External Audit Research Articles

Evaluation of an Innovative Technology Curriculum

This research aims to devise an innovative curriculum, to determine the opinions of parents, teachers, students, and educators of the curriculum, and to present results using the CIPP approach. The study employed a qualitative research method, a program execution case study. It used maximum variation sampling, a purposeful sampling method. The study, involving eighteen participants, was conducted in a high school that runs a technology education program. Data was obtained using the semi-structured and focus group interview methods. Participant confirmation was obtained to increase reliability, which was then subjected to external audit, allowing another researcher to examine the process and results. Awareness of the “Proficiency in Technology” (PIT) curriculum and curriculum implementation emerged as the main facts. The research findings show that a lack of communication and trainer qualifications caused disruptions in the program.

The Effect of Financial Audits on Governance Practices: Evidence from the Nonprofit Sector

The Effect of Financial Audits on Governance Practices: Evidence from the Nonprofit Sector

Identification of fraudulent financial statements through a multi‐label classification approach

SummaryAlthough the financial audit controls in companies have advanced over the years, the number of corporate fraud instances is growing, thus raising the need for investigating the factors that can be used as early warning signals and developing effective systems for identifying financial fraud. In this paper, financial statements from 133 Greek companies listed in the Athens Stock Exchange over the period 2014 to 2019 are investigated, based on the fraud diamond theory. Financial data and corporate governance variables are used as inputs to data mining techniques to develop models that can identify patterns of irregularities in a company's financial reports. To this end, popular machine learning classification algorithms are employed in a novel multi‐label classification setting that not only identifies fraudulent cases but also considers the nature of the auditors' comments. The results indicate that the proposed multi‐label approach provides enhanced results compared to binary classification algorithms, avoiding inconsistent outputs with respect to the existence of different forms of manipulation of financial statements.

Differences Between Internal And External Audits In Detecting Fraud: The Moderating Role Of Professional Skepticism As A Moderating Variabel

This research aims to examine the differences between internal and external audit in detecting fraud, as well as the role of professional skepticism as a moderating variable between independence and audit experience in fraud detection. The population and research object are internal and external auditors in Central Java Province. The sampling technique used in the research was purposive sampling, obtaining a sample of 155 internal auditors and 177 external auditors. The research method uses Structural Equation Model (SEM) with the help of Smart-PLS 4 software. Data was obtained using a questionnaire. The research results were divided into two groups, namely in the internal and external auditor groups, where there were similar results which stated that professional independence and auditor experience had a positive impact on fraud detection. The moderating variable professional skepticism is unable to moderate the relationship between professional independence and auditor experience in detecting external and internal auditor fraud. However, in the professional internal auditor group, skepticism was able to moderate the relationship between auditor experience and fraud detection.

El Rol de la Auditoría Forense en la Detección de Fraudes Corporativos

This article reviews the role of forensic auditing in the detection of corporate fraud through a qualitative literature review. Forensic auditing is essential to identify and prevent fraudulent activities, promoting ethics and transparency within organizations. Advanced methods such as data analysis, interviews and interrogations, and documentary reviews, which have proven to be effective, are discussed. Technological innovations, such as artificial intelligence and blockchain, have significantly enhanced these capabilities, although organizational obstacles such as internal resistance and lack of resources remain. The combination of technical and soft skills, as well as multidisciplinary approaches that integrate legal, financial and technological expertise, are crucial to the success of forensic audits. Despite the challenges, forensic auditing positively influences corporate culture, fostering a culture of whistleblowing and strengthening internal controls. Investment in advanced technologies and continuous training of forensic auditors are critical to maintain effectiveness in fraud detection. In conclusion, forensic auditing not only detects fraud, but also strengthens corporate governance and ensures the long-term sustainability of organizations.

Assurance Practices for Ethical and Sustainable Business Practices

The purpose of this study is to examine the role of assurance practices in promoting ethical and sustainable business conduct within contemporary organizations. Through a qualitative research design and methodology, the study systematically analyzes existing literature to identify key insights and trends in assurance practices related to business ethics and sustainability. Findings indicate that assurance mechanisms, such as external audits and third-party certifications, play a crucial role in bolstering stakeholders' confidence in corporate disclosures concerning ethical conduct and sustainability performance. Additionally, the study highlights the evolving nature of assurance practices, particularly in response to emerging challenges and opportunities in the realm of business ethics and sustainability. Implications of the findings suggest that organizations can leverage assurance practices to enhance transparency, accountability, and trustworthiness, thereby fostering a culture of integrity and responsible conduct. Furthermore, the integration of technology and the expansion of assurance services offer opportunities to strengthen the effectiveness and relevance of assurance practices in addressing contemporary sustainability challenges.

Analysis on Behavioral Intention of Financial Auditors in Adopting Big Data Analytics

Analysis on Behavioral Intention of Financial Auditors in Adopting Big Data Analytics

QUALITATIVE ANALYSIS ON THE INTERFERENCE AND CAUSALITY BETWEEN ACCOUNTING AND AUDITING FOR ROMANIAN COMPANIES “TOP TRADED” LISTED AT THE BUCHAREST STOCK EXCHANGE

The instability generated by legislative changes, price volatility, difficulties in obtaining and maintaining financial stability are realities that characterize the current economic situation, and the first indications of significant uncertainties regarding the continuity of an entity's activity can be obtained from the financial statements and the audit report, consequently, it becomes essential to assume the responsibilities that administrators and financial auditors have in assessing the adequacy of the going concern principle. The objective of the research is the analysis of how the auditor, by belonging to the Big 4 or Non-Big 4 category, the audit opinion, the number of key audit aspects included in the audit report, confirms the positive or negative implications on the principle of business continuity. The research methodology involved qualitative analysis by manually extracting data from the audit reports issued for the period 2018-2022, for a sample that includes 45 companies "top traded" from Romania listed on the Bucharest Stock Exchange (BSE). Following the analysis, it was found that the assumption of continuity of activity in the preparation of the individual annual financial statements, assumed by the management of the company, is adequate in 78% of the cases for the studied sample.

Professional Scepticism, Independence, Information Technology, Auditor Competence, And Audit Quality

Purpose: This study aims to obtain empirical evidence regarding the effect of professional scepticism, independence, information technology, and auditor competence on audit quality. Methodology/approach: This study uses a quantitative approach with primary data in the form of questionnaires. Respondents of this study were 68 auditors of BPK RI Representative of Riau Province. Regression analysis using the PLS-SEM method. Findings: The results showed that professional scepticism and BPK auditor competence significantly positively affected BPK audit quality. Other results show that independence and information technology do not significantly affect BPK audit quality. Practical implications: These results provide a new understanding of independence and information technology in conducting audits in the public sector. Although BPK is an external auditor for all government agencies, the income of BPK employees or auditors comes from the government, so independence is not quite appropriate to be pinned on BPK auditors. Still, the objective attitude of each BPK auditor in carrying out audits at government agencies must be improved. Originality/value: These results contribute to the development of literature on the determinants of audit quality.

The Mediation Effect of Audit Assessment on Audit Competency and Digital Audit to Audit Work Performance Effectiveness

The relationship between auditor competency and the use of digital audit has been recognized as a potential factor that could enhance audit evaluation and enhance auditor performance. This study examines the direct impact of audit competency and digital audit variables on the efficiency of auditor work performance. It also explores the role of audit assessment as a mediator in these connections. The data used in this study is obtained from external auditors. A survey was conducted in Malaysia to determine the direct impact of audit competence and digital audit on the efficiency of audit work carried out by the external auditor. Based on the findings, it appears that increasing the efficiency and effectiveness of auditors' work performance was largely dependent on their competency as well as their usage of modern digital audits. Further investigation reveals the impact of audit competency and digital audit on audit assessment, which is a necessary process for enhancing the performance effectiveness of the external auditor. This research enhances our understanding of audit assessment as an essential tool for evaluating audit proficiency and the auditor's competency and effective utilization of digital audit in evaluating the auditor's work performance.

The Influence of Financial Distress, Auditor Switching, Profitability, Audit Quality on Audit Delay

Audit delay is the period for completing the annual financial report audit, namely from the date the company's books are closed to the date stated in the independent auditor's report. The length of the audit delay affects the value of the audited financial statements. This research aims to find out whether Financial Distress, Auditor Switching, Profitability, and Audit Quality affect Audit Delay. The data used in this research is secondary data in the form of audited financial reports. This research population was obtained using methods from non-cyclical consumer sector companies listed on the IDX during the 2020-2022 period. Based on predetermined criteria, a sample of 129 companies was obtained. The analytical method used is multiple linear regression analysis with the STATA 17 software tool. The research results show that financial distress affects audit delay. Meanwhile, auditor switching, profitability, and audit quality do not affect audit delay.

The impact of external auditors with forensic accounting competencies on auditee firm performance

The purpose of this study is to examine how the presence of auditors with forensic accounting skills impacts the financial performance of audited companies. Using a quantitative approach, this research employs linear regression analysis and examines a sample of 74 companies from the industrial and service sectors listed on the Amman Stock Exchange between 2012 and 2021. The findings reveal that external auditors with forensic accounting competencies have a positive impact on the financial performance of audited companies. The insights presented in this study could serve as valuable tools for improving the financial performance of companies in the service and industry sectors, highlighting the importance of supporting and promoting the skills and competencies of forensic accountants.

Stakeholder Identification in Internal Control of Building Construction using Design and Build Contract to Improve Efficiency and Effectiveness

The amount of infrastructure development in Jakarta makes internal control of the implementation of design and build contracts for the construction of state buildings need attention. The problem in internal control is there are still some recurring findings and supervisory findings that are not detected by Government Internal Supervisory Apparatus (APIP) but found by external auditors, as well as delays in completing assignments. The problems include a limited number of technical auditors, uneven knowledge, and experience of construction supervision, overlapping assignments, and a report process that takes time. These problems can have an impact on the implementation of internal control, that is lack of achievement of internal control objectives and the potential for non-compliance with the construction process with laws and regulations, thus showing that internal control of construction is not running effectively and efficiently. To improve efficient and effective internal supervision of construction, it is necessary to standardize operational procedures (SOP) or work procedures for internal control of construction, especially for design and build contracts. This research aims to identify stakeholders and the roles and responsibilities of each party in internal control of building construction using design and build contract to improve efficiency and effectiveness. The results reveal a set of internal and external stakeholders as well as the form of organizational structure and the relationship of coordination and responsibility lines. The results of this research also emphasize the roles and responsibilities of each stakeholder so that each party fully understands the obligation to carry out internal supervision assignments for design and build construction.

The moderating role of professional commitment in the relationship between time budget pressure and sustainable audit quality: The mediating role of professional skepticism

The study aimed to identify the relationship between time budget pressure and the quality of external auditing in the Jordanian environment through the mediating role of professional skepticism. The moderating role of external auditors' professional commitment in this relationship was tested. The study population consisted of certified Jordanian accountants. 234 questionnaires were distributed to the respondents. The study indicated that certified Jordanian accountants are subject to a high level of pressure, in addition to having a high level of audit quality and professional skepticism, and they are professionally committed. The results of the analysis also indicated that high professional skepticism affects the quality of the external audit and that there is an impact of time budget pressure on the quality of the audit, as the pressure of deadlines for preparing audit reports reduces the level of professional skepticism practiced by external auditors in Jordan. The results also indicated that auditors' professional commitment moderates the relationship between time budget pressure, the level of professional skepticism, and audit quality. Interestingly, there is no moderating role for professional commitment in the relationship between professional skepticism and the quality of external auditing in Jordan. This study emphasizes the need for auditors to maintain professional skepticism when exposed to pressures, including time budget pressure, in order to produce high-quality audit reports.

Pengaruh Faktor Lingkungan Pada Penentuan Materi Kesalahan Dalam Audit Laporan

The purpose in this study was to determine the effect of environmental factors on the determination of error material in the audit of financial statements. Ind facto environment is accountability, independent auditors, experience, auditory performance and auditory professionalism in determining the quality of the audit. The approach used is Quantitative by using multiple linear regression analysis. The results showed that Value from R Square in the study was 0.616 (61.6%) meaning that there were still 38.4% of factors (variable) that could affect the quality of the audit. For this reason, researchers can further add to the use of other variables other than the four variables that have been used in this study, such as leadership styles, auditor competence competencies, and time pressure budget.

ТЕХНОЛОГИЧЕСКИЙ АУДИТ ПРЕДПРИЯТИЙ В ПРОМЫШЛЕННЫХ КЛАСТЕРАХ

The subject of this study is issues related to the justification for the inclusion of various enterprises in an industrial cluster that has a multi-industry focus, including the use of wood chemical technologies for recycling waste from the forestry complex. The paper substantiates the need for mandatory technological audit of enterprises when they are included in an industrial cluster with a multi-industry focus. The existing methods of technological audit carried out at enterprises are considered, and several groups of methods for conducting technological audits that can be used at enterprises are identified. The methods of technological audit carried out at the enterprise where the levels of technology readiness are used, as well as the levels of technology maturity are investigated; methods of technological audit at the enterprise, which take into account both the external and internal environment of the business entity, taking into account their impact on the level of its technological development. Methods based on conducting a comprehensive audit of an enterprise are considered, including interrelated specialized audits: commercial audit; technical and technological audit; institutional audit; social audit; economic audit; risk audit; financial audit; technology audit methods, which are carried out only at a certain stage of the life cycle of an economic entity; technology audit techniques that determine the discrepancy between the functional and cost components in the activities of the enterprise. The result of the study was the development of strategic analysis matrices, which allows, based on the methodology of the level of technology readiness, to justify the decision to include an economic entity at a certain level of technological development in the industrial cluster of a multi-industry focus.

Impact of a DSS-supported medication review on the safety of drug therapy and quality of life in patients with antithrombotic therapy

Polypharmacy is common among patients with antithrombotic medication, giving rise to concerns about Drug-Related Problems (DRPs). Therefore, these patients would benefit from a Medication Review (MR) along with pharmacist counselling to reduce the risks accompanying polymedication. This prospective study presents a concept for MRs that are applicable in German community pharmacies and can efficiently support pharmacist counselling and improve the safety of drug therapy. As this is a major challenge in everyday pharmacy practice, we used a Decision Support System (DSS) to evaluate its ability to support the process of pharmacist-led MRs. The primary endpoint was the impact of a community pharmacist on the reduction of DRPs. We investigated the impact of the interventions resulting from MRs on patients taking at least one antithrombotic drug as part of their polymedication regimen. Secondary endpoints were the reduction in the number of patients with bleeding risks and the improvement of patients’ Quality of Life (QoL) and therapy adherence. Furthermore, the DSS used in the study was controlled for correct data assessment and plausibility of data. We selected adult patients who were taking no less than three different medications for long-term treatment, at least one of which had to be an antithrombotic drug, and who were customers in one of eight selected pharmacies over a period of 6 months. Data from 87 patients were analyzed with DSS-support. A total of 234 DRPs were identified by the pharmacist (2.7 DRPs per patient). MR reduced DRPs by 43.2% which, resulting to a reduction of 1.2 DRPs per patient. The intervention also led to a significant improvement in the patients’ QoL (assessed via EQ-5D-5L questionnaire; p < 0.001) and enhanced therapy adherence (assessed via A14 questionnaire; p < 0.001). The control of correct data assessment (with 93.8% concordance) and plausibility of data (with 91.7% concordance) of the DSS software were conducted by an external auditor. No significant effect was found for overall bleeding risk. The results of this study indicate that DSS-supported and structured MR conducted by pharmacists can contribute to a reduction in DRPs and significantly improve patient’s QoL and adherence to treatment.

Pengaruh Tata Kelola Perusahaan, Komite Audit, Dan Kualitas Audit Terhadap Kinerja Perusahaan

Corporate governance, audit committee, and audit quality are important factors that can influence company performance. Good corporate governance can create an effective internal control system, increase transparency and maintain company accountability. The audit committee, as part of corporate governance, plays a role in overseeing the financial reporting process, evaluating the internal control system, and monitoring external audit performance. High audit quality can increase stakeholder confidence in the company's financial reports and provide guarantees for the accuracy and reliability of financial information. This research aims to analyze the influence of corporate governance, audit committee, and audit quality on company performance. Corporate governance variables are measured using corporate governance scores, while audit committee variables are evaluated based on the characteristics and effectiveness of the audit committee. Audit quality is assessed by the reputation and experience of the external auditor. Meanwhile, company performance is measured using financial ratios such as return on assets (ROA) and return on equity (ROE). This research uses data from companies listed on the Indonesia Stock Exchange (BEI) during a certain period. Data analysis was carried out using the multiple linear regression method to test the influence of independent variables on the dependent variable. It is hoped that the findings of this research will contribute to the development of corporate governance practices, audit committee management, and improvement of audit quality in Indonesia, as well as provide insight for companies in efforts to improve their financial and operational performance.

Beyond the numbers: assessing the risk of management motives for fraud in external audits

PurposeThe purpose of this study is to explore how the risk of management motives for fraud can be assessed in external audits.Design/methodology/approachSemi-structured interviews were conducted with 26 experienced external auditors to explore their perspectives on the methods they employ to assess the risk of management motives for fraud.FindingsThe study identifies six methods external auditors can use to assess management motives for fraud. It emphasises that assessing management motives requires auditors to go beyond understanding these motives and necessitates a sceptical and analytical mindset. Auditors need to identify the accounts most vulnerable to management manipulations, observe management attitudes and assess the credibility of management assertions. The auditors in this study highlight specific accounts frequently manipulated by management. Still, manual year-end journal entries are the most vulnerable to management manipulations as they are subject to fewer controls. They recommend increasing the sample size to 100% and assigning more experienced staff, particularly, those with qualifications in fraud examination or anti-fraud training, to audit these vulnerable accounts thoroughly. They also provided examples of how auditors can identify management motives for fraud, observe management attitudes and assess the credibility of management assertions.Practical implicationsAudit standards (e.g. ISA 240, SAS99) lack explicit guidance on assessing management motives for fraud, but auditors are required to consider it in fraud risk assessment. This study proposes guidance recommendations to improve auditors' ability to assess this risk, which could be integrated into professional audit standards and training materials to improve auditors' professional scepticism, ability to challenge management and skills in fraud risk assessment.Originality/valueAssessing the risk of management motives for fraud in external audits has received limited attention in the literature. To the best of the authors’ knowledge, this study is the first to address this knowledge gap.

Effect of Internal Control Systems on Financial Reporting Lag among Listed Companies in the Nairobi Securities Exchange.

The timeliness of audited financial reporting has been a concern for various stakeholders, including shareholders, managers, and regulators, as well as internal and external auditors. In the Kenyan perspective timeliness of audited financial statements is prescribed by the Company Act, 2015 as six months or approximately one hundred and eighty days. The general objective of the study was to evaluate the effect of internal control systems on financial reporting lag among listed companies in the Nairobi Securities Exchange. The specific objectives were; to investigate the effect of corrective controls, preventive controls, detective controls and finally monitoring controls on the on financial reporting lag among listed companies in the Nairobi Securities Exchange. The study was anchored on the following theories; agency theory, stewardship theory, attribution theory and systems theory. The method of study adopted in this study was descriptive research design. The target population of this study l comprised companies listed at NSE. Specifically, the units of analysis will be the four departments of finance, human resources, companies listed at NSE. This study used Purposive stratified sampling method to get the sample size which will sample a suitable number of respondents from the different strata from the NSE companies which operate though board of management. The study used both primary and secondary data to gather information needed to respond to the research objectives. The Panel Data Analysis model was used to determine the significance of each independent variable in affecting the financial performance of companies. Qualitative data as analyzed using content analysis, through developing a thematic framework from the key issues, concepts and themes emanating from the open-ended questions. The study adopted several diagnostic tests that included multicollinearity test, test for fixed or random effects and multicollinearity test. Regarding corrective controls, the study established that corrective controls had a significant and negative effect on the financial reporting lag among listed companies in the Nairobi Securities Exchange. The study also established that preventive controls had a significant and negative effect on the financial reporting lag among listed companies in the Nairobi Securities Exchange. The study further established that detective controls had significant and a negative e effect on the financial reporting lag among listed companies in the Nairobi Securities Exchange. The value of the coefficient is also negative. The study finally established that monitoring controls on had significant and a negative effect on the financial reporting lag among listed companies in the Nairobi Securities Exchange. The value of the coefficient is also negative.