Audit Quality Of Financial Statements Research Articles

Accounting reporting complexity, audit engagement partner mandatory rotation, and audit quality

AbstractThis paper investigates the influence of a firm's accounting reporting complexity (ARC) on financial statement audit quality. We predict and find that there is a non‐linear relationship between a firm's ARC and audit quality. Specifically, a more complex accounting environment—measured by ARC—leads to higher quality audits, but this effect diminishes when ARC continues to increase. Further analyses reveal that the effect is more salient among client firms that do not purchase non‐audit services (NAS). We also examine whether ARC affects audit quality in the circumstance of mandatory audit partner rotation. Empirical results show a moderating effect of ARC on the negative influence of audit partner rotation on audit quality. Our study extends the literature by illustrating how a firm's ARC influences audit quality in a special manner.

Audit Quality of Financial Statements of Commercial Banks in Vietnam

Financial statements are a means of presenting the profitability and current state of corporate finance to interested persons. Commercial banks in Vietnam are required to prepare honest and reliable financial statements as a basis for effective decision making by stakeholders. However, the quality of auditing financial statements of commercial banks in Vietnam has been a topic of concern in recent years. In this article, the author explores the situation of audit quality of financial statements of commercial banks in Vietnam. From there, focus on proposing a number of measures to improve the quality of auditing financial statements of commercial banks in the coming time.

PENGARUH TEKANAN DAN KECERDASAN EMOSIONAL TERHADAP KUALITAS AUDIT PADA PADA KANTOR AKUNTAN PUBLIK DI PROVINSI BANTEN

This study discusses the client’s understanding of intelligence and emotions on audit quality (empirical study on in the South Tangerang area). In this study using a survey method with a questionnaire. The object of this study is the auditors who work in the South Tangerang, Banten Province. The total sample 45 respondents obtained from 5 KAP is KAP Ruslim dan Ruslim, KAP Tri Bowo Yulianti, KAP Noor Salim & Rekan, KAP Heliantono & Rekan dan KAP Kadim, Veronica & Syahirman. The results of the study revealed that the audit quality of financial statements is not always going well, pressure and dictation from the company are one of the reasons for poor audit results. However, emotional intelligence can be a middle ground for these problems.In other words, an auditor's discretion can reduce bad actions,as well as self-protection from the bad influence of the organization.
 Keywords: Pressure, Emotional Intelligence, Audit Quality

Factors Affecting the Audit Quality of Financial Statements of Listed Businesses

Financial statements are written records that convey the business operations and financial performance of a company, directly affecting investors' decisions. However, at present, the awareness of investors or auditing firms is still limited in controlling the quality of audits. Through quantitative research methods and multivariate regression analysis to measure the level of influence of these factors, the article has found 5 factors affecting the audit quality of financial statements of listed businesses which include (1) Auditing firm size, (2) In-depth skill of auditors, (3) Quality control procedures at the audit firm, (4) Price of auditing, (5) Service range of the auditing company. Then, the study made a number of recommendations for independent auditing companies and related agencies to improve the audit quality of financial statements of listed companies, at the same time, to find the development direction for the audit profession.

The Investigation on Opinion Shopping Before the Implementation of Equity Incentives

The provision of Measures for the Administration of Equity Incentive of Listed Companies (Trial) stipulates the listed companies that intend to implement equity incentives cannot have an audit report where there is an adverse opinion or disclaimer of opinion. This provision may induce companies preparing to implement equity incentives to engage in strategic opinion shopping. Specifically, opinion shopping can be achieved by raising audit fees, auditor changes or other means. Opinion shopping damages the independence of auditors, and it impacts the audit quality of financial statements. Therefore, this study is devoted to studying whether companies engage in strategic opinion shopping before implementing equity incentives. If that phenomenon is real, what are the characteristics of enterprises engaging in opinion shopping before the implementation of equity incentives? To analyze opinion shopping before the implementation of equity incentives, first, the propensity score matching method is used for selecting the corresponding control group that companies do not implement equity incentives for the experimental group that companies have the plan of implementing equity incentives. Then based on the experimental group and the selected control group data, the opinion shopping model of Lennox (2000) is adopted to analyze opinion shopping. Finally, the equity incentive related variables are added to the opinion shopping model of Lennox (2000), which forms the difference-in-differences model to analyze the opinion shopping before the implementation of equity incentives. The main conclusions are as following. First, the equity incentive plan has a significant inducement effect on opinion shopping before the implementation of equity incentives. Companies with equity incentive plans have obvious opinion shopping behaviors before the implementation of equity incentives to meet the provision. Second, in 1 year prior to the implementation of equity incentives, the audit quality of companies with equity incentive plans is lower, which is reflected in the reduction of the performance through the manipulation of negative accruals. Third, companies engage in partner-level opinion shopping in 1 or 2 years prior to the implementation of equity incentives, and they engage in auditor-level opinion shopping in 1 year prior to that. Fourth, in distinguishing the nature of property rights and organizational forms of audit firms, it is found that partner-level opinion shopping before the implementation of equity incentives is more significant in non-state-owned enterprises. Partner-level opinion shopping before the implementation of equity incentives can be inhibited when audit firms were formed as a partnership before 2013, but it cannot be inhibited after 2013. The contributions of this article are mainly reflected in the following two aspects. First, this paper shows the fact that there is opinion shopping induced by Measures for the Administration of Equity Incentive of Listed Companies (Trial). Second, this paper studies the factors that have influence on opinion shopping from the perspective of the implementation of equity incentives, which enriches the literature on stock incentives and opinion shopping. In view of the phenomenon of opinion shopping before the implementation of equity incentives, this study puts forward the following suggestions. First, regulatory authorities should accurately grasp the supervision time and strengthen the supervision before the implementation of equity incentives. There is generally a time lag between the publication date of equity incentive draft and the granting date, sometimes even across a fiscal year. Therefore, in order to protect the rights of investors and maintain the capital market order, regulatory authorities should strengthen supervisions on companies issuing the draft of equity incentives. Second, the detailed reasons of the partner’s change should be disclosed compulsorily. Compared with the auditor, the partner’s change is more concealed. Therefore, the companies, which have the disclosure of equity incentive draft and the change of the partner, are required to disclose the detailed reasons to facilitate regulatory supervisions.

The Impact of Benefit Plan Audits on Financial Statement Auditor Choice and Financial Statement Audit Quality

Benefit plan audits, a material but less understood public accounting service, represent a non-audit service that is “audit-related.” We explore the implications of benefit plan audits for the financial statement audit. We find that performing a benefit plan audit for a company significantly increases the likelihood that the firm will be selected as a company’s financial statement auditor in the future, particularly for smaller audit firms. Further, we find that companies that engage the same audit firm for both their benefit plan and financial statement audits have a significantly lower likelihood of misstatements and shorter audit report lags. Finally, we find evidence consistent with the joint provision of these services creating greater bonding and higher switching costs for the financial statement audit. Our findings speak to the continued debate over effective market expansion of financial statement audit providers, audit quality determinants, and audit efficiencies.

Anteseden Dan Konsekuensi Audit Delay Pada Perusahaan Perbankan Perioda 2011-2014

<em>Timeliness in financial reporting can contribute to efficient performance for the stock market because it can reduce the asymmetry information, mitigate insider trading, and improve the usefulness decision of information to stakeholders. There were inconsistencies in prior research and the case of delay submission on issuer financial statements to the Financial Service Authority. There were 30 cases for each in 2013 and 2014. This study aimed to examine (1) the negative impact between the company size, profitability, leverage, and the auditor quality on audit delay; (2) the positive impact of audit delay on audit switching; and (3) the positive impact of audit delay and audit delay switching on audit quality in banking companies listed on the Stock Exchange 2011-2014 period. A purposive sampling method is used and as the sample, 30 companies are obtained in four years so the analyzed data was based on 120 observations. The data analysis technique used is multiple linear and logistic regression. Results showed that (1) the size of the company and leverage have no impact on audit delay, while the return on assets and the auditor quality have a negative impact and significantly related to audit delay; (2) audit delay has a positive impact and significantly related to audit switching; (3) audit delay has a positive impact and significantly related to audit quality, while audit switching has no impact on audit quality. This study has contributed in optimizing timeliness performance of financial information reporting, effectiveness and efficiency of audit time range so that general information increased, and The implication for audit quality of financial statements become more reliable. </em>

The organizational response to the discovery of false sign-off

Financial statement audit quality is directly threatened when auditors sign off audit steps without performing the required work. This behavior, known as false sign-off, has received attention in the academic literature for over 30 years. Most prior false sign-off research has focused on trying to understand why and how much false sign-off occurs from the perspective of the auditors who engage in the behavior. Some recent research based on experiments and semi-structured interviews has investigated the organizational response to the discovery of false sign-off, finding that one reason the behavior may occur is that it is not sufficiently discouraged when it is discovered. The current study uses a widely distributed survey to ask auditors about their discovery of and response to actual instances of false sign-off. The survey explores the types and frequency of discovered false sign-off, the actions actually taken by auditors when it is discovered, the factors that influenced the auditors’ chosen course of action and the ultimate organizational response to the cases that are reported.