Audit Efficiency Research Articles

Change In Publıc Fınancıal Management And The Development Of Turkısh Court Of Accounts’ Audıt Authorıty Of Performance

Kamu kurum ve kuruluşlarının, kamu kaynaklarını kullanırken, gerçekleştirmiş oldukları iş ve işlemlerinin sadece mevzuata uygunluk, doğruluk ve düzenlilik yönlerinden denetlenmesi günümüzde artık yeterli görülmemektedir. Aynı zamanda bu kaynakların verimli, etkili ve tutumlu bir şekilde hesap verme sorumluluğu kapsamında kullanılması, sadece girdilere değil, çıktı ve sonuçlara odaklanan bir denetimi gerekli kılmaktadır. Bu bağlamda gelişmiş ve gelişmekte olan ülkeler açısında kamu mali yönetimi reformları kapsamında performans denetimi gündeme gelmiştir. Ülkemizde de kamu mali yönetimi alanında yapılan reformlar sonucunda Sayıştay Başkanlığı dış denetim kapsamında kamu idarelerine yönelik performans denetimi yapma yetkisine sahip olmuştur. Bu çalışmada; kamu mali yönetimi alanındaki değişim ve dönüşümlere kısaca değinilmiş ve performans denetimi incelenmiştir. Bu kapsamda Sayıştay’ın performans denetim yetkisi tarihsel süreç içinde ele alınmıştır. Ayrıca yapılan yasal düzenlemeler ve bu düzenlemelerde Sayıştay’ın performans denetimi yetkisinin gelişimi ele alınmıştır. Sayıştay’ın yapmış olduğu performans denetimi kapsamında verimlilik, etkililik ve tutumluluk (VET) denetimi yapamadığı sadece performans bilgisi denetimi yaptığı tartışılmıştır.

Audit Partners’ Co-Working Experience and Audit Outcomes

Issues related to audit team personnel and the resultant effects on audit outcomes have not been investigated widely with archival data due to data unavailability. In this study, we examine whether and how increases in co-working experience between the lead and the concurring partners impact engagement audit quality and audit efficiency. A priori, increases in co-working experience could increase or decrease audit quality. In contrast, we expect increases in co-working experience will increase audit efficiency. Using a unique setting, Taiwan, where the identities of these two partners are known, we find increases in co-working experience are positively associated with audit quality and audit efficiency. Our results are robust to alternative measures of co-working experience and audit quality and to controlling for potentially omitted variables and selection bias. Further tests show that the effects of co-working experience on audit quality and audit efficiency are more pronounced when client audit risk is higher, the audit firm is not an industry expert, audit firm tenure is relatively shorter, and the two audit partners more consistently serve in only one role.

Data visualization and cognitive biases in audits

Purpose This paper aims to examine major cognitive biases in auditors’ analyses involving visualization, as well as proposes practical approaches to address such biases in data visualization. Design/methodology/approach Using the professional judgment framework of KPMG (2011), this study performs an analysis of whether and how five major types of cognitive biases (framing, availability, overconfidence, anchoring and confirmation) may occur in an auditor’s data visualization and how such biases potentially compromise audit quality. Findings The analysis suggests that data visualization can trigger and/or aggravate the common cognitive biases in audit. If not properly addressed, such biases may adversely affect auditors' judgment and decision-making. Practical implications To ensure that data visualization improves audit efficiency and effectiveness, it is essential that auditors are aware of and successfully address cognitive biases in data visualization. Six practical approaches to debias cognitive biases in auditors’ visualization are proposed: using data visualization to complement rather than supplement traditional audit evidence; positioning data visualization to support rather than replace sophisticated analytics tools; using a dashboard with multiple dimensions; using both visualized and tabular data in analyses; assigning experienced audit staff; and providing pre-audit tutorials on cognitive bias and visualization. Originality/value The study raises awareness of psychological issues in an audit setting.

The effect of the implementation of the performance audit of efficiency on improving of public sector accountability

The aim of this study was to investigate the implementation of a scientific approach and results oriented performance auditing of efficiency, and accountability of government. Methodology: Methods of solidarity and survey research, including research in order hypotheses (8) assumes two questionnaires developed five options (Likret), which both feature high reliability and validity have been prepared in the interval Since October 2014 to June 2015, the Supreme Audit Court and the provincial sample using formula Cochran (357) patients were determined, were distributed. To test the hypothesis of non-parametric tests (Pearson), test (t) one-sample and independent equations path analysis and multiple regression analysis were used in spss. Results: Test results showed, while the implementation of performance auditing efficiency has a significant relationship with the public sector accountability; Conclusion: 1) the implementation of audit performance through operating efficiency (efficiency audit) a significant relationship with the public sector to improve corporate accountability, 2) the implementation of performance audit through operating efficiency (efficiency audit) is a significant contribution to the improvement of public sector accountability legislation, 3) implementation of audit performance through operating efficiency (efficiency audits) significant contribution to the improvement of professional accountability the public sector, and 4) implementation of a performance audit through operating efficiency (efficiency audit) a significant relationship with the public sector to improve political accountability, 5) implementation of audit performance through operating efficiency (efficiency audits) significant contribution to the improved public sector financial accountability, and 6) the implementation of audit performance through efficiency operations (efficiency audits) the public sector's significant contribution to the improvement of moral accountability, 7) implementation of audit performance through operating efficiency (efficiency audits) significant contribution to the improvement of cultural and public sector accountability and ultimately 8) audit the performance of the Index Seven combined response (organizational, legal, professional, political, financial, moral, and cultural) is a significant contribution to the improvement of public accountability.

Do Audit Firms’ Internal Inspection Programs Have Teeth? Evidence from the U.S. Operations of the Largest Audit Firms

We examine the effect of large audit firms’ internal inspection programs, an important monitoring mechanism, on auditor behavior and financial reporting quality. Internal inspections are often predictable, and engagement teams concentrate their effort on audits ultimately selected for inspections. The extra-effort increases the likelihood of a favorable inspection rating. We find some evidence of improvement in financial reporting quality in the inspection year, suggesting that internal inspections are effective in deterring auditor shirking. Upon receiving a favorable rating, the engagement team reverts audit effort back to the pre-inspection level. However, if the rating is unfavorable, the team increases effort on future engagements of the client, and this higher effort improves the client’s financial reporting quality if the internal inspection program is considered effective by the PCAOB. The results suggest that higher effort under ineffective internal inspection programs likely involves excessive documentation and reflects lower audit efficiency.

Catching Them Red-Handed

The Centers for Medicare 8 Medicaid Services (CMS) launched its nursing home rating system in 2008, which has been widely used among patients, doctors, and insurance companies since then. The system rates nursing homes based on a combination of CMS's inspection results and nursing homes’ self-reported measures. Prior research has shown that the rating system is subject to inflation in the self-reporting procedure, leading to biased overall ratings. Given the limited resources CMS has, it is important to optimize the inspection process and develop an effective audit process to detect and deter inflation. We first examine if the domain that CMS currently inspects is the best choice in terms of minimizing the population of nursing homes that can inflate and minimizing the difficulty of detecting such inflators. To do this, we formulate the problem mathematically and test the model by using publicly available CMS data on nursing home ratings. We show that CMS's current choice of inspection domain is not optimal if it intends to minimize the number of nursing homes that can inflate their reports, and CMS will be better off if it inspects the staffing domain instead. We also show that CMS's current choice of inspection domain is only optimal had there been an audit system in place to complement it. We then design an audit system for CMS which will be coupled with its current inspection strategy to either minimize the initial budget required to conduct the audits or to maximize the efficiency of the audit process. To design the audit system, we consider nursing homes’ reactions to different audit policies, and conduct a detailed simulation study on the optimal audit parameter settings. Our result suggests that CMS should use a moderate audit policy in order to carefully balance the tradeoff between audit net budget and audit efficiency.

The Effects of Non-Big 4 Mergers on Audit Efficiency and Audit Market Competition

This study examines whether a recent wave of mergers between small and midsize accounting firms influences audit market competition by increasing the number of firms that can efficiently or effectively compete with larger rivals. Using proprietary data provided by the PCAOB, I find evidence that in-market mergers (involving auditors that operate in the same geographic market) generate efficiencies that are reflected in a post-merger reduction in audit hours but not audit quality. For both in-market and out-of-market mergers, clients switching to post-merger firms are more likely to be accelerated filers and are significantly larger in terms of several proxies for size and complexity. Lastly, I examine realization rates and find that an increase in market-level merger activity is associated with lower profitability of Big 4 firms operating in the same market. These findings suggest that recent mergers have actually increased competition in segments of the audit market dominated by the Big 4 despite already high concentration and concerns about a lack of sufficient competition.

An analysis of energy saving through delamping method

Electrical energy consumption is one of the focus areas in Green and Sustainable technology in the 21st century. Many energy consultants offers services to reduce the electricity consumption to the commercial consumer. Many proposals are focusing on selling their energy management system product which cost a lot of initial investment. The problem of applying energy management system is that the building needs major renovation. In this paper, electricity consumption is reduced through delamping method. The delamping is strategizing based on energy efficiency audit. This technique complies with the ASHRAE international standard for office building. The number of light reduced and electricity consumption from this exercise can translate into reduction of maintenance and electricity bill. The comparison of payback period for various energy saving techniques were discussed as well.

THE ROLE OF AUDIT AND CREDIT RATING AGENCIES IN THE ASSESSMENT OF COMPANY CREDITWORTHINESS WITH SPECIAL FOCUS ON BANKS

Audit and credit rating agencies have a significant responsibility in assessing company creditworthiness and giving opinions on the client’s ability to continue business in the future, most often the next fiscal year. Responsibility is even greater when it comes to banks and their creditworthiness. The financial crisis of 2007 and the bankruptcy of a number of banks and other financial institutions imposed a need to seek accountability for the “delayed” reaction of regulatory bodies and significant fiscal consequences of the crisis. The aim of the paper is to evaluate the efficiency of credit rating agencies and external audit in assessing the creditworthiness of companies and banks, not for the purpose of finding their individual responsibilities, but to look at possible coordinated and joint actions to prevent future crisis events.

Research on International Standards on Auditing: Literature synthesis and opportunities for future research

Research on International Standards on Auditing (ISAs) would greatly benefit from a research framework that categorizes the research streams related to ISAs and suggests areas for future research. This paper reviews the current research related to ISAs and develops a framework for analysis going forward. We identify seven main research streams: the development and history of ISAs; adoption of ISAs; association between national auditing standards and ISAs; financial reporting quality; audit reports; audit efficiency; and International Financial Reporting Standards (IFRS) compliance. For each research stream, the main results are summarized. At the conclusion of our literature reviews for each research stream, we suggest areas requiring further examination.

Improving efficiency of remote data audit for cloud storage

Improving efficiency of remote data audit for cloud storage

Exploring the Effectiveness of an Energy Efficiency Behaviour Change Project on Well-Being Outcomes for Indigenous Households in Australia

The Koorie Energy Efficiency Project (KEEP) was a Victoria-based, Australian social marketing initiative designed to provide support to Indigenous households so they could better manage their energy bills by reducing or controlling their energy use. The program was delivered by trained, Indigenous project employees who visited Indigenous households in metropolitan and regional parts of the state. During the home visit, they provided an energy efficiency audit, as well as specific energy efficiency tips and advocacy support. Minor draft-proofing products were also supplied to each household. As part of this project, dwelling and householder information was gathered during each home visit, as well as measures of energy efficiency knowledge, behaviours, and well-being of the main householder before and after a home visit. The results indicate that home visits to support the energy efficiency of indigenous households are effective in terms of encouraging new energy efficiency knowledge, behaviours, and broader elements of well-being. Furthermore, the home visit was found to be effective across all home types, but was significantly more effective in reducing energy related stress and discomfort in traditional houses and traditional apartments. These households were also often small and densely occupied. This suggests that when social marketing programs use methods that are culturally suitable and respectful, such as those used in KEEP, they become a powerful tool to help drive social change in Indigenous communities. The authors conclude that such programs in future will be hindered in their effectiveness unless property owners, such as those of social housing, do not urgently address the maintenance of their properties and ensure they provide fit living conditions for the tenants.

New provable data transfer from provable data possession and deletion for secure cloud storage

With the continuous and rapid development of cloud computing, it becomes more popular for users to outsource large-scale data files to cloud servers for storage and computation. However, data outsourcing brings convenience to users while it also causes certain security problems. The integrity of outsourced data needs to be periodically checked by users to protect their data. Also, the secure transfer of cloud data can avoid data losses to users. Aiming at solving these problems in the data outsourcing process, a provable data transfer scheme based on provable data possession and deletion is recently proposed by Xue et al. However, we found a security flaw in Xue et al.’s scheme. Concretely, the block tags can be forged in their scheme. In this article, we first give a brief review of Xue et al.’s scheme and then a detailed attack is shown. To remove the security flaw, an improved scheme is proposed. Furthermore, we replace the integrity checking protocol of their proposal with a more efficient protocol to improve the efficiency of data integrity auditing.

Improving and raising the effectiveness of audit of tax accounting at the agricultural enterprises

The subject of the study is theoretical and practical aspects of the formation, implementation and increase of the efficiency of audit of tax reporting of domestic enterprises. The purpose of the work is to determine the content, features and theoretical and practical principles of implementation, improvement, increase of the efficiency of audit of tax reporting of enterprises as a basis for their sustainable and competitive development in the future. Methodological basis of the article became as general scientific, and special methods of scientific knowledge. Were used methods: dialectical, monographic, historical, system-structural analysis and synthesis, accounting and audit. Results of work. The article defines the content of taxes, tax reporting and audit in agrarian enterprises. The procedure and stages of carrying out of audits, their purpose, methods, the estimation of efficiency and efficiency are developed. The necessary audit procedures are established. Typical and possible violations of tax legislation and methods of their detection are revealed. The means and directions of improvement of representation of taxes in accounting, tax discipline and carrying out of the tax audit are substantiated. This will help increase the financial and economic stability of agrarian enterprises and their sustainable development. The field of application of results. Conclusions and results of the article can be used in the educational-scientific process of the economic faculties of higher educational institutions. It is expedient to transfer them for practical use in the work of accounting services of enterprises, audit companies, tax authorities. Conclusions. As a result of writing the article, it was found that the audit of the taxation of agricultural enterprises has certain characteristics. They are determined by the specifics of agriculture itself. It is fully related to the definition of payers and the establishment of a single tax (EP). The organizational and economic bases of the audit, its purpose, stages, procedures, types of inspections were determined. The content of audit reports and the significance of their use in corporate management, tax administration is substantiated. Proposals to improve and increase the effectiveness of tax audit on these bases will contribute to strengthening tax discipline, transparency of agribusiness, its optimization and competitiveness in agrarian markets.

ЕФЕКТИВНІСТЬ ФІНАНСОВОГО КОНТРОЛЮ ТА ДЕРЖАВНОГО АУДИТУ ДЛЯ ЗАБЕЗПЕЧЕННЯ ФІНАНСОВО-ЕКОНОМІЧНОЇ СТІЙКОСТІ ДЕРЖАВИ

Одним із ключових завдань управління є контроль за використанням фінансових і матеріальних ресурсів. Особливе значення фінансовий контроль має у державному секторі, адже дотримання чітких стандартів у бюджетній сфері сприяє досягненню соціальної стабільності, економічної безпеки та високого рівня добробуту населення. Від ефективності фінансового контролю значною мірою залежить довіра суспільства до влади та державних інституцій, що обумовлює актуальність дослідження питань ролі фінансового контролю у забезпеченні економічної стійкості держави. У статті авторами проведене дослідження економічної сутності державного фінансового контролю та ролі державного аудиту у фінансово-економічному секторі держави, визначено напрями розвитку державного фінансового аудиту. На сучасному етапі в Україні не запроваджено єдиних методологічних основ побудови ефективної системи аудиту в секторі державного управління, що вимагає розробки теоретико-прикладних пропозицій щодо формування аудиту в державному секторі. Пропонований авторами підхід до класифікації державного аудиту передбачає виділення внутрішнього та зовнішнього аудиту, а також трьох основних різновидів державного аудиту - фінансового аудиту, аудиту ефективності та операційного аудиту. Така класифікація може застосовуватись у діяльності органів зовнішнього та внутрішнього державного фінансового контролю. При цьому об’єктами фінансового аудиту мають бути суб’єкти господарювання, бюджетні установи та суб’єкти державної та комунальної форми власності, аудит ефективності має бути скерований на оцінку виконання місцевих бюджетів та програм розвитку, операційний аудит орієнтований на перевірку окремих господарських операцій. Авторами розроблено методичний підхід до загальної оцінки ефективності державного фінансового контролю та аудиту, що передбачає застосування відповідних коефіцієнтів ефективності контролю та ефективності державного аудиту.

Prepare for Takeoff: Improving Audit Efficiency and Effectiveness with Drone-enabled Inventory Audit Procedures

Auditors increasingly employ technologies to improve audit quality. Using a design science approach, we examine whether using drones and automated counting software can improve audit quality and thereby improve financial reporting. We assess three dimensions of audit quality—efficiency, effectiveness, and quality of audit documentation. We provide evidence that auditors can perform inventory counts with these technologies much more efficiently than they can with manual techniques, decreasing count time in our study from 681 hours to 19 hours. At the same time, auditors can maintain or improve audit effectiveness with these technologies, decreasing error rates in our study from 0.15% to 0.03%, while providing higher-quality audit documentation. Interviews with national-level partners and audit standard setters highlight impediments to adopting these technologies, including firm concerns about being first movers combined with inability of standard setters to provide guidance at a pace that matches the pace of technological development. Collectively, our results suggest that technology-enabled inventory audits can improve audit quality, and further regulatory guidance on using such technologies would enhance adoption.

The relationship between evidence characteristics and audit efficiency and effectiveness: evidence from Middle Eastern countries

This paper investigates the relationship between three evidence characteristics (namely, sufficiency, reliability, relevance) and audit quality. We employ a multi-method approach that is broken down into two tools; questionnaires and interviews with 103 external auditors working in Jordan, Saudi Arabia and the United Arab Emirates. The current study adopted the decision usefulness theory as a theoretical framework. The main finding of the study revealed that there is a significant relationship between sufficiency and audit quality (both the efficiency and effectiveness of the audit). Interestingly, the results show that reliability and relevance are associated with audit effectiveness, but did not show significant association with audit efficiency. The contribution of the current study is that it increases awareness of the evidence characteristics and their impact on the audit quality. This kind of awareness aids the decision makers to have a better vision that enables them to take sufficient, relevant and reliable decisions.

The relationship between evidence characteristics and audit efficiency and effectiveness: evidence from Middle Eastern countries

This paper investigates the relationship between three evidence characteristics (namely, sufficiency, reliability, relevance) and audit quality. We employ a multi-method approach that is broken down into two tools; questionnaires and interviews with 103 external auditors working in Jordan, Saudi Arabia and the United Arab Emirates. The current study adopted the decision usefulness theory as a theoretical framework. The main finding of the study revealed that there is a significant relationship between sufficiency and audit quality (both the efficiency and effectiveness of the audit). Interestingly, the results show that reliability and relevance are associated with audit effectiveness, but did not show significant association with audit efficiency. The contribution of the current study is that it increases awareness of the evidence characteristics and their impact on the audit quality. This kind of awareness aids the decision makers to have a better vision that enables them to take sufficient, relevant and reliable decisions.

Performance Audit and Public Sector Budgetary Efficiency in Southwest Nigeria

This study examined performance audit and public sector budgetary efficiency in southwest Nigeria. Specifically, the study examined the effect of total quality management (TQM) on budgetary efficiency in Southwest Nigeria, Public service value (PSV) on budgetary efficiency in Southwest Nigeria and Government accountability system (GAS) on budgetary efficiency in Southwest Nigeria. Primary method of data collection was employed, through structured questionnaire and it was sourced from the Ministry of Finance, Ministry Rural Development, Ministry Health, Ministry Work and Infrastructure in selected Southwest States in Nigeria, which are, Lagos, Oyo and Ogun. Data were analyzed using both descriptive and inferential statistics. Descriptive analyses conducted in the study include frequency table, and pie chart while inferential analyses conducted in the study include linear regression and ANOVA analysis. F.test used to test the overall significance of the regression model while the coefficient of determinant r2, was used to determine how much variation the dependent variable was explained by the independent variable. Result revealed that coefficient of determination (r2) of total quality management, public sector value and government accountability system were 0.730, 0.654 and 0.433 which implies that about 73%, 65.4% and 43.3% variation in budgetary efficiency of the selected states can be explained by total quality management, public sector value, government accountability system in individual States. The study found out that total quality management (TQM), public service value (PSV) and government accountability system (GAS) indicated positive and significant effect on budgetary efficiency in southwest Nigeria, (.854, p .000 < 0.05), (809, p 0.003 < 0.05) and (.658, p .002 < 0.05) respectively. The overall regression model of (Total quality management, Public sector value and Government accountability system in the selected States) are significant in terms as F calculated (256.641, 83.084 and 61.846) are greater than F critical (3.89) respectively. The study concluded that total quality management, public service value and government accountability system have significant effects on public sector budgetary efficiency in Southwest Nigeria, and positively related.

Формирование условий для проведения обзоров расходов в России

The article is focused on implementation of spending reviews in Russia. The authors claim that general success of spending reviews in the country depends on certain institutional conditions. Adoption of the order of the Russian Government on the approval of the spending reviews format is viewed by the authors as one of the necessary steps that should be followed by adoption of the regulations and guides set. In particular, operational procedures of working groups should be approved, preparation standards for final reports should be set, leading role of the Ministry of Finance in operational management should be outlined as well as roles and responsibilities of all other stakeholders. Based on the experience of OECD countries, the article states that special information base of spending reviews is also required. It should be different from the base used in programs and project evaluation process because of different purposes of spending reviews and program efficiency evaluation: success of spending review means that proposals for future expenditures reallocation are integrated into the budget process (which is usually not the case with program efficiency evaluation). The authors conclude that implementation of spending reviews should become a part of integrated approach in governance of budget expenditures in Russia, complementing such performance budgeting instruments as project/program effectiveness and efficiency evaluation, monitoring of financial management quality and efficiency auditing.