Specialist Auditors Research Articles

The Influence of Audit Switching, Workload and Auditor Specialization on Audit Quality in the Public Accounting Office in Medan

This study aims to empirically examine the effect of audit switching, workload, and auditor specialization on audit quality at Public Accounting Firms in Medan City. The sample of this study was 103 public accountants at 25 KAPs in Medan City using the validity-reliability test to test the validity and reliability of the questionnaires given and the classic assumption test, which is required for conducting multiple linear regression analysis. The research results and testing of the hypotheses that have been carried out show that the first hypothesis is accepted, where there is a positive and significant effect of audit switching on audit quality. The second hypothesis is rejected, where workload has a negative but insignificant impact on audit quality. The third hypothesis is accepted, where there is a positive and significant effect between auditor specialization and audit quality. The fourth hypothesis is accepted, where audit switching, workload, and auditor specialization simultaneously affect audit quality. Keywords: audit switching, workload, auditor specialization, and audit quality

Effect of Management Ownership, Industry Auditor Specialization, Audit Complexity and Auditor Switching on Timeliness of Financial Reporting

This study aims to determine the effect of managerial ownership, auditor industry specialization, complexity audit, and auditor switching on the timeliness of submitting financial reports to Energy sector companies listed on the Indonesia Stock Exchange in 2017-2021. The method in this research is a quantitative research method. The population in this study are energy sector companies listed on the Indonesia Stock Exchange during 2017-2020. The sampling technique in this study used a purposive sampling technique with 41 research samples within five years so that a total of 205 research data were obtained. Data analysis used descriptive statistical analysis method and logistic regression analysis using SPSS 26 software. The results showed that managerial ownership, auditor industry specialization, audit complexity had a positive effect on the timeliness of financial reporting, while switching auditors did not affect on the timeliness of financial reporting. The accuracy of submitting financial statements to companies tends to be influenced by factors such as high levels of managerial ownership, auditor industry specialization, and audit complexity, but the presence of switching auditors in the company does not affect the time of submission of financial statements.

Within or across Auditors? Understanding Knowledge Transfer in Audit Production

SYNOPSIS Knowledge transfer affects audit production: it is an underlying reason for specialization premiums and economies of scale. Using measures of client-level comparability to proxy for the internal (within-auditor) and external (across auditors) knowledge transfers that occur during audit production, our results indicate that internal knowledge transfer subsumes external knowledge transfer. Although this result may seem intuitive, recent research implies external knowledge transfer significantly impacts audit efficiency. Thus, the dominance of internal knowledge transfer is important to document. We also provide evidence that the benefits of auditor specialization are not uniform, as typically modeled in the literature. Specifically, we provide evidence that knowledge transfer enhances the efficiencies from auditor specialization. Finally, we find knowledge transfer is associated with greater audit efficiency, irrespective of auditor specialization or industry homogeneity. Overall, our results reaffirm the importance of within-auditor knowledge transfer and highlight the importance of considering client characteristics when examining knowledge transfer. Data Availability: Data are available from the public sources listed in the text. JEL Classifications: M41; M42.

Global-Level Auditor Industry Specialization and the Cost of Equity Capital

SYNOPSIS We examine (1) the association between global-level and joint global-, national-, and city-level auditor industry specialization and audit clients’ cost of equity capital and (2) how the national investor protection environment impacts the preceding association. Our results indicate that cost of equity capital is negatively associated with global-level and joint global-, national-, and city-level auditor industry specialization. This relation is incrementally more negative when the auditor is a joint global-, national-, and city-level industry specialist than when the auditor is not a global-level industry specialist. We also find the negative relation between cost of equity capital and joint global-, national-, and city-level auditor industry specialization holds only in countries with strong investor protection. We further show investors perceive potential accentuation of accruals quality and ownership concentration on cost of equity is mitigated by joint global-, national-, and city-level specialist auditors. JEL Classifications: M42; G32; K49.

How do auditor attributes affect bank earnings management? Evidence from Africa

PurposeThis paper aims to examine the impact of the auditor's characteristics on bank's earnings management (EM) through loan loss provisions (LLP) for African banks.Design/methodology/approachThis study is based on 360 bank-year observations from 14 African countries for the period 2011–2016, discretionary LLP is used as proxy for EM. Panel regressions have been conducted.FindingsThe authors' findings reveal that auditor's industry specialization and tenure exert a negative and significant influence on the extent of LLP-based EM. The results also show that total fees paid to the banks' auditors are positively related to the extent of EM. In a further analysis, the authors find that industry specialist auditors are more effective in reducing the incoming-increasing. Similarly, the positive relationship previously found between EM and total fees still holds only for income-increasing. Moreover, auditor tenure negatively impacts both income-increasing and income-decreasing EM. As for auditor change, results reveal differential effect on EM.Originality/valueThe current research extends prior literature and provides an understanding of an important external monitoring mechanism, the external audit, within African banks. To the best of the authors' knowledge, there is a paucity of cross-country studies that has addressed the influence of auditors' attributes on banks' EM in Africa.

Peran Spesialisasi Auditor dalam Memoderasi Financial Distress dan Komite Audit Terhadap Audit Report Lag

Objectives. This study aims to investigate the factors that influence the occurrence of audit report lag, considering financial distress and audit committees as the cause, and auditor specialization as a moderating variable.Design/method/approach. This study's population comprises mining companies listed on the Indonesia Stock Exchange (IDX) between 2017 and 2021. A purposive sampling method was employed to select a sample of 229 listed companies. Data analysis involved the use of the multiple linear regression method and the moderated regression analysis.Result/findings. Financial distress and the presence of audit committee are likely to influence the audit report lag. However, it was observed that auditor specialization does not moderate the impact of financial distress and the audit committee on the audit report lag.Theoretical contribution. This study investigates the moderating role of auditor specialization on the impact of financial distress and audit committees on audit report lag. Notably, this simultaneous examination of these variables has not been conducted before.Practical contribution. The findings indicate that both financial distress and the presence of audit committee play crucial roles in ensuring punctual submission of audited financial reports. This punctual reporting helps companies manage their financial condition effectively and enhances the audit committee's effectiveness in improving the punctuality of financial reporting.Limitations. The auditor specialization index in this study exclusively focuses on companies within the mining sector.

Do Industry Specialist Audit Firms Influence Real Earnings Management? The Role of Auditor Independence

In this study, we provide empirical evidence on how the relationship between industry specialist auditors and real earnings management (REM) is moderated by the auditors’ independence. From a sample of Malaysian listed companies for the period 2009 to 2016, the results indicate that companies with specialist auditors are less likely to practise REM. However, this negative association is less pronounced when the independence of the specialist auditor is low, suggesting that the presence of economic bonding between the specialist auditor and the client may allow the auditor to become sufficiently lax to align with the interests of an economically important auditee. Our findings remain robust after controlling for endogeneity and self-selection bias and performing several further analyses. This study is the first to prove that auditor independence can moderate the effectiveness of industry specialist auditors in mitigating REM practices. The results have implications for policy makers to enhance the current regulation structure of auditing and accounting professions. The results also provide new insights into the association between audit quality, REM and auditor independence in an emerging economy. En este estudio proporcionamos evidencia empírica sobre cómo la relación entre los auditores especializados en la industria y la gestión de ganancias reales (REM) es moderada por la independencia de los auditores. A partir de una muestra de empresas malasias que cotizan en bolsa para el período comprendido entre 2009 y 2016, los resultados indican que las empresas con auditores especializados son menos propensas a practicar REM. Sin embargo, esta asociación negativa es menos pronunciada cuando la independencia del auditor especialista es baja, lo que sugiere que la presencia de vínculos económicos entre el auditor especialista y el cliente puede permitir que el auditor sea lo suficientemente laxo como para alinearse con los intereses de un auditado económicamente importante. Nuestros resultados siguen siendo sólidos tras controlar la endogeneidad y el sesgo de autoselección y realizar varios análisis adicionales. Este estudio es el primero que demuestra que la independencia de los auditores puede moderar la eficacia de los auditores especializados en el sector a la hora de mitigar las prácticas REM. Los resultados tienen implicaciones para que los responsables políticos mejoren la actual estructura de regulación de las profesiones de auditoría y contabilidad. Los resultados también aportan nuevos conocimientos sobre la asociación entre la calidad de la auditoría, el REM y la independencia del auditor en una economía emergente.

Tax Avoidance: Peran Karakter Auditor Menekan Munculnya Tax Avoidance (Kasus Pada Perusahaan yang Tergabung dalam JII70 Tahun 2021)

<p class="bdabstract"><em><span>The research is intended to test the effect of auditor characteristics (audit specialization, audit tenure, audit opinion and audit fees) on tax avoidance empirically. Testing this research has a fundamental essence, namely testing agency theory in the form of economic rational content in taxation so that it creates motivation to carry out tax avoidance. This research was conducted at companies that are members of the Jakarta Islamic Index (JII70) in 2021. The data is in the form of secondary data collected by documentation procedures. The total population of the study was 81 companies, the number of samples was 44 companies, and the sampling technique used was purposive sampling. To analyze the data using ordinary least squares. The results showed that two of the four hypotheses were accepted: audit specialization and audit fees significantly affected tax avoidance. However, audit tenure and audit opinion have no significant effect on tax avoidance. Observing the results of this hypothesis implies that in accordance with the rules of agency theory, economic rational strength creates tax avoidance motivation to defend the company's interests.</span></em></p>

Audit partner industry specialization and audit report lag: does changing in the audit reporting requirements matter?

Purpose This study aims to examine the relationship between the individual auditor’s industry specialization and the audit report lag (hereafter ARD). Further, it explores whether changing in the audit reporting requirement (i.e. the adoption of ISA701) influences the auditor’s industry specialization effect on the ARD. Design/methodology/approach A large data set of companies listed on the NASDAQ OMX Stockholm over the period 2010–2019 has been analyzed. Least squares regressions have been estimated to provide empirical evidence for the researched hypotheses. Findings The research findings indicate that the ARD is shorter for client firms audited by an industry specialist audit partner. Testing for the moderating role of changing in the auditing reporting regulation on the relation between the audit partner’s industry specialization and the ARD, the authors reveal that all client firms (except client firms with industry specialist audit partners) experienced an increase in the ARD. Overall, the baseline regression findings are found to be robust to the endogenous auditor choice and multiple measures of both the ARD and the auditor’s industry specialization. Originality/value This paper provides novel evidence on the relationship between the audit reporting lag and industry specialization from the individual auditor perspective, an issue that has hitherto been unexplored. The regression results further contribute to the upsurge debate about the consequences of changing in the audit reporting model by providing consistent support for the importance of industry specialization of the audit partner in minimizing costs derived from the former requirement.

Effect of Audit Tenure, Audit Fee, Size of Public Accounting Firm, Auditor Specialization, and Audit Rotation on Audit Quality

Audit quality is all possibilities (probability) where the auditor when auditing the client's financial statements can find violations that occur in the client's accounting system and report them in the audited financial statements, where in carrying out their duties the auditor is guided by auditing standards and the relevant public accountant code of ethics. This study aims to examine the effect of audit tenure, audit fees, size of public accounting firm, auditor specialization, and audit rotation on audit quality. Audit quality is measured using a dummy variable by looking at going concern opinions made by independent auditors, audit fees are measured by Ln (natural logarithm), audit tenure is measured by calculating the number of years in which the same auditor has engaged the client, size of public accounting firm, specialization auditors, and rotation is measured using a dummy variable. The population in this study are Transportation and Logistics Service companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period which have been audited. The sample selection was carried out using purposive sampling method. The analytical method used to test the hypothesis is logistic regression analysis. The results of this study indicate that audit specialization has an effect on audit quality, while audit tenure, audit fees, size of a public accounting firm, and audit rotation have no effect on audit quality.

A Study on the Relationship between Industrial Specialist Auditor and Audit Fee ：Focusing on Industrial Expertise of Engagement Partner

A Study on the Relationship between Industrial Specialist Auditor and Audit Fee ：Focusing on Industrial Expertise of Engagement Partner

DAPATKAH UKURAN KAP MEMPENGARUHI AUDIT REPORT LAG DENGAN SPESIALISASI AUDITOR SEBAGAI PEMODERASI

This research aimed to analyze the effect of the variable kap size on audit report lag with auditor specialization as a moderating variable. The population in this research were mining companies listed on the indonesia stock exchange for the period of 2017-2019. Sample on this research was selected by purposive sampling method and order to obtain a 21 sample companies as 63 data analysis units. Hypothesit test in this research used of path analysis. Path analysis was an analytic on the research model that has been made previously. WarpPLS 7.0 was a software used in this research. The result of this research showed that kap size has a negative effect significant on audit report lag, auditor specialization was unable to moderate the relationship between kap size and audit report lag.

PENGARUH UKURAN KAP, UKURAN PERUSAHAAN KLIEN, SPESIALISASI AUDIT DAN FEE AUDIT TERHADAP KUALITAS AUDIT (STUDI EMPIRIS PADA PERUSAHAAN MANUFAKTUR SUB SEKTOR MAKANAN DAN MINUMAN YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2019-2021)

The purpose of this study is to analyze the effect of public accounting firms size, clients company size, audit specialization and audit fees on audit quality on food and beverage sub-sector manufacturing companies listed in Indonesia Stock Exchange in 2019-2021. The type of this study is quantitative using secondary data collected from financial statements and annual reports listed in the IDX. The population in this study is the food and beverage sub-sector manufacturing companies listed in Indonesia Stock Exchange in 2019-2021 total 39 companies and the sample in this study were 23 companies that had been selected with certain criteria. Data analysis techniques and hypothesis testing in this research used descriptive statistical analysis techniques and logistic regression analysis. The results of this study indicate that the public accounting firms size, clients company size, audit specialization and audit fees have no effect on audit quality in the food and beverage sub-sector manufacturing companies listed on the IDX for the 2019 2021 period. 
 Keywords: Public Accounting Firms Size, Clients Company Size, Audit Specialization, Audit Fees, Audit Quality

Effect of Auditor Specialization, Auditor Characteristics, Board Independence on Audit Quality through intellectual capital : Study on service companies

This study aims to examine the effect of auditor specialization, auditor characteristics, and board independence on audit quality through intellectual capital in service companies in West Java. The research was conducted using a quantitative approach with a sample of 384 service companies in West Java. Data were analyzed using Partial Least Square-Structural Equation Modeling (PLS-SEM) with SmartPLS 4.0 software. The results of this study showed that auditor specialization, auditor experience, and board independence had a positive and significant effect on audit quality. Meanwhile, intellectual capital has a significant mediating effect on the relationship between auditor specialization, auditor experience, and board independence on audit quality. The findings of this study provide important insights into the factors that contribute to the enhancement of audit quality in service companies. This study suggests that service companies in West Java should consider hiring specialized auditors, experienced auditors, and independent boards to improve audit quality. Additionally, companies should also focus on the development of intellectual capital, which plays an important role in enhancing audit quality.

Pengaruh Fee Audit, Rotasi Audit, Reputasi Auditor dan Spesialisasi Auditor terhadap Kualitas Audit

This study aims to examine the effect of audit fees, audit rotation, auditor reputation and auditor specialization on audit quality in transportation sub-sector companies listed on the Indonesian stock exchange in 2018 to 2021. The population in this study was 47 transportation sub-sector companies that listed on the Indonesian stock exchange from 2018 to 2021. Sampling uses purposive sampling, namely sampling by setting certain criteria. Based on the criteria that have been set so that a sample of data is obtained as many as 29 companies in the transportation sub-sector for an observation period of four years, a sample of 116 data is obtained. In this study, the data analysis used was descriptive statistical analysis and logistic regression analysis. The results of this study indicate that audit fees have a significant and positive effect on the audit quality of transportation sub-sector companies listed on the Indonesian stock exchange in 2018 to 2021. While audit rotation, auditor reputation and auditor specialization have no effect on audit quality of transportation sub-sector companies that are listed on the Indonesian stock exchange. listed on the Indonesian stock exchange from 2018 to 2021.

Time Budget Pressure, Audit Tenure, Ukuran Perusahaan, Spesialisasi Auditor, dan Kualitas Audit

Audit quality is a measure of quality carried out by auditors who are in accordance with auditing standards and quality control systems. The auditor must have adequate audit quality so as to reduce the dissonance that occurs between management and shareholders. There are several factors that affect audit quality, namely time budget pressure, audit tenure, company size and auditor specialization. The purpose of this study was to empirically examine the effect of time budget pressure, audit tenure, company size and auditor specialization on audit quality in the property, real estate and building construction sectors listed on the Indonesia Stock Exchange in 2017-2019. The sample of this research is 49 companies using purposive sampling technique. The data analysis technique used in this study is logistic regression analysis. The results of the study show that time budget pressure and auditor specialization have no effect on audit quality. Meanwhile, audit tenure and firm size have a negative and significant effect on audit quality.
 Keywords: Time Budget Pressure; Audit Tenure; Company Size; Auditor Specialization; Audit Quality

Auditor specialization in R&D and clients’ R&D investment-q sensitivity

While research and development (R&D) activities contribute to economic growth via technological innovations, they impose significant uncertainty and agency costs. In this study, we examine the governance role of R&D specialist auditors in affecting clients’ R&D investment decisions. Using a sample of U.S. firms during 2001–2016, we find that R&D specialist auditors’ clients make more efficient investments in the form of a higher R&D investment-q sensitivity. We also find that the reduction in discretionary adjustments of R&D expenses moderates the results. Further, when clients are audited by R&D specialists, their R&D investments are more closely linked to innovative output in subsequent years. Collectively, our results suggest that an auditor’s specialized knowledge induces clients to make better economic decisions.

The Effect of Audit Tenure, Auditor Specialization, and KAP Reputation on Audit Quality (Empirical Study of Manufacturing Companies Listed on The Idx In 2017–2019)

The Effect of Audit Tenure, Auditor Specialization, and KAP Reputation on Audit Quality (Empirical Study of Manufacturing Companies Listed on The Idx In 2017–2019)

Bank Competition and Borrower Conservatism

ABSTRACTWe study the influence of bank competition on U.S. public borrowers’ accounting conservatism by exploiting the staggered adoption of the Riegle-Neal Interstate Banking and Branching Efficiency Act (IBBEA) of 1994, which increased the threats of new bank entrants and actual bank entry. We find that borrowers’ conditional conservatism fell after IBBEA. Conservatism fell more for firms located in states with weak incumbent banks and states with more out-of-state entrants, especially entrants with better monitoring technologies. The decrease in conservatism partially stems from borrowers’ increased investment and risk-taking incentives. Conservatism fell more for firms relying more on bank loans, especially those that borrowed loans for the first time after IBBEA and for firms having lower dedicated institutional ownership and board independence. We also find that loans included fewer covenants and that bank loan borrowers became less likely to choose Big N auditors and industry specialist auditors after IBBEA.Data Availability: Data are available from the public sources cited in the text.JEL Classifications: G21; G28; K23; M41.

The interaction effect of auditor industry specialisation and board governance on financial reporting timeliness: evidence from the UAE

PurposeThis study investigates how the timeliness of financial reporting by listed companies in the United Arab Emirates (UAE) is influenced by the interaction effect between industry-specialist auditors and board governance.Design/methodology/approachThe Emirati capital markets – the Abu Dhabi Securities Exchange (ADX) and the Dubai Financial Market (DFM) – were used to obtain the data, which covered the seven-year period between 2011 and 2017. In total, 385 observations were obtained. Descriptive statistics and multiple regression were the principal statistical tests employed using the panel data method.FindingsThe results of the direct effect tests reveal that board independence and industry-specialist auditors have no significant influence on financial reporting timeliness. Nevertheless, the results also show that the timeliness of financial reporting by listed companies in the UAE is influenced by the interaction effect between auditors' industry specialisation and the governance of firm boards. More specifically, the results reveal that financial reporting timeliness is positively associated with board independence for companies audited by industry-specialist auditors. This finding is consistent with the notion that industry-specialist auditors complement the role of effective board governance.Research limitations/implicationsThis study only focuses on secondary data from non-financial companies listed in the UAE markets. Therefore, the outcomes may not be generalisable to sectors related to finance. Future researchers are recommended to examine financial sectors and apply alternative measurements such as surveys or interviews with directorial boards and external auditors. Furthermore, this study used only one measure of industry-specialist auditors, while board governance was limited to board independence. Future studies could utilise different measurements for industry-specialist auditors and more board governance measures to obtain more robust findings.Practical implicationsThe evidence provided indicates that when a company listed in the UAE has a high-quality board, it benefits by engaging auditors who specialise in the industry in terms of improving the timeliness of financial reporting. The findings also indicate the need for closer monitoring of management to safeguard their reputation. This might attract the attention of the Big Four audit firms and industry–specialist auditors to continuously re-evaluate their audit work, professional training and staff skills, while they might also try to differentiate their performance and monitoring capabilities from the non-Big Four audit firms and non-industry specialist auditors.Originality/valueThe main contribution of this study to the overall body of research is the concept that having independent directors is associated with improved reporting timeliness because financial reports are monitored with greater efficiency by industry–specialist auditors. This study provides evidence for the interaction effect between internal and external governance mechanisms on financial reporting quality, which has not been the focus of prior studies on financial reporting quality.