Audit firm informatization and audit quality during COVID-19

An analysis of attributes that impact information technology audit quality: A study of IT and financial audit practitioners

Does International Accounting Network Membership Affect Audit Fees and Audit Quality? Evidence From China

Auditor Size, Auditor Quality, and Auditor Fee Premiums: Further Evidence from the Public Accounting Profession

Purpose: This study aims to examine how the restructuring of human capital management in audit firms under advanced digital technologies affects audit quality and auditors’ professional judgment. It addresses the accelerating changes in the auditing environment and the growing reliance on digital and analytical solutions within the profession. Methodology: The research adopts an analytical–interpretive approach supported by an integrated theoretical framework that combines human capital theory, dynamic capabilities theory, and the digital transformation perspective in the auditing profession. Design and Approach: A conceptual model is developed to illustrate the relationships between digitally enabled human capital management practices—such as skill development, continuous learning, human analytics, and professional decision support—and both audit quality and professional judgment. The model is empirically tested using a quantitative approach based on field data collected from audit firms, employing appropriate statistical models to test the research hypotheses. Findings: The findings reveal a positive and statistically significant impact of digitally driven human capital management restructuring on both audit quality and the level of professional judgment. The strength of this impact varies according to the degree of digital maturity across audit firms. Originality and Value: This study makes an original contribution by directly linking the digital transformation of human capital management to audit outcomes, a relationship that remains underexplored in international auditing literature, particularly within the context of emerging economies. Theoretical, Practical, and Social Implications: Theoretically, the study enhances understanding of the role of digital human capital in advancing the auditing profession. Practically, it provides guidance for audit firms and regulatory bodies in developing policies for capability building and professional development. Socially, it contributes to strengthening confidence in audit outcomes and protecting stakeholders’ interests.

Does auditing multiple clients affiliated with the same business group reduce audit quality? Evidence from an emerging market

Mandatory audit firm rotation sets a limit on the number of years a public accounting firm may audit a company’s financial statements. After a predetermined period, an accounting firm is no longer eligible to serve as the company’s auditor for a set time interval and a rotation of firms is required. The objectives of this study are: (1) to explore current audit appointment practices by audit firms in Bahrain; (2) to look into the opinions of audit firms in Bahrain on potential effects provided by implementing mandatory audit firm rotation (audit quality); and (3) to investigate audit firms’ views in implementing mandatory audit firm rotation in Bahrain. To achieve these objectives, a questionnaire was developed and distributed to respondents that consist of all auditors working in audit firms in Bahrain. The findings indicated that there is a significant relationship between mandatory audit firm rotation and quality of audit. The study also indicated that longer partner tenure makes the auditor’s performance lack the quality in the auditing process. The average mean for all questions of the hypothesis together is 2.73 with average standard deviation of 0.94 which is less than half of the mean. This means that there is no dispersion among respondents about the questions of the hypothesis. Also, the analysis shows that the t-value is 29.922, which is greater than the table critical value of t (1.66), and the p-value obtained is 0.000 which is less than the value of significance at p < 0.05. These results confirm statistically that there is a significant relationship, so the null hypothesis is rejected and the alternative hypothesis is accepted. this study focused on the impact of MAR on audit quality in Bahrain, further research may be directed towards examining the impact of MAR upon auditor independence and the cost of audit rotation. However, variables other than those included in the questionnaire of the study may affect the MAR.

This research aims to determine the effect of remote audits and the number of auditor assignments on audit quality, moderated by audit information technology and professional development (empirical study on BPKP representatives in West Sumatra Province). The population in this study was 95 people with a sample of 95 respondents. The type of data in this research is quantitative data. Data was obtained by conducting a questionnaire, then processed and tested using SmartPLS. The data analysis method used is descriptive analysis, quality testing (data normality), confirmatory test (validity test, reliability test, model suitability test results (goodness of fit test) and hypothesis testing. From the research conducted it is known that based on the results of hypothesis testing it shows that Remote audit and audit assignments have a positive and significant effect on audit quality, Professional Development has no mediation between Audit Assignments and audit quality, Professional Development has mediation between remote audits and audit quality, Information Technology has no mediation between Audit Assignments and audit quality and Information Technology has mediation between remote audit and audit quality.

Audits play a critical role in satisfying the public interest in strengthening accountability and supporting confidence in financial reporting. Conventionally, audit quality is defined as a probability that financial statements are free from material misstatements. The existence of a positive relationship between audit firm size and audit quality has long been accepted in previous literature. This has resulted in numerous studies collecting evidence of differential audit quality relative to the size of audit firms, both large and small. Consequently, the conclusion has been asserted that larger audit firms produce a higher and more homogenous audit quality. The collapse of Arthur Andersen, however, has undermined the premise that large audit firms provide higher audit quality than smaller firms. This research investigates audit quality based on the extent of compliance levels with disclosure requirements pertaining to goodwill impairment of large listed Hong Kong firms in the third year transition to International Financial Reporting Standards (IFRS). The result found that audit firm identity appears to be a significant proportion of cross-sectional variation, in which compliance levels and disclosure quality varied considerably among auditors.

The significance to prepare reliable information discloses the need to fall back on an external auditor and a quality auditing process that can caution against the management of earnings. In line with the business practice, auditing does not provide sufficient coverage for some earnings management (EM) activities that result in financial statement fraud. Over the years, capital markets around the globe have witnessed numerous corporate financial scandals largely because of financial and accounting figures' manipulation. This has led to casting doubt on the quality of published financial reports and questioning the ability of the audit process. Against this background, this study examined the relationship between audit quality and real earnings management of listed manufacturing companies in Nigeria. Specifically, this study evaluated the effect of audit firm size, audit firm industry specialization, audit firm tenure, and audit firm independence on real earnings management. The study sampled 38 out of 55 listed manufacturing companies that cut-across different sectors from 2013 to 2020. From the multivariate analysis, the findings revealed a significant relationship between audit quality (audit firm size and audit firm independence) with a p-value of 0.014 and 0.003 respectively. It was concluded that firms audited by Big-4 firms with independence attract greater publicity and tighter scrutiny; hence, companies tend to desist from managing their earnings. The study, therefore, recommended that the management of manufacturing firms in Nigeria should persist in engaging experience audit firms with international affiliations, and they should work strictly with the CAMA, 2020 as amended by rotating audit firms after every three years as this will promote the reliability of financial statement prepared by management, and finally reduce manipulation of earnings.

PurposeThis study aims to test the effect of individual audit quality on career advancement the audit labour market.Design/methodology/approachThis paper uses data on auditors from two collapsed audit firms in China, namely, Ruihua and Zhengzhong Zhujiang, and tests the effect of individual audit quality on career advancement in the audit labour market.FindingsThe baseline results show that high-quality audits promote auditors’ career advancement. Our results hold after a battery of robustness tests. Further analyses support our hypothesis, indicating that client retention and audit fees are positively related to auditors’ prior audit quality. The effect of audit quality on career advancement does not hold for auditors from sanctioned branch offices or for auditors with prior culpable clients, as shared reputation damage can weaken the effect of high audit quality. Furthermore, this paper investigates whether the reputation enhancement effect of high audit quality can be strengthened by auditor experience, the title of “senior auditor” and IPO auditing experience. We also show that clients and audit firms place more weight on the quality of audits conducted by auditors in competitive markets and auditors with engagements matched with industries.Originality/valueTogether, these findings indicate the vital role of individual audit quality in auditors’ career development in the audit labour market, consistent with the reputation rationale for audit quality.

Audit quality has been addressed and is being discussed globally, throughout the years. The Enron Corporation and WorldCom cases have affected the reputation of the audit profession. The credibility of auditors also has become more questionable as the auditors' function in identifying mistakes and fraud is being debated by the public. However, the issue of audit quality has only focused on big firms only. There is shortage of studies that focussed on audit quality in small and medium audit firms. In line with this issue, this study aimed to investigate the relationship between top management support, auditor’s experience and auditor’s accountability on audit quality amongst small-medium audit firms in Malaysia. By employing the Attribution Theory, the study utilised purposive sampling. The data used in this study was primary data obtained through questionnaires from external auditors in small and medium sized audit firms around Klang Valley. A total of 100 questionnaires were distributed and the number of usable questionnaires was 81. Findings indicate that auditor’s experience and auditor’s accountability have a significant effect on audit quality. This research thus contributes to standard setters, regulators, policymakers and other audit firms by providing evidence with regard to the determinants of audit quality judgment in Malaysian small and medium audit firms. Keywords: audit quality, small and medium audit firms, audit judgments, accountability, audit experience

This study investigates the role of audit styles at different levels on financial statement comparability in South Africa, a setting where firms report under International Financial Reporting Standards (IFRS), the institutional environment is strong and the audit environment is dominated by the Big 4 audit firms. An output‐based comparability measure is used to consider the association between audit styles at a firm level, audit office level and individual auditor level and financial statement comparability. Evidence of audit style effects on financial statement comparability is found at the three different levels—the audit firm, the audit office and the individual auditor. The study further finds some evidence that audit office style dominates audit firm style and individual auditor style dominates audit office style. This finding suggests that even in countries where internal (within the audit firm) and external (country regulations) control mechanisms are strong, the audit style of the individual auditor is present and associated with increased financial statement comparability. Using a setting where firms report under IFRS further suggests that in a principles‐based environment, despite strong internal controls and in‐house working rules by audit firms, individual auditors continue to have some level of autonomy in the interpretation and application of the accounting principles and in‐house working rules.

Audit is getting more and more importance in assuring the reliability of financial information including financial statements for all parties. Commonly, quality of an audit is viewed as probability that financial reports are free from material irregularities. In the previous literature, there is a positive relationship between size of audit firm and audit quality that has long been understood. This has resulted in many publications to gather evidence of differential audit quality relating to audit firm size. In consequence, the conclusion has been focused that bigger audit firms produce higher audit quality than smaller ones. However, the collapse of many big international audit firms, typically Arthur Andersen has reduced the statement that large audit firms have higher audit quality than small ones. Therefore, this study looks into audit quality basing on the extent of compliance with disclosure requirements pertaining to goodwill impairment of large listed firms in Hong Kong context in the second year transition to IFRS. We found that audit firm identity appears to be a substantial variation, in which compliance levels changed significantly among auditors in the context of Hong Kong.

The purpose of this study is to analyze the influence of Independence, Competence and Islamic work Ethics partially and simultaneously to the Audit Quality . The next purpose is to analyze the influence of Audit Quality, Audit Services Portfolio and Audit Firm Reputation partially and simultaneously against Auditee Satisfaction on Islamic Banks in Indonesia. This study is expected to provide benefit to the development of knowledge, particularly in the field of accounting and auditing, Government, Islamic Bank, Indonesian Institute of Accountants (IAI ), Indonesian Institute of Certified Public Accountants (IAP ), the auditors and the Audit Firm (KAP). The results are expected to provide information for various parties accurately and meaningfully as a solution to determine the variables that affect the Auditee Satisfaction and Audit Quality at Islamic Bank in Indonesia. Limitations of the study include: (1) The extent of the problem which studied in determining the factors that can affect the Audit Quality and Auditee Satisfaction in Islamic Bank in Indonesia , (2) Limitation of the study lies in the data acquisition, (3) This study only emphasized the perception of the factors that may affect Audit Quality and Auditee Satisfaction.This study used primary data through questionnaires with the population of internal auditors of Islamic Banks in Indonesia. This study used a quantitative approach and in terms of the type of investigation, this study is causal. Based on the time horizon the study is cross-sectional (one - shot ) because the data was collected only once . Before using the data to test hypothesis, the validity and reliability test should be done first.Data analysis uses Structural Equation Model (SEM) supported by AMOS software. Based on the test results, it shows that Independence, Competence and Islamic work Ethics partially or simultaneously affect the Audit Quality significantly. The next stage of testing Audit Quality partially has no significant effect on the Auditee Satisfaction. While Audit Service Portfolio and Audit Firm Reputation either partially or simultaneously have significant effect on the Auditee Satisfaction. Simultaneously the three variables Audit Quality, and Audit Services Portfolio and Reputation of Audit Firm have significant effect on the Auditee Satisfaction.

This paper examines whether ethical violations committed by an audit partner and the public release of the resulting PCAOB disciplinary order affects the associated audit firms’ switching risk, audit fees and audit quality relative to other comparable audit firms. I examine the effects of ethical violations on audit firms affiliated with a sanctioned auditor (also referred to as affiliated audit firm or sanctioned auditor) at the city (office), MSA, state, regional, and national (firm) level in order to determine if there is a spill-over effect. My findings suggest that at no level in my analysis did the public disclosure of the PCAOB sanction have a significant effect on sanctioned auditors losing or gaining clients. Furthermore, results indicate that there is no significant association between having a certified public accountant (CPA) serve on the audit committee and an affiliated audit firm’s ability to retain clients or attract new clients. In regards to audit fees, findings suggest that audit fees were affected by the PCAOB sanction in that sanctioned auditors experienced audit fee growth after the sanction was made public. This result is consistent across all samples for all tests with the exception of the state and national (firm) samples. Again, there appears to be no significant association between having a CPA serve on the audit committee and audit fee growth rates. Finally, in the audit quality tests of discretionary accruals, there is no evidence to suggest that the sanctioned auditor’s audit quality was different from that of other non-sanctioned audit firms during the three-year window either before or after the sanction. However, the results of the audit quality test using restatements indicate that after the sanction was made public, restatements increased at the regional and national (firm) level for sanctioned firms vs. non-sanctioned firms. At the city (office), MSA and state level there appears to be no effect on restatements as a result of the public disclosure of the PCAOB sanction. Consequently, it is difficult to infer that higher restatements at the regional and national (firm) levels are associated with the PCAOB sanction.