Forensic Service Supply by Audit Firms: Classification, Market, Methods, and Prior Research

Provision of non-audit services is of increasing economic importance for audit firms Especially provision to non-audit clients Wide range of offered services From detection to prevention, from bribery to fraud to violation of code of conduct Small, but growing market with Big 4 as clear leaders Wide variety of backgrounds of forensic services professionals Consequently, diverse portfolio of methods Most research focuses on fraud with some high-quality publications Missing high-quality forensic services researchUniversidad de Malaga. Campus de Excelencia Internacional Andalucia Tec

Do clients business scandals affect the reputation of Audit firms?

The auditor is required to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Reputation is essential in the audit industry. Business scandals can threaten the reputation of the involved auditorUniversidad de Málaga. Campus de Excelencia Internacional Andalucía Tech

Audit market concentration and related regulatory measures

Audit markets are highly concentrated and such a situation might have negative consequences on competition, and thus, on price setting, on audit quality and on the functioning of markets. The European regulator recognized some causes for audit market concentration, identified a systemic risk and suggested joint audits and a mandatory rotation of audit firms to reduce concentration. Prominent concentration measures are concentration ratios, the Lorenz curve, the Gini-coefficient and the Herfindahl-Hirschman-Index. An empirical study on the concentration of German Prime Standard market for the period 2010 – 2013 revealed a high concentration which is quite stable over time and a narrow oligopoly with duopolistic tendencies. Nevertheless, competition could still work, e.g. due to the threat of market entrants. Moreover, given the fact that Big4 audit firms provide a higher audit quality, concentration may have positive effects. The mandatory audit firm rotation has a positive effect on auditor independence and a negative effect on auditor competence. This explains why related research output is inconclusive, i.e. the total effect on audit quality remains unclear. Moreover, a positive impact on competition is not ensured. Archival studies reveal that joint audits do not improve audit quality but increase audit costs. On the other hand, joint audits potentially reduce concentration. A combination between audit firm rotation and joint audits might be an optimal solution.Universidad de Málaga. Campus de Excelencia Internacional Andalucía Tech

Taking a New-Generation Manager Perspective to Develop Interface Designs

Digital natives are increasingly populating organizations’ management. As they have higher expectations with respect to IS accommodating their (non-functional) user preferences, interfaces of management support systems (MSS) are becoming more important. We develop design guidelines for new MSS interfaces from a new-generation manager perspective. We compile a set of requirements from a literature review and based on a multiple-case study we synthesize five guidelines: (1) use sparklines to present information at a glance and complement them with tooltips to access details, (2) support economic value-added concepts as a “must-have” and be aware that self-service predictive analyses make them more valuable, (3) draw managers’ attention to critical events in real-time by sending notifications to their smart devices, (4) to harvest the knowledge of different users, integrate collaboration capabilities into MSS interface designs, (5) align different information media with managers’ device selection and do not forget their mobile offline use situations

Can prohibitions of non‐audit services and an expanded auditor liability improve audit quality?

Law entrusts auditors to conduct statutory audits. They fulfil a societal role in providing an opinion on the truth and fairness of the financial statements of audited entities and reducing the risk of misstatement. The purpose of an audit is to enhance the credibility of financial reports prepared by management (Watts & Zimmerman, 1986). Thereby, audits contribute to financial stability, trust and market confidence in the economy by protecting investors from agency risk, which in turn reduces the cost of capital for companies (European Commission, 2010). To fulfil this function, auditors need to provide an adequate service quality. According to the generally accepted definition of DeAngelo (1981), audit quality is the market-assessed joint probability that an auditor will discover material misstatements (auditor competence) and report them (auditor independence). This definition stresses that providing a high factual audit quality is insufficient but that users must also perceive audit quality as appropriate. Accounting scandals like Carillion, a UK construction and facility services company, or Wirecard, a German fintech company, raise public suspicion of auditing failures and result in regulatory initiatives, which seek to improve audit quality

Environmental Scanning Systems: State Of The Art And First Instantiation

The 2008/2009 economic crisis provided a sustainable impulse for improving environmental scanning systems (ESS). Although a rich body of knowledge exists, concepts are not often used in practice. This article contributes a literature review addressing six findings for ESS design to become more applicable than the state of the art. They are structured by the elements of information systems (IS) design theories. Addressing the lack of a sound requirements analysis, our first finding proposes a 360- degree ESS for executives\u27 managing a company task and presents how to select just the most important scanning areas to keep focus. Three other findings cover the IS model perspective focusing on a better grasp of weak signals: define concrete indicators and use IT to identify relevant cause effective- chains, leverage IT to automate day-to-day routines and monitor the variety of indicators\u27 movements, and leverage expert experience and translate indicators\u27 impact into a balanced opportunity-and-threat portfolio. From the methods perspective on ESS, we fifth propose to incorporate scanning results into executives\u27 decision-making process more closely by generating scenarios from a set of assumptions and the development of indicators. Retrospective controls to update the ESS continuously and collaboration to share the scanning findings in day-to-day operation is our sixth finding. Finally, an instantiation at a large international company helped us validate our findings and to highlight how current developments in IS contribute to successful design, implementation, and day-to-day operation of new-generation ESS

The Perceptions and Determinants of Auditing and Reporting Quality in the Asia-Pacific Region

A country’s institutional environment significantly influences perceptions of auditing and reporting quality (ARQ) at the national level. Relying on a relatively unique measure of ARQ, collated by the World Economic Forum (WEF), we evaluate the influence of nine key isomorphic pressures on the ARQ in 26 Asia-Pacific countries. The results suggest that six of these (the efficacy of the corporate board, securities exchange regulations, reliance on professional management, protection of minority interests, adoption of international financial reporting and prevalence of foreign ownership) have a highly significant influence on the perception of ARQ whereas adoption of international standards on auditing is only moderately significant. However, contrary to expectations, our findings do not support the argument that the efficiency of legal frameworks and political systems significantly influence the perceptions of auditing and reporting quality in the Asia-Pacific region. These results should be of use to investors and the accounting profession in evaluating economic environments

A First Perspective on Requirements of New-Generation Managers for Collaboration Technology to be Integrated into Management Support Systems

Companies today are mostly populated by new-generation managers—consisting of digital natives and digital immi­grants. New-generation managers have expanded their role in operations and have to make decisions faster than in the past. Management support systems (MSS) serve as mana­gers’ central, hands-on, day-to-day source of information. Thus, the present situation is favorable for redesigning MSS in two respects: On the one hand, new-generation mana­gers’ faster decision making is driving a new demand for self-service MSS. Unlike earlier MSS, self-service MSS accommodate individual user preferences and increasingly enable managers to operate MSS themselves. On the other hand, as companies become larger and more dispersed, face-to-face meetings and even telephone calls become less prac­tical, but new collaboration technology is becoming in­creasingly important. Subject to these considerations, we examine collaboration technology—technology assisting people working towards the same goals—suitable to be incorporated into MSS for new-generation managers’ self service

MANAGERS AND COLLABORATION TECHNOLOGY: A BUSINESS PERSPECTIVE FOR IMPROVING MANAGEMENT SUPPORT SYSTEMS

Over the last years managers have expanded their role in operations and nowadays they make decisions faster than in the past. Collaboration technology promises to support managers in doing so. Hence, the present situation is favorable for a redesign of management support systems (MSS) incorporating collaboration technology. To examine such technology, we consider analyst - and consumer -type managers´ perspectives and cover collaboration technology for different devices. Based on findings from a literature review and arguments validated in structured manager interviews, we propose four initial design guidelines facilitating collaboration for managers: (1) Coordination: MSS should indicate the availability of other users, send read confirmations, and provide document sharing. (2) Communication: MSS should enable on-topic annotations and sending them to other users at the push of a button. (3) Cooperation: MSS should provide a comprehensive managerial self-service search function. (4) Devices: For shared documents and textual annotations tablets have become managers most wanted smart device type

A comparison of the information technology knowledge of United States and German auditors

The International Federation of Accountants has stated that competence in information technology is imperative for the professional accountant due to its pervasive use in the business world. Auditors would normally be expected to have higher knowledge than the average accountant since they must audit the work of many different clients with diverse information systems. We surveyed 2,500 United States and German auditing professionals to determine their self-reported knowledge levels (IT self-efficacy) of 36 information technologies, some of which include various emerging technologies. Responses totaled 587 for a 23.5% overall response rate. A factor analysis of the 36 individual technologies revealed five underlying general constructs. Response statistics indicated both countries lacked significant knowledge for three of these five constructs. Scores were then culturally standardized to appropriately compare United States and German responses. German auditors had significantly higher knowledge for the construct of networking and data transfer. U.S. auditors had significantly higher knowledge for three constructs: ecommerce technologies, general office automation, and audit automation technologies. No differences were found for the construct of accounting firm office automation technologies. This study provides a foundation and methodology by which future researchers can measure whether, as an “emerging technology” matures, greater convergence will occur over time across cultures in factor analysis, as in the case of the more mature construct, general office automations.La Federación Internacional de Contables ha declarado que la competencia en la tecnología de la información es obligatoria para los contables profesionales, debido a su uso penetrante en el mundo de los negocios. Los auditores habrían esperado normalmente tener un conocimiento más elevado que un contable medio, ya que ellos deben auditar el trabajo de un gran número de diferentes clientes con sistemas de información diferentes a su vez. Encuestamos a 2.500 profesionales de auditoría de EEUU y Alemania, con el objetivo de determinar sus niveles de conocimiento auto-declarados (autoeficacia informática) en cuanto a las 36 tecnologías de la información, algunas de ellas incluyendo varias tecnologías emergentes. Las respuestas obtenidas fueron 587 por un tasa general de respuesta de 23.5%. Un análisis factorial de esas 36 tecnologías individuales reveló cinco constructos generales subyacentes. Las estadísticas de respuesta indicaron que ambos países no tenían un conocimiento relevante de tres de estos cinco constructos. Las calificaciones estaban entonces estandarizadas culturalmente para comparar de forma apropiada las respuestas de ambos países. Los auditores alemanes tenían un conocimiento mucho más elevado de las constructos de redes y transferencia de datos. Los auditores de EEUU tenían un mayor conocimiento sobre los tres constructos: tecnologías del comercio electrónico, la automatización de oficinas, y las tecnologías de automatización de auditorías. No se encontraron diferencias en cuanto al constructo de tecnologías ofimáticas para empresas de contabilidad. Este estudio proporciona una base y metodología con la que los futuros investigadores puedan medir si, a medida que una “tecnología emergente” madura, se producirá una mayor convergencia con el tiempo entre las culturas en el análisis factorial, como en el caso de un constructo más maduro, las automatizaciones de oficina