Role Of Audit Research Articles

Retracted: International expansion and audit opinion shopping: A signaling perspective

AbstractOpinion shopping is an essential indication of audit collusion. Hence, it is crucial to explore the driving factors of audit uopinion shopping to better control and address this issue. Drawing upon signaling theory, this paper explores the relationship between international expansion and audit opinion shopping and the moderating roles of internal control quality and auditors’ quality. We find that the higher the level of international expansion of an enterprise, the greater the likelihood of audit opinion shopping. Furthermore, we also find that high internal control quality and high auditor quality can weaken the positive relationship between international expansion and audit opinion shopping. Besides, heterogeneity analysis shows that the impact of international expansion on audit opinion shopping is more pronounced in non‐SOEs and firms which stay in the growth and maturity stage. This paper contributes to the antecedent research of audit opinion shopping and exposes the possible “dark side” of international expansion. Finally, this study may provide practical implications to help the authorities better regulate internationalized enterprises as well as contribute to the healthy development of the auditing market.

A Critical Analysis of Risk Auditing: An Auditor's Approach

This research aims to critically analyze risk auditing, focusing on the auditor's approach, to uncover complexities and challenges inherent in contemporary auditing practices. The study synthesizes findings from a literature review, discussing implications for auditors, organizations, and future research. The multifaceted role of auditors in risk auditing involves identifying, assessing, and managing risks across financial and operational domains, ensuring organizational objectives and assets' safeguarding. Auditors must possess diverse skills, expertise, and judgment to navigate subjective risk assessment, particularly in evaluating emerging risks and complex financial instruments. Moreover, auditors must adopt a proactive approach to risk management, anticipating potential risks and providing timely recommendations. However, challenges such as the lack of standardized risk assessment practices, the rapid pace of business environment changes, and integrating emerging technologies into risk auditing persist. These challenges underscore the need for ongoing innovation and improvement in risk auditing practices. Empirical findings suggest a positive association between risk disclosures' quality and firm performance, emphasizing governance mechanisms' importance in risk management. By addressing challenges and collaborating with stakeholders, auditors can enhance risk management practices' effectiveness, safeguarding organizational objectives and assets in dynamic business environments.

Innovations in accounting and auditing: A comprehensive review of current trends and their impact on U.S. businesses

The landscape of accounting and auditing is undergoing a transformative evolution, driven by rapid technological advancements, regulatory changes, and shifting business paradigms. This comprehensive review delves into the contemporary innovations shaping the realm of accounting and auditing and assesses their profound implications for U.S. businesses. Technological innovations, particularly the integration of artificial intelligence and machine learning, have revolutionized traditional accounting processes. Automation tools and advanced data analytics are streamlining routine tasks, enhancing accuracy, and enabling accountants to focus on more strategic, value-added activities. The paper explores how these technological advancements are reshaping the skill sets required in the accounting profession and the consequent impact on professional development and education. Furthermore, the study investigates the evolving role of auditors in an era dominated by Big Data. The adoption of data analytics and blockchain technology is enhancing audit efficiency, transparency, and the overall quality of financial reporting. The analysis emphasizes the importance of auditors embracing these innovations to provide more timely, accurate, and insightful assessments of financial statements. Regulatory changes, such as the implementation of new accounting standards and reporting requirements, also feature prominently in this review. The study examines the challenges and opportunities arising from these regulatory shifts and assesses their impact on financial reporting practices in U.S. businesses. As businesses adapt to these innovations, the paper explores the broader implications for decision-making, risk management, and corporate governance. It sheds light on how the changing landscape of accounting and auditing influences the strategic decision-making processes of organizations, with a focus on fostering transparency and accountability. In conclusion, this comprehensive review synthesizes the multifaceted innovations in accounting and auditing, offering insights into the current trends shaping the industry and their far-reaching consequences for U.S. businesses. The research contributes to a deeper understanding of the challenges and opportunities associated with these transformations, guiding stakeholders in navigating this dynamic landscape effectively.

A research note on earnings quality of private SMEs: the impact of IFRS adoption and Big Four auditor presence

This study analyzes whether International Financial Reporting Standards (IFRS) adoption and the presence of Big Four auditors affect the earnings quality of UK private small and medium-sized enterprises (SMEs). Using data covering 2011–2018, we show that IFRS adoption is not significantly associated with earnings quality. This may be because SMEs’ smaller size and simpler business model mean that only a few accounting rules are relevant for them. The high quality of UK domestic accounting standards may also explain this result. Furthermore, we find that the presence of Big Four auditors results in lower earnings quality, in contrast to prior research results. The advisory role played by Big Four auditors for SMEs and UK tax authorities’ less monitoring of financial statements may contribute to this result. Our findings offer new insights into the potential impact of IFRS adoption on private SMEs’ earnings quality and suggest that policymakers aiming to enhance earnings quality should carefully consider the advisory role of auditors in SMEs’ financial reporting.

THE ROLE OF INTERNAL AUDIT IN RISK MANAGEMENT OF CORPORATE ORGANIZATIONS

Abstract. The role of audit in a company is very important because auditis a control of all activities in the organization, so the function of internalaudit is to control all activities in the organization so that workimplementation is more effective and efficient according topredetermined standards, therefore the role of internal audit Thecompany's risk will be small because company risk management canhelp the company's risk of events that will be faced in the future. Thisresearch uses a qualitative approach which aims to understand thephenomena that occur in research subjects to assess research questionsand to provide data. based on the researchers' ideas. focuses on previousresearch findings regarding the role of internal auditors in implementinggood risk management for good corporate governance. Based on thedescription, analysis, data interpretation and statistical data processingthat have been described in the previous chapters, it can be concludedthat the level of effectiveness of the role of the internal audit function isimportant in operational risk management. Based on the calculationresults of the average level of effectiveness located in quadrant II in theCartesian Diagram, it shows that the role of the internal audit function inoperational risk management has been effective. The role of internalauditors in risk management is closely related to the risk managementsystem development stage. Top management must be aware of theirspecific functions and responsibilities in risk management. Topmanagement must provide appropriate signals to lower levels ofmanagement (top-down approach) to convince them of their operationalresponsibilities regarding for example the development andimplementation of internal controls. Keywords: Internal Audit, Risk Management

Peran Internal Auditor Untuk Mencegah Terjadinya Fraud Di Dalam Perusahaan

This article aims to determine the role of internal auditors in preventing conditions or fraud in companies. Acts of circumstances can occur due to opportunity, pressure and rationalization, as mentioned in the fraud triangle. One of the reasons why perpetrators of conditional acts can freely carry out conditional acts is if there is no proper supervision, so that the opportunity to carry out conditional acts comes. Therefore, the role of independent internal auditors in companies is very necessary to suppress opportunities that will be taken by potential perpetrators.

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.

The role of auditor’s gender and audit firm size on the audit report lag and the role of key audit matters as a moderating variable

Due to its potential to impact the timeliness of accounting information used by both internal and external users in their decision-making, audit report lag (ARL) is a significant problem (Mardi et al., 2020). Thus, the study looked at how the size of the audit firm and the gender of the auditor affected the ARL as well as how key audit matters (KAMs) functioned as a moderating factor in Jordanian companies that were listed on the Amman Stock Exchange (ASE). A correlational research strategy was employed in the study. The information gathered between 2016 and 2020 from the 144 Jordanian enterprises mentioned in their published annual financial reports. The findings indicated a substantial inverse link between audit report delays and audit firm size. Furthermore, there exists a negligible but positive correlation between the gender of auditors and the latency of audit reports. This study also discovered that, in relation to audit report latency, KAMs may function as a moderator between audit company size and auditor gender. It is advised that scholars investigate new businesses and employ alternative approaches in the future. Future studies might examine components like the opinion of the auditors and the auditors’ remuneration.

The Diminished Role of Larger Auditors as External Monitors in de-SPAC Transactions

The Diminished Role of Larger Auditors as External Monitors in de-SPAC Transactions

АУДИТОРСЬКИЙ ЗВІТ ТА ЙОГО ВАЖЛИВІСТЬ У ПРИЙНЯТТІ УПРАВЛІНСЬКИХ РІШЕНЬ ПІДПРИЄМСТВОМ

In today's environment, any business entity faces intense competition in the national and international markets. There is a need to continuously improve its operations to strengthen its market position and attract more customers to be able to adapt to any external and internal changes and withstand competition in the long term. That’s why the decisions made by management should be strategic and effective, as they determine the future of their company. Such effectiveness is possible if there are reliable sources of information that form the basis for any decision. The audit report serves as an important resource in business management due to its own content and high quality of disclosed information, which can provide management with reliable and accurate information. The research is aimed at determining the role of the independent auditor's report in management decision-making by studying its content and the possibility of influencing the performance of a business entity. The role of management decisions in the functioning of an economic entity and further development of its capabilities is determined. The essence and characteristics of the auditor's report are investigated. The requirements for the structure of the independent auditor's report and the information to be covered in it are analyzed. The necessity of the independent auditor's report in the activities of an enterprise is substantiated and its importance as a tool for management to improve the efficiency of the process of forming and making management decisions is described. The process of forming an auditor's opinion during the audit procedures and collection of audit evidence is briefly described. Possible reasons for misunderstanding of the independent audit report by the management of an entity are given, and the factors influencing the effectiveness of the audit report and its possible effectiveness for the enterprise are highlighted. Recommendations for accelerating the process of forming an independent audit report and its application in the development of strategic decisions by management personnel are considered.

Integrating corporate governance and forensic accounting: A sustainable corporate strategy against fraud

In the realm of financial oversight and corporate management, forensic accounting (FA) holds a critical position, serving as a central control mechanism and being widely recognized as an essential component of corporate governance. FA plays a crucial role as a central control mechanism and is acknowledged as a pivotal element of corporate governance. Consequently, it needs to continuously adapt in response to shifts in corporate governance practices, while the role of internal auditors transforms to actively support corporate sustainability. The aim of this research is to assess the effectiveness of FA and explore its relationship with corporate governance, based on the relevant literature. Thus, the main objectives of the present study are to identify the internal control attributes that influence the quality of its performance and to evaluate how corporate governance contributes to enhancing the quality of FA. To achieve the aim and the objectives of the paper, a literature analysis was carried out. The main contribution of the present paper is to refresh the existing body of knowledge on contemporary FA and its interplay with corporate governance.

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

Pengaruh Modal Manusia dan Pengembangannya terhadap Kinerja Auditor Kementerian Kelautan dan Perikanan

Auditors are internal supervisors whose role is to provide assurance and consultation so that the Ministry of Marine Affairs and Fisheries' programs, activities and budgets are carried out transparently and accountable. Good auditor performance can improve organizational performance and encourage the implementation of good governance. This study aims to analyze the characteristics of human capital and human capital development that affect the performance of auditors of the Ministry of Marine Affairs and Fisheries. The sampling technique uses non probability sampling. The type of non probability sampling used in this study is saturated sampling where all respondents are used as examples. The data were analyzed with descriptive statistics and Structural Equation Modeling Partial Least Square (SEM-PLS) analysis by first testing the questionnaire through validity and reliability tests. The results showed that auditor performance is not influenced by human capital development but has a significant important role for human capital. Human capital development indicators that are best reflected in a row are on-the-job training, career support and off-the-job training. Good human capital plays an important role for auditors in meeting work quantity, time and quality targets. This study also found that human capital can mediate the effect of human capital development on auditor performance. Knowledge, experience, professional proficiency and personality traits are important human capital indicators in this study.

Riding the Merger Wave: The Gatekeeping Role of Auditors

Riding the Merger Wave: The Gatekeeping Role of Auditors

NAVIGATING THE GLOBAL ACCOUNTING LANDSCAPE: ADVANCING FINANCIAL LEVEL REPORTING STANDARDS TO COMBAT FINANCIAL FRAUD

Financial fraud stands as a formidable challenge within the global economic milieu. While extant literature has extensively scrutinized financial fraud reporting, scant attention has been directed towards exploring prevention strategies from the vantage point of auditors, particularly in burgeoning economies like India. This study delves into the adoption of accounting financial level reporting and the deployment of strategies for preventing financial fraud. Drawing from a sample comprising 199 auditors across various metropolitan cities in India, employing a convenience sampling methodology, this research elucidates the pivotal role of auditors' commentary in facilitating flexible and robust financial fraud reporting mechanisms. The findings underscore the indispensable role of auditors in the realm of fraud prevention, with both internal and external auditors frequently resorting to internal control reviews and enhancement strategies.

The Role of Internal Auditors in Implementation Social Environmental Governance

The aim of this study is to know how big the role of the auditor is in raising awareness of the application of sustainability reporting and the extent to which information is disclosed on the aspects of Environment, Social and Governance (ESG). Several previous studies were used as objects reviewed. The result underscores the multifaceted contributions of internal auditors, ranging from providing assurance on ESG disclosures and conducting due diligence on business partners to engaging in consulting activities and fostering a sustainable supply chain. This practice emphasizes that ESG-related expertise within Internal Audit Functions (IAFs) is crucial for promoting ESG maturity and effective reporting. Collaboration between internal and external auditors is vital to maintain independence and objectivity, ensuring the quality and reliability of ESG-related information. The trend of integrating ESG considerations into audit processes aligns with the broader global shift toward responsible business practices, and it positions internal auditors as valuable contributors to corporate governance and stakeholder trust. As ESG gains prominence, the internal auditor's ability to navigate the complexities of ESG metrics and controls becomes a competitive advantage, reinforcing their role as a key player in achieving sustainable and responsible business outcomes.

Lean Six Sigma, effectiveness, and efficiency of internal auditing

PurposeIn light of the recent changes in the internal audit (IA) landscape, the role of auditors has undergone a significant transformation. This paper aims to investigate the effects of applying Lean Six Sigma (LSS) techniques on the effectiveness and efficiency of IA.Design/methodology/approachThe study used a quantitative approach, surveying Iranian internal auditors with a sample size of 384 participants. Data analysis involved confirmatory factor analysis and structural equation modeling.FindingsThe analyses demonstrate a significant association between LSS application and IA effectiveness and efficiency. In addition, an exploratory analysis indicates that the application of LSS techniques by less experienced internal auditors had a reverse effect on IA function quality as a component of IA competency. However, IA motivation factors, including education and position, did not mediate the impact of LSS on IA effectiveness and efficiency.Research limitations/implicationsThis study was conducted with Iranian internal auditors, which may limit the generalizability of the findings to other countries. However, the primary academic implication of this research lies in its novel perspective on emphasizing the concept of continuous improvement in IA through the use of LSS techniques. By focusing on the need for internal auditors to add value to the business in new ways, this research contributes to the literature on IA quality.Practical implicationsThis study has significant implications for the effective management of IA departments. By promoting the application of LSS techniques in IA, lean auditing is enhanced, and IA can create value by improving the quality of its functions. Moreover, IA regulators can benefit from this study as it emphasizes providing guidance and training on LSS techniques to enhance IA skills.Originality/valueThis research is pioneering in applying LSS methodology to enhance the effectiveness and efficiency of internal auditing. It also considers the integration of lean thinking into current audit practices, making it unique and valuable in internal auditing research.

The Relationship between Assessing Audit Risks and Revealing Creative Accounting Methods in Accounting Estimates: The Perspective of Algerian External Auditors

Numerous studies have underscored the pivotal role of external auditors in identifying unfair estimates and preventing accounting manipulation. This is achieved by gathering sufficient and appropriate evidence when material misstatements are detected and verifying the existence of such misstatements. This study aims to explore the relationship between audit risk assessment (comprising the assessment of inherent risks, control risks, and the control of detection risks) and the detection of creative accounting methods in accounting estimates, from the perspective of Algerian external auditors. To fulfill this objective, a descriptive-analytical approach was adopted. The review encompasses the most significant findings of prior studies, supplemented by a field study involving the distribution of a questionnaire to a random sample of Algerian external auditors practicing the profession (n=300). The collected data were subsequently analyzed using the Statistical Package for the Social Sciences (SPSS26). The study concludes that there exists a positive and statistically significant relationship between the assessment of audit risks and the revelation of creative accounting methods in accounting estimates, according to Algerian external auditors. This implies that as audit risks are assessed, the likelihood of detecting creative accounting methods in accounting estimates increases, accounting for 62.8% of the variance. The remaining 37.2% is attributed to other factors. Notably, there is a positive relationship, varying in degree, between the assessment of audit risks and the detection of creative accounting methods. Assessing inherent risks has the highest impact, followed by assessing control risks and controlling detection risks. Additionally, the study identifies statistically significant differences in the perception of audit risks and creative accounting methods in accounting estimates among Algerian external auditors based on demographic characteristics within the study sample.

Internal Audit in Public Hospitals: the case of Greece

Internal control is of utmost importance for effective corporate governance, particularly in public hospitals aiming for modernization in the Greek framework. Internal audit functions enhance transparency, enforce accountability, and ensure compliance with societal values, bolstering public trust. This study delves into the implementation of internal control in Greek public hospitals, considering factors like size, structure, and operational intricacies. We explore the regulatory framework, procedures, scope, and objectives, while interviewing auditing experts for insights into challenges and opportunities. Findings reveal procedural dominance in current implementation of the Law. Focus on accounting neglects crucial functional departments. The audit committee's role and composition raise independence concerns. Understaffing further hampers operations. A significant weakness appears in the independence of the audit. Internal auditors report to the hospital administrator and participate in the audit committee. The appointment and remuneration of auditors is not based on the auditor's competence and suitability, but on a cost basis. The question therefore arises as to whether the auditor performs the duties objectively and impartially in accordance with the International Institute of Internal Auditors' standards. Furthermore, regarding the research question on the role of the internal auditor and the treatment by auditees, there has been a significant improvement as evident by the respondents’ answers.

Peran Audit Internal Atas Kualitas Pemeriksaan Laporan Keuangan Yang Dilakukan Oleh Audit Eksternal Pada Sebuah Perusahaan

This study aims to research the role of internal auditor to the quality of financial reporting. Financial reporting is an important part as consideration to make a decision. Therefore, the quality of financial reporting needs to be observed because it affects stakeholders’ decision. Nowadays, the role of internal audit is highlighted as one of the important roles to improve the quality of financial reporting.The samples used are Internal Audit working in a company. The dependent variable in this study is the quality of financial statements, while the independent variable is Internal Audit. The results of this research shows that the internal auditor has a positive and significant role on the quality of financial reporting. The more the internal auditor involves in monitoring the reliability of financial reporting, the better quality of financial reporting will be.