Adoption of International Standards on Auditing (ISA): Do Institutional Factors Matter?

Informed by the neo-institutional perspective, this study seeks for the first time to investigate empirically the determinants of ISA adoption and commitment to harmonisation on a cross-national basis (89 countries). The findings show that the protection of minority interests, regulatory enforcement, lenders/borrowers rights, foreign aid, prevalence of foreign ownership, educational attainment and particular forms of political system (level of democracy) prevailing in a country, are observed to be significant predictors of the extent of commitment to the adoption and harmonisation of ISAs. Our statistical analysis therefore suggests that coercive, mimetic and normative pressure have a significant impact on ISA adoption relative to economic (efficiency-led) factors. Our findings imply that current efforts by the International Federation of Accountants (IFAC) and other international agencies to implement ISAs need to recognise that a broad set of institutional factors, rather than narrow economic ones, are of relevance in the development of audit policymaking, practice and regulation worldwide

Fraud and the interaction between political, legal and financial reporting regimes

There is evidence in the extant literature on frauds and its drivers and inhibitors at firm level. Yet, there is still the beliefs that (1) ‘Politicians could intervene to protect fraudster and that this intervention varies between political regimes of countries and (2) the legal regimes could be less rigour or contains loopholes that reduces deterrent incentives to frauds and fraudster’, let aside the financial reporting regimes. This is an anecdote that is yet to be demystified. This paper therefore argues that behind this anecdote, that there is an interaction between politics, laws and financial reporting on fraud and that the nature and magnitude of this interaction either deters or covers up frauds. The purpose of this paper is two phases: (i) to assess this triangular effect and (ii) to investigate how each type of political, legal and financial reporting regime impacts on fraud at a country level

Fraud and the interaction between political, legal and financial reporting regimes

There is evidence in the extant literature on frauds and its drivers and inhibitors at firm level. Yet, there is still the beliefs that (1) ‘Politicians could intervene to protect fraudster and that this intervention varies between political regimes of countries and (2) the legal regimes could be less rigour or contains loopholes that reduces deterrent incentives to frauds and fraudster’, let aside the financial reporting regimes. This is an anecdote that is yet to be demystified. This paper therefore argues that behind this anecdote, that there is an interaction between politics, laws and financial reporting on fraud and that the nature and magnitude of this interaction either deters or covers up frauds. The purpose of this paper is two phases: (i) to assess this triangular effect and (ii) to investigate how each type of political, legal and financial reporting regime impacts on fraud at a country level