Auditor Expertise Research Articles

"The Effect of the determinants of Auditor's expertise and external factors on the auditor's professional skepticism – A practical study" An extract from PhD thesis in accounting

"The Effect of the determinants of Auditor's expertise and external factors on the auditor's professional skepticism – A practical study" An extract from PhD thesis in accounting

Are Client Importance and Auditor Expertise Associated with How Material Misstatement Corrections Are Disclosed?

SUMMARY Management is often motivated to correct misstatements discreetly. Using misstatement corrections disclosed in annual reports from 2007 through 2020, I find that important clients are less likely to disclose material misstatements correctly and that auditor specialization does not seem to impact whether material misstatements are disclosed correctly. Additionally, I find that important clients disclose material misstatement corrections more discreetly when misstatements are negative, when the audit office recently lost clients, when audit market competition is high, and when the restatement auditor is the same as the misstatement period auditor. For immaterial misstatements, client importance is not associated with disclosure accuracy, but specialist auditors increase accuracy. These findings suggest that auditors may allow more discreet misstatement corrections when pressured by important clients. Moreover, specialist auditors exhibit higher quality only when correcting immaterial misstatements. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M42; M48.

Post-project financial auditing as a continuous improvement tool for SMEs

Post-project financial auditing is a critical tool for ensuring transparency, accountability, and financial accuracy within small and medium-sized enterprises (SMEs). As SMEs navigate project-based operations, it is essential to assess the financial outcomes of completed projects to inform future decision-making and resource allocation. This review explores the role of post-project financial auditing as a continuous improvement tool in SMEs, highlighting its ability to enhance financial discipline, improve cost control, and promote long-term financial sustainability. By examining key aspects of project revenues, expenditures, and profitability, post-project financial audits provide insights into financial performance that are essential for strategic planning. These audits help identify budget deviations, resource misallocations, and cost inefficiencies, enabling SMEs to adjust future financial planning and project management practices. In doing so, audits contribute to refining budgeting processes, promoting data-driven decision-making, and reducing financial risks in subsequent projects. The review also emphasizes the benefits of post-project auditing in fostering a culture of financial responsibility within SMEs. Through the audit process, SMEs can strengthen internal controls, monitor compliance with financial regulations, and ensure that project outcomes align with organizational financial goals. Additionally, the integration of audit findings into future financial strategies enables SMEs to continuously improve their profitability, mitigate risks, and enhance overall financial stability. Despite the clear advantages, challenges such as resource constraints, data management issues, and limited audit expertise can hinder the adoption of post-project audits in SMEs. The review offers practical recommendations to address these challenges, advocating for the use of scalable audit frameworks, digital tools, and ongoing staff training to support effective auditing practices. Ultimately, post-project financial auditing represents a vital mechanism for driving continuous improvement and ensuring the financial resilience of SMEs in an increasingly competitive marketplace.

Unveiling the Nexus: Audit Quality and Financial Reporting in Sharia Banks—An Analysis of Non-Financial Matrix

This research investigates the impact of auditor experience and ethical perspectives on audit quality and financial reporting in Sharia banks in Indonesia. Utilizing a quantitative approach and employing Partial Least Squares Structural Equation Modeling (PLS-SEM), the study reveals a positive and significant relationship between auditor experience and both audit quality and the quality of financial reports. Ethical perspectives of auditors are also found to positively influence these outcomes. The findings highlight the importance of investing in auditor expertise and ethical considerations to ensure the integrity and reliability of financial information in Sharia banks. The study contributes valuable insights for practitioners and policymakers in the Islamic finance sector, emphasizing the crucial role of auditor experience and ethical perspectives in enhancing audit quality and financial reporting in Sharia banks.

The Effect of Auditor Competence and Independence on Audit Quality at AYZ Company

The aim of this research is to see how auditor competence and independence affect audit quality. The background to this research is the importance of audit quality for stakeholders and the role of auditor competence and independence in improving audit quality. Data was collected through auditor reviews from various Public Accounting Firms (KAP). The research results show that the auditor's expertise and independence contribute significantly and positively to audit quality. In addition, the relationship between expertise and independence was also found to strengthen audit quality. This research shows that improving auditor education, training and experience and maintaining auditor independence are critical to producing high-quality audits.

Determinant Factors of Auditor’s Ability to Detect Fraud: Auditor Proffesional Scepticism as Moderation

With the moderating effect of auditor professional distrust in mind, this study attempts to investigate the relationship between three key factors fraud audit training, auditor competence, and auditor experience and the auditor's capacity to identify fraud. This study utilized data collected from 117 auditors who work in Public Accounting Firms located in the center of Java, Indonesia. This study used the Partial Least Squares (PLS) method to address the research hypothesis. The study's findings demonstrate that an auditor's expertise and training in fraud auditing have a direct, beneficial impact on their capacity to spot fraud. Nevertheless, the auditor's expertise has been demonstrated to have no impact on their capacity to identify fraud. The results of this study also managed to demonstrate how an auditor's professional skepticism enhances the impact of their expertise, experience, and fraud audit training on their capacity to identify fraud.

The extent of auditors’ efficiency in using accounting programs to reduce audit risks

The purpose of this study is to analyze the role of the ability of auditors to use accounting software in reducing audit risk, because accounting software is one of the most important tools that various companies and factories use in their business and is of great importance is Various operations in the audit process and their impact on risk. This is because auditors' inability to handle these plans affects audit risk because the results of these plans are not properly audited. To achieve the research objectives, the statistical program SPSS was used and a questionnaire was created and distributed to a sample of examiners in the Iraqi Kurdistan region. After collecting and analyzing the data, the two researchers came to a number of conclusions, the most important of which are: Using accounting software in mathematical operations requires the auditor's expertise, awareness and ability to handle different types of these procedures. In light of the results of the research, the researchers concluded a set of recommendations, the most important of which is to increase qualification courses for auditors and the necessity of working to issue legislation or laws requiring the use of computer programs.

Do foreign institutional investors vote with their feet when firms engage in distinctive characteristics of real earnings management

ABSTRACT Regulatory restrictions prohibit certain types of foreign institutional investors (FIIs) from appointing board members of listed firms in which they invest in Taiwan, which creates unfavorable monitoring conditions and may reduce the willingness of FIIs to extend their efforts to engage in more corrective corporate governance practices. Abnormal business activities can indicate either opportunistic earnings manipulation without an economic basis or a non-opportunistic size-adjustment of anticipated future opportunities which, in turn, result in different forms of economic consequences. The distinctive characteristics of abnormal business activities provide an appropriate setting for us to examine whether FIIs involved in governance practices of their invested firms engage in such earnings reporting behavior, i.e. decreasing (increasing) their ownership stake when firms engage in opportunistic (non-opportunistic) real earnings management (RM). Empirical result shows that FII ownership decreases (increases) when firms engage in opportunistic (non-opportunistic) RM in Taiwanese listed firms. Further analyses document that this association is stronger after the deregulation of FIIs in 2003, in firms with low auditor expertise, FII ownership below 10%, or high FII shareholding volatility. This finding indicates that FIIs are likely to opt for a ‘vote with their feet’ strategy in their portfolio firm’s earnings reporting and correctly price the impact of managerial decisions.

Positive Impact of Audit Quality on Sharia Banks

Sharia banking can thrive by using the company's financial success, which is closely aligned with the audit process. The purpose of the audit task is to acquire evidence and assess it impartially to determine if the audit criteria are satisfied, so ensuring a high-quality audit and preventing fraud. Subsequently, a study was conducted to ascertain the influence of ethical factors and auditor expertise on the level of audit excellence in the financial statements of Islamic banks in Banda Aceh. The research employed a quantitative approach, utilizing the multiple linear regression model for data analysis. The primary data was collected through a questionnaire and processed using IBM Statistics to test statistical hypotheses. The study findings indicate that both ethical factors and audit experience have a favorable influence on the quality of audits conducted by Islamic institutions.

Climate risk disclosures and auditor expertise

Many jurisdictions are establishing requirements for corporations to disclose climate-related risks, and for those disclosures to be audited. One of the first jurisdictions to do so is Australia, where the Australian Accounting Standards Board (AASB) and Auditing and Assurance Standards Board (AUASB) issued a Joint Bulletin in 2018 stating that both preparers and auditors should consider the impact of climate risks on the company's financials. Utilising the Australian setting, this paper introduces a new measure of audit partner expertise, namely expertise in climate-related issues, and examines whether it is associated with the client company's climate risk reporting. We define audit partner expertise in climate-related issues based on their client portfolio composition in terms of greenhouse gas emissions. We find that the likelihood and quality of climate risk disclosures is higher when the audit partner has climate risk expertise, and this finding is driven by clients in industries with material climate risks.

Policy Implementation of Minister of Home Affairs Regulation No. 48 of 2021 concerning Development Planning and Supervision of Regional Government Implementation (Study at the Waropen Regency Inspectorate)

The purpose of this research is to see the performance of the Regional Inspectorate in carrying out the function of supervising government administration in Waropen Regency (Human Capital Based). Human resources are an instrument for increasing productivity to maintain organizational sustainability. One way of the Government's commitment to realizing good governance, especially eradicating corruption, collusion and nepotism, is to increase the role of the Government Internal Supervisory Apparatus (APIP). This research uses a qualitative method with a case study design. Data collection techniques are interviews, observation and studies and documents. The research results stated that the performance of the Waropen Regency Inspectorate was relatively low. In carrying out its supervisory function, the Waropen Regency Inspectorate does not use expert auditors. However, it is supported by auditors from the Financial Audit Agency (BPK). Developing organizational competence and working capabilities of the APIP team needs to be carried out in achieving clean governance. In achieving clean governance, it is necessary to pay attention to supporting and inhibiting factors as well as efforts to overcome obstacles in improving the performance of the APIP team

The Influence of Work Experience and Audit Expertise on Audit Quality in the Public Sector: The Moderating Effect of Professional Qualification

Purpose: This study analyses the degree to which audit experience and expertise affect audit quality through the moderating effect of Professional Qualification. 
 Design/Methodology/Approach: The study used a survey research design from a sample of about 400 audit staff of the Ghana Audit Service. 
 A conceptual framework was developed by adopting the framework for Audit Quality (2014) instituted by the International Auditing and Assurance Board (IAASB) and tested using PLS-SEM method of analysis.
 Findings: The study found that in the Public Sector, both audit expertise and experience influence audit quality.
 Furthermore, it was also established that professional qualification did not moderate the relationships between work experience, audit expertise and audit quality. 
 Professional qualification in audit quality was also found to be significant in the study.
 Implications/Research Limitation: The results of the study extend and add to the growing empirical research studies on audit expertise, work experience, and audit quality, as well as in the area of public sector auditing. However, the study was limited to only public sector auditors working with Ghana's Supreme Audit Institution (SAI), the Audit Service.
 Practical Implication: The study results have the prospect of encouraging top management to intensify the need to consciously institute and implement strategies that incorporate people with the requisite audit expertise and experience into the public sector to maximise and enhance audit quality.
 Originality/Value: This study is the first from a public sector perspective that directly examines how audit quality is influenced by audit expertise and experience and how professional qualification moderates this effect.
 Nonetheless, this research is distinct from other empirical studies on the basis of the method used and the context of the study.

Determinan Pendeteksian Kecurangan Penyajian Laporan Keuangan : Studi Empiris pada Inspektorat Provinsi Sulawesi Selatan

This study aims to analyze the influence of understanding good governance and the expertise of internal auditors on the detection of fraud in the presentation of financial statements. at the South Sulawesi Provincial Inspectorate. Understanding good governance, and the expertise of internal auditors as independent variables and fraud detection as dependent variables. The population in this study is all auditors who work at the South Sulawesi Provincial Inspectorate. Sampling was carried out using the Nonprobality Sampling method, and the number of samples was 41 respondents. The collection method uses primary data obtained from the distribution of questionnaires. The data analysis technique used in this study is multiple regression analysis technique. The results of the study showed that the understanding of good governance had no effect and the expertise of internal auditors had an effect on the detection of fraud in the presentation of financial statements.

Pengaruh Independensi, Keahlian Auditor, dan Pengalaman Auditor terhadap Audit Judgment: Studi Empiris pada BPK RI Perwakilan Provinsi Sumatera Barat

The aim of this research is to evaluate how the independence, expertise, and experience of auditors influence the audit evaluation process. The main focus of this study is the entire group of auditors working at the Representative Office of the Republic of Indonesia for the West Sumatra Province. As the total population is less than 100 individuals, the method of total sampling is employed, involving all members of the population as participants in the study. Consequently, the sample for this research consists of around 60 auditors from the Republic of Indonesia's BPK Representative Office for West Sumatra Province. The data for this research are collected through the distribution of a questionnaire.

Do customers’ financial restatements affect how auditors respond to their suppliers? Evidence from China

PurposeThe purpose of this study is to explore the economic impact of financial restatements by major customers on the audit opinion of their suppliers, showing that non-financial information disclosure potentially helps auditors make better assessments.Design/methodology/approachUsing a sample of China’s listed firms from 2007 to 2021, the authors aim to find the relationship between customers’ financial restatements and their suppliers’ audit opinions. Heckman selection model, placebo tests and other robustness checks are used as well.FindingsThe findings reveal that customers’ financial restatements have a significant effect on the likelihood of suppliers receiving modified audit opinions. This relationship is pronounced when suppliers face a higher level of financial constraints, exhibit poorer accounting conservatism or receive more negative media coverage. Additionally, this effect occurs through increased business risk and information risk, which heightens auditors’ perceived audit risk. Moreover, the study highlights the influence of switching costs, auditor expertise and restatement severity on this relationship.Practical implicationsRisks originating from customers can spread along the supply chain, emphasizing the necessity for auditors to give heightened attention to both the audited firms and their customer information. Moreover, regulators should carefully consider the important impact of customer information disclosures to maximize the protection of the interests of external information users.Originality/valueThis study not only confirms the crucial role of customer information disclosures in annual reports for stakeholders and auditors but also contributes to the existing literature on customer–supplier relationships.

Current auditor expertise and future relevance of innovative audit technology: evidence from Indonesia public sector auditor

ABSTRACT The COVID-19 pandemic has inevitably accelerated technology adoption in almost all industries, including the auditing industry. Indonesia’s supreme audit institution (Badan Pemeriksa Keuangan-Republik Indonesia – BPK-RI) as a government auditor had to use remote audit technologies in conducting state financial audits. Despite the widespread adoption of digital technologies in public administrations, little attention has been paid to the expertise level of auditors as the main users of audit technologies. This study aims to investigate current auditor expertise, and the future importance, of 18 innovative audit technologies identified from relevant studies. In addition, this study also aims to compare the importance of the technologies with current auditor expertise to identify the relevance-knowledge gap (expertise gap). We surveyed state external auditors (supreme auditors) from Badan Pemeriksa Keuangan Republik Indonesia – BPK-RI. We used t-test and deviation analysis to analyse the data. Cloud computing, self-service reports, and scanbots are perceived as the most relevant technologies, and auditors perceive their knowledge of most technologies as moderate. The results also reveal an expertise gap ranging from moderate to high across all the innovative audit technologies. It appears crucial for policymakers to focus on educational efforts to bridge this gap.

Connection Between the Audit Characteristics and Corporate ESG Performance in Indonesia

This research delves into the essential connection between audit committee characteristics and the ESG performance of corporations in Indonesia. Existing studies emphasize the pivotal role of audit committees in shaping ESG outcomes, focusing on factors like independence, expertise, and committee size. However, there is a limited comprehensive examination of these dynamics within the context of Indonesian businesses. The study seeks to empirically examine the correlation between audit committee characteristics and corporate ESG performance among listed companies on the Indonesia Stock Exchange, explicitly exploring four key attributes. The results highlight a noteworthy influence of Audit Expertise and Internal Auditor characteristics on corporate ESG performance. These findings provide valuable insights for companies, auditors, and policymakers, offering empirical evidence to enhance comprehension and practices related to corporate governance and ESG performance. Furthermore, the study's implications extend beyond the Indonesian context, contributing to a broader understanding of the global discourse on sustainable business practices.

Climate Risk Disclosures and Auditor Expertise

Climate Risk Disclosures and Auditor Expertise

The Internal Auditors in Catalyst for Sustainability Performance through Environmental Audit

Environmental issues like deforestation have been a global concern for the past ten years. Despite various strategies implemented by management, the issues persist. This paper aims to underscore the crucial role of internal auditors in environmental audits. The paper reviewed 30 journals published from various sources. Two themes have been established: the role of internal auditors and the benefits of the environmental audit. The sub-analysis focuses on three specific criteria: governance, risk management and control. This paper outlines the responsibilities of internal auditors to provide assurance and consulting services, conduct risk screenings, ensure compliance with environmental laws and standards, and identify areas for improvement. The paper also re-emphasizes the benefits of these practices, which include significant cost savings through resource optimisation, continuous improvement by identifying areas for enhancement, and enhanced compliance with environmental regulations. The significant cost savings through resource optimisation should be a source of optimism for businesses, as it demonstrates the financial benefits of environmental compliance. Moreover, the expertise of internal auditors in risk assessment and control systems is instrumental in mitigating potential legal and reputational risks for organisations. It proves that having an internal audit involved in environmental audits significantly contributes to an organisation’s compliance with environmental regulations and programs.

Are Client Importance and Auditor Expertise Associated with How Material Misstatement Corrections are Disclosed?

Are Client Importance and Auditor Expertise Associated with How Material Misstatement Corrections are Disclosed?