client Loyalty, which are moderated by Fraud Confirmation. The research was conducted at the BKM, a community-based organization, formed by the Government, through the Kotaku Program. The research used Regression statistical analysis and conducted a hypothesis test. Regression analysis used includes Simple Linear Regression Analysis, Multiple Regression Analysis, and MRA Regression Analysis, and Path Model Linear Regression Analysis. This study also pays attention to the calculation of the coefficient of determination to give an idea of the ability of the model in explaining the phenomenon of Client Satisfaction and Client Loyalty. The result that both partially and simultaneously, Audit Quality Attributes, Fraud Confirmation affected Client Satisfaction and Loyalty. The research also succeeded in proving that Client Satisfaction mediates the effect of Audit Quality Attributes on Client Loyalty, but failed to provide empirical evidence, that the Fraud Confirmation moderated the effect of Audit Quality Attributes on Client Satisfaction and Loyalty. Contribution to audit practices, where it is important to realize Client Satisfaction through Audit Quality Attributes and Fraud Confirmation, especially in situations where Fraud acts are suspected.

Associations and Networks of International Accounting Firms

Commonly examined attributes of audit quality in international markets include accounting firm size (proxied for by Big 4 membership) and industry expertise, which is highly correlated with accounting firm size. In this study, we focus on an important but often overlooked sector of the international audit market: non-Big 4 accounting firms. Specifically, we examine whether membership in an international accounting association or network (AAN) allows non-Big 4 accounting firms to provide higher audit quality. Using a difference-in-differences research design and data from 24 countries, we find that audit quality improves after small international accounting firms join an AAN. We also find that AAN-member audit quality is not significantly different from Big 4 audit quality when audit clients are similarly sized. These findings have important implications for accounting firms, audit committees, regulators, and investors in international markets.

Attributes of audit quality and weak fiscal sustainability countries

This paper seeks to examine the effect that audit quality has on audit opinion expression in the context of the recessive Eurozone environment. Based on a sample consisting of all the European Monetary Union countries for a period of nine years (2005-2013) our findings suggest that the size of the auditing firm and auditor's expertise in an industry continues to be a proxy for audit quality and impacts audit opinion during the recession. However, this finding does not persist for audit tenure. These findings provide evidence with respect to audit quality differentiation in a monetary union, with a common currency and accounting standards in the presence of an economic recession. It attempts to provide useful insights for auditors, accountants and regulators concerning the regulatory framework and the efficiency of various audit policy changes especially in periods of fiscal distress.

Attributes of audit quality and weak fiscal sustainability countries

This paper seeks to examine the effect that audit quality has on audit opinion expression in the context of the recessive Eurozone environment. Based on a sample consisting of all the European Monetary Union countries for a period of nine years (2005-2013) our findings suggest that the size of the auditing firm and auditor's expertise in an industry continues to be a proxy for audit quality and impacts audit opinion during the recession. However, this finding does not persist for audit tenure. These findings provide evidence with respect to audit quality differentiation in a monetary union, with a common currency and accounting standards in the presence of an economic recession. It attempts to provide useful insights for auditors, accountants and regulators concerning the regulatory framework and the efficiency of various audit policy changes especially in periods of fiscal distress.

Atribut Kualitas Audit di Indonesia: Perspektif Penyaji dan Pengguna Laporan Keuangan Samirah Dunakhir

The project aims to investigate the attributes of audit quality in Indonesia by considering input from groups of audit clients and external statement users. Beside the facts of the important to consider the issue from different groups of stakeholders such as audit committee chairpersons and loan officers, there have been very few published empirical studies of perceived audit quality in Indonesia from those groups’ perspectives. This study attempts to address the gap by identifying the major attributes that enter into the determination of audit quality in Indonesia based on the perspectives of different groups of clients and external users. Survey questionnaires are sent to a random sample of the two groups. The result shows that there are significant difference perceptions between the groups.

Comments by the Auditing Standards Committee of the Auditing Section of the American Accounting Association onFramework for Audit Quality, Consultation Paper by the International Auditing and Assurance Standards Board

SUMMARYOn January 15, 2013, the International Auditing and Assurance Standards Board (IAASB) solicited public comments on the exposure draft of its consultation paper entitled A Framework for Audit Quality (the Framework). The four-month comment period ended on May 15, 2013. This commentary summarizes the contributors' views on this exposure draft (the exposure draft and related information are available at: http://www.ifac.org/publications-resources/framework-audit-quality).This consultation paper makes great strides toward meeting the IAASB's strategy of “enhancing the quality of assurance” and “supporting global financial stability.” The three-by-three design (attributes of audit quality coupled with engagement, firm, and national levels; see page 24 of the Framework) and detailed outline of inputs, outputs, context, and interactions provides practitioners, regulators, and other stakeholders with a common audit-quality roadmap for implementation, communication, and research agendas. As financial systems continue to become more integrated, the Framework supports the global financial system and economic stability by providing worldwide coordination of the expectations of auditors, regulators, investors, and other stakeholders. We also believe that the Framework should be of great use to auditing academics and doctoral students, both as a teaching and research tool. Summarized below are our specific comments on specific issues raised in the consultation paper.

THE EFFECT OF AUDIT QUALITY ATTRIBUTES ON CLIENT SATISFACTION

This study aims to determine whether the quality attributes affect the quality of the audit clientsatisfaction. The primary data were taken through questionnaires using non probabilitysampling with convenience sample technique. The sample being processed consists of 37 respondentsthat financial managers of companies already involved in services, trades and industries.The statistical analysis is OLS (Ordinary Least Square) using SPSS version 17.0.The results of this study concluded that audit quality attributes are formed by the attributes ofexperience in audit, understanding industry customer to respond to the needs of the clientcomplying with common rules, the attitude of care, strong commitment to quality, audit firm,leadership participation doing work field properly, the participation of the audit committee,high ethical and not easily to believe simultaneously and partially are not influential significantlytoward the customer satisfaction. In this case, such finding is in terms of significancelevel each of audit quality has significance level above 0.05 or 5 percent.

The Relative Importance of Audit Quality Attributes

Corporate collapses and audit failures have threatened the credibility of the audit function, with audit quality once again being a major issue. Motivated by the significance of auditing and perceptions of audit quality in enhancing the reliability and credibility of financial statements, this article investigates the relative importance of audit team and audit firm attributes in perceptions of audit quality by users of audit services. Data are gathered from 81 users of audit services and analysed using adaptive conjoint analysis in order to measure the relative importance of audit team and audit firm attributes in perceptions of audit quality. The results show that, in general, users of audit services perceive audit team attributes as being relatively more important than audit firm attributes in perceptions of audit quality. The findings of the study have implications for regulators and the accounting profession concerned with improving confidence in corporate governance and the effectiveness and integrity of the audit process, and for audit firms in monitoring and promoting the quality of their audit services.

Audit quality attributes, client size and cost of equity capital

PurposeThe purpose of this paper is to investigate the impact of certain audit quality attributes, namely auditor size, auditor industry specialization and auditor tenure on a client firm's cost of equity capital.Design/methodology/approachThe paper uses empirical data to construct a measure of ex ante cost of equity capital for each firm and year using analyst forecasts. Independent audit quality measures used are auditor size, auditor industry specialization and auditor tenure. Firm cost of equity capital is regressed against the three independent variables and appropriate control variables.FindingsThe paper finds that auditor size (auditor is a member of the BigX), auditor industry specialization and auditor tenure are negatively associated with the client firm's cost of equity capital. However, the paper finds that this effect is limited only to small client firms, potentially reflecting the poor information environment associated with such firms.Practical implicationsThe study highlights the importance of audit quality attributes in determining the firm's cost of capital. It also highlights ways in which firms (especially small firms) can reduce the cost of equity capital by improving their information environment through the judicious selection of auditors.Originality/valueThis is believed to be the first paper to examine whether the effects of three audit quality attributes (auditor size, auditor industry specialization and auditor tenure) on a firm's cost of capital are dependent on the client's size. The paper empirically shows that such effects are more pronounced for smaller clients.

Audit quality attributes of European Union supreme audit institutions

PurposeTo examine the enabling legislation of European Union (EU) member country supreme audit institutions (SAIs) for their accountability to parliament and independence from the executive arm of government.Design/methodology/approachThe sample comprises the SAIs of the 25 EU member countries and the European Court of Auditors. Data were collected on 30 accountability and independence issues directly from the enabling legislation of these SAIs.FindingsResults indicate that apart from a number of instances where the enabling legislation is silent, provisions generally provide for adequate independence of the SAIs from the executive arm of government. On the other hand, the provisions for the accountability of the SAIs to parliament are somewhat weaker.Research limitations/implicationsIf actual practice or convention does not reflect the literal interpretation and application of the enabling legislation, then SAIs may have more or less independence and/or accountability than suggested by the analysis of the legislation alone.Practical implicationsResults of this study highlight where current provisions could be further strengthened through appropriate amendments to the enabling legislation.Originality/valueSuch findings may be useful to policy makers and legislators.

Audit Quality Attributes, Client Size and Cost of Capital

We investigate the effects of audit quality attributes related to the auditor and the auditor-client relationship on the firm's cost of capital. We further examine whether these effects differ according to client size. We focus on two auditor characteristics; auditor size and auditor industry specialization and two auditor-client relationship characteristics; auditor tenure and the auditor's opinion. We use the client firm's cost of capital as a proxy for the degree to which the market values these quality attributes. Auditor size, industry specialization, tenure and type of auditor opinion are important determinants of perceived audit quality. The first three characteristics are negatively related to the cost of capital. We also find that that the client firm's cost of capital increases if the auditor issues any opinion other than a clean opinion. These results are driven by small clients, suggesting audit quality attributes are highly appreciated for smaller clients.

How is Audit Quality Perceived by Big 5 and Local Auditors in China? A Preliminary Investigation

This study seeks to determine what attributes are perceived by various groups of players in the Chinese auditing market as being important to audit quality. Attributes of audit quality were incorporated into a survey instrument which was administered to auditors from a local CPA (Certified Public Accountant) firm and a Big 5 firm operating in Shanghai, as well as subjects belonging to another group—regulators. Results indicate that the attributes perceived as having the most positive effect on audit quality correspond to a very high degree with those identified in the prior (mostly US‐based) literature. Attributes thought to be most detrimental to audit quality, on the other hand, were developed from consultations with key players, and were unique to the Chinese context. Wide differences were observed between auditors and regulators (e.g., regulators and Big 5 auditors), but not among the independent practitioners (local CPAs and Big 5 auditors). In addition to heightening the current understanding of what attributes of audit quality are important to audit firms operating in emerging markets such as China, these findings are expected to hold significant implications for strategy formulation by public accounting firms in China, both local as well as international.

Client Satisfaction and Big 6 Audit Fees*

AbstractThis study examines whether client satisfaction can help explain cross‐sectional variation in Big 6 audit fees paid by Fortune 1000 clients. After controlling for other factors related to audit fees (including audit quality attributes), client satisfaction with the audit team is positively associated with fees. It appears that a dimension of client satisfaction unrelated to audit quality attributes is the factor associated with an audit fee premium. This dimension of satisfaction may reflect other aspects of service quality not documented in the literature, or it may simply enable an auditor to earn economic rents through enhanced bargaining power. Client satisfaction with the audit firm does not appear to be priced in this segment of the audit market.The results are consistent with the view that a Big 6 audit is a service that is differentiable in the eyes of client management, and the results highlight the importance of the audit team composition in allowing a Big 6 audit firm to differentiate the audit product. Also, if auditors are earning local rents due to enhanced satisfaction levels, then a perfect competition model may not be appropriate for the audit services market.