Responsibilities Of Auditors Research Articles

Compatibility between the Auditor and the Institutional Investor and its Impact in Evaluating Requirements with International Accounting Disclosure Standards

The study examined the requirements of accounting disclosure standards from the perspectives of institutional investors and external auditors, highlighting the distinctions between their respective perspectives. due to the importance of the data generated in the financial statements that the institutional investor needs to make investment decisions, and the difference in viewpoints regarding the amount of data disclosure between the two parties. It focusses on outlining what needs to be reported in joint-stock firms' financial statements in a way that promotes objectivity in the financial statements and is transparent, appropriate, and adequate. The study had three main components: the literature and theoretical foundations of accounting disclosure and external auditors comprised the second axis, and the overall methodological framework of the study addressed the first.The idea of disclosure and transparency in the financial statement presentation was covered in the first topic, and the auditor's role and responsibilities in disclosure and transparency in financial reports were covered in the second. As for the third axis, it focused on the practical framework of the research, where an analysis of the sample members’ responses to questionnaire forms distributed to (100) external auditors and (100) institutional investors was presented. The questionnaire questions included three axes, the second axis, which dealt with the income statement's duties under accounting disclosure rules, and the first. It is focused on the balance sheet requirements of accounting disclosure rules. The requirements for accounting disclosure rules for contingent liabilities and events that occur after the budget were covered under the third axis. The research came to several findings after analysing the data for the questions using the SPSS statistical tool. The most important of which were :- The external auditor and the institutional investor have largely agreed upon the requirements of accounting disclosure standards for the income statement. The auditor is particularly interested in the paragraphs that discuss granting credit facilities and avoiding reliance on secondary sources of income, while the investor is more interested in the paragraphs that discuss income and expenses associated with the.fundamental income-generating activities When assessing the accounting disclosure requirements for the balance sheet, the institutional investor and the external auditor have a lot in common. The sections of the financial statements that highlight the uses of money and the requirement to disclose them to users, such as the institutional investor who was concentrating on these lines, are of particular importance to the auditor.due to the fact that they bear in It is fraught with dangers. The external auditor and the institutional investor have essentially reached consensus over their respective points of view when evaluating the accounting disclosure requirements for contingent liabilities and subsequent events . While the investor is primarily focused on the accounting disclosure, the auditor is especially interested in the criteria that revolve around the paragraphs referring to the total value of the provision for losses on loans and advances provided .requirements that place an abnormally high priority on risk In order to set disclosure standards and determine the quantity and quality of data that should be displayed in financial reports while maintaining the transparency necessary to achieve objectivity, the research advises considering the perspectives of the entities that stand to gain from the data generated in those reports as well as the regulatory authorities represented by the external auditor. These guidelines must be updated periodically since investor behaviour changes in response to political, social, and economic factors.

The association between institutional monitoring, political connections and audit report lag: evidence from the Malaysian capital market

PurposeThis study aims to examine the association between institutional investors’ ownership (IOW), politically connected firms (POCF) and audit report lag (AUDRL).Design/methodology/approachThis study employs a feasible generalised least squares (FGLS) model for panel data to examine the association between IOW, POCF and AUDRL for Malaysian publicly listed companies.FindingsThe findings reveal a statistically significant negative relationship between IOW and AUDRL, with this negative relationship being more pronounced amongst POCF. Additionally, the results demonstrate that the relationship between IOW and AUDRL varies depending on the domicile of IIs (local vs. foreign). Specifically, local institutional investors exhibit a negative and statistically significant relationship with AUDRL, whilst foreign institutional investors show a positive and statistically significant relationship with AUDRL.Originality/valueThe results of this study provide a new understanding of auditor responses to institutional investor monitoring and political connections (PCs) in an emerging economy.

The effect of audit training in universities on the audit expectation gap

The audit expectation gap (AEG) is a phenomenon where there is a difference between what people expect of auditors and what they can do. This research was conducted in 2023 with 336 university students in Vietnam to assess the effect of university training on the AEG related to auditors' responsibilities. The reliability of the scale and the average difference between student groups were tested using SPSS 29 software. The results showed that AEG exists among accounting students who have studied auditing subjects. Most of these students have higher expectations than other students. This study also revealed that the university's auditing program and auditing courses effectively narrowed the AEG to two in nine auditor's responsibilities and one in nine auditor's responsibilities, respectively. However, it is important to note that these changes were only cognitive. Students still expect auditors to fulfill crucial responsibilities such as detecting fraud, predicting bankruptcy, evaluating ongoing operations and serving as the "family doctor" of the enterprise. Therefore, training for students can help narrow the AEG about certain audit responsibilities. A better approach is to strengthen the responsibility and authority of auditors. The future of the audit profession depends on the demands of stakeholders and the capabilities of the profession. The auditing profession must accept new demands for auditor responsibilities in the new context. This also has implications for audit bodies in narrowing the audit expectation gap in Vietnam.

Corruption and audit fees: New evidence from EU27 countries

This study examines the relationship between country‐level corruption and audit pricing decisions across EU27 countries. Using a sample of 29,607 firm‐year observations for the period 2011–2021, I find that firms headquartered in more corrupt countries pay higher audit fees and have longer reporting lags. I also show that this relationship is stronger after the EU audit reform came into force in 2016. The results suggest that auditors respond to corruption risk stemming from the broader macroeconomic environment by increasing audit fees and audit effort. In additional analyses, I show how the association between audit fees and corruption varies across firm industries, and I document that female engagement partners tend to be more sensitive to corruption risk than their male counterparts. Ultimately, I find unexpected evidence indicating that financial reporting quality, proxied by discretionary accruals, is not adversely affected by corruption. This study addresses prior calls for a more granular understanding of external factors in audit research and provides the first European evidence of the association between corruption and auditor responses. The implications of this study should be particularly relevant for researchers, market participants and regulators.

Effect of audit client’s use of blockchain technology on auditing accounting estimates: evidence from the Middle East

Purpose This study aims to examine the effect of audit client’s use of blockchain (BC) on auditing accounting estimates (AEs), especially the inherent risk (IR), control risk (CR) and collection of audit evidence. Design/methodology/approach The study used a questionnaire to collect data for a sample of 249 auditors. A partial least squares method is used to test the hypotheses. Findings The results showed positive relationship between audit client’s use of BC and both IR and CR when auditing AEs. The results also showed the BC improves the collection of sufficient and appropriate audit evidence when auditing AEs. Research limitations/implications This study did not address all the risks associated with auditing AEs, including fraud, detection, sampling and nonsampling risks, and the procedures and tests for auditing AEs. Practical implications There are several implications of this research, including that it informs the revision of auditing standards and guidelines to correspond with successive technological changes, which subsequently clarify the roles and responsibilities of auditors, and the study findings will also cause changes to the design and form of audit procedures so as to obtain sufficient and appropriate audit evidence. Originality/value To the best of the authors’ knowledge, this study is considered the first of its kind that deals with the effects of audit client’s use of BC on audit AEs in the Middle East and North Africa region. This study also presented different sets of measures as proxies for measuring IR, CR and AE.

Organizational commitment, religiosity, and auditors’ responsibility for fraud detection

The government auditor plays a crucial role in the oversight and prevention of fraudulent activities inside the government. The examination of elements that influence the auditor's responsibilities in identifying fraud holds significant importance. This is also supported by previous literature, which states that there is quite a lot of understanding related to fraud behavior that has not been explored in the fields of accounting and auditing. This study aims to examine the influence of affective commitment, continuance commitment, normative commitment, and religiosity on the fraud detection responsibility of the auditor. The present study employed a quantitative methodology utilizing a survey-based research design. The participants in this research comprised a sample of 101 government auditors employed at the Audit Board of the Republic of Indonesia. The hypothesis was tested using Structural Equation Modeling-Partial Least Squares (SEM-PLS). The results showed that affective commitment, continuance commitment, normative commitment, and religiosity have a positive influence on the auditor’s responsibility in detecting fraud. This study also confirms the Theory of Planned Behavior (TPB). This research contributes to the development of literature related to behavioral accounting, especially regarding fraud detection responsibility. The implication of this research is that it is important for the audit board, especially human resource management, to consider providing activities that can increase the organizational commitment and religiosity of auditors, which can then be used as motivation for auditors to increase their responsibility in detecting fraud.

Determinants influencing the effectiveness of internal auditing and the responsibility of auditors in fraud detection in an emerging country

Internal audit has become an essential part of firms in the age of Industry 4.0 due to its ability to identify errors or violations leading to fraud in firms (Alzeban & Gwilliam, 2014; Cohen & Sayag, 2010). This study is conducted to investigate the relationship between variables such as the quality of internal audit, the capability of the internal audit team, the independence of internal audit, and the support of leadership on the effectiveness of internal audit (EIA). Specifically, the study also examines the relationship between the EIA and the responsibility of auditors in detecting fraud. Data were gathered through a survey of 325 questionnaires from joint stock firms in the context of Vietnam, using SPSS 22 software and SmartPLS 3.0 software to analyze the regression of influencing determinants. The results reveal that: 1) the quality of the internal audit, the capability of the internal audit team, the independence of the internal audit, and the support of leadership have an impact on the internal audit effectiveness; 2) the EIA, the responsibility of auditors, and auditor training have a positive and significant impact on fraud detection. Therefore, the importance of internal audit in identifying accounting fraud and the need for firms to design internal audit processes and training to improve the effectiveness of their operations are highlighted.

Dampak Tanggungjawab dan Pelatihan Auditor Internal terhadap Pendeteksian Kecurangan yang Dimoderasi Audit Jarak Jauh

The entities suffer material and non-material losses from fraudulent acts by employees. Indonesia is one of the countries with the highest corporate fraud rates in Asia Pacific. To minimize the occurrence of fraud, the role of internal auditors is needed. To detect fraud, internal auditors shall receive continual training. As is known, since the pandemic broke out, internal auditors have also conducted audits remotely. This study aims to examine the effect of internal auditors’ responsibility and training on fraud detection moderated by remote auditing in Indonesia. This study uses primary data. The population of this research is internal auditors from various types of institutions in Indonesia. Judgment sampling method is used. The sample consisted of 43 respondents. The research hypotheses were tested using multiple regression analysis. The results of the study prove that the responsibility and training of internal auditors have positive and significant effects on fraud detection. However, remote auditing is not proven to moderate the effects of internal auditors' responsibility and training on fraud detection. This study enriching the literature regarding the determination factors of responsibility and training of internal auditors on fraud detection. In addition, this research also proves that remote auditing in Indonesia is still relatively difficult to do, so that it can be used as an evaluation material for various entities to improve in the near future

The Internal Auditors in Catalyst for Sustainability Performance through Environmental Audit

Environmental issues like deforestation have been a global concern for the past ten years. Despite various strategies implemented by management, the issues persist. This paper aims to underscore the crucial role of internal auditors in environmental audits. The paper reviewed 30 journals published from various sources. Two themes have been established: the role of internal auditors and the benefits of the environmental audit. The sub-analysis focuses on three specific criteria: governance, risk management and control. This paper outlines the responsibilities of internal auditors to provide assurance and consulting services, conduct risk screenings, ensure compliance with environmental laws and standards, and identify areas for improvement. The paper also re-emphasizes the benefits of these practices, which include significant cost savings through resource optimisation, continuous improvement by identifying areas for enhancement, and enhanced compliance with environmental regulations. The significant cost savings through resource optimisation should be a source of optimism for businesses, as it demonstrates the financial benefits of environmental compliance. Moreover, the expertise of internal auditors in risk assessment and control systems is instrumental in mitigating potential legal and reputational risks for organisations. It proves that having an internal audit involved in environmental audits significantly contributes to an organisation’s compliance with environmental regulations and programs.

경제환경적 불확실성 하에서의 감사품질

[Purpose] This paper examines the impact of macro-uncertainty on audit quality. Furthermore, it explores whether the relationship between uncertainty and audit quality varies based on the audit effort exerted by senior CPAs within audit firms.
 [Methodology] This paper uses Korean listed firms from the years 2014 to 2019 and utilizes 9,772 number of observations. To quantify uncertainty, this study employs VKOSPI, an option-based measure of uncertainty provided by KRX. For assessing audit quality, the absolute magnitude of discretionary accruals is utilized.
 [Findings] Using regression analyses, this paper finds a negative relation between VKOSPI and discretionary accruals, meaning that audit quality improves under uncertainty. Further analyses indicate that this negative relationship between VKOSPI and discretionary accruals is observed specifically within the subsample of firms audited by auditors with above median input from senior managers.
 [Implications] By using recent sample after year 2014, this paper shows evidence that audit fee discount under uncertainty does not lead to deterioration of audit quality. Korea has put consistent effort to increase the responsibility of auditors. As one example, Korean companies are obliged to disclose number of staff put to audt process, audit hours, audit plan, and actual audit implementations. The results of our paper indicates that a series of efforts to strengthen auditors’ responsibilities are somewhat effective.

Accounting Personnel Quality, Audit Risk, and Auditor Responses

SUMMARY This study draws on human capital theory to measure the quality of accounting personnel based on their education level and investigate whether the education level of the client firm’s accounting personnel affects auditors’ assessment of audit risk by examining audit outcomes. It shows that auditors charge higher fees and are more likely to make audit adjustments for companies whose accounting personnel have a lower level of education. The relationship between the education level of accounting personnel and audit fees (audit adjustments) is robust to an instrumental variable model, an entropy balancing approach, and a difference-in-differences analysis. Audit firms strategically assign more experienced partners to audit companies whose accounting personnel’s average education levels are relatively low. Taken together, these findings suggest that the education level of clients’ accounting personnel affects auditors’ assessment of audit risk and audit outcomes. JEL Classifications: M40; M42; J01; J24.

LEVELS OF INDEPENDENT AUDITORS RESPONSIBILITY AGAINST ERROR AND FRAUD: A STUDY IN ANKARA PROVINCE

The aim of the study is to examine the approaches of independent auditors operating in Ankara regarding their level of responsibility against error and fraud. Another aim of the study is to determine whether approaches to this issue differ in terms of demographic variables. Frequency, T Test, ANOVA and Tukey Post Hoc test methods were used to achieve the objectives of the study. When the data obtained is analysed; It has been observed that respondents have the opinion that the responsibility of independent auditors in detecting errors and frauds is to provide reasonable assurance, that the responsibility in the audit should be shared with the parties related to the fraud, that fictitious sales should not be ignored, and that detecting fraud committed by managers may be more difficult than fraud committed by employees. In addition, the approaches of independent auditors regarding their level of responsibility against error and fraud vary in terms of their gender, titles, education level, age, experience period and working style. The fact that the study has not been researched from the current study perspective before supports its contribution to the literature.

Behaviorism in auditing and its influence on the legal content of international standards on auditing

The paper is devoted to behaviorism in the field of audit activity, which in the form of the theory of behavior is widely used in scientific research and practice in foreign countries, especially in the USA. The least the problem of behaviorism is studied in Ukraine and then in rather general terms. It is shown that the main source of behaviorism is the philosophy of positivism and pragmatism. Its external manifestation is considered to be an individual reaction on stimuli of an external environment. In connection with this, the motives of the behavior of individuals are assigned a leading role in determining the normative regulation of activity of participants in accounting and auditing. It should also be noted that the precedents for assessing the subjects' behavior in this aspect constitute the system of Anglo-American law. The specified legal system has significant differences from the continental or European law to which Ukraine belongs. The dominance in conceptual law of normativism leads objectively to difficulties on introduction of International Standards on Auditing (ISA) based on the Anglo-American legal system in European countries and Ukraine. The paper also considers how a behavioral approach is used in specific ISA. As the example the ISA 315 "Identification and Assessment of Risks of Material Misstatement" and the ISA 240 "Auditor's Responsibilities Regarding Fraud in the Audit of Financial Statements" are taken. In particular, ISA 315 proposes to assess the risks of material misstatement through an understanding of the entity and its environment. It is emphasized that such an understanding of the business entity should not be a formal act as a legal entity, but from the position of the real behavior of management personnel. According to the ISA 240, the auditor should exercise professional skepticism throughout the audit, with recognizing the possibility of significant distortion due to fraud or error regardless of management's positive assessment. Based on professional skepticism, regarding the identification by the auditor of specific opportunities to commit fraud, the ISA 240 recommends to analyze the motives of the management personnel's behavior, pressure from the external environment, opportunities to commit fraud, attitudes and logical justification of wrongdoing. The final part of the paper gives relevant recommendations for harmonizing the ISA with domestic regulatory and legal acts and the practical activity of auditors on the territory of Ukraine.

More than Making Copies: Survey Evidence on the Work of Novice Auditors

SUMMARY The auditing landscape has changed dramatically in the last 20 years due to new standards, improved technology, internal shared services centers, and more. These institutional advances have altered the responsibilities of novice auditors. However, our knowledge of novice auditor task responsibilities and experiences has not been systematically updated in the 21st century. This study provides empirical evidence on the tasks and experiences of novice auditors by reporting survey responses from 104 audit interns, more than 30 intern supervisors, and 89 staff auditors. Our results shed light on the evolution of the roles of novice auditors by documenting the significant number and variety of tasks that they perform, as well as the interpersonal interactions, formal training, and other activities they commonly experience. Data Availbility: Please contact the authors.

Effect of Audit Regulations and Litigation on Auditors’ Liabilities: A Subjective Approach

In this review, we take a theoretical look at how audit regulation and litigation have changed the liability landscape for auditors. In order to increase transparency and trust in financial reporting, auditing is a crucial public service. The auditing industry has received a lot of attention, some of it unfavourable, as a result of scandals like Enron and WorldCom in the United States or Parmalat in Europe or Cadbury Nigeria PLC. People all throughout the world have spoken out to demand better audit quality. Due to this, adjustments have been taken to increase audit openness and auditor accountability. However, there is still a need for enhancements to be made. This leads to inquiries into the different requests and concerns, and the extent to which they may be fulfilled (auditors' responsibility). Auditors are put in a difficult position since they are expected to please both shareholders and other interested parties. When it comes to the auditor's responsibilities, each stakeholder group has different priorities and requirements. Several ideas have been developed since the field's inception that attempt to pin down audit's precise purposes. Findings of the study has revealed that regulations and litigations have significant positive and adverse effect on auditors’ liability and the expectations of the stakeholders as a result of audit expectation gap. The conclusion here is that, audit regulations and litigation have a significant relationship with auditors’ liability. Irrespective of the outcome of audit litigations as a result of auditors’ negligence to duty, there is an impact on the affected organizations. Therefore, auditors should carefully practice in accordance with national and international auditing standards in order to sustain the good reputation of the organizations.

수주산업 회계부정 사례를 통한 외부감사인의 책임과 시사점

[Purpose] The order－made production industry, including the construction and shipbuilding industries, recognizes revenue based on the progress rate. Because progress estimates involve complex assumptions and estimates, they have high inherent risk and high audit risk. As a result, accounting fraud often occurs in order－made industries such as construction and shipbuilding. This study analyzes the accounting fraud cases of Company A in the ordermade production industry from 2008 to 2015 to present legal responsibilities for external auditors' poor auditing and implications of the court’s ruling on Company A’s accounting fraud on external audit.
 [Methodology] We conducted a search of court rulings related to Company A’s accounting fraud lawsuit and literature published by relevant supervisory authorities.
 [Findings] First, external auditors must strive to strengthen their competence and independence. Second, the scope of responsibility of the audit team must be made clear. Third, if the audited company’s submission of audit－related data is insufficient it is necessary to increase the differential information value of the audit report by actively considering modifying the audit opinion. Fourth, active communication between the auditor and the audited company is necessary, and after communication, audit risks must be managed by documentation.
 [Implications] By analyzing cases of accounting fraud in the order－made production industry based on court rulings, this study presented how the auditor’s perspective on accounting audits differs from the court’s perspective. In addition, it is different in that it analyzes accounting fraud cases from the auditor’s responsibility perspective and suggests implications.

Analysis of the role of emotional intelligence, social intelligence and social responsibility of auditors on the audit report readability

Analysis of the role of emotional intelligence, social intelligence and social responsibility of auditors on the audit report readability

Analisis Kredibilitas Dan Tanggung Jawab Auditor Pemerintah Dalam Pendeteksian Fraud Pada Laporan Keuangan Provinsi Sumatera Utara

The purpose of this study is to analyze and test the effect of auditor credibility on the process of detecting fraud in financial statements and the effect of auditor responsibility on the process of detecting fraud in the financial statements of North Sumatra Province. The research method used is explorative qualitative with inductive data analysis and the research results emphasize meaning rather than generalization. This research is explorative qualitative in nature because the research that the researchers conducted aims to provide an overview of the audit process at the inspectorate of North Sumatra Province so that a narrative is obtained to reach a conclusion. The results of the study are that the inspectorate auditor has sufficient credibility and experience in examinations, the data found and recommended for North Sumatra Province for the 2013 to 2017 period there were 1,423 findings and 1,709 recommendations. With details of cases completed as many as 1,197. In the process as many as 142 recommendations and 344 have not been followed up. Then for Regencies/Cities 1,668 findings and 2,040 recommendations. Examination The auditor carries out his responsibility to detect fraud, conducts inspections in accordance with procedures and after carrying out the inspection, provides feedback by conducting formal correspondence procedures soliciting responses from the object being examined.

The Impact of Auditor Liability System on Audit Quality

The complexity of business operations and the likelihood that accounting information may be distorted are both rising along with the market economy's quick expansion, which raises the stakes for auditing work. In the process of independent auditing, the purpose of the auditor responsibility system is to control the auditor's numerous audit relationships. To a certain extent, this system can prevent audit risk and lower the likelihood of audit failure, improving audit quality. This paper examines the issues and causes of certified public accountants' audit failure in the auditing process, examines the current issues with the auditor responsibility system, and makes recommendations for enhancing audit quality in light of the administrative penalty decision made by the China Securities Regulatory Commission (CSRC) on ShineWing China Accounting Firm and the two signatory certified public accountants in 2022. suggestions for raising the quality of the audit.

The Influence of Audit Quality, Company Financial Condition, Previous Year's Audit Opinion, Company Growth on Acceptance of Going Concern Audit Opinion in Companies Listed on the IDX

The responsibilities of auditors currently do not only focus on assessing the fairness of financial statements and detecting fraud, but also on assessing the company's ability to maintain its survival. This is due to the demands of the shareholders to the auditor to provide early warning about the prospects of a company as consideration before deciding an investment decision. The research's goals were to examine the effect of the audit opinion received in the quality of the audit, financial condition of the company, previous years against the acceptance and the company's growth of a going concern opinion. The samples of this research were the companies that suffered losses three years in a row and were listed on the Indonesian Stock Exchange (ISE) from 2011 to 2013. The hypotheses were tested using a logistic regression method. The results of this research showed that the quality of audits and previous audit opinions had a significant effect, but the financial variables and growth companies weren't significantly influenced by going concern opinions.