Joint Audit Research Articles

Effect of Audit Attributes on the Financial Reporting Quality of Nigerian Insurance Companies

This study investigated the association that exists between the audit attributes and the financial reporting quality of firms listed under insurance sector of Nigerian economy. The study had five objectives that include the investigation of audit type, audit tenure, joint audit, industry specialised audit and audit fee on the financial reporting quality as was measured by discretionary accruals using modified Jones model. The use of ex post facto research design was adopted which necessitated collection of secondary data from the annual report of the twenty two sampled insurance firms, from 2011 to 2020 financial years. The data were analysed using statistical tools like descriptive statistics, correlation analysis, fixed effect and random effect model tests, where Hausman test was used to choose the best between the two models, as a requirement for running panel data regression analysis. The empirical result therefrom indicates that audit type has positive and no significant effect on the financial reporting quality. Further result shows that audit fee has inverse statistical significant effect on financial reporting quality at 1% level. Nonetheless, audit tenure, joint audit and industry specialised audit have negative but no significant effect on financial reporting quality of the listed insurance firms. The study recommendations emanating from the findings among others maintain that the regulatory bodies should reaffirm that audit firms rely on professional benchmark-based fee calculation in every audit engagement, bearing in mind that any compromise or cut in audit fee, possibly as a result of competing for clients, would undermine the quality of financial reporting in the sector

The Effect of Joint Audit on the Quality of Financial Reports and their Influence on Investors Decisions

تهدف الدراسة الى ابراز أهمية اسلوب التدقيق المشترك وتأثيره في جودة التقارير المالية وانعكاسهما على قرارات المستثمرين ولتحقيق اهداف الدراسة تم قياس انعكاس تأثير التدقيق المشترك على قرارات المستثمرين اعتمادا على قيمة الاسهم المتداولة خلال كل سنة من سنوات عينة البحث , ولقياس تأثير التدقيق المشترك في جودة التقارير المالية وانعكاس ذلك التأثير على قرارات المستثمرين تم استخدام استمارة استبيان لهذا الغرض كان المستهدف فيها المستثمرين في سوق العراق للأوراق المالية وكانت بواقع 77 استمارة تم استرجاعها من اصل 100 استمارة ,وقد استعمل مقياس ليكرت الخماسي للتعبير عن جمل الابعاد الخمسة ,ولاختبار فرضيات الدراسة احصائيا فقد تم الاستعانة بعدد من البرامج الإحصائية لمعرفة حجم الارتباط والاثر ومستوى المعنوية بين متغيرات البحث ،وقد توصلت الدراسة الى مجموعة من الاستنتاجات أبرزها:
 من وجهة نظر افراد عينة الاستبيان فإن التدقيق المشترك يزيد من جودة التقارير المالية مما يدل على أهمية التدقيق المشترك في توفير معلومات محاسبية اكثر ملائمة, وعليه فان هذه الجودة تصب في مصلحة المستثمرين من حيث اتخاذ القرارات الاستثمارية .

The role of the joint audit method in enhancing the quality of the audit process

هدف البحث إلى تحديد دور التدقيق المشترك في إيجابيات وسلبيات الأسلوب في تعزيز جودة التدقيق واستخدمت الدراسة قائمة استبيان تم تصميمها لغرض توزيعها على عينة البحث المكونة من مجتمع مراقبي الحسابات بالعينة العشوائية حسب نشرة مراقبي الحسابات المجازين لعام 2021 وعددهم 291 مراقب حسابات وعبر استمارة الكترونية ويدوية تم توزيعها على عينة البحث مكونة من ستة عشر فقرة تتضمن محور ترابطي بالعلاقة بين التدقيق المشترك وجودة التدقيق. ,واستنتجت الدراسة ان هنالك علاقة معنوية ذات دلالة احصائية بين التدقيق المشترك وجودة التدقيق ويمكن ان يوصف التدقيق المشترك بأنه النهج الصحيح اللذي يمكن اتباعه لغرض تعزيز وتحسين جودة عملية التدقيق لانه يعزز الاستقلالية للمدقق الخارجي ويحسن من اكتشاف الاخطاء الجوهرية ويضفي المزيد من الثقة الى المهنة. وأوصت الدراسة بضرورة وجود معيار تدقيق مشترك يمكن اتباعه لغرض تنظيم رقابة مشتركة وكذلك تثقيف المجتمع المالي والوحدات الاقتصادية بضرورة اتباع نهج التدقيق المشترك وعلى الجهات المنظمة للمهنة اصدار معيار بالتدقيق المشترك

A blockchain-based audit approach for encrypted data in federated learning

The development of data-driven artificial intelligence technology has given birth to a variety of big data applications. Data has become an essential factor to improve these applications. Federated learning, a privacy-preserving machine learning method, is proposed to leverage data from different data owners. It is typically used in conjunction with cryptographic methods, in which data owners train the global model by sharing encrypted model updates. However, data encryption makes it difficult to identify the quality of these model updates. Malicious data owners may launch attacks such as data poisoning and free-riding. To defend against such attacks, it is necessary to find an approach to audit encrypted model updates. In this paper, we propose a blockchain-based audit approach for encrypted gradients. It uses a behavior chain to record the encrypted gradients from data owners, and an audit chain to evaluate the gradients’ quality. Specifically, we propose a privacy-preserving homomorphic noise mechanism in which the noise of each gradient sums to zero after aggregation, ensuring the availability of aggregated gradient. In addition, we design a joint audit algorithm that can locate malicious data owners without decrypting individual gradients. Through security analysis and experimental evaluation, we demonstrate that our approach can defend against malicious gradient attacks in federated learning.

Institutionally Sustaining or Abandoning Mandatory Joint Audits: The Contrasting Cases of France and Denmark

This study draws on two longitudinal case studies of the French and Danish joint audit models to understand and compare how mandatory joint audits have emerged and evolved. In both settings, joint audits appeared in the 1930s to increase auditors’ competence and independence. After a few decades of practice, joint audits became taken for granted, but in the 1980s, conglomerated audit networks attempted to circumvent the joint audit rule, entering into conflict with local auditors. In France, the main association of auditors adopted successive regulatory measures that prevented circumventing the model, therefore avoiding its erosion. Such regulatory layering crucially reshaped the model to sustain belief in its potential whenever a particular form of joint audit failed. In Denmark, the local audit firms essentially resisted attacks against the model rhetorically, which was insufficient to prevent its erosion in the 1990s and its suppression by the law in 2005. Contrasting the two cases shows the multi-modal ways in which actors undertake institutional work and it provides timely information for regulators engaged in discussions about joint audits.

Assessment of joint audit mission quality in Tunisia

PurposeUsing a sample of 250 Tunisian companies, this paper aims to assess the joint audit mission quality in Tunisia.Design/methodology/approachThe present work aimed at investigating the determining factors of the joint audit quality.FindingsA total of nine essential determining factors were predictably identified: length of service, experience, size asymmetry between the joint auditors, complexity, governance, expertise, information and communications technology use, profitability and staff qualification. However, results show that specialization, satisfaction, the supply of services other than audit, work distribution, leverage as well as size have a positive but non-significant correlation with the joint audit quality, which may be due to the Tunisian context.Originality/valueMany previous works have been conducted on joint audit in France (Haak et al., 2018), Denmark (Lesage et al., 2017), Germany (Velte and Azibi, 2015), Sweden (Zerni et al., 2012) and Italy (Bianchi et al., 2019). However, to the authors’ knowledge, the Tunisian context is still under-studied and, thus, the objective was to fill this gap in the literature b.y examining the determinants of the quality of joint audit in Tunisia.

Are joint audits associated with higher audit quality?

This paper investigates and assesses whether a joint audit engagement results in higher audit quality compared to a single audit given audit firms’ characteristics and complexity of their clients’ activities. The research adopts a survey-based questionnaire sent to external auditors of five audit firms with international affiliation including two Big 4 firms to assess their perceptions about whether joint audit improves audit quality compared to a single audit. Also, interviews with audit partners and professors of auditing were made to check the reliability of the survey. Descriptive and inferential statistics are used to test the research hypotheses. The results reveal that joint audit enhances the quality of the audit as auditors in joint audits deliver high audit quality and ensure continuity with the client. The results also confirm the importance to perform joint audit engagements involving one of the Big 4 with one audit partner possessing industry specialization related to the audit engagement. However, no variation was found in audit quality in a joint audit compared to a single audit for listed companies compared to non listed companies even when there are discrepancies in the joint audit partners’ level of competence and experience. The study is among the first to survey the impact of joint audits compared to single audits on audit quality in an emerging economy. The study identifies valuable insights and provides recommendations to audit firms, professional and oversight bodies, and government to encourage the use of joint audits versus single audits to improve audit quality

The role of joint auditing to improving the quality of the electronic auditor's report in Iraqi banks

This study aims to demonstrate the impact of joint auditing on improving the quality of the electronic auditor's report in Iraqi banks, by examining whether the banks that have been audited by independent auditors are of high quality in the electronic audit report from the banks that are audited by a single auditor. In addition, to test the hypotheses, the study used a sample of 10 Iraqi banks during the period from 2015 to 2020. The results of multiple regression analyzes show that the companies that were audited by joint auditors are of high quality in the electronic audit report from the banks that were audited by individual auditors. . However, the results showed that electronic audit reports are more appropriate in banks that use joint audit, and the results also showed that the electronic audit report is more understandable and has an honest representation in banks that use joint audit.

The impact of audit quality on organizational effectiveness of listed banks in Nigeria

The objective of this study is to examine impact of audit quality on the organizational effectiveness of listed banks in Nigeria. Regression analysis was used to test the impact of audit quality on the organizational effectiveness of listed banks in Nigeria. The findings of this study reveal that all exemplary variables (Auditor Independence (AID), Audit Report (ADR) and Joint Audit (JOA)) have positive impacts on organizational effectiveness (OE) but are insignificant due to some reasons in Nigerian financial institutions. On these premises the study recommended that auditors should be monitored and there should be adequate regulatory provision to encourage the independence of the audit firms. The management and the regulatory agencies should emphasize on the audit report as this appears to be positive insignificant in improving organizational effectiveness. Regulatory agencies around the world should emphasize on joint audit as it appears positive insignificance in providing organizational effectiveness in the listed banks in Nigeria.

Determinante abnormalno visokih revizorskih naknada u finansijskim izveštajima zasnovanim na međunarodnim standardima finansijskog izveštavanja

This study essentially examines the audit effort as a possible determinant of the abnormal audit fees evinced in International Financial Reporting Standards-based financial statements. Therefore, the secondary data were sourced from the audited annual reports and the relevant financial statements of the Nigerian listed banks for the period of observation (2010-2019). An analysis was performed using the relevant techniques that include descriptive statistics, the correlation matrix and panel regression. The findings showed that the IFRS, the client complexity (CPX) and the client size (SIZ) were negatively correlated with abnormal audit fees (ABFEE), whereas joint audit (JAD) recorded a positive correlation with such abnormal audit fees. Lucidly, joint audit showed a stronger relationship with abnormal audit fees, whereas the client size showed a significant, but negative relationship with abnormal audit fees. Similarly, the fact that, with a probability value 0.9494, the relationship between ABFEE and the client complexity was not significant was noticed. Given these research outcomes, it can be concluded that abnormal audit fees are primarily motivated by extra or unexplained audit efforts and the costs associated with them. It is, therefore, recommended that, proportionately with the service(s) rendered, accounting professional bodies should review, harmonize and tactically institute a limit for professional charges through the enforcement of regulated benchmarks for audit fees payable by clients.

The role of joint audit in audit quality - Practitioners’ insights

The role of joint audit in audit quality - Practitioners’ insights

The Impact of Joint Audit on Audit Planning Quality: A Field Study

In the Egyptian environment, joint audit is implemented voluntary and mandatory before the European Commission issues its report in 2010. It is implemented voluntary for first time in 1981 for the Egyptian Stock companies, insurance companies, and factoring companies. While, banks have been obligated to implement joint audit since 2003. In addition to mortgage finance companies, fund-raising companies, investor protection fund, investment funds, and depository companies and central registration must designate at least two independent auditors. The purpose of this paper is to investigate the impact of joint audit on audit planning quality in the Egyptian environment. By examining whether joint audit can affect on the initial audit planning, the comprehensive audit strategy, and the overall audit plan and program, as proxies for audit planning quality. To test our hypotheses, we use a sample of 400 professional auditors from different-sized auditing firms and academics from different Egyptian universities. The results of our multiple regression analyses show that joint audit has a significant positive impact on the initial audit planning. Moreover, we find that joint audit has a significant positive impact on the comprehensive audit strategy. We also find joint audit has a significant positive impact on the overall audit plan and program. The results of the additional analyses show that the majority of the respondents' opinions (93%) support the application of voluntary joint audit for all companies and (89%) support if one of the two appointed auditors is a non-big 4 auditor.

Joint audit as a tool to improve the quality of financial report: Field study: (environment of professional practice in the Arab Republic of Egypt): المراجعة المشتركة كأداة لتحسين جودة التقارير المالية دراسة ميدانية: (بيئة الممارسة المهنية في جمهورية مصر العربية)

This research aims to clarify the role of the joint review in improving the quality of financial reports. In the completion of this research, the researcher relied on the analytical descriptive approach and relied on the Statistical Package for Social Science Spss / Pc + in testing hypotheses, analyzing the sample and discharging data. Classifying and analyzing them. The research concluded that there is a positive relationship between the application of the joint audit and the increase in the quality of the audit process, and the existence of a positive relationship between the joint audit and the quality of financial reports. The research recommended the necessity of obliging the major offices to cooperate with each other to develop methods of professional practices such as the joint audit method and to clarify its importance and advantages.

Aspects Regarding the Structure of the Financial Audit Market in the European Union from Fees Perspective

The audit market, developed out of the need to strengthen the credibility and the quality of financial reporting, has led since the 1980s to a concentration around large audit firms, the dominance effect being marked on the one hand by the auditor’s increasing reputation and notoriety, and on the other hand by the client’s association with a reputed auditor, which contributes to improving the company’s image on the market. In this context, a major issue is represented by the level of the fees charged, as they represent key elements that may affect the auditor’s independence. Moreover, a sensitive aspect is the relationship between the fee charged for financial audit services and the one for non-audit services and the compensation practices between them. The European Commission wants to facilitate competition in an overly concentrated market and also provide the opportunity for small and medium-sized audit firms to become active players in the large corporate audit market through joint audit, in which at least one of the audit firms is not part of the Big4 group. The mandatory audit firm rotation and the limitation on the non-audit services provided are the main aspects of the recent audit reform that directly influences the fee level. The main purpose of this study is to analyse whether there is a pattern of audit costs at the community level. In this context, this paper aims to assess the uniformity of audit costs, namely to determine the structure of the audit market in the European Union. The research involves data set comparison methods, by analysing a sample of 2,896 firms listed on the stock exchange in 35 different states over the period 2013-2021.

Do corporate governance practices restrain earnings management in banking industry? Lessons from India

PurposeThis study aims to investigate the role of corporate governance practices in restraining earnings management in Indian commercial banks.Design/methodology/approachEstimation of earnings management is based on discretionary loan loss provision and discretionary realised security gains and losses using Beatty et al. (2002) model. The effect of corporate governance on earnings management is examined by performing two-way least square dummy variable regression. Data for a period of five years (2016–2020) is collected from the Centre for Monitoring Indian Economy ProwessIQ database, Reserve Bank of India website, annual report of banks, National Stock Exchange and bank’s website.FindingsRegression results exhibit that number of board committees, size and independence of audit committee and joint audit are significantly effective in curbing earnings management. Other board-related variables (size, independence, meetings and diligence) and audit committee variables (meetings and diligence) are not effective in restraining earnings management in Indian banks.Practical implicationsThe findings may prove to be helpful to regulators, board of directors and investors. It shows the weak area of corporate governance in India that is lack of autonomy to independent directors, which needs regulators attention and it also suggests that the number of independent auditors should be adequate for audit purposes. The board of directors must ensure the formulation of an adequate number of committees, which perform their own super specialised functions. This study brings an alarm to investors not to rely on reported earnings alone as they may be manipulated.Originality/valueThis paper substantiates the scant literature on the role of corporate governance practices in restraining earnings management in banks of emerging markets and to the best of the authors’ knowledge impact of joint audits on earnings management is previously unexplored in Indian banks, which are examined in this study.

MANDATORY JOINT AUDIT AND AUDIT QUALITY IN THE CONTEXT OF THE EUROPEAN BLUE CHIPS

This study investigates audit quality under joint and single audit regimes with a sample of large European firms. Both, the economic relevance of these companies, and the fact that the impact of joint audit on audit quality should be stronger when the audited company is a blue-chip firm motivate the study. If mandatory joint audit were positively associated with audit quality, French firms, under mandatory joint audit since 1966, should present higher audit quality compared to their European peers. The results do not indicate this to be the case. Specifically, similar levels of discretionary accruals are observed for French and other European firms. Furthermore, for the first time in the literature, evidence is reported indicating that French firms may even present lower audit quality than their European peers, when audit quality is measured by the likelihood of just beating earnings benchmarks. These results are expected to inform the ongoing debate in several countries about joint audits.

DETERMINANTS OF FINANCIAL REPORTING QUALITY IN NIGERIA NON-FINANCIAL INSTITUTIONS (2010-2018)

This study focused on the investigation of determinants of quality of financial report in nonfinancial institutions in Nigeria. To achieve this objective a time series research design was adopted to gather data from the annual financial report of the selected institutions from the periods 2010- 2018. Moreover, from the 106 non-financial institutions quoted on the stock exchange market in Nigeria only 32 institutions were purposively selected for the study on the basis of certain criteria’s. In addition, both descriptive and inferential statistics tools of Panel regression analysis were used for the study. The result of the pre-estimate estimate conducted for the study revealed that the random effect estimate was better for the study. Meanwhile, the result of the study obtained indicated that there were determinants of financial reporting quality in the selected nonfinancial institutions. In particular, it was found that audit firm tenure, audit fees, joint audit and audit firm independence were determinants of financial reporting quality. The study concluded that audit firm characteristics might be indicators of financial reporting quality in the selected institutions.

A proposed model for disclosing the role of the collective intelligence system in improving joint auditing

This research aims to present a proposed model for disclosure and documentation when performing the audit according to the joint audit method by using the questions and principles of the collective intelligence system, which leads to improving and enhancing the efficiency of the joint audit, and thus enhancing the confidence of the parties concerned in the outputs of the audit process. As the research problem can be formulated through the following question: “Does the proposed model for disclosure of the role of the collective intelligence system contribute to improving joint auditing?” 
 The proposed model is designed for the disclosure of joint auditing and the role of collective intelligence in improving it to achieve integration between the auditor’s report on the one hand and the joint audit information on the other hand, by disclosing the joint audit information in the explanations complementing the audit report that should be available in the current audit file of the economic unit in question. Auditing, by merging the questions of the collective intelligence system (who, what, how, why) with the indicators of the quality of the audit, and the research reached a set of conclusions, the most important of which is unified documentation of the joint audit work in the audit office as it is permissible to use the collective intelligence system—documenting the work carried out by members of his team independently of the other office. As for the most important recommendations, they were represented in need to adopt the proposed model for using collective intelligence to improve the quality of joint auditing performance, which aims to provide a mechanism for disclosure and documentation of joint auditing

Using Joint Audits to Support the Auditor's Independence "A Field Study"

Using Joint Audits to Support the Auditor's Independence "A Field Study"

LEGAL AUDIT QUALITY AND FRAUD RISK: THE CASE OF TUNISIAN LISTED COMPANIES

The aim of this study is to examine the impact of legal audit quality on the likelihood of accounting fraud, for a sample of 48 companies listed on the Tunisian stock market over the period between 2014 and 2018. Based on the logit panel regression, we have shown that the audit firm's membership in one of the Big networks and the rotation of external auditors are two major determinants in the reduction of cases of fraud in Tunisian companies. In addition, the results showed that joint audit deteriorates the quality of auditing and thus increases the risk of fraud. This study provides new insights in terms of legal audit and fraud risk in the Tunisian context based on the econometrics of panel data, which is a valuable method to measure the impact of several actions alone or simultaneously. It has allowed us to analyze the behaviors of companies by considering the effect of many proxies of legal audit quality.
 JEL Classification Codes: G32, M42, C23.