Sector Audit Research Articles

A Comparative Analysis of Independent Audit Sectors in Turkiye And Uzbekistan

The independent audit sector consists of independent auditing companies and professionals providing auditing services to businesses and organizations. The sector has a critical importance for developing countries to provide and sustain qualitative operations of enterprises and organizations. A strong independent audit sector helps to improve the operations of entire private sector and hence provides better integration to international markets In this context, due to the importance of the subject, a research on the audit sector is carried out in this study. The main axis of the study is the comparative analysis of the independent audit sectors in Uzbekistan and Türkiye. Since there is no other study comparing these two countries in terms of this sector, this paper tries to make a contribution to the related literature. The study’s central hypothesis is that Uzbekistan has a significant potential to catch international auditing standards. A comparative analysis is conducted for independent audit sector of two counties in order to test this hypothesis

Assessing the Integration of ChatGPT in IT Audits that Support Financial Statement Audits

Artificial intelligence (AI) has brought significant changes in many fields, including the audit sector. Generative AI, a type of AI, leverages deep learning models to generate human-like content like images and words. ChatGPT, a type of generative AI, is a language model capable of revolutionizing information technology (IT) audits in support of financial statement (FS) audits. This paper highlights and examines advantages and disadvantages of incorporating ChatGPT into IT audits that support FS audits. ChatGPT offers benefits such as efficiency, precision, and speed, which are vital in the IT audit process. However, it also comes with challenges that need to be addressed. This paper contributes to the growing body of knowledge related to the use of ChatGPT in IT audits that support FS audits. The paper further provides insights into how audit firms can effectively adopt ChatGPT to improve the quality, efficiency, and effectiveness of their IT and FS audits.

TOE framework elements used on Artificial Intelligence implementation in the accounting and audit sector

The purpose of this article is to clarify the impact of technological, organisational, and environmental contexts in which Artificial Intelligence solutions are implemented by the accounting and audit companies in Europe. The organizational and environmental contexts were not enough studied in accounting and audit field but are becoming more and more important in the future. The applied methodology was based on a structured interview, to which it has answered 62 top financial specialists from 18 European countries, in companies with more than 10 years of experience in the accounting and audit sector. To design the structured interview, it was used the Technology-Organisation-Environment framework. A serious concern for the companies’ representatives consists in the lack of specialists capable to understand and work with Artificial Intelligence solutions. One option that is generally preferred by companies is to prepare their employees for these new tasks, rather than hiring qualified persons. There are two methods that can be used when implementing Artificial Intelligence, to buy specific provided solutions from third parties, or to developed them internally. Data storage and security, the complexity of Artificial Intelligence solutions and government regulations do not represent a threat to companies willing to develop this area. The main contribution of this study consists of an extensive analysis of the most important elements of Technology-Organisational-Environmental framework and their applicability for accounting and audit companies, which implemented or are willing to implement Artificial Intelligence solutions.

ISSUES OF INTERACTION DURING THE STATE AUDIT BY THE STATE AUDIT BODIES

The article raises the problem of duplication functions in the state audit system of Kazakhstan. It was also shown what other risks this problem can cause. In this regard, in determining the relevance of this issue, an analytical study was conducted, a review of existing regulatory legal acts was carried out. An analysis of the functional obligations and powers of state audit bodies in the audit system was carried out, practical examples were given. A comparative analysis of the state of the state audit sector in other countries was carried out. The results of the analysis showed the existence of the problem of duplication functions in the state audit system. This issue not only reflects the shortcomings of the state audit system, but also negatively affects its further improvement. At the same time, based on the results of the analytical study, a number of proposals were proposed for my part. In turn, I hope that the proposed proposals will eliminate incessant inspections in the industry and optimize duplication functions. At the same time, it should compensate for the shortcomings in the state audit system and contribute to the development of the country as an improved stable institution in the public administration system.

ОГЛЯД ВЕЛИКИХ МІЖНАРОДНИХ АУДИТОРСЬКИХ КОМПАНІЙ

The article examines the world's largest auditing companies and analyzes their activities. The purpose and key indicators of each company are defined. The analysis is focused on determining the goals and key indicators of each company, as well as identifying the size and dynamics of changes in the income of international audit organizations. In particular, it was investigated which types of activities bring the most income in 2022. Various global events, such as the war in Ukraine and quarantine restrictions, have forced major international audit firms to make strategic decisions. As part of this study, a SWOT analysis was developed, aimed at determining the strengths and weaknesses of each company, as well as identifying opportunities and threats of the external environment. Additionally, the article examines the dynamics of changes in the company's revenues, which ranks fifth after the Big Four. The authors analyze the global statistics for the years 2021 and 2022 aimed at understanding the development of this player in the market. The methodological basis of this study includes a wide range of scientific approaches, including general scientific, theoretical and special methods that contribute to the comprehensive analysis of phenomena and processes. The following methods are used in this article: – Statistical and economic analysis. This method is used to summarize and present the results of the economic activity of audit companies during 2022. It allows us to carefully examine the financial indicators and trends that determine the performance of companies. – Comparative analysis. The comparison method is used to compare the structure of revenues and the dynamics of their changes during 2021-2022. This makes it possible to identify key differences and trends in the development of the audit sector. – SWOT analysis. This method is used to identify the strengths, weaknesses, opportunities and threats of the Big Four companies. SWOT analysis helps to identify strategic advantages and potential risks that may affect their activities. – Graphical analysis. This method is used to visualize and visualize data, which helps in better understanding of relationships and trends. Graphs and charts make information more accessible and digestible for readers. The general system of methodology allows not only to consider various aspects of the auditing field in detail, but also provides means for objective and comprehensive coverage of research results and conclusions.

The evaluation of mandatory audit firm and auditor rotation: literature review

Purpose- The purpose of this study it to evaluate the impacts of mandatory audit firm and auditor rotation on audit quality and auditor independence by literature review. Methodology- This study empoys a literature review on the auditor rotations in the auditing firms. Findings- In the first stage of literature review, it is determined that there are positive sides of mandatory audit firm and auditor rotation reflected on audit quality and auditor independence. Among them such facts are observed; a client’s be audited by the same audit firm and auditor for a long time can increase intimacy and therefore, professional skepticism can be declined. Furthermore, mandatory rotation can prevent poor audit procedures. Besides, it is also emphasized that financial information users’ perception regarding auditors’ independence is positively effected and with a new point of view, rotation decreases the risk of misevaluation caused by repetitional tasks and risk of making mistakes. It is also observed that a positive competition in the audit sector would be created and therefore, there would be an era for the firms other that the big four. On the other hand, negative sides of rotation draw the attention in the literature review, as well. It is underlined that it could take long time period to determine the firm’s organization structure, its operations, exposed risks, due to new auditor’s inexperience and this could lead to cost increases. Furthermore, following the rotation, long-term-based audit information could disappear and efficiency and productivity of audit process could decline. Besides these, by the approach of the planned rotation date, it is observed that especially in the last year careless behaviours could be seen and therefore, mandatory audit quality could be affected negatively. Limited number of nonaudit firms on behalf of clients, new auditors high confidence in existing audit reports and therefore, their incapability of making tiny distinctions, are the other findings of the study. Conclusion- Literature review indicates that there are mixed findings regarding mandatory rotations’ impacts on independence and quality other than positive and negative results. Hence, it is seen that there is no consensus on mandatory rotation in terms of rotation period and its impact on independence and quality. Field researches especially by considering qualitative methods are important to explain the results obtained by quantitative researches. In-depth interviews with experienced international audit sector representatives are important to explain the rotation impact levels of international audit network (Big Four and other international firms) and national audit firms and their comparisons, ex-audit firm turning back ratios and its reasons. In this way, it could be supportive to decide whether existing legislation is capable of creating independence and quality in audit and by new amendments it could be possible to develop confidence in audit firms, audited clients and capital markets. Keywords: Mandatory auditor rotation, mandatory audit firm rotation, quality in independent audit, auditor independence JEL Codes: M42, M48

Supervision of professional nursing practice in Brazil: a scoping review.

to map studies that analyze the audit process of nursing councils. this is a scoping review, anchored in the JBI framework, with the guiding question: what is the evidence of the audit process of legal practice of nursing by class councils (COFEN/COREN system)? The searches were carried out in October and November 2022 without limitation of language and year. of the 9 selected studies, all are Brazilian and published from 2014 onwards. Among the topics addressed are the role, challenges, costs and difficulties in nurse auditors' daily work process, in addition to the contribution of the audit sector in Brazil. the studies gathered discuss aspects related to costs, challenges and difficulties, but there is no focus on corrective, disciplinary and educational activities as well as little is said about the audit process, its reporting, referral and outcomes.

THE ADAPTATION OF INDEPENDENT AUDIT PROFESSION TO THE DIGITAL ERA

Today, the independent audit profession has updated the auditor’s role from working among piles of paperwork to digital age. Unprecedented innovations in this area are cognitive technology (artificial intelligence), predictive analytics, workflow automation and smart digital hubs and electronic audit apps, eliminating boring and labor-intensive manual processes that are traditionally associated with an audit process. Moreover, these innovations can increase the quality of audit and provide more benefits for customers, auditors, investors and capital markets as a whole. On the other hand, in line with these developments, today's auditors should keep their professional knowledge and skills up-to-date in order to meet the challenges posed by the profession and should be able to follow the era closely. In addition to these, the COVID-19 pandemic has forced the audit industry to work remotely and strengthen its infrastructure with digital technologies. The full disclosure restrictions during the pandemic have pushed the audit industry for remote working. This study aims to highlight the innovations experienced by the audit profession and to identify the factors for those who are willing to work in the audit in the future. In addition, suggestions are made in order to achieve efficient and quality results in the face of positive situations such as technological developments that may occur in the audit sector in the future or negative situations such as global pandemics. This study contributes to the literature on emphasizing the need to transform audit services by integrating new technologies and enriching studies on audit quality.

Impact of business owner’s gender on the audit firms income: the case of Kazakhstan

Kazakhstan is characterized by women’s significant representation in the financial industry, including the audit sector, which distinguishes the country from other states and can lay the basis for a competitive advantage of the economy. The literature review on audit firms in Kazakhstan showcases a scarcity of studies about gender’s influence on audit firms’ financial performance. The paper aims to identify the correlation between business owners’ gender and the net income of Kazakhstani private audit firms. The publicly available data on audit companies and the size of their paid taxes were processed and analyzed with the quantitative research method. The data of 117 audit firms for 2021 were scrutinized through the parametric Student t-test for independent samples with the utilization of the Statistical Package for the Social Science (SPSS). To analyze and adjust the normal distribution of the studied data, frequency histograms, taking logarithms, and formalized tests by Kolmogorov-Smirnov and Shapiro-Wilk criteria were applied. The findings demonstrate the significant correlation between women owners and the size of paid taxes by their audit firms: women positively contribute to audit firms and generate higher net earnings compared with their men counterparts. The paper postulates the necessity of women’s more intensive involvement in higher levels of decision-making to increase the performance indicators of the financial industry in Kazakhstan. The study supports the idea that less gender bias in the expert field can be a good indicator of women's real contribution to Kazakhstan's economy. The auditing field should serve as a solid role model for lowering the barriers to female leadership in other industries.

Artificial Intelligence in audit

The main objective of this paper is to identify the benefits of applying the Artificial Intelligence (AI) in the audit sector. The study employed a questionnaire for a research sample including 206 auditing and accounting practitioners and students. Data were collected via an online survey. A principal axis factor analysis with the Promax rotation was conducted to assess the underlying structure for the points of the questionnaire. The research outcomes indicate that, in the opinion of the respondents, AI adoption increases audit efficiency, and enhances client communication and service. Finally, AI can also automate time-consuming and routine tasks. The three indicated factors account for 62.223% variance. The findings reveal the advantages of AI adoption and could support managers in deploying new technology in their organizations. The research limitation concerns the fact that this study focused only on respondents from Poland.

Analysis of potential factors influencing audit quality: The moderating effect of time budget pressure

In a pandemic situation the audit sector, either government or public, is affected in terms of audit implementation, especially in carrying out field audits. However, auditors can tackle this issue by applying new methods. Therefore, the purpose of this study is to examine the effect of auditor skepticism, auditor competence, understanding of information systems, and auditor motivation on audit quality. It also assesses whether time budget pressure has a moderating effect on the relationship between auditor competence, auditor motivation, and audit quality. 58 questionnaires were issued to government internal auditors in the Principal Inspectorate of Indonesia’s Supreme Audit Institution in the AKN V and VI units, and the data were acquired using a Google Form. SmartPLS software version 3.0 was used to analyze data applying Structural Equation Modelling (SEM). Purposive sampling was used in this investigation, which took a quantitative approach. The paper uses the theory of planned behavior and the inverted U theory. The results conclude that auditor skepticism, auditor competence, and understanding of information systems have a significant positive effect on audit quality. Auditor motivation has no significant positive effect on audit quality. Furthermore, time budget pressure does not moderate the effect of auditor competence and auditor motivation on audit quality. This study is expected to provide valuable input to improve the audit quality and assist auditors in the AKN V and VI units uphold professionalism and integrity in carrying out audit examinations even under the condition of a pandemic.

WOMEN MANAGERS IN AUDITING SECTOR: A DESCRIPTIVE RESEARCH ON TURKEY

This study examines the relationship between female managers' presence in audit firms and audit firms' characteristics. In line with the employment rates obtained from POA, it is observed that gender inequality in the audit sector started from employment. In the research part, 90 audit companies' data that published transparency reports in 2018 were used. It has been determined that there are very few female managers in the sector; in fact, 47 of 90 companies do not have a female partner, board member, or responsible auditor. It is also analyzed that in the older audit firms, the audit firms that earn more revenue and big four firms, the number of female managers is significantly higher than in other firms. The study is essential in revealing that women's employment in the audit sector is a crucial problem and detects the positive relationship between corporate governance and female managers.

Application of Technical and Soft Skills in the First Job Experience by Accountancy Graduates in the Philippines: Implications for Accounting Curriculum Development

Currently, the labor workforce in the Philippines needs accountants brought about by the ASEAN integration. As such, there is a greater demand for universities to produce graduates who are ready to face the real world of business. To produce quality graduates, the technical and soft skills of the accountancy graduates must be in harmony. This study aimed to ascertain the technical and soft skills matching in relation to the first job experience of accountancy graduates. A descriptive-correlational design was utilized in this study. Stratified random sampling was utilized to get the 70-study sample. Self-constructed questionnaires were used in this study. Content validity was done by five experts. Percentages, mean, stand and regression were used in the analysis of data. The work profile revealed the following: 37.14% of accountancy graduates are working in the audit sector, 34.29% worked in General Accounting/Finance; 70% of respondents are currently working with 1 - 3 years of experience, while 30% working beyond 3 years from the date of graduation; 45.71% of the respondents underwent internship at Alas Oplas & Co. CPAs, and 58.57% of accountancy graduates who took the internship program spent at least 160 hours on their internship. Regression analysis revealed that the technical skills gained in the internship program of the accountancy graduates were significantly related to the technical skills applied during their first job experience. On the other hand, the Accountancy Program’s soft skills are significantly related to the soft skills applied during their first job experience.

Audit Institutions in the European Union: Public Service Promotion, Environmental Engagement and COVID Crisis Communication through Social Media

This article analyses Social Media (SM) use as a promotion tool for public institutions in the public audit sector. The authors propose a quantitative model to assess online engagement of 94 European audit institutions (national and regional) with their stakeholders, based on SM and web activity metrics of these institutions, with a focus on pressing matters such as environment, sustainability and the current COVID pandemic. The proposed model may be applied to assess organisations from any public or private sector. The research finds that SM presence helps audit institutions to promote their services more effectively by directing their stakeholders to extensive content on the audit institutions’ websites, thus contributing to an increase in their web traffic. Most audit institutions do not have a strategy for the online promotion of their services and work outputs, nor do they, in general, use SM for intensively promoting environmental or sustainability-related messages. The only exception is the European Court of Auditors, who clearly promotes its environment-related activity by actively and increasingly posting on SM and referencing its reports. Audit institutions could benefit from the nature of their evidence-based activity and promote their findings on emerging topics to positively influence public policies and accountability at all levels.

Compliance no Terceiro Setor

Tendo em vista a grande relevância que as entidades paraestatais conquistaram em decorrência da sua atuação paralela à Administração Pública nacional, este artigo tem como mote central a investigação de aspectos pertinentes quanto à interiorização dos princípios éticos e morais relativos à cultura do SEBRAE Ceará, com foco no setor de Auditoria. O objetivo principal do estudo foi o conhecimento das variáveis que influenciam a internalização do compliance na cultura organizacional do SEBRAE, as quais são frutos das ações destinadas à implementação do Programa de Integridade - PI, assim como a valorização dos princípios da transparência e da ética organizacional pelos colaboradores. Observou-se que há uma limitação, especialmente quando se trata de recursos destinados ao desenvolvimento do PI e do apoio da Alta Administração em reconhecer e considerar as questões relacionadas ao citado Programa. Apesar dos obstáculos descritos no estudo, observou-se, também, um grau de resiliência dos colaboradores frente aos ideais do programa.

Generations Y and Z in Auditing—Solutions for Enthusing the Young Generations about a Job in the Audit Sector

Generations Y and Z in Auditing—Solutions for Enthusing the Young Generations about a Job in the Audit Sector

The Relationship between Organizational Justice and Auditors’ Professional Skepticism with the Moderating Role of Organizational Commitment and Identity

The purpose of this study is to investigate the relationship between organizational justice on professional skepticism with the moderating role of organizational commitment and identity. In order to collecting data the questionnaire employed. The statistical population of the study is 137 auditors working in the audit organization and private audit sector institutes in Iran. Structural equation modeling approach based on partial least squares (PLS) method was used to test the hypotheses. The results of data analysis showed that there is a positive and significant relationship between organizational justice and professional skepticism with moderating role of organizational commitment, but between organizational justice and professional skepticism with moderating role of organizational identity does not exist a significant relationship. Considering that, the results of this research are aimed at better perception and enhanced and more significant recognition of the competitive advantage of the organization; besides, the relationship between organizational justice on auditor’s professional skepticism with moderating role of organizational commitment and identity so far has not been tested yet in the society of audit and consideration to the relationships between these variables will derive the performance of audit firms with added productivity and value.

Organizational cynicism and employee performance: evidence from a Sri Lankan audit sector

Abstract: Purpose: This study examined the relationship between organizational cynicism and employee performance at diverse hierarchical levels in big four audit firms in Sri Lanka. Research methodology: By adopting quantitative research methodology, questionnaires were used as a primary data collection method from audit trainees, audit supervisors, and audit managers in big 4 audit firms in Sri Lanka. This was conducted by deploying a convenient sampling technique, and regression models are used by applying SPSS. Results: The study found a significant negative relationship between organizational cynicism and employee performance at audit firms and that each dimension of organizational cynicism. Limitations: Organizational cynicism was analyzed based on employee perception, although there are other influencing factors for organizational cynicism. Contribution: This study's findings are expected to support audit supervisors in avoiding the discovered negative effect instead by lessening the degree of psychological contract violation and organizational politics. Keywords: Organizational cynicism, Employee performance, Audit firms, Affective cynicism, Cognitive cynicism, Behavioral cynicism Keywords: 1. Organizational cynicism 2. Employee performance 3. Audit firms 4. Affective cynicism 5. Cognitive cynicism 6. Behavioral cynicism

The Effect of Corporate Governance Mechanism on the Financial Performance of Microfinance Institutions Evidence from Ethiopian Microfinance Institutions

The study was aimed to examine the effect of corporate governance attributes on the financial performance of MFIs. Explanatory research design with mixed research approach was employed to carry out the study. From 12 legally registered microfinance institutions at NBE and operating in Addis Ababa city administration, 7 MFIs was purposively selected to investigate the effect of corporate governance variables such as board size, board educational qualification, board experience in the financial sector, meeting frequency of the board, board audit committee size and board independency on the financial performance of MFIs measured by Return on Equity and Operational Self Sufficiency. In addition to main explanatory variables, control variables such as MFIs size, leverage and MFIs age were also included in the study variables. Both primary and secondary data were used in which primary data regarding board characteristics was collected through questionnaire and secondary data was obtained from NBE and AEMFI. Panel data covering six year from 2010-2015 was analyzed for seven microfinance institutions. The regression results revealed that board size, board educational qualification, meeting frequency, board independency and MFIs age have positive and significant relationship with financial performance; whereas board experience in the financial sector and board audit committee size has statistically negative association with MFIs’ financial performance. Leverage and the size of microfinance institutions do not have significant impact on the financial performance of Microfinance Institutions. Based on empirical result of the study, it is recommended that board audit committee sizes should be kept low. Furthermore, in order to reduce the problem of management failures which put at risk the money obtained from government and other sources, the governance system of MFIs have to be effective. Keywords: Corporate Governance Mechanisms, Agency Theory, Financial Performance, MFI DOI : 10.7176/RJFA/10-21-03 Publication date: November 30 th 2019

Do government-experienced auditors reduce audit quality?

PurposeRecent studies regarding auditor experience generally focus on auditor overall experience in accounting, auditing, finance and related fields (Hardies et al., 2014), auditor sector and domain experience (Bedard and Biggs, 1991; Hammersley, 2006), auditor experience as CPA (Ye et al., 2014; Sonu et al., 2016) or big N experience (Chi and Huang, 2005; Gul et al., 2013; Zimmerman, 2016) or auditors’ international working experience (Chen et al., 2017). But there is little attention paid to where auditors obtained their experience from? And how do auditors with government experience affect audit quality (AQ)? This paper aims to present the effect of auditors with government experience on AQ.Design/methodology/approachThe authors used Turkish publicly traded firms in Borsa Istanbul between the year 2008 and 2015 to test the hypothesis. The sample comprises 1,067 observations and eight years. Two main proxies of government experience are used in this paper. The first proxy is auditor’s government experience in the past. The second proxy is the continuous variable which is “the logarithmic value of the number of years of government experience”. Further, auditor overall experience in auditing, accounting, finance and other related fields are also used as a control variable. Audit reporting aggressiveness, audit reporting lag and discretionary accruals are used as proxies of AQ. Besides this, the authors adopted the model to estimate the probability of selecting a government-experienced auditor, and they presented the regression results with the addition of inverse Mills ratio.FindingsThe main findings are consistent with conjecture. Government-experienced auditors do not enhance AQ. They are aggressive, and they complete audit work slowly and they cannot detect discretionary accruals effectively. Spending more time in a government agency makes them more aggressive and slow, and they do not detect earnings management practices. The Heckman estimation results regarding the variable of interest are also consistent with the main estimation results. In addition, the authors found in predicting government-experienced auditor choice that family firms, domestic firms and firms that reported losses (larger firms, older firms) are more (less) likely to choose government-experienced auditors.Research limitations/implicationsThis study has some limitations. The authors used a small sample to test the impact of government-experienced auditors on AQ because of data access problems. Much data used in this study were collected manually. Earnings quality was calculated using only discretionary accruals. Real activities manipulation was not used as the proxy of AQ in this paper. The findings from emerging markets might not generalize to the developed countries because the Turkish audit market is developing compared to Continental Europe or USA.Practical implicationsThe findings are considered for independent audit firms. Audit firms may employ new graduates and train them to offer more qualified audit work for their clients. The results do not mean that government-experienced auditors should not work in an audit firm, or that they should not establish an audit firm. It is clear that government-experienced auditors provide low AQ in terms of audit reporting aggressiveness, audit report lag and discretionary accruals. But as they operate more in the independent audit sector, they will become successful and provide qualified audit work. One other thing we can say is that it is perhaps better for government-experienced auditors to work in the tax department of independent audit firms.Originality/valueThis paper tries to fill the gap in the literature regarding the effect of auditor experience on AQ and concentrates on a different type of experience: Auditors with government experience.