Premature sign off of audit documents by external auditors of small and medium sized audit firms / Khairunnisa Mohd Jais

Premature sign off of audit documents is the behaviour of the external auditors towards their audit progress. The emphasis in the research is to provide information regarding premature sign off that occur in the small and medium sized audit firms. Therefore, the research contains chapters on introduction, background of the study, research issue and methodology, results of findings and conclusions as well as recommendation. The aim of this study are (i) to investigate whether the external auditors of small and medium sized audit firms understand that premature sign off of audit documents is not a proper audit practice; (ii) to investigate whether the external auditors of small and medium sized audit firms commonly practice premature sign off of audit documents of their corporate clients; (iii) to identify the causes contributing towards premature sign off of audit documents by the external auditors of small and medium sized audit firms during audit of their corporate clients; (iv) to examine whether the behavior of premature sign off of audit documents by the external auditors of small and medium sized audit firms affect the users of audit report; and (v) to identify the impacts of premature sign off of audit documents by the external auditors of small and medium sized audit firms on users of audit report. This study is based on primary data. The study shows that the external auditors from small and medium sized audit firms have express their responses through interview and questionnaire. The study provides vital information to the external auditors in issue of the premature sign off of audit documents behaviour. As the external auditors from small and medium sized audit firms, this study might help them to review and aware of the premature sign off of audit documents behaviou

Results of Covid -19 on small and medium practice auditing firms

As a result and the influence of covid-19, many enterprises faced problems like they had never  before. For many small businesses, it is important to have a trusted consultant in the form of small and medium-sized audit firms, who we can ask  for help and advice during the current crisis. Although covid-19 has posed many challenges, it has also become a catalyst for both business and small and medium-sized firms, to undergo their digital transformation. Firms with small and medium practices should switch to automated auditing remotely, because it enables a more cost-effective, efficient and quality audit. They need to develop the ability to offer cloud-based consulting services. Experts adapt to the changing environment created in the field of business, properly change the processes of preparation and submission of financial statements, the information disclosed in the financial statements and re-evaluate the possibilities of maintaining the activities of enterprises in the near future

Constructing the Audit Risk Assessment by the Audit Team Leader When Planning: Using Fuzzy Theory

[EN] The aim of this study is to construct the assessment of the expected audit risk by the audit team leader (ATL) during the planification phase of the audit. The ATL plays an important role within the audit, and even more so regarding small and medium-sized (SME) audit firms. The audit risk assessment is critical as relying more (less) on internal controls implemented by the client leads to performing less (more) substantive audit procedures. This is determined by the ATL based on their professional judgement and previous experience. The use of fuzzy theory has powerful potential into the audit arena, as the audit risk assessment (outcome) is critically related to the auditors' judgement and perception. We argue that ATL characteristics are core conditions in determining the audit risk assessment when planning. Using hand-collected and private data from Spanish SME audit firms, we find that a comprehensive set of conditions must be given for perceived high audit risk. The results indicate that female and inexperienced ATLs planning the audit of indebted firms with high proportions of capital assets, less profitability, and with a larger board sizes, as they are expected to have bad internal control. The same conditions are met when expecting errors, as well as shorter audit tenures. Finally, conditions such as the ATL's experience gains importance in expecting irregularities. This paper extends our understanding of the role of ATL characteristics on the audit risk assessment when planning and raising awareness on studying SME audit firm behavior.Porcuna-Enguix, L.; Bustos-Contell, E.; Serrano-Madrid, J.; Labatut-Serer, G. (2021). Constructing the Audit Risk Assessment by the Audit Team Leader When Planning: Using Fuzzy Theory. Mathematics. 9(23):1-22. https://doi.org/10.3390/math923306512292

Constructing the audit risk assessment by the audit team leader when planning: using fuzzy theory

The aim of this study is to construct the assessment of the expected audit risk by the audit team leader (ATL) during the planification phase of the audit. The ATL plays an important role within the audit, and even more so regarding small and medium-sized (SME) audit firms. The audit risk assessment is critical as relying more (less) on internal controls implemented by the client leads to performing less (more) substantive audit procedures. This is determined by the ATL based on their professional judgement and previous experience. The use of fuzzy theory has powerful potential into the audit arena, as the audit risk assessment (outcome) is critically related to the auditors’ judgement and perception. We argue that ATL characteristics are core conditions in determining the audit risk assessment when planning. Using hand-collected and private data from Spanish SME audit firms, we find that a comprehensive set of conditions must be given for perceived high audit risk. The results indicate that female and inexperienced ATLs planning the audit of indebted firms with high proportions of capital assets, less profitability, and with a larger board sizes, as they are expected to have bad internal control. The same conditions are met when expecting errors, as well as shorter audit tenures. Finally, conditions such as the ATL’s experience gains importance in expecting irregularities. This paper extends our understanding of the role of ATL characteristics on the audit risk assessment when planning and raising awareness on studying SME audit firm behavior

Blockchain in accounting and auditing: unveiling challenges and unleashing opportunities for digital transformation in Egypt

Purpose – This paper aims to examine the role of Blockchain in the accounting and auditing literature and profession. Specifically, the paper investigates auditors' perceptions about the role of blockchain in accounting and auditing and the perceived potential benefits and challenges of blockchain-based accounting systems in Egypt. Moreover, what are the capabilities required for successfully implementing blockchain-based accounting systems? Design/methodology/approach – A mixed-method approach was adopted to achieve the research objectives. The qualitative study included 11 in-depth interviews with external auditors, and the results of the interviews and the literature review helped develop a survey collected from 58 auditors. Findings – The findings revealed low-to-moderate awareness of Blockchain-based accounting systems. Also, there were significant differences between auditors from large audit firms and small-and-medium audit firms regarding the benefits and challenges associated with Blockchain-based accounting systems. Practical implications – The results provide valuable insights for practitioners, researchers and policymakers. Originality/value – Understanding blockchain-based accounting systems and the benefits and challenges associated with their application is crucial for developing effective strategies and frameworks to overcome barriers and realize the transformative potential of blockchain in the accounting and audit market

The Application of Business Risk Audit Methodology Within Non-Big-4 Firms

This research is motivated by interest in recent changes in the audit approaches of audit firms. The business risk audit approach has been adopted based on assertions about its benefits by administrators of large audit firms and academics linked with these firms and, more recently, has been legitimised by the issuance of international auditing standards that give recognition to this approach. Studies investigating the business risk audit approach have relied on the content of audit manuals of large audit firms and pointed to claimed benefits, such as providing consistency of worldwide audit practice, broadening auditors’ awareness of risks, increasing audit effectiveness and efficiency, and creating more value for audit clients. In investigating this recent change in audit approaches, this thesis is concerned with the application of the business risk audit approach within the non-Big-4 audit firms, with a focus on three countries: the United States, the United Kingdom and Canada. The research focuses on the motivation for adopting this approach for non-Big-4 audit firms in the three countries, and the advantages, disadvantages and aftermath of applying this method. These issues are addressed through research methods comprising semi-structured interviews and a questionnaire survey. These methods are deemed appropriate to provide consideration of the contextual factors affecting the non-Big-4 audit firms and audit practice in the three countries examined. The findings show that non-Big-4 audit firms in the three countries adopted the business risk audit; their motivation was primarily to follow the standards in each country and to follow the general trend in the industry. The advantages were consistent with previous research; there was direct benefit to audit effectiveness and risk management. One major disadvantage of applying this method was the cost burden to both the audit firm and their clients. Some of the interviewees claimed that this method is better suited to large firms and large audits. Overall evidence from this research shows that this method helped auditors better understand their clients and assess the risk associated with the audit process. Auditors from non-Big-4 firms expressed their interest that the business risk audit should remain in use with some modification to fit small and medium audits. This study also contributes to the literature on the internationalisation of audit practice and the audit practice of small- and medium-sized audit firms, which is lacking in existing research related to this group

Analysis of the risk premium for auditor women: The Spanish case

[SPA] Este estudio investiga la aplicación, por parte de las socias auditoras, de una prima de riesgo en las auditoras españolas de pequeñas y medianas empresas como herramienta de cobertura. Mediante técnicas econométricas se ha realizado un análisis univariante y multivariante a 2.536 observaciones de clientes auditados por veintiuna firmas de auditoría de pequeña y media dimensión durante el periodo 2002 y 2014. Los resultados sugieren que las empresas auditadas pagan unas tarifas de auditoría más altas cuando el informe de auditoría es firmado por una mujer. La evidencia combinada en este estudio sugiere la existencia de una prima de riesgo femenina. Esta prima en los honorarios puede existir por las diferencias de género existentes a la hora de percibir y tolerar el riesgo. A diferencia de estudios anteriores se controla el esfuerzo del auditor a través de las horas dedicadas en cada uno de los trabajos, centrando el análisis en el segmento de pequeñas y medianas firmas de auditoría.[ENG] This study investigates the application by auditor women of a risk premium in Spanish audit firms of SME companies as a hedging tool. Using econometric models, it has been developed univariate and multivariate analysis over 2,536 observations of clients audited by twenty one small and medium-sized audit firms for the period of 2002 to 2012. In short, the results suggest that the audited companies pay higher tariffs audit when the audit report is signed by a woman. The combined evidence in this study suggests the existence of a female risk premium. This premium in fees may exist due to gender differences existing when perceiving and tolerating risk. Unlike previous studies, the audit effort has been controlled by the hours dedicated to each of the works and focused the analysis on the segment of SME audit firms

Adoption of generalised audit software (GAS) by external auditors in the UK

This thesis was submitted for the degree of Doctor of Philosophy and awarded by Brunel University.This research is motivated by the interest in understanding the usage of the Generalised Audit Software (GAS) by external auditors within public accounting firms. GAS is a tool used by auditors to automate various audit tasks. It helps auditors to analyse accounting data electronically where it is quite impossible to do so manually. GAS is claimed to be the most influential Computer Assisted Audit Tools and Technique (CAATTs) that can facilitate the audit objective. However, research has found that there is little evidence that auditors have extensively adopted GAS. Even greater benefits have been promoted since the existence of GAS, but auditors do not really seem to be interested in this tool. Most previous studies have focused on either internal auditors, large accounting firms, other countries or merely adopters of GAS. However, there is little evidence that the study of GAS has been conducted on external auditors, especially in small and medium sized accounting firms in the United Kingdom (UK). This study helps to fill this gap by exploring the use of GAS among them, and covers both adopters and non-adopters of GAS. Through an online survey using both close and open-ended questions, this issue has been investigated among registered statutory auditors. The primary aim of this study is to explore the current usage of GAS and to understand the factors that influence the use of GAS as well as the perceptions and expectations of using GAS. The views are gathered from both auditors who are already implementing GAS and those who are not using GAS. A framework was developed to identify a range of relevant factors which are important when considering the application of GAS. Responses from 205 statutory auditors across the UK were then mapped against the framework. Of the 14 variables used to test the factors that influence the use of GAS, only six of them are found to be significant from logistic regression analysis. These are firm size, experience of auditors in computerised auditing, organisational influence, client factor, audit engagement allocation and perceived usefulness. The findings show that the utilisations of GAS is unusually low among audit firms in the UK. Almost 73% of external auditors make no use of GAS, due to the limited perceived benefit of using GAS for auditing small clients. While some respondents recognised the advantages of GAS, they were put off by what they believed to be high implementation costs; the significant learning curve and adoption process; and lack of ease of use. Some auditors expressed their awareness of GAS, but most of them showed a preference for using traditional auditing methods instead. A few problems have also been identified in causing the limitation of GAS usage. This study contributes to the literature on suggestions to improve the use of GAS that can be used by small and medium sized public accounting firm, which is lacking in existing research related to this group. In sum, this study has deepened current understanding of the GAS usage among small and medium sized audit firms in the UK, and has provided useful insights for audit professionals, software developers, vendors, standards setters, academicians and researchers. This study has also opened up the possibilities for further study on GAS or related areas either in the UK or other places in the world.This study is funded by the Universiti Utara Malaysia and the Ministry of Higher Education of Malaysia

Firm Size and Audit Regulation and Fraud Detection: Empirical Evidence from Iran

An auditor has the responsibility for the prevention, detection and reporting of fraud, other illegal acts and errors is one of the most controversial issues in auditing, and has been one of the most frequently debated areas amongst auditors, politicians, media, regulators and the public (Gay et al 1997). Prior research has documented a positive association between audit quality and auditor size. While some studies have used audit fee as a surrogate for audit quality, other studies have employed more direct measures, such as the outcomes of quality control reviews. Those latter studies, however, used samples that suffer from severe geographic or client type restrictions. Moreover, most studies of the quality-size relationship have focused on relatively large CPA firms. In recent years there has been considerable debate about the nature of audit practice (Salehi, 2007). Auditors also have responsibility regarding accuracy and precise of statements prepared by managers