Auditor Independence Research Articles

The influence of auditor ethics on audit quality: Analyzing key factors in Vietnamese audit firms

This paper aims to analyze the possible influence of auditor ethics (AE) factors on audit quality (AQ). Additionally, this study examines whether AE can mediate the relationship between various factors and AQ. These factors include independence, competence, work experience, ethical standards, and due care. Data were collected using structured questionnaires sent by post or email to auditors, audit team leaders, and deputy managers/heads of 314 independent audit firms in Vietnam. Using SPSS 26 and AMOS 24 for analysis, the results show positive relationships between competence, work experience, ethical standards, and AE, as well as between competence, due care, and AQ. Negative relationships were found between independence, due care, and AE and between independence, work experience, ethical standards, and AQ. These findings provide important recommendations for auditing companies to enhance ethics and AQ, helping them maintain loyal customers, attract potential clients, and further develop audit services in Vietnam.

EARNING MANAGEMENT IN MANUFACTURING COMPANIES IS INFLUENCED BY COMPANY CHARACTERISTICS AND AUDIT ELEMENTS

This study seeks empirical evidence regarding the effect of growth opportunities, leverage, fixed asset turnover, profitability, company size, company age, audit quality, audit independence, and audit committee on earnings management. This study uses the reporting of manufacturing companies listed on the Indonesia Stock Exchange from 2016 to 2018. The research sample consisted of 309 data, which were selected as the final sample using purposive sampling. This study uses multiple regression analysis with the SPSS program to test the relationship between independent and dependent variables. The results of this study indicate that the variables of growth opportunity, profitability, and audit quality affect earnings management. While the variables of leverage, fixed asset turnover, company size, company age, audit independence, and audit committee do not affect earnings management.

The Influence of Solvency, Profitability and Company Size on Audit Delay in Property and Real Estate Companies on the IDX 2018-2021

The capital market is a mechanism or place where various financial instruments are traded. These instruments include stocks, bonds, mutual funds and derivatives. The main objective of the capital market is to facilitate the flow of funds from parties who have surplus funds (investors) to parties who need funds (companies or government) for operational or investment activities. Understanding the Capital Market, here tells how the Primary Market and Secondary Market issue securities for the first time. The function of the Market is as a source of funding, investment, setting share prices, reselling securities. Talking about variables that discuss audit delay, namely the period of time between the closing date of the company's fiscal year and the date of completion of the audit report by an independent auditor. Audit delay is a major concern because it has an impact on the timeliness of presenting financial reports to stakeholders. This research aims to analyze the influence of Sovability, Profitability and Company Size on Audit Delay in Property and Real Estate Companies on the IDX 2018-2021. The data used in this research is secondary data taken from real estate and Property financial reports. This research is research Quantitative with the sampling technique used is purposive sampling. It is hoped that the results of this research will provide a clear picture of the influence of Solvency, Profitability and Size Companies regarding Audit Delay. And the results of this study become a reference for investors in making more measured decisions.

Impact of Audit Committee Quality on the Financial Performance of the Iraqi Banking Sector

Purpose: The purpose of this study is to examine the impact of Audit Committee Quality on Financial Performance in the Iraqi Banking Sector to improve Financial Performance. The agency theory serves as the study’s theoretical underpinning. Design/methodology/approach: The major research design was a quantitative method employing Structural Equation Modelling (SEM). SmartPLS3 was utilized to examine data from a set of respondents who were chosen using a purpose random sampling technique which included the CEO, CFO, accountants, and auditors. The survey questionnaire was disseminated to 386 people, and the collected data were evaluated using a measurement model. Findings: According to the findings, the Audit Committee Components have a considerable impact on financial performance. The relationships were found to be positive and significant whereby Expertise (β =7.422, p0.05), Independence (β =4.549, p 0.05), Size (β=3.736, p0.05), and Meetings (β=3.064, p0.05). The Audit Committee component of Expertise was found to have the most significant impact on financial performance. Research, Practical & Social implications: Implications-wise, this study indicates the need for Iraqi banks to improve the quality of their audit committees towards enhancing their financial performance, also Central Bank should work side by side with Iraqi universities to continue research on the role of Audit Committees. Originality/value: This study provides an overview of the impact of the quality of the audit committee on financial performance and the extent of its importance in the Iraqi banking sector to reduce cases of manipulation and errors in the financial statements of banks. The study recommends the use of independent audit committees to improve financial performance in the Iraqi liquidation sector.

DECISION-MAKING SUPPORT TECHNOLOGIES IN THE FORMATION OF QUALITY MANAGEMENT SYSTEMS AT VEHICLE REPAIR ENTERPRISES

In recent years, the strategy of creating a safely functioning and efficient transport complex of Ukraine integrated into the world transport network has been fixed. Therefore, the creation of a progressive system of product quality management in the conditions of car repair enterprises is considered an urgent scientific and technical task. The quality management system is a management subsystem of an industrial enterprise. Modern production systems are based on TQM principles and widely use ISO 9001 certification. At the same time, certification is based on independent third-party audits (a conformity assessment organization). The wide spread of the standard is based on the fact that it contains generalized requirements (principles) for the organization of product quality control, which can be used at enterprises that differ significantly both in terms of specialization and the scale of production (depots or car repair plants). But this is the «bottleneck» of the standard – the lack of consideration of specialized production conditions makes it impossible to compensate for critical factors affecting the final quality of products. Currently, the accepted approaches to quality assessment do not fully take into account the factors that affect the final quality of products. In order to put all market participants - railway operators, manufacturers, rolling stock repairers and suppliers in mutually beneficial conditions, a single International Railway Industry Standard ISO / TS 22163 International Railway Industry Standart (IRIS) was developed.For the effective use of tools for ensuring the quality of rail car repair, it is considered necessary to use modern management decision support systems. They will allow real-time monitoring of production processes. It is possible to use the method of fuzzy sets to improve the quality management systems of wagon repairs based on the development of separate control algorithms with decision tables. In order to meet the requirements of international quality standards, it is necessary to significantly modernize management approaches based on the creation of progressive decision support systems.

Behavioral aspects of auditor's professional judgment and professional skepticism

The paper examines the behavioral aspects of auditing in the context of auditor’s independence, auditor’s professional judgment, and professional skepticism. Over the past 50 years, in the researches of foreign scientists, the issues of accounting and auditing have been considered through the theory of behavioral accounting. On the other hand, in the studies of Ukrainian scientists, behavioral accounting in accounting and auditing was almost not considered. The main meaning of the theory of behavioral accounting is not to consider accounting and auditing exclusively in numbers, but to consider that accountants and auditors are people with a specific profession who behave according to their feelings and thoughts. It is customary to consider the concept of behavioral accounting according to the following topics: the influence of accounting information on behavior, management control, audit, ethics. Behavioral aspects of the auditor's independence, which are influenced by an auditor's personal prejudices and the auditor-client relationship, are studied. Auditor’s independence is considered in two dimensions - organizational independence and operational independence. E.g., independent auditors may face the problem of conflicting interests of the public and clients. Behavioral aspects of negotiations between the auditor and the client are also considered. The negotiation tactics used by the participants matter. It can be a yielding tactic, or a tactic of disputes. In particular, in the study of accommodating tactics, it was found that both auditors and clients reciprocated the accommodating negotiation tactics. There are many models of professional skepticism that have been summarized. Nelson and Hurtt's models are considered, the two fundamental components of which are professional skeptical judgment and professional skeptical action. Auditors should exercise professional skepticism, making judgments based on audit evidence without being influenced by clients.

Corporate Governance and Market Response: Mediating Role of Firm Performance Empirical Evidence from Indonesia

This research aims to investigate the influence of corporate governance on market response (Rit) through company performance (ROI). Corporate governance uses measurements of the intensity of participation of managerial ownership, independent board of commissioners, audit committee and institutional ownership in the process of monitoring the company's managerial processes. Using a quantitative approach with ordinary leasquare analysis techniques and path analysis. Data from 60 manufacturing companies with the observation period 2017 to 2021, totaling N 285 samples. The research results show that corporate governance variables are dominated by managerial ownership in influencing company performance (ROI) and the ROI variable partially mediates the relationship between managerial ownership of the company and stock returns. Meanwhile, independent commissioner ownership, audit committee and institutional ownership do not affect company performance or stock returns. Thus, the governance conditions of manufacturing companies in Indonesia are dominated by managerial ownership compared to the ownership of independent boards of commissioners, institutional ownership and audit committees. In other words, supervision of managerial process governance is only dominated by managerial ownership.

Independence and objectivity of internal auditors within provincial governance systems

The study addresses the dearth of research on internal audit activity independence (IAAI) and internal auditors' objectivity within South Africa's (SA) provincial governance systems, despite their crucial role in government department performance. A mixed research approach was employed, using 260 purposely selected participants. Questionnaires, telephone interviews, and focus group discussions were used as data collection instruments. A triangulation of descriptive statistics and thematic analysis was applied to report the findings. The study found that management is not taking timely corrective action based on audit findings and recommendations. Internal auditors have friendship relationships with auditee employees, sectional heads are not cooperating with the internal audit function (IAF), and management has a negative perception of the IAF, viewing it more as a fault-finder than as adding value to the organization. Furthermore, the study's insights offer practical implications for improving internal audit practices within provincial governance systems, thereby facilitating better governance and operational efficiency.

Evaluating Internal Audit Excellence: Insights from Auditors and Auditees in Riau Province Regional Inspectorates The purpose of this study is to ascertain the variables that affect audit quality in the Pelalawan Regency, Riau Province, Indonesia, Regiona

The purpose of this study is to ascertain the variables that affect audit quality in the Pelalawan Regency, Riau Province, Indonesia, Regional Inspectorate. The Government Internal Supervisory Apparatus' (APIP) function has changed from that of a watchdog to that of a consultant and quality assurance agency in response to the public's growing desire for accountability and openness. This study uses auditor ethics as a moderating variable to investigate the effects of auditor competence, independence, reluctance culture, and professional correctness on audit quality using James Scott's patron-client theory. Using a survey approach, the study gathers primary data from 197 OPD leaders and 142 auditors. Partial Least Squares Structural Equation Modeling (PLS-SEM) is used for analysis. The findings show that while independence and a culture of reluctance have mixed impacts, competence and professional precision favorably affect audit quality. The association between competence and audit quality is strongly moderated by auditor ethics, but not that between independence, a culture of reluctance, or professional precision and audit quality. According to the findings, improving ethical standards and addressing the patron-client relationship are critical for efficient supervision and the reduction of corruption, even though boosting auditor independence and competency is also important. In order to accomplish good governance and raise the caliber of audits in regional administrations, this research emphasizes the necessity of regular training and bolstering the independence of the Regional Inspectorate.

The Influence of Competency, Professionalism and Auditor Independence on Audit Quality with Integrity as a Moderation Variable at DKI Jakarta Public Accounting Firm (Empirical Study at The Public Accounting Office of DKI Jakarta Province)

The Influence of Competency, Professionalism and Auditor Independence on Audit Quality with Integrity as a Moderation Variable at DKI Jakarta Public Accounting Firm (Empirical Study at The Public Accounting Office of DKI Jakarta Province)

Corporate Accountability for Human Rights: Evidence From Conflict Mineral Ratings

This article examines the impact of sustainability-oriented governance factors on companies reporting on due diligence requirements of conflict minerals (DDRCM). We use the rating scores that are assigned by the Responsible Sourcing Network (RSN) on a sample of multinational companies between 2015 and 2019. We consider whether the existence and type of an independent external audit, the existence of sustainability reports to communicate a firm’s message, the inclusion of sustainability-related targets in executive compensation contracts, and the existence of board-level sustainability committees are associated with DDRCM reporting. We find that the combined effect of sustainability-oriented governance factors is associated with higher DDRCM reporting suggesting that sustainability governance plays an effective role in shaping the corporate response to conflict mineral risks. We also find that effective boards moderate the association between sustainability governance and DDRCM reporting suggesting that effective boards can substitute for the resources that are required for sustainability governance.

The Role and Importance of Independent Auditing in Combating Climate Change

The Role and Importance of Independent Auditing in Combating Climate Change

Integritas Laporan Keuangan Berdasarkan Perspektif Struktur Kepemilikan

The integrity of financial statements is the extent to which financial statements are presented correctly and honestly. Cases of corporate dishonesty in presenting financial statements occur because good corporate governance is not implemented. This study aims to examine and obtain empirical evidence of the effect of independent commissioners, institutional ownership, audit committees, firm size, and leverage on the integrity of financial statements. The population of this research is manufacturing companies on the IDX for the 2019-2021 period. The sample in this study were 121 manufacturing companies which were determined based on the purposive sampling method. The analysis technique used is multiple linear regression analysis. The results of this study show that independent commissioners and audit committees have a positive effect on the integrity of financial statements, while institutional ownership, firm size, and leverage have no effect on the integrity of financial statements. The adjusted R Square result in this study is 21.2%, so that further researchers can develop this research using other variables which in theory have an influence on the integrity of financial statements.

Pengaruh Independensi Auditor, Profesionalisme, Dan Pemahaman Good Governance Terhadap Kinerja Auditor Pada Kantor Akuntan Publik Di Bali

The auditor's performance is the implementation of the inspection task that has been completed by the auditor with full responsibility in an effective and efficient manner. To improve the performance of the auditor, it is necessary to have a professional attitude owned by the auditor himself. The problems raised in this study are how does the influence of auditor independence (X1) on auditor performance (Y), how does professionalism influence (X2) on auditor performance (Y), and how does the understanding of good governance (X3) influence auditor performance (Y) in Accounting firm in Bali. The population of this study includes auditors who have worked in 15 accounting firms in Bali, totaling 107 people. The number of research samples used was 69 respondents. The data analysis technique used is multiple linear regression analysis. Analysis results of multiple linear regression equations Y = 11.184 + 0.444X1 + 0.118X2 + 0.131X3. The obtained conclusion is that auditor independence (X1) has a positive and significant impact on the efficiency of auditors of accounting firms in Bali, as shown by the regression coefficient β1X1 having a positive value. . Professionalism (X2) has a positive and significant effect on auditors' performance in an accounting firm in Bali, as indicated by a positive value of the regression coefficient β2X2. Understanding of good governance (X3) has a positive and significant impact on the performance of auditors of accounting firms in Bali, as indicated by a positive value of the regression coefficient β3X3.

Investigating ISA adaptation in a developing country context: the selective influence of Big Four affiliates

ABSTRACT This paper examines how the national process of adapting the International Standards on Auditing (ISAs) unfolds in developing countries, focusing on the case of Egypt. The study relies on data gathered from 33 semi-structured interviews with government officials and senior auditors alongside documentary evidence. Our findings show how legacy state institutions that were involved in the national standard-setting committee have largely fallen short of their aspirations to align local auditing standards with the expectations set out in the ISAs. The lack of a coherent approach to developing state policy objectives, resources, and public consultation, together with technical demands and translation difficulties, hampered the process. Such weaknesses provided an opportunity for the local Big Four affiliates to become deeply involved. The firms’ strategic manoeuvres were driven not only by a material desire to protect their market position/status but also by a commitment to a perceived national duty to support government attempts at national standard-setting. Importantly, our findings reveal the selectivity of such interventions and the differential impact of ISA adaptation on the diverse constituency of audit firms. Theoretically, we propose the institutional void perspective to conceptualise the intervention of private actors as well as to articulate the elements of a void in an audit regulatory process. While Big Four firms typically seek to position themselves in such processes, we argue that international reforms and policies should focus on fostering a more inclusive, accountable, and deliberative system that promotes the presence of diverse, independent and representative local audit actors.

The Correlation Between the Size, Independence and Experience of Internal Audit and its Impact on Reducing Financial Corruption: Evidence from the Public Sector in Iraq

Financial corruption crimes in the public sector are prevalent in numerous developing nations, frequently stemming from political, economic, or social problems, among other things. In order to combat these unethical behaviours in the public sector, governments are aggressively striving to improve the internal audit function. This requires recruiting an adequate number of auditors who can carry out their duties with the highest level of professionalism, fostering the autonomy of the audit function and auditors, and improving the effectiveness of auditors through training, qualifications, and education. In the end, this will help decrease the financial corruption that hinders the long-term progress of Iraq. The goal of this study is to assess the magnitude, autonomy, and expertise of internal auditing in Iraq's public sector entities, as well as the extent of financial corruption within this sector. To accomplish the goals of the study, we created a survey and administered it to a randomly selected group of internal auditors in 15 Iraqi governorates, excluding the Kurdistan Region. We issued a total of 174 questionnaires, each containing two axes. The initial segment has three facets of internal auditing (magnitude, autonomy, and expertise) and a total of 27 inquiries. The second axis consisted of 14 questions that assessed financial corruption using regression analysis. The study used basic and numerous linear tests to investigate the hypotheses, ultimately determining that the inclusion of more staff was essential for carrying out certain audit responsibilities. The department lacks a proportional allocation of internal auditors compared to the workload, resulting in the audit body's weak independence. This is primarily due to the administration's interference in the transfer and employment of individuals based on its own discretion, as well as corruption prevalent in government units, particularly in investment spending. The results also revealed a direct relationship between size, independence, internal auditing experience, and financial corruption.

Mandatory audit partner rotation and stock price crash risk: causal evidence from a natural experiment

PurposeThis study aims to examine whether mandatory audit partner rotation is associated with future stock price crash risk.Design/methodology/approachThis study makes use of a regulatory change from the Ministry of Finance of China and the China Securities Regulation Commission, which requires mandatory rotation of audit partners since 2004, as a natural experiment to establish causality and applies a difference-in-difference research design.FindingsAudit partner rotation leads to a significant decrease in future stock price crash risk in the departing partner’s final year of tenure preceding mandatory rotation, consistent with peer monitoring argument of mandatory rotation. Inconsistent with other arguments, including client-specific knowledge, fresh perspective and auditor independence, no significant effect takes a place in the incoming partner’s first year of tenure following mandatory rotation. Mechanism analysis documents that mandatory audit partner rotation reduces stock price crash risk by improving audit quality and constraining managerial empire building.Originality/valueThe results shed new light on the capital market consequence of mandatory audit partner rotation and the cause of stock price crash risk.

The Effect of the Source of Commitment and Ethical Style of Auditors on Independent Auditors’ Whistle-blowing

The Effect of the Source of Commitment and Ethical Style of Auditors on Independent Auditors’ Whistle-blowing

Ethical considerations in Risk management of autonomous and intelligent systems

Abstract The rapid development of Artificial Intelligence (AI) has raised concerns regarding the potential risks it may pose to humans, society, and the environment. Recent advancements have intensified these concerns, emphasizing the need for a deeper understanding of the technical, societal, and ethical aspects that could lead to adverse or harmful failures in decisions made by autonomous and intelligent systems (AIS). This paper aims to examine the ethical dimensions of risk management in AIS. Its objective is to highlight the significance of ethical considerations in mitigating risks associated with the development, deployment, and use of AIS. The paper provides an overview of various types of AI risks and risk management procedures aimed at mitigating the negative impacts of those risks. We employ a comprehensive risk management approach that combines technical expertise with ethical analysis to ensure alignment with human values and societal objectives. Through the analysis of AI risks and risk management procedures, we advocate for establishing effective mechanisms for ethical oversight and legal control to promote ethical and trustworthy AIS. The findings reveal key risks associated with transparency, accountability, privacy infringement, algorithmic bias, and unintended consequences. To address these challenges, we consider integrating ethical principles into risk management practices, transparent risk communication, continuous engagement with all stakeholders, establishing robust accountability mechanisms, and regular ethical oversight as imperative in ethically designing and operating AI systems. Given the diminished effectiveness of internal audits compared to external audits, we also recommend the implementation of regular monitoring mechanisms through independent external audits when evaluating risk management practices.

Going Concern Audit Opinion: Does it Depend on Disclosure and Previous Years’ Audit Opinion?

A going Concern Audit Opinion is an opinion given by an independent auditor to the auditee. This opinion contains the auditor's assessment regarding the company's sustainability. This opinion is one factor that becomes a consideration for management, creditors, investors, and other stakeholders in making decisions. The population in this study were all companies listed on the Indonesia Stock Exchange for the 2017 - 2019 period. The sample selection technique used purposive sampling, and 25 companies were obtained, so 50 samples were processed. Hypothesis testing uses multivariate analysis, namely logistic regression, with E-Views 10 software. This research aims to determine the effect of disclosure and the previous year's opinion on going concern audit opinion with opinion shopping as a moderating variable. This research found that disclosure did not affect the acceptance of going-concern audit opinions. Still, the previous year's opinion positively affected the acceptance of going-concern audit opinions. These results indicate that investors have to be careful in reading the audit opinion of the previous year regarding the company's going concern.