WAYS OF STRENGHTENING THE STATUTORY AUDIT EFFICIENCY

The integrity of the auditor’s opinion and the audit process conducting effectivenesshangs on the professional judgment applied on obtaining, processing and interpreting the internal andexternal information. Documentation is based on all the audit evidence collected through proceduressuch as: inspection, confirmation, documentation etc. Audit evidence is used to determine whether thefinancial statements present the economic reality of transactions and if they faithfully reflect thefinancial position of the company. To achieve a reasonable assurance, the auditor should gathersufficient and high quality audit evidence so that the view expressed in the report of the independentauditor should be based on a credible and relevant background.audit evidence, audit procedures, professional judgment, reasonable assurance.

Undertaking clinical audit, with reference to a Prescribing Observatory for Mental Health audit of lithium monitoring

Audit is an important tool for quality improvement. The collection of data on clinical performance against evidence-based and clinically relevant standards, which are considered by clinicians to be realistic in routine practice, can usefully prompt reflective practice and the implementation of change. Evidence of participation in clinical audit is required to achieve intended learning outcomes for trainees in psychiatry and revalidation for those who are members of the Royal College of Psychiatrists. This article addresses some of the practical steps involved in conducting an audit project, and, to illustrate key points, draws on lessons learnt from a national, audit-based, quality improvement programme of lithium prescribing and monitoring conducted through the Prescribing Observatory for Mental Health

Audit market structure, fees and choice in a period of structural change: evidence from the UK – 1998–2003

This paper presents evidence on audit market concentration and auditor fee levels in the UK market in the crucial period of structural change following the PricewaterhouseCoopers’ (PwC) merger and encompassing Andersen’s demise (1998–2003). Given the current interest in auditor choice, analysis is also undertaken at the individual audit firm level and by industry sector. There is evidence of significant upward pressure on audit fees since 2001 but only for smaller auditees. Audit fee income for top tier auditors (Big 5/4) did not change significantly while the number of auditees fell significantly, consistent with a move towards larger, less risky, clients. A decomposition analysis of the aggregate Big 5/4 concentration ratio changes over the period identifies the impact of four distinct consumer-based reasons for change: leavers; net joiners; non-par auditor switches; and (only for the audit fees measure) audit fee changes. Andersen’s demise markedly reduced the level of inequality among the top tier firms but PwC retained its position as a ‘dominant firm’. On switching to the new auditor, former Andersen clients experienced an initial audit fee rise broadly in line with inflation, with no evidence of fee premia or discounting. They also reported significantly lower NAS fees, consistent with audit firms and auditees responding to public concerns about perceptions of auditor independence. There is no general evidence of knowledge spillover effects or cross-subsidisation of the audit fee by NAS. The combined findings provide no evidence to indicate that recent structural changes have resulted in anticompetitive pricing; the key concerns remain the lack of audit firm choice and issues concerning the governance and accountability of audit firms

Differences in audit quality between audit firms: The impact of audit-firm portfolio characteristics.

Companies generate financial statements that are used for decision making by various stakeholders and the quality of those financial statements depends on the quality of the external auditor. There exists empirical evidence of quality differentiation between audit firms, but the audit-quality proxy that is typically used, auditor size (big 6 / non-big 6 firm), is very rough. The major purpose and contribution of this paper is to further investigate audit-quality determinants empirically. To that end we test the impact on financial statement and audit quality of audit-firm portfolio characteristics, that we selected based on a well-perceived theory by DeAngelo (1981). We indeed find that audit-firm portfolio characteristics better explain variations in financial statement and audit quality. In particular: 1) the short-term leverage of an audit firm's portfolio is negatively, and 2) the number of clients in an audit firm's portfolio is positively associated with financial statement and audit quality.Image; Characteristics; Companies; Decision making; Theory;

Mandatory audit firm rotation and Big4 effect on audit quality: evidence from South Korea

In South Korea, due to concurrent financial scandals, Korean legislators implemented two major audit policies in the 2000s; the mandatory audit “partner” rotation policy in 2000 and the mandatory audit “firm” rotation policy in 2006. The mandatory audit “firm” rotation policy was introduced as a mean to improve audit quality based on the auditor entrenchment hypothesis. In this paper, we compare the audit quality of firms subjected to mandatory audit “firm” rotation with two benchmark groups, a sample that adopted the policy voluntarily; the second group consists of the mandatory “firm” rotation sample in years prior, a period firms were subject to mandatory audit “partner” rotation. Using accrual-based measures as proxies for audit quality, we find evidence that audit quality of the mandatory rotation firm sample is lower compared to firms that voluntarily adopted the policy. Furthermore, we find evidence that audit quality of the mandatory rotation firm sample is lower compared to the mandatory audit partner firm sample. Additionally, we also find evidence that the mandatory audit firms rotation sample whose auditors were rotated from Non-Big4 to Big4 are generally associated with lower levels of abnormal accruals consistent with the argument that the audit quality of Big4 accounting firms is superior to Non-Big4 firms. Finally, longer audit tenure and switches to Big4 audit firms generally have a positive effect upon audit quality. These findings suggest that extended audit tenure improves audit quality due to accounting firm’s accumulated client specific knowledge. Thus, our evidence suggests that the mandatory audit firm rotation policy did not have the desired effect in a Korean context

Risk Based Tax Audit Practices in Ethiopia, Evidence from Western Addis Ababa Small Taxpayers Branch Office

This study was study was designed to assess Practices of Risk Based Tax Audit in Western Addis Ababa Small Taxpayers Branch Office in Ethiopia To achieve the stated objectives descriptive research design with mixed research approach was adopted. The result of the study revealed that there was a significant problem of supporting the audit work by Information Technology, the tax audit evidence is not obtained from y third party. No difference in risk selection criteria’s for similar for Large, Medium and Small taxpayers, focusing on revenue collection than enhancing tax compliance, extensive application of comprehensive audit than risk based sample among others  The study recommends: adequate use of information Technology in selecting taxpayers based associated risks, emphasizing on spot/issue oriented audits, applying different selection criteria based on their nature, to focus on issue audit and to use third party audit evidence. Keywords: Tax, Risk based Tax Audit, taxpayer selection, Third party information d information Technology DOI: 10.7176/EJBM/12-28-06 Publication date:October 31st 2020

Lifting the lid: a clinical audit on commode cleaning

Many healthcare-associated infections (HCAIs) are preventable by infection control procedures designed to interrupt the transmission of organisms from a source. Commodes are in use constantly throughout healthcare facilities. Therefore commode surfaces are constantly handled, and any pathogens present have the potential to be transferred to not only other surfaces but also, more importantly, to patients, thus compromising patient safety. In order to examine the effectiveness and thoroughness of cleaning commodes an audit was undertaken to assess compliance with evidence-based practice. This audit demonstrates a cycle which includes defining best practice, implementing best practice, monitoring best practice and taking action to improve practice. The audit results confirmed an issue that the authors had long suspected. That is, that commodes allocated to individual patients are not always cleaned after every use. Using adenosine triphosphate (ATP) bioluminescence as an indicator of organic soiling also demonstrated that commodes that were considered clean were not always cleaned to a high standard. Implementing the audit recommendations improves staff knowledge through education, standardises cleaning procedures and ultimately improves patient safety

The Case for Limited Auditor Liability - The Effects of Liability Size on Risk Aversion and Ambiguity Aversion

Both the US and the EU consider limiting auditor liability in order to ensure the viability of the audit market, but fear its potentially negative impact on audit quality. Our paper discusses the existing empirical results on this topic in the auditing and behavioral economics literature, and provides new evidence based on a controlled laboratory experiment. Our experiment involves real losses and allows for direct inference of behaviour under limited and unlimited liability in situations of ambiguous liability risk. Our findings imply that limited liability can induce an efficient level of audit effort, while unlimited liability induces an inefficiently high level of audit effort. This paper contributes to the literature on auditor liability, as well behavioral economics research in general, by addressing recent controversial issues on behavior in the presence of ambiguity and real losses.

Audit services, non-audit services, and audit firm tenure: Three perspectives on audit quality

The faith in financial reporting quality and the corresponding auditing process has suffered a lot within the last decade, due to significant accounting scandals (e.g. Enron, WorldCom, Parmalat, etc.). As an answer to these accounting scandals, the law-makers in Germany and the European Union, respectively, have strengthened audit regulations in order to improve the quality of the conducted audits. The aim of this cumulative dissertation is to provide empirical evidence on the effects of intended and already implemented regulative audit requirements in Germany. ln order to consider the wide range of different audit requirements, the dissertation is based on four different study manuscripts, highlighting various perspectives with regard to the appointment, duration, and remuneration of a statutory auditor in the German audit environment. Besides the empirical evidence for separate auditing issues, this dissertation is also aimed to provide a solid theoretical background and critical suggestions for future research.:I. Audit services, non-audit services, and audit firm tenure – three perspectives on audit quality … 1 II. Abnormal audit fees and audit quality in German audit market: initial evidence on association of audit fee premiums and audit fee discounts with earnings management … 13 III. Effects of initial audit fee discounts on audit quality: evidence from Germany … 32 IV. Non-audit services and audit quality: blessing or curse? … 60 V. Relationship of auditor tenure to audit quality: empirical evidence from the German audit market … 8

Audit risk and rent extraction: Evidence from a randomized evaluation in Brazil

We report results from a randomized policy experiment designed to test whether increased audit risk deters rent extraction in local public procurement and service delivery in Brazil. Our estimates suggest that temporarily increasing annual audit risk by about 20 percentage points reduced the proportion of irregular local procurement processes by about 17 percentage points. This reduction was driven entirely by irregularities involving mismanagement or corruption. In contrast, we find no evidence that increased audit risk affected the quality of publicly provided preventive and primary health care services -measured based on user satisfaction surveys- or compliance with national regulations of the conditional cash transfer program "Bolsa Família".Corruption, Rents, Local Governments, Law Enforcement