Audit Report Research Articles

The relationship between site history and human health risks: Lessons from 13 years of contaminated land risk assessments in Victoria, Australia

AbstractSite history is widely recognized as one of the key determinants of the nature and scale of contamination that is likely to be present at a location. While there is vast anecdotal and empirical evidence on the relationship between site history and risk of exposure to pollution, few attempts have been made to systematically collate data across sites to rigorously identify such trends. This study presents an analysis of human health risk metrics extracted from all 1732 contaminated land environmental audits published in Victoria, Australia between 2006 and 2018. The contaminating activities found to be most likely associated with elevated risks to human health were service stations, fuel depots, dry cleaners, gasworks, mechanical parts manufacturers, imported fill and unknown offsite sources generating regional groundwater pollution (usually polluted with trichloroethene). The ten chemical contaminants most frequently assessed in human health risk assessment reports included (in order): benzene, C>10–16 petroleum hydrocarbons, naphthalene, C6–10 petroleum hydrocarbons, xylenes, trichloroethene, toluene, ethylbenzene, benzo(a)pyrene, and tetrachloroethene. The findings of this report include recommendations to develop regulatory guideline values in Australia for trimethylbenzenes, heavy fraction petroleum hydrocarbons (C>16), and trans‐1,2‐dicholoethene, and to strengthen the evidence base informing risks associated with light fraction petroleum hydrocarbons (C6–16) and trichloroethene. To the author's knowledge, this study is the first to extract risk metrics from environmental audit reports and provides a strong evidence base to help regulators, academics and commercial practitioners rank and prioritize sites based on their site history and associated risks.

Auditor characteristics and audit report lag: A research from the Indonesian Stock Exchange

This study aims to determine the effect of auditor specialists, auditor reputation, auditor gender, auditor education level, and auditor professional certification on audit report lag by using research objects, namely all companies listed on the Indonesia Stock Exchange (IDX) for the 2017-2021 period. The sampling technique in this study used a purposive sampling technique. The data analysis used in this study is the Eviews 9 panel data regression analysis software. The results show that the auditor specialist independent variable has a negative effect on audit report lag. Meanwhile, auditor reputation, auditor gender, and auditor education level do not effect audit report lag. The professional certification of auditors has a positive effect on audit report lag. Meanwhile, the addition of control variables, namely firm size and loss, has a positive effect on audit report lag. However, the control variable ROA has a negative effect on audit report lag.

The analysis of factors affecting audit report lag: A literature review

Financial statements are critical for evaluating a company's condition, influencing stakeholder decisions. Timely financial reporting enhances information effectiveness for investors. Audit report lag, the delay in the audit process, poses a significant challenge to timely reporting. This study explores the impact of audit committee characteristics, CEO traits, and financial distress on audit report lag through a literature review. Audit committees, particularly when independent and possessing accounting expertise, can expedite audits, ensuring effective oversight. CEO characteristics, including accounting expertise and gender, play a role in timely audit completion. A financial distress situation further complicates the audit process, extending the lag in reporting. Understanding these dynamics is crucial for improving financial transparency, efficiency, and reliability, benefiting decision-makers and stakeholder trust. The research contributes to a deeper comprehension of factors influencing audit delays, reinforcing literature on this subject.

Faktor- Faktor yang Mempengaruhi Audit Report Lag pada Perusahaan Teknologi yang Terdaftar di Bursa Efek Indonesia

The purpose of this study is to find the determining factors for late audit reports. Delays in audit reports are important considering that reports are very important in a company and can also affect the timeliness of accounting information that will be used by internal and external users for their decisions make decisions. There are 3 factors, profitability, audit opinion and company size. This research uses 40 companis registered in The Indonesian Stock Exchange uses reports for the 2022 peiod. Proposed hypothesis proposed test with multiple linear regression models

The determinants of audit report lag: Evidence from Indonesia

The determining factors that cause delays in audit reports are essential for shareholders to pay attention to when making quick decisions. Delays in audit reports receive significant attention in the capital markets where audited financial statements in annual reports are the only reliable source of information available to investors. This study aims to identify factors that cause delays in audit reports in the form of company and industry specifics consisting of profitability, company size, audit committee, audit opinion, and size of a public accounting firm. The research method uses a panel data regression model to test five hypotheses based on data collected from annual reports from 2011 to 2021. The research sample selected were 46 companies in the construction and property services sector listed on the Indonesian Sharia Stock Index. Empirical findings show that a public accounting firm’s profitability, audit opinion, and size hurt audit report lag, while the audit committee has a positive impact. Company size is the only factor that does not have an impact on audit reporting delays. The research results provide recommendations for company management and shareholders that delays in audit reports can be reduced by increasing company profits. Apart from that, audit delay lag can also be reduced by appointing a reputable or international public accounting firm and providing a quality audit opinion.

A Review on Risk-Based Audit Approach: Malaysian Public Sector’s Perspective

Purpose: This study aims to understand the Risk-Based Audit (RBA) approach, the advantages of RBA, RBA in the Malaysian public sector, and the issues and challenges inimplementing RBA in the Malaysian public sector. Design/ Methodology/ Approach: A library search and evaluation of earlier literature reviews were conducted on the topic of RBA and internal auditing that covers online and print sources, journal articles, newspaper articles, and official legal documents. Findings: RBA is a methodology that provides an independent and objective opinion to an organisation's management, determining whether the management of its risks is on acceptable levels. The strength of RBA lies in the distinct nature of this audit approach, which focuses on the business risk and factors triggering the risk and resulting in a more effective and efficient audit. Several issues and challenges were identified in the implementation of RBA, especially in Malaysia: (1) legislation requirements; (2) lack of resources; (3) limited access to data; and (4) duplication of work. Research Limitations/ Implications: The data pertaining to public sector internal audit reports are considered confidential and sensitive. This aspect placed limitations on the depth of the collected insights. This study also focused on the data obtained mainly from secondary sources, leading to results that cannot be generalised to other countries. Practical Implications: Findings from the document review and identification of current problems may offer indications to the Accountant General's Department of Malaysia (AGD) on the current usage of RBA. Therefore, subsequent actions are required to improve internal audit work. Originality/ Value: This study discussed the current state of RBA applied by the internal auditors in the Malaysian public sector. This finding may encourage future researchers to highlight the methods of integrating a comprehensive RBA that would fulfil the 3Es (effective, efficient, and economy) for the benefit of internal auditors, particularly in the Malaysian public sector. Keywords: Risk, internal audit, public sector, Accountant General's Department of Malaysia (AGD).

Audit Quality dan Value Relevance of Accounting Information

Users of financial reports need relevant information as a basis for making decisions. The existence of an auditor helps investors in assessing the quality of accounting information. The research aims to examine the quality of audit reports as proxied by the size of the public accounting firm and audit opinions on the value relevance of accounting information. The research population is all sectors of business entities registered on the IDX in the 2018-2021 period. A total of 1,480 observations were used as samples in the research. Researchers use a fixed effect model in a panel data structure to test hypotheses. The research results show that auditor size increases the relevance of earnings value, but reduces the relevance of book value. Meanwhile, the audit opinion was found not to affect the relevance of accounting information. The research findings are interesting because audit opinions provided by Big 4 auditors increase the relevance of book value. This research is expected to help investors consider audit quality as an integral part of fundamental analysis, as well as contribute to the development of the topic of value relevance of accounting information and audit quality.
 Keywords: Audit, Financial Statement, Value Relevance

The effect of expanded audit report on IPO underpricing: Evidence from China

This study investigates the impact of the expanded audit report on IPO underpricing. Using the sample of A-share listed firms in China from June 2014 to November 2021, we find that the expanded audit reports can reduce the speculative behavior of investors in the initial phase of IPOs, resulting in lower IPO underpricing and consecutive rising limits. The channel tests suggest that the disclosure of key audit matters reduces value uncertainty and alleviates investors' local bias. Our results are consistent to a series of robustness tests. Further analyses show that the negative relation between expanded audit reports and IPO underpricing intensifies when the legal environment is weak and firms' information transparency is low. Additional tests uncover positive market reaction after the mandatory disclosure rule in the long run. Overall, our study adds new insights to the information effects of the expanded audit reports in emerging markets.

Pengaruh Opini Audit, Audit Tenure, Audit Switching Terhadap Audit Delay Pada Perusahaan Batu Bara

Audit delay is the length of time required to complete the audit report which is calculated starting from the closing date of the financial year until the date of issuance of the audited report. The purpose of this research is to find out how the influence of audit opinion, audit tenure, audit switching on audit delay in coal sector companies listed on the Indonesia Stock Exchange (IDX). The factors tested in this study are audit opinion, audit tenure, and audit switching as independent variables and audit delay as the dependent variable. The sample in this study are coal sector companies listed on the Indonesia Stock Exchange (IDX) for the 2020-2021 period, totaling 16 companies. The analysis technique of this study uses the classical assumption test, multiple linear regression equations, and hypothesis testing with SPSS 26. The results prove that audit opinion has a positive effect on audit delay, audit tenure has a negative effect on audit delay, audit switching has a negative effect on audit delay.

Research on the Prevention and Response of Goodwill Impairment Auditing Risk Based on the Audit Case of Zeus Entertainment

The impact of goodwill on financial statements has attracted attention from all walks of life. The huge impairment of goodwill in A-shares at the end of 2018 made goodwill once again the focus of discussion and research. The uncertainty of accounting estimates for the subsequent measurement of goodwill and the complexity of the impairment testing process have long brought greater difficulties to financial accounting and CPA auditing. This article selects the audit reports of A-share listed companies as a sample, and analyzes the main audit response measures for goodwill impairment matters listed in the key audit matters to understand the status of goodwill impairment audits by CPAs. Based on the statistical analysis results and the summary of relevant administrative regulatory measures of the China Securities Regulatory Commission, the main risk points of the current goodwill impairment audit inspection risks were summarized according to the audit business stages. Thirdly, this article selects representative audit cases of listed companies in the media industry for case analysis. After comprehensively elaborating on the goodwill formation and subsequent measurement process of the case company, this article conducts an in-depth analysis of the main audit measures taken by certified public accountants on the company's goodwill impairment matters, and analyzes the project's goodwill impairment based on the goodwill impairment audit risk model. Value audit risks are analyzed and problems that may lead to inspection risks are summarized. The conclusions drawn based on statistical analysis and literature review were verified, and the causes of the problems were analyzed based on the case background. Finally, this article puts forward countermeasures and suggestions for preventing and responding to goodwill impairment audit risks from both short-term and long-term aspects.

Hyperbole or reality? The effect of auditors' AI education on audit report timeliness

We manually collect data on auditors with artificial intelligence (AI) educational backgrounds comprising 8201 company-year observations of A-share listed companies in China between 2014 and 2020. We then develop an auditor individual-level setting to investigate the role of AI education in audit report timeliness. Results show auditors with AI educational backgrounds are negatively and significantly associated with audit report lag, indicating auditors with AI education can shorten annual audit report times by using programming, applied technology, and logical-thinking skills, thereby enhancing audit report timeliness. In addition, this timeliness effect is more pronounced in accounting firms with more branches and among state-owned enterprises, and higher-risk clients. Furthermore, AI education and Certified Public Accountant status can complementarily strengthen this effect, particularly in companies with higher client portfolio risk. Our results provide evidence that auditors with AI education play an important role in audit report timeliness reality and not hyperbole, which supports the efficiency view, and the understanding potential unintended consequences of auditors' AI education could be of interest to regulators that plan to develop new liberal arts framework.

Literatur Review : Analisis Pergantian Auditor, Opini Audit, Dan Audit Fee Terhadap Audit Delay

Audit delay is the period from the end of the financial year to the date of the company's audit report. There are several factors that influence audit delays, such as change of auditors, audit opinions, and audit fees. The purpose of this study is to analyze the impact of Auditor Change, Audit Opinion, and Audit Fee on Delayed Audit. This research is a Systematic Review study where the method uses review, expression, structured evaluation, classification, and categorization of previously generated evidence based. The article in this study is downloaded from an online application namely google scholar with specific inclusion standards and exclusion criteria. The results of this study showed that the change of auditors would affect the audit delay, the audit opinion influenced the delayed audit, and the audit fee had no influence on the delays audit.

The effect of forensic accounting expertise on independent audit quality in Iraq and Iran: A comparative study

Skill, experience, and expertise are three factors that might influence the quality of an audit; forensic accountants can conduct higher-quality audits since they have completed a specialized fraud course. Thus, the purpose of this article is to examine how forensic accounting methods affect the caliber of audits. All of the businesses that are listed on the stock exchanges in Tehran and Iraq make up the statistical population. To determine the sample, 35 enterprises from 2013 to 2020 in Iraq and 100 companies from 2014 to 202 in Iran were chosen using the systematic elimination approach. The study hypotheses were tested using the multi-variate regression model that was based on the combined data. The findings indicated that the quality of audits in Iran and Iraq is positively impacted by forensic accounting techniques. Additionally, the findings demonstrated that the number of independent audit report paragraphs in Iran and Iraq is not significantly impacted by the forensic accounting technique. The importance and application of accounting and forensic auditing are felt more than before due to the lack of professional activities related to forensic accounting in the Iraqi economic environment, the rise in cases of financial embezzlement and corruption, the need for financial discipline along with economic development, and the preservation of public trust in the accuracy of financial information. Thus, doing this research can help enhance the corporate climate in Iran and Iraq by determining the significance and requirement of implementing forensic auditing.

Measuring and analyzing the information entropy value of key Audit matters (KAMs) disclosure at the system and reporting scale

Drawing upon information entropy theory, this study deduces a measurement formula for the information entropy for key audit matters (KAMs) disclosure, considering both system scale and audit report scale. The information entropy of an audit report within a specific system is calculated as the weighted average logarithm value of the continuous product of KAM disclosure frequencies. Subsequently, a systematic calculation of KAM disclosure information entropy is conducted using 14,837 financial statement audit reports from listed companies traded on the Shanghai and Shenzhen Stock Exchanges, covering the FY 2017-20 period. The findings indicate that: (1) The information entropy of KAM disclosure has decreased from 2017 to 2020, while the homogenization degree of KAM disclosure has increased. (2) The information entropy and evenness of KAM disclosure on the main board are significantly higher than those of the ChiNext and the STAR Market. (3) The transportation, storage and postal services, manufacturing, finance, power supply, heating, gas and water supply industries exhibit the highest overall information entropy of KAM disclosure, indicating good quality. (4) The information entropy and evenness of KAM disclosure are higher for the big 4 accounting firms compared to domestic accounting firms and big 8 accounting firms. (5) The KAMs disclosed when the Certified Public Accountant (CPA) provides unqualified opinions, emphasizing that matter paragraphs possess higher information value, and are more disorderly and balanced. The measurement method and related results of information entropy offer reference and comparative value for future research on the quality of KAMs disclosure.

The Influence of Audit Fee, Audit Tenure, and Auditor Competency on Audit Quality: A Systematic Review

Financial audit reports play a crucial role in corporate decision-making, and their quality is impacted by various factors such as audit fees, audit tenure, and auditor competency. Audit fees refer to the costs associated with audit services, audit tenure signifies the duration of the audit firm's responsibility, and auditor competency encompasses the auditor's knowledge, skills, and attitudes. This study employs a systematic review approach, analyzing articles downloaded from the Google Scholar online database covering journals published from 2019 to 2023 using keywords like audit fee, audit tenure, auditor competency, and quality of financial audit reports. The research incorporates 10 quantitative journals, with 5 employing linear regression analysis, 4 using logistic regression analysis, and 1 utilizing the partial least squares method. The findings reveal that a majority of the journals demonstrate a positive and significant correlation between audit fees, audit tenure, auditor competency, and the quality of audit reports. Nonetheless, a few articles assert the absence of a relationship between audit fees, audit tenure, and audit quality. In summary, public accounting firms should regularly assess and formulate strategies concerning audit fees, audit tenure, and auditor competency to enhance client value by producing high-quality, accurate, and dependable financial audit reports.

The Impact of Implementing Good Corporate Governance Mechanisms and Compliance Programs in Combating Corruption in Egyptian Companies: A Case Study from Egypt

In recent years, there has been increasing interest and demand for the application of good corporate governance mechanisms and compliance programs as a means of reducing corruption in institutional companies. Since corporate corruption is widespread in all societies, both developed and developing, and since corruption has a serious impact on economic, sustainable, and social development, there has been widespread agreement that the application of good corporate governance mechanisms and compliance programs are effective tools that can reduce the serious consequences of corruption in large companies. Therefore, this study aimed to study the impact of the application of different corporate governance mechanisms and compliance programs on reducing corporate corruption. The study also included the advantages and disadvantages of each corporate governance mechanism according to the latest findings of experimental studies. The study also assessed the extent to which Egyptian companies comply with the Egyptian legislation and laws issued for corporate governance, and identified the best mechanisms that can be applied in Egyptian companies to govern those companies and implement compliance programs, and the impact of the application of good governance in reducing Egyptian corporate corruption, increasing employee and customer satisfaction, and reducing the depletion of company resources. In addition, the study addressed the main challenges facing Egyptian companies in implementing good corporate governance and compliance. The results of the study indicated that corporate governance mechanisms proposed by most international agencies and organizations concerned with combating corruption have an effective impact in reducing corruption in companies. However, to achieve the desired results from each good corporate governance mechanism, recent experimental studies have proposed some requirements or precautions that companies or governments can commit to to maximize the benefits of these mechanisms. On the other hand, the results of the study showed that Egyptian companies, both in the private and public sectors, have taken serious steps in implementing good corporate governance and implementing compliance programs. However, companies do not fully comply with the instructions of good corporate governance, and there are still some shortcomings in the implementation of good corporate governance and compliance programs. These shortcomings are due to several different reasons, which are mainly related to the non-mandatory nature of corporate governance in Egypt, in addition to the lack of sufficient incentives for companies to implement the proposed programs. Keywords: Governance mechanisms – compliance programs – corruption

Improving the Audit of Financial Liabilities by Developing the Relationship between the Materiality and the Audit Procedures

The most important aspects of the research are based on the overall study of legal relationships, accounting methodologies and the spectrum of perspective views of the financial audit of financial liabilities presented by the author. The research is focused on the methodological delimitation of the materiality applicable in financial accounting and the one applicable in financial audit for the correct assessment of sources and their use for specific purposes, as well as their influence on the audit results. At the same time, the audit procedures were identified and selected based on materiality research and establishing the complementary relationship. The study also focuses on the application of professional judgment to build a reasoned structure through which the audit procedures present a solid foundation of the materiality applicable in the audit, delimited from that used in financial accounting, as well as identifying the influence and impact of these actions on the information in the audit report.

Corporate Sustainability with Forensic Auditing: An Evidence from India

The repercussions of fraud are huge and sufferers are many. An organisation's very existence and sustainability of an organisation is threatened by frauds, which remain unchecked due to weak corporate governance norms and inadequacy of audit function in detection of financial statement frauds. This culminates in the closure of the entity at the cost of the interests of various stakeholders. Forensic accounting and auditing not only help detect fraud but can also prevent fraud by strengthening the corporate governance practices in an organisation. ABG Shipyard Ltd., belonging to one of the oldest and most prestigious ABG groups in India, building warships and other vessels for the Indian Navy, was once considered to be the largest private shipping yard. The Global Financial Crisis hit the company in 2008, and the consequent failure to repay the loans led to the corporate failure and liquidation. The fraud at the company was detected through a forensic audit at the State Bank of India’s behest in 2019 and the Central Bureau of Investigation (CBI) was able to register the case by 2022. This study tries to understand what went wrong and how, by analysing the annual reports, audit reports and financial statements and computing of Beneish M-score and Altman Z-score. The study finds that the erring auditors, self-dealing promoters and faulty management are the root causes of this fraud.

Corporate governance and reporting quality of accounts in China-listed firms. A moderating role of ownership pattern.

Financial reporting quality is critical for businesses, stakeholders, and government to ensure transparency and accountability. The purpose of this paper is to investigate the relationship between corporate governance, financial reporting quality, and ownership structure as a moderating factor for Chinese stock exchange-listed firms. Quantitative data of 550 listed firms from 2012 to 2022 are collected from the annual reports. For investigating the relationship between variables, panel data analysis with random and fixed effect models is used. Our results show that corporate governance's different attributes such as Auditor brand name, Existence of an audit committee, independent board, family ownership, and profitability have a significant negative impact on the audit report lag that decreases the lags and increases the financial reporting quality in China listed firms. Auditor opinion, Board diligence Board size, and CEO duality have a significant positive impact on the audit report lag that increases the lags and decreases the financial reporting quality of China-listed firms. Furthermore, our findings show that ownership concentration has no moderating effect between corporate governance, different attributes, and financial reporting quality. Family ownership, on the other hand, has a strong moderating effect between corporate governance characteristics and financial reporting quality. However, due to limitations, this study provides the opportunity for future research on corporate governance mechanisms in different cultures and environments. Moreover, this study has some important implications for investors, policymakers, and government.

The Quality of Company Audit in Indonesia during COVID-19 Pandemic: A Review of Literature

As many companies transform, auditing is crucial in a company's development process, especially during the COVID-19 pandemic. Transformation without a financial audit can lead to problems because it may not effectively minimize fraud or unanticipated risks. With the advent of COVID-19, auditors' work is constrained by government policies that limit on-site work, preventing auditors from accessing necessary data freely. This situation has the potential to result in lower-quality audit reports. Research on the quality of company audits during the COVID-19 pandemic was conducted using review literature. The research process involved collecting data from offline and online journals and proceedings. This study revealed a general decline in audit quality, but there were also cases where the quality remained consistent with the pre-COVID-19 period. This study concludes that the quality of audit analysis results plays a crucial role in ensuring company transparency and integrity, particularly in the presentation of financial reports. By leveraging the audit findings provided by the auditors, stakeholders will have a robust and thorough foundation for making informed conclusions and decisions regarding the company's future. Amidst the COVID-19 pandemic, the integrity of audits came under scrutiny due to the numerous changes implemented by companies striving to endure the crisis.