Audit Tendering in the UK: A Review of Stakeholders’ Views

This study reports the results of a content analysis of the comment letters sent to the UK Financial Reporting Council (FRC), in response to its consultation document on the 2012 revisions of the UK Corporate Governance Code, concerning the proposal for mandatory audit tendering. The results indicate a general support for the FRC’s proposals with a number of key concerns related to audit quality, auditor independence and audit cost. There is also clear conflict of interests among some stakeholder groups such as audit firms and companies on one side and institutional investors on the other side. There is evidence of conflict of interest between Big 4 and non-Big 4 audit firms. Implications for future consultations and legislations are also discussed

An analysis of the possible impact of mandatory audit firm rotation on the transformation and market concentration of the South African audit industry

Abstract: Orientation: Consistent with global concerns regarding the quality of audits and regulatory changes in Europe, South African audit regulations will require audit firms to rotate clients periodically, in an attempt to safeguard auditor independence and audit quality. In 2017 the South African audit regulator issued a ruling requiring mandatory audit firm rotation (MAFR) every 10 years, effective April 2023, primarily intended to improve audit quality. In addition to audit quality improvement, the regulator also believes that MAFR will stimulate transformation in the audit profession by building capacity of black-owned audit firms and allowing opportunities for small- and medium-tier audit firms to compete for the audits of listed companies..

The Auditor-to-Client Revolving Door: A Structured Literature Review

This study analyses the under-explored research area of audit revolving door (ARD). The analytical framework categorised the reviewed articles by author & article information, citation, research theme, motivational event, jurisdiction, nature of research, regional focus, organisational focus, research method, data analysis, literature focus and findings. Our analysis highlights that no particular aspect can be held true or generalised about the ARD phenomenon. The ARD literature is USA dominated, organisationally based and focused on post-departure issues, employing quantitative approach with obvious lack of perceptions of stakeholders. We call for more qualitative research that critiques pre- and post-ARD, addressing the ‘how’ and ‘why’ questions, soliciting perceptions of various stakeholders. To frame directions for future research, we refer to three areas: threats, benefits and safeguards of ARD. Our findings are relevant to research students reviewing the auditing literature to find their own research and to academic auditing researchers looking for appropriate research outlets

Audit completion phase: determinants and implications for audit quality

Thesis (D.B.A.)--Boston University PLEASE NOTE: Boston University Libraries did not receive an Authorization To Manage form for this thesis or dissertation. It is therefore not openly accessible, though it may be available by request. If you are the author or principal advisor of this work and would like to request open access for it, please contact us at [email protected]. Thank you.This study provides evidence on the audit completion phase, the period between the end of the auditor's fieldwork for a client and the release of the audit report. The audit completion phase has generally been unexplored by the existing literature. Using a unique setting that arises from the enforcement of a recent auditing standard on audit documentation, I infer the time that auditors spend during the completion phase and investigate the determinants and the implications for audit quality of this last audit phase. First, I explore the determinants of audit completion phase. I find that operational complexity, financial or mining industry membership, litigation risk, financial risk, auditor size, and client importance influence audit completion time. Of particular note is that completion time spent on financial firms increases in recent years, causing an increase in total audit lag. Similarly, control risk and having a December fiscal year-end increase completion time as well as lengthen overall audit lag. There is also some evidence, mostly for non-accelerated filers, that completion time increases with the magnitude of impairment expense. For accelerated filers, audit completion times are shorter if the audit office has fewer clients. Second, I explore whether the audit completion phase adds value to the audit. Results generally indicate that longer completion time increases for problematic clients, as reflected in future restatements. I also find in an additional test, however, that longer completion time is associated with lower likelihood of restatements in some accelerated filers. This suggests that a longer time spent during the last phase of audit may actually be beneficial for large firms with tight reporting deadlines

What matters in disclosures of key audit matters: Evidence from Europe

New regulation in the European Union has introduced the mandatory disclosure of key audit matters (KAMs) to audit reports. The EU has identified KAMs as significant risks, significant transactions or events, or significant judgments by auditors. This paper aims to determine the factors that influence the number of KAMs that auditors disclose in the main European countries under the new regulation. We predict that the litigation risk, reputation loss, auditor–client relationship, precision of accounting standards, and the effect of regulators and supervisors’ activities affect the number of KAMs that auditors disclose. The sample consists of firms on the FTSE 100, CAC 40, or AEX 25 that have disclosed KAMs at the 2016 fiscal year-end. In line with our hypotheses, the findings show that a higher number of business segments (complexity) and more precise accounting standards lead to the disclosure of a higher number of KAMs. Contrary to our expectations, the results indicate that a positive association exists between the audit fee and the number of KAMs disclosed. As audit fees can be related to higher client risk, this finding could indicate that litigation risk dominates any auditor–client dependence. Further, although auditors often view their audits of banks as complex, the findings show a negative association between banks and the number of disclosed KAMs. This evidence may be related to the fact that financial institutions are in a highly regulated and supervised industry that reduces the need to disclose the KAMs..info:eu-repo/semantics/publishedVersio

Audit partner independence and business affiliation: evidence from Taiwan

[[abstract]]Affiliated business groups play important roles in markets, especially emerging markets. Both International Auditing and Assurance Standards Board (IAASB) and Public Company Accounting Oversight Board (PCAOB) have expressed strong concerns about the audit quality of group financial statements. Audit quality is closely related with auditor independence (Tepalagul & Lin, 2015). In this study, we examine whether audit partners are more likely to compromise their independence for clients affiliated with consolidated business groups. We incorporate the impact of business group in the construction of client importance proxy in order to explore the potential impact of clientele's business group affiliation. Our findings support that there is no evidence on Big N audit partners compromising their independence for economically important clients no matter whether the clients are affiliated or not. However, we find that the previously documented relation between client importance and audit partner independence in non-Big N audit partners rests with business-group-affiliated and unlisted clients. Therefore, we conclude that non-Big N audit partners tend to compromise their independence for economically important clients who are within affiliated business groups and not listed in stock exchanges.[[notice]]補正完