Audit Activities Research Articles

Behaviorism in auditing and its influence on the legal content of international standards on auditing

The paper is devoted to behaviorism in the field of audit activity, which in the form of the theory of behavior is widely used in scientific research and practice in foreign countries, especially in the USA. The least the problem of behaviorism is studied in Ukraine and then in rather general terms. It is shown that the main source of behaviorism is the philosophy of positivism and pragmatism. Its external manifestation is considered to be an individual reaction on stimuli of an external environment. In connection with this, the motives of the behavior of individuals are assigned a leading role in determining the normative regulation of activity of participants in accounting and auditing. It should also be noted that the precedents for assessing the subjects' behavior in this aspect constitute the system of Anglo-American law. The specified legal system has significant differences from the continental or European law to which Ukraine belongs. The dominance in conceptual law of normativism leads objectively to difficulties on introduction of International Standards on Auditing (ISA) based on the Anglo-American legal system in European countries and Ukraine. The paper also considers how a behavioral approach is used in specific ISA. As the example the ISA 315 "Identification and Assessment of Risks of Material Misstatement" and the ISA 240 "Auditor's Responsibilities Regarding Fraud in the Audit of Financial Statements" are taken. In particular, ISA 315 proposes to assess the risks of material misstatement through an understanding of the entity and its environment. It is emphasized that such an understanding of the business entity should not be a formal act as a legal entity, but from the position of the real behavior of management personnel. According to the ISA 240, the auditor should exercise professional skepticism throughout the audit, with recognizing the possibility of significant distortion due to fraud or error regardless of management's positive assessment. Based on professional skepticism, regarding the identification by the auditor of specific opportunities to commit fraud, the ISA 240 recommends to analyze the motives of the management personnel's behavior, pressure from the external environment, opportunities to commit fraud, attitudes and logical justification of wrongdoing. The final part of the paper gives relevant recommendations for harmonizing the ISA with domestic regulatory and legal acts and the practical activity of auditors on the territory of Ukraine.

ANALISIS PENGARUH KEGIATAN SOSIALISASI PERPAJAKAN DAN PEMERIKSAAN PAJAK TERHADAP PENERIMAAN PPH PASAL 25/29 WAJIB PAJAK BADAN PADA KPP PRATAMA MEDAN PETISAH

This study aims to find out how to analyze the influence of tax socialization activities and tax audits on income tax revenues article 25/29 for corporate taxpayers at KPP Pratama Medan Petisah. The population in this study is the number of taxpayers who are active and registered at KPP Pratama Medan Petisah from 2015-2022. This study uses primary and secondary data obtained by direct surveys to the field by distributing questionnaires to corporate taxpayers. The data analysis technique used in this study is a descriptive data analysis technique, namely describing and interpreting data according to existing facts.Based on the discussion of the research results obtained, it can be concluded that tax socialization activities at KPP Pratama Medan Petisah partially have a significant positive effect on tax revenues. Tax audit at KPP Pratama Medan Petisah has a significant positive effect on tax revenues. There is a positive influence on the receipt of income tax articles 25/29 for corporate taxpayers. simultaneously tax socialization and tax audit have a positive and significant effect on tax revenues. We can see that the three variables have a positive and significant influence. This means that the more often (positive) tax socialization and tax audit activities are carried out, the income tax revenue article 25/29 will also increase.

Pengaruh komite audit, likuiditas, leverage , dan aktivitas terhadap financial distress

The purpose of the study was to analyze the effect of the audit committee, liquidity, leverage, and activity on financial distress. This research is a case study on insurance sector sub-financial service companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2022 period. This study took secondary data from the financial statements of insurance companies. Technical analysis of data Using Audit Committee analysis, liquidity, leverage, and activity. The analysis concluded that the Audit Committee, liquidity, and leverage had no influence on financial distress. Meanwhile, activities can affect financial ditress in insurance companies. Analysis This study uses 4 independent variables, namely the audit committee, liquidity, leverage, and activity where it can be seen that the Adjusted R Squared value is low at 32.8% so that there are still 67.2% of other variables that are not included in this study.
 
 Keywords — financial distress, liquidity, leverage, and activity.

ДІЯЛЬНІСТЬ АУДИТОРСЬКИХ ФІРМ В УМОВАХ ВОЄННОГО СТАНУ – ОНЛАЙН-АУДИТИ

The issue of audit development under martial law and post-war reconstruction is currently extremely relevant and plays an important role for both business and the state, which influenced the choice of the topic, stated goal, objectives, subject and structure of the research. As a result of the hostilities and mass migration, the audit industry has suffered serious negative consequences. The legislator has taken significant measures to stabilize the situation and restore the activities of audit entities. A whole range of regulations was adopted to ensure the effective operation of audit firms. In particular, scholars have paid great attention to the issue of online audits. Prominent international organizations of auditors and professional accountants have developed the Guidelines for Ukrainian auditors taking into account the conditions of the military conflict. It turned out to be urgent because business entities that continue to operate in the conflict zone need constant support and advice. The article analyzes the state of audit activity in the context of the military conflict, identifies the main problems and suggests the ways to solve them. The authors also identified the main directions of development of audit entities with a view to achieving European integration, including their regulatory framework. The general scientific and general theoretical methods were used in the work: system analysis - to determine the main research criteria; abstract and logical - to make theoretical generalizations and conclusions about the problems and challenges of audit activity in war conditions; induction - at the stage of collecting, systematizing and processing information for research; deduction - in the process of studying the theoretical problem. The article analyzes the current state and prospects of audit activity and online audit in the context of modern business. The main problems faced by auditors are considered, and the main challenges facing audit firms are identified. Among other things, the positive aspects and future opportunities of online audit were highlighted, and the services that can be provided through this form of audit were considered. The authors found that the issues related to audit activity under martial law were regulated at the legislative level, and the main areas of support for auditors in the post-war period were identified. Prospects for further research consist in the fact that Ukrainian audit firms can achieve further development and recovery in the post-war period with the help of smart management decisions, legislative support, and the introduction of online audits. The priority goal of the audit system should be to increase trust in the audit process and the auditor. This will increase the investment attractiveness of enterprises. Given the uncertainty and riskiness of financial statement users in the current economic environment, the introduction of online audits is a flexible mechanism that will allow receiving audit reports and will influence positive movements in the recovery of the Ukrainian economy, which is why further research is needed.

CONTROL OF QUALITY OF AUDITING SERVICES IN CONDITIONS OF MODERN INCLUSIVE ENVIRONMENT: THE THEORETICAL-PRACTICAL ASPECT

Introduction. In the article in theory the modern checking of quality of public accountant services and professional ethics system is investigational and she is described component elements, the functions of regulators are exposed and analyses normatively is the legal providing; the dynamics of amount of subjects of public accountant activity, amount of orders of subjects of public accountant activity, actual volume of the rendered services, middle accuses of one subject of public accountant activity, amount of verifications, is certain in connection with a receipt from physical and legal persons, and also public organs of complaints, statements, appeals from that improper implementation of professional duties was seen by the subjects of public accountant activity on results a grant by them public accountant services and accordingly amount penalty, on their result for period 2015 -2017; directions of upgrading of public accountant services are reasonable within the framework of integration. Purpose. Purpose is theoretical and practical investigation of quality of audit services and professional ethics. Results. The analysis of generalized information on audit activity during 2015-2017 indicates changes due to the introduction of new legislative acts and from the side of regulators. For gaining of the aim it is defined the next tasks: the analysis of quantitative and qualitative indicators of audit activity and of system control of quality of audit services and professional ethics for the period of 2015-2017 years, the defining of directions of improvement of quality audit managing processes, substantiated directions of improvement of audit services quality within the framework of European integration. Subjects of mandatory quality control of audit services are subjects of audit activity that provide services for mandatory audit of financial statements. Quality control of audit services involves testing of internal procedures, verification of working documents, audit reports and other reports, contracts for the provision of audit services, internal administrative acts of the audit activity subject, which determine the policy and procedures to be applied in the provision of audit services.

Bibliometric Analysis of Academic Studies in the Field of Internal Audit and Determination of Factors Affecting their Citations

Internal audit activities are vital for the continuity of businesses. This situation is carefully followed by the researchers. Therefore, researchers carry out academic studies on the effectiveness, efficiency, etc. of internal audit. This study is carried out in order to make a bibliometric analysis of academic studies in the field of internal audit and to determine the factors that affect the probability of being cited. In the research, 226 articles published on the Dergipark platform in the period of 2013-2022 are included and the citations to the studies are obtained from Google Scholar. In the evaluation of the data, bibliometric analysis and logistic regression analysis methods are used. As a result of the bibliometric analysis, the most studies are carried out in 2019 with 37 articles. 226 studies published in the 2013-2022 period received 1,350 citations in total. 92% of the studies are published in Turkish and 8% in English. It is determined that studies with 3 authors received more citations. When the citations from the published studies are examined, it is determined that the other category is in the first place in terms of total and international citations, and the full professor category is in the first place in terms of national citations. The keywords of 216 (95.6%) of 226 articles within the scope of our study include the phrase "internal audit". In the logistic regression analysis of the citation probabilities of the articles included in the review, it is found that there is a positive and significant relationship between the age of the article, presence of the phrase "internal audit" among its keywords, at least one of the authors being a full professor, the number of downloads from the Dergipark platform and the probability of being cited. On the other hand, it is determined that the language, type, number of authors, number of pages, number of keywords, inclusion of the phrase "internal audit" in the title of the article, indexing of the journal in which it was published in the TR Dizin and the number of references do not affect the citation potential.

Self-regulation of audit activity: current state and development prospects

The proposed article discusses the current state and further development of the institution of audit self-regulation. The features of the system of regulation of audit activity are indicated, which, taking into account world experience, is based on a combination of regulation carried out by the Ministry of Finance of Russia, the Bank of Russia, with a self-regulation mechanism by the professional community of auditors. The features of the legal status of the self-regulatory organization of auditors are determined from the standpoint of its special functions, rights and obligations. In accordance with the legislation on audit activity, the governing bodies and specialized bodies of the self-regulatory organization of auditors, including the Committee of audit organizations in the financial market, are characterized. The provisions on the control powers of the Ministry of Finance of Russia for self-regulatory organizations are outlined. Attention is paid to assessing the real state of audit self-regulation, taking into account the negative trends that can be traced today in the field of audit self-regulation. The prospects for the development of self-regulation as “the main institution of the audit profession”, which will significantly reduce the negative trends of the current period of audit selfregulation, are determined.

Институциональные основы аудита

The article presents an overview of the development of the system of institutional regulation of auditing activities in Russia. A comparison was made of previously adopted Russian auditing standards and international auditing standards that are currently in force in the Russian Federation. At the same time, the question was raised about the advisability of introducing international auditing standards in the Russian Federation and abolishing Russian auditing standards, which were already developed taking into account international auditing standards, but in Russian and adapted to Russian accounting and auditing practice. The article presents the dynamics of the number of legal entities and individuals eligible to carry out audit activities in Russia and the dynamics of their income for the period from 2018 to 2022. Based on the eight principles of institutional design formulated by E. Ostrom at the end of the 20th century, the authors propose the basic principles necessary for determining the institutional framework for audit, the observance of which will ensure the development of audit activities and maintaining a high level of audit services quality.

Case Study: Internal Audit's Contribution to Financial Sustainability in Self-Financing Units

The aim of this research is to demonstrate the role of internal audit activity in achieving financial sustainability in self-financing units, and to achieve the objectives of the research and test its hypotheses, we conducted a case study in municipal institutions in Nineveh Governorate. One of the most important findings of the study that the researchers reached was the weak role of internal audit in achieving financial sustainability, the lack of adoption of modern internal audit objectives, and the lack of a clear program for internal audit prepared according to sustainability. The study concluded with a number of recommendations, the most important of which are: Activating the internal audit advisory services with regard to the financial sustainability of the unit, directing its expenditures and maximizing its revenues, and the internal audit should measure the financial sustainability of the financial reporting information through specific quantitative measures.

The Use of Continuous Audit to Improve the Effectiveness and Efficiency of Internal Audit Activities: A Practical Study of Distribution Sharia Company in Indonesia

The implementation of technology has encouraged internal auditors to develop continuous audits as a practical method for obtaining useful information from a set of company electronic data related to internal audit activities at all stages. Continuous audit methods allow internal auditors to process the entire population of transaction data to identify risk and internal control weaknesses that are more likely to be the subject of an audit finding. XYZ is a distribution company that continues to expand its business with more than 200 branches in Indonesia especially in sharia business. However, a large number of branches and transactions face limited internal auditors, high audit costs, low levels of audit coverage, and potential human error, which are an obstacle. This research is a design science that proposes the use of DMADV six sigma methodology as a problem-solving method to enhance the effectiveness and efficiency of internal audit activity by applying technology and audit concept in the continuous audit system. This research revealed that the internal audit cost can decrease by 45,5% to IDR 528.000.000 and audit coverage can increase by almost double to 86,3% in a year.

The Influence of Blueprints on Internal Audit Monitoring System (IAMS) Application Development


 The Digitalization era shows increasing application developments, both at the individual, group, and corporate levels. One of the corporations or companies involved in this Digitalization development is PT Pelindo Terminal Petikemas. The need for auditing activities arises to ensure that the company's business processes comply with regulations and policies. To fulfill the audit working papers, the Internal Audit Division of PT Pelindo Terminal Petikemas has developed IAMS (Internal Audit Monitoring System), a web-based application that plays a role in digitizing the auditing process. However, the absence of a blueprint or master plan for this application has become a constraint in its development, as there are still features that are not fully optimized when used. This research is conducted to identify the deficiencies in the application caused by the absence of a blueprint and to emphasize the importance of creating a blueprint in the application development process. The research adopts a descriptive qualitative approach and tends to use analysis. The primary data for this research were obtained through interviews and literature studies, and bibliographic references were used to compile the literature. The research findings conclude that the IAMS (Internal Audit Monitoring System) application must still be fully optimized to assist the company's internal auditing activities. One of the reasons for its suboptimal performance is the lack of a blueprint, which would facilitate the application's development and serve as a direction and master plan for designing an application.
 
 DOI: https://doi.org/10.5281/zenodo.8415610

감사원 직무감찰의 개선에 관한 연구

Recently, the Civil Rights Commission Collisions between the election management committee and auditors, and adverse effects due to duplicate audits with auditing organizations, With the enactment of the “Public Audit Law” and the “Special Law on Local Autonomy Decentralization and Regional Balanced Development”. Due to the rapid changes in the audit and administrative environment, the reform of the existing audit system can no longer be postponed. The Board of Audit and Inspection's job inspection establishes discipline in public office by eliminating control over state power and corruption. It plays an important role in national audit activities. In terms of job inspection, In addition to the legality audit, there is a suitability audit. “Special Act on Decentralization of Local Autonomy and Reorganization of Local Administrative System” With the enactment of, the administrative affairs of local governments have been abolished, and only the administrative affairs of local governments have been abolished.
 As for self-government affairs, there is a possibility of infringing the essence of autonomy, so a purposeful audit of the central administrative agency should be conducted. Denial is reasonable. Of job inspections, interpersonal inspections are used to ensure democratic control and responsibility.
 Expanding the scope of job inspections, the purpose of administrative affairs inspections will be closely related to auditing results of audits. Therefore, it is desirable to combine administrative audits with accounting audits.
 In order to ensure the effectiveness of the results, it is necessary to overcome the functional, political, ceremonial and scope limitations of the duty inspection.
 And financial application rights, indictment jury rights, investigative rights, etc. should be considered. Also includes self-audit, Auditing bodies ensure unrestricted access to information and audit findings and reports and audits to Congress and the general public.
 It is necessary to set up institutional devices such as checking the status of result disposition and audit monitoring.
 Meanwhile, while strengthening the position of the Audit & Supervisory Board Members as the highest auditing body, we will strengthen the self-audit system, which is an internal control system.
 Auditors are encouraged to switch to a guardianship audit. I would like to see the legislative reform so that the employees can discuss and coordinate as the highest auditing body. Inspection by Audit & Supervisory Board Members.
 but, If the independence of the Board of Audit and Supervisory Board is not guaranteed, the establishment and effectiveness of the guardianship audit system of the Board.
 It will not be able to secure it and will not be able to smoothly perform its functions of cooperation and coordination as the Supreme Oversight Body.

Some Aspects of the Organization of Internal State Audit in Kazakhstan

In the article, the authors identified shortcomings in risk management in the state audit system. These aspects are system-forming in the organization of state audit, as it is a holistic and independent assessment of the effectiveness of the audit objects, covering not only financial issues, but also all areas of their activities with the presentation of effective recommendations and suggestions for their management. The system of organization of internal audit in the Republic of Kazakhstan, the results of the audit activities of the Internal State Audit Committee of the Ministry of Finance of the Republic of Kazakhstan are considered. A comparative analysis of the internal audit of longterm assets showed how prepared the financial statements on all material aspects in accordance with the established conceptual framework for their presentation. According to the results of the study, it was revealed that today internal audit is focused more on «post-audit», since it is carried out mainly to identify and eliminate violations of the budget and other legislation of the Republic of Kazakhstan, as well as internal regulatory documents of the organization. Research methods: With the help of general scientific research methods, as well as methods of statistical and comparative analysis, conclusions are drawn about the need for analysis in the state audit system. Suggestions for further improvement of risk management are given

THEORETICAL AND PRACTICAL ASPECTS OF INTERNAL AUDIT ACTIVITY IN BUDGET ORGANIZATIONS

This article discusses the theoretical and practical features of internal audit activities in budgetary organizations.

STATE AUDIT IN THE FIELD OF ASSESSING THE EFFECTIVENESS OF THE USE OF NATURAL RESOURCES: WORLD EXPERIENCE

Against the background of globalization of trends in the transition to «green» technologies and the economy, the increase in related costs, the relevance of assessing the effectiveness of audit activities in the environmental sphere is also increasing. In this regard, the article examines the world experience in organizing and conducting a state audit of the efficiency of the use of natural resources. In particular, the authors consider the methodological approaches of the supreme audit institutions of foreign countries that occupy high positions in international ratings of environmental protection and the use of resource-saving technologies. As a result of the study, it was revealed that most of the external state audit bodies do not conduct an audit of the use of natural resources, not in the form of a separate type of audit, but as an audit of efficiency. In some cases, these audits combine elements of an efficiency audit and a compliance audit, as well as a financial audit. At the same time, in the structure of the efficiency audit elements used in the activities of the supreme audit institutions of the countries under study, «economy», «efficiency» and «efficiency» can be distinguished, with the exception of the experience of Canada, whose audit management adds «environment» and «sustainable development». Based on the results of the analysis, the authors formulated conclusions in the context of considering the possibility of adapting the best best practices of the Supreme Audit Institutions in domestic conditions in the field of assessing the effectiveness of the use of natural resources and environmental protection measures in general.

Consensus-Based Development of a Global Registry for Traumatic Brain Injury: Establishment, Protocol, and Implementation.

Global disparity exists in the demographics, pathology, management, and outcomes of surgically treated traumatic brain injury (TBI). However, the factors underlying these differences, including intervention effectiveness, remain unclear. Establishing a more accurate global picture of the burden of TBI represents a challenging task requiring systematic and ongoing data collection of patients with TBI across all management modalities. The objective of this study was to establish a global registry that would enable local service benchmarking against a global standard, identification of unmet need in TBI management, and its evidence-based prioritization in policymaking. The registry was developed in an iterative consensus-based manner by a panel of neurotrauma professionals. Proposed registry objectives, structure, and data points were established in 2 international multidisciplinary neurotrauma meetings, after which a survey consisting of the same data points was circulated within the global neurotrauma community. The survey results were disseminated in a final meeting to reach a consensus on the most pertinent registry variables. A total of 156 professionals from 53 countries, including both high-income countries and low- and middle-income countries, responded to the survey. The final consensus-based registry includes patients with TBI who required neurosurgical admission, a neurosurgical procedure, or a critical care admission. The data set comprised clinically pertinent information on demographics, injury characteristics, imaging, treatments, and short-term outcomes. Based on the consensus, the Global Epidemiology and Outcomes following Traumatic Brain Injury (GEO-TBI) registry was established. The GEO-TBI registry will enable high-quality data collection, clinical auditing, and research activity, and it is supported by the World Federation of Neurosurgical Societies and the National Institute of Health Research Global Health Program. The GEO-TBI registry ( https://geotbi.org ) is now open for participant site recruitment. Any center involved in TBI management is welcome to join the collaboration to access the registry.

Mandatory Audit of Business Entities in Bankruptcy Proceedings: Law Enforcement Aspects

The article presents the results of the analysis of the decisions of arbitration courts on disputes arising in connection with the application of Article 70 of the Federal Law “On Insolvency (Bankruptcy)” on the involvement of an auditor to conduct a mandatory audit of the debtor. As circumstances identified by the courts for the correct resolution of these disputes, the mandatory nature of the audit, as well as the content of the auditor’s activities and the documentation prepared by him, are considered. The approaches that have been formed in judicial practice regarding the ratio of the obligation to conduct financial analysis in bankruptcy proceedings and the obligation to engage an auditor are identified and disclosed. It is proposed to clarify paragraph 2 of Article 70 of the Federal Law “On Insolvency (Bankruptcy)” in terms of specifying the content of the duties of an interim manager and the auditor involved by him. It is concluded that it is necessary to supplement part 1 “Legal support of bankruptcy procedures” of the Unified training program for arbitration managers with a topic devoted to the legal regulation of audit activities.

Factors of Effective Internal Audits for Patient Safety in Primary Health Care Centers of Taif, Saudi Arabia

Introduction: Internal audit is one of the tools to ensure safety in patient care. Literature on the internal audit effectiveness (IAE) in patient safety is scarce in Saudi Arabia. This study therefore aimed to assess the factors which influence the IAE in patient safety. Methods: A cross-sectional study was conducted among primary healthcare centers’ general directors and medical directors in Taif, Saudi Arabia. Data were collected using a validated structured questionnaire in Arabic and English. The questionnaire besides sociodemographics characteristics collected data on support of management, interdepartmental coordination, independence, objectivity, competence, and IAE. Analysis was done on SPSS version 26.0. Pearson correlation was used to see the relationship between factors and the IAE in patient safety. Results: A total of 94 participants were included in the analysis. The mean scores in each of the domains on a scale of 5 were; support of management 4.04, interdepartmental coordination 3.95, independence 4.03, objectivity 4.20, and competence 4.46, while for the IAE the mean score was 4.36. Correlation analyses found that the IAE was significantly associated with all five factors. All the factors had moderate association except for objectivity which had a weak correlation with IAE. Conclusions: Overall, there were satisfactory scores for the factors which affect IAE with room for further improvement. All the factors studied were positively associated with the IAE, indicating a need for healthcare organizations to consider these factors while planning internal audit activities. Further research on large scale is required to provide robust and generalizable results.

Costs to Implement a Pediatric Weight Management Program Across 3 Distinct Contexts.

The Connect for Health program is an evidence-based program that aligns with national recommendations for pediatric weight management and includes clinical decision support, educational handouts, and community resources. As implementation costs are a major driver of program adoption and maintenance decisions, we assessed the costs to implement the Connect for Health program across 3 health systems that primarily serve low-income communities with a high prevalence of childhood obesity. We used time-driven activity-based costing methods. Each health system (site) developed a process map and a detailed report of all implementation actions taken, aligned with major implementation requirements (eg, electronic health record integration) or strategies (eg, providing clinician training). For each action, sites identified the personnel involved and estimated the time they spent, allowing us to estimate the total costs of implementation and breakdown costs by major implementation activities. Process maps indicated that the program integrated easily into well-child visits. Overall implementation costs ranged from $77,103 (Prisma Health) to $84,954 (Denver Health) to $142,721 (Massachusetts General Hospital). Across implementation activities, setting up the technological aspects of the program was a major driver of costs. Other cost drivers included training, engaging stakeholders, and audit and feedback activities, though there was variability across systems based on organizational context and implementation choices. Our work highlights the major cost drivers of implementing the Connect for Health program. Accounting for context-specific considerations when assessing the costs of implementation is crucial, especially to facilitate accurate projections of implementation costs in future settings.

Preconditions for the development of organizational knowledge ecosystem inside an audit firm

The paper aims to present key preconditions for the development of organizational knowledge ecosystem inside an audit firm. The audit activities represent a specific context for knowledge management, especially what concerns knowledge sharing and generation of new knowledge in organizational environment of formal rules and standards. We present the survey of audit firm employees (68) and their management by discussing the key challenges related to the dynamic knowledge sharing and new knowledge creation inside an audit firm. The paper investigates the nature of knowledge within an audit firm and analyses the cultural and structural aspects of KM practices that may lead to the emergence of ecosystem for sharing the existing and generating new knowledge. The paper adopts the intra-organizational perspective to knowledge ecosystem. The audit firm operates as knowledge organization that, despite its strong formal side, is a complex dynamic system of knowledge professionals, who form the different communities of practice inside the firm. Research presented in this paper helped identify the key challenges and opportunities for the emergent knowledge partnerships inside the professional audit firm. The key cultural preconditions behind the effective knowledge ecosystem - trust-based relations, organizational culture, positive horizontal and vertical relations, and strong intrinsic motivation to share knowledge - are in place. Research findings also reveal a good fit between the employee expectations and organizational practices. However, certain challenges need to be addressed, such as bringing out and embodying the tacit knowledge of employees, and the need for continuous upgrading of the processes of knowledge creation and integration. To establish an effective and sustainable knowledge ecosystem inside the professional services firm, the paper argues for striking a delicate balance between the formal and informal parts of organization, as well as its KM system.