Asleep at the Wheel (Again)? Bank Audits During the Financial Crisis

Doogar, Rajib; Rowe, Stephen P.; Sivadasan, Padmakumar

doi:10.2139/ssrn.1982234

Cited by 11 publications

(17 citation statements)

References 31 publications

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“…In this study, the definition for commercial loans includes trades (both domestic and international), service and industrial loans. Many studies found positive association between audit fees and bank credit risks (Fields et al 2004;Ettredge et al 2011;Lobo et al;Doogar et al 2012;Cullen et al 2012;Schneider and Tran 2013). Likewise, in this study a positive relationship between audit fee and the credit risk proxies (Nonperforming loan rates, net loan charge offs and commercial loans) is expected.…”

Section: H4 Liquidity Risk Has Positive Relationship With Audit Feessupporting

confidence: 71%

“…Theoretically, audit fees should be increasing in the client's level of capital risk. However, as (Fields et al 2004;Doogar et al 2012;Schneider and Tran 2013) suggested the relationship between audit fees and the risk-adjusted capital ratio could conceivably be positive or negative. Practically speaking, riskier banks are often required by regulators to maintain larger regulatory capital cushions.…”

Section: H4 Liquidity Risk Has Positive Relationship With Audit Feesmentioning

confidence: 99%

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Audit Fee Determinants and Audit Quality in Ethiopian Commercial Banks

Afesha¹

2016

Ethiopian J. Bus Econ

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The audit profession has been highly scrutinized among researchers and regulators following the fall of giant companies in the west. One of the issues that gained momentum has been to analyze the audit fee structure and the various auditor-client relationships. This study investigates the determinants of audit fees and the ex-ante audit quality based on variables unique to the banking firms and considered important by regulators in Ethiopian commercial banks. The study also examined whether auditors value factors considered important by the regulatory bank, which result in better alignment of interests of auditors and regulators. The study used panel data for eight commercial banks from the year 2004-2012. The panel fixed effect regression result revealed bank size, liquidity, efficiency, loan growth, capital adequacy and auditor size are significant determinants of audit fees in Ethiopian commercial banks. However, among the factors considered important by the regulatory bank, credit risk is found to be insignificant. With regard to audit quality, the study did not find significant relationship between the extent of earning management and abnormal audit fees, indicating that auditors do not seem to compromise audit quality to secure abnormally higher audit fees. The researcher recommends auditors to further align audit fee valuation with the interests of regulatory bank, particularly in respect of credit risk.

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Section: H4 Liquidity Risk Has Positive Relationship With Audit Feessupporting

confidence: 71%

Section: H4 Liquidity Risk Has Positive Relationship With Audit Feesmentioning

confidence: 99%

Audit Fee Determinants and Audit Quality in Ethiopian Commercial Banks

Afesha¹

2016

Ethiopian J. Bus Econ

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“…However, this was not the case for regulated firms that continued to see steady increases in audit fees through the later period. We attribute this to heightened scrutiny of bank holding companies by auditors in the wake of the sub‐prime mortgage crisis (Doogar et al ., ). We also find that non‐accelerated companies exhibited stronger positive linear trends than did accelerated companies for both levels of regulation during the later four‐year period.…”

Section: Discussionmentioning

confidence: 97%

“…2 H6: Regulated companies exhibited stronger positive linear trends in the period 2006-2009 for both accelerated and non-accelerated companies. Doogar et al (2012) found that auditors were alert to changing audit risks emanating from the developing sub-prime financial crisis during the period 2005-2007. We expect that regulated companies will exhibit stronger positive linear trends in the later period than non-regulated companies because auditors have been shown not only to respond to regulatory changes, but also to economic shocks.…”

Section: Hypothesesmentioning

confidence: 99%

“…Rather than compare audit fees for two discrete time periods surrounding a major regulatory change such as SOX, this study examines linear trends in audit fees over an extended period of time (2002)(2003)(2004)(2005)(2006)(2007)(2008)(2009). This time frame not only spans the implementation of SOX, but also changes in audit standards pertaining to the audit of internal controls as well as auditor responses to economic shocks such as the sub-prime mortgage crisis (Doogar et al, 2010, Doogar, Rowe & Sivadasan, 2012.…”

Section: Introductionmentioning

confidence: 99%

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Modeling Linear Trends in Audit Fees

2013

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This study uses repeated‐measures ANOVA design to examine linear trends in audit fees of US companies. Audit fee trends are analyzed across the effects of regulatory oversight, accelerated or non‐accelerated SOX filing status, and time (2002–2009). Accelerated filers showed stronger positive linear trends than did non‐accelerated filers for the entire eight‐year period. However, non‐accelerated companies showed stronger positive linear trends than did accelerated companies during the latter four‐year period (2006–2009). We attribute this result to additional audit work required in the earlier four‐year period (2002–2005) by accelerated companies to meet the requirements of SOX 404 during the earlier period. We attribute the slowing trend in the latter four‐year period to the increasing maturity of the internal control systems for accelerated companies as well as changes in auditing standards that allowed auditors to more efficiently allocate auditing resources based on audit risk for these accelerated firms.

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The relation between audit fee cuts during the global financial crisis and earnings quality and audit quality

Chen

Krishnan

2018

Advances in Accounting

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Asleep at the Wheel (Again)? Bank Audits During the Financial Crisis

Cited by 11 publications

References 31 publications

Audit Fee Determinants and Audit Quality in Ethiopian Commercial Banks

Audit Fee Determinants and Audit Quality in Ethiopian Commercial Banks

Modeling Linear Trends in Audit Fees

The relation between audit fee cuts during the global financial crisis and earnings quality and audit quality

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