External audit quality and firms’ credit score

Zalata, Alaa Mansour; Elzahar, Hany; McLaughlin, Craig

doi:10.1080/23311975.2020.1724063

Cited by 8 publications

(11 citation statements)

References 56 publications

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“…Third, it is still a matter of debate until now that large audit firms are more likely to detect material errors and misstatements. Large audit firms hire auditors with different attributes (Bagley et al , 2012), such as arrange certification or specialized training programs to auditor staff (Svanström, 2016; Zalata et al , 2020). Finally, the market considers that large audit firms have higher audit quality than smaller audit firms (Tien et al , 2019).…”

Section: Resultsmentioning

confidence: 99%

Public accounting profession and fraud detection responsibility

Rustiarini

Yuesti

Gama

2020

JFC

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Purpose The study aims to examine the influence of auditor personal factors, such as goal orientation, self-efficacy and professional commitment to auditor’s responsibility to detect the fraudulent, particularly in small accounting firms. Design/methodology/approach The authors surveyed 86 auditors working in small accounting firms in Bali Province, Indonesia. Findings The results prove the role of self-efficacy as a mediating variable in the relationship of goal orientation and auditor responsibility. This result at once confirms that self-efficacy can improve individual performance even in complex tasks. This study also proves the role of professional commitment as a mediator variable. Research limitations/implications Given that the respondents came from small accounting firms, these findings are not intended to be generalized with auditors in large accounting firms. Practical implications These findings highlight essential efforts to reduce audit expectation gaps between auditors and the public. The small accounting firms’ leaders must to alignment workplace organizational goals and organization professional goals. A dualism of purpose causes the auditor to fail to fulfill the responsibility of fraud detection. Social implications There is a severe audit expectation gap related to the auditor’s role in detecting fraud. This finding expected to answer public questions related to auditors’ ability and responsibility in small accounting firms in detecting fraud. Originality/value There is limited research on auditor responsibility, particularly in small audit firms in developing countries. Also, there is still debate scientific about the influence of goal orientation, self-efficacy and professional commitment to auditor performance.

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Section: Resultsmentioning

confidence: 99%

Public accounting profession and fraud detection responsibility

Rustiarini

Yuesti

Gama

2020

JFC

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“…Many studies assert that the industry expertise of external auditors adds value because it enhances their ability to detect and report irregularities in financial reports and controls (Balsam et al, 2003;Solomon et al, 1999;Zalata et al, 2020). Further, this expertise strengthens the external auditor's aim to protecting its reputation and avoid the financial and litigation costs that arise from audit failure.…”

Section: Audit Firm Industry Expertisementioning

confidence: 99%

“…Further, companies hire high-quality auditors such as big4 audit firms, who usually charges high fees, to signal their credibility and good performance (Al-Qadasi et al, 2019;Fan & Wong, 2005;Huang & Kang, 2018). In doing so, external auditors have to spend a correspondingly large amount of time and effort testing and verifying documents and the internal control system (Simunic, 1980;Zalata et al, 2020). Prior research indicates that external auditors use internal auditors or rely on their work in planning and testing the management's assertions on financial statements and internal controls (Desai et al, 2011;Glover et al, 2008).…”

Section: Audit Feesmentioning

confidence: 99%

Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

Baatwah

Aljaaidi

Almoataz

et al. 2021

Cogent Business & Management

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Outsourcing the internal aud it function (IAF) is a worldwide practice attractive to companies, practitioners and regulators because it is believed that providers of this function are objective and competent and can provide high-quality audit. This study explores the potential influence of company and auditor characteristics on selecting outsourced IAF providers with industry expertise. Using 334 observations for non-financial companies that outsourced this function to an external provider over the period 2010-2017, logistic regression suggests that company characteristics such as size, issue of new equity, age, and total accruals significantly determine the selection of industry-expertise outsourced IAF (IEOIAF) providers. We report similar findings when considering alternative approaches for measuring industry expertise, using a matching sample method, and controlling for the potential effect of endogeneity. In additional analysis, we explore these ABOUT THE AUTHOR

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“…made for high-quality financial reporting, which have been motivated by many factors, including recent financial scandals; the introduction of new complex services; the growth in disclosure requirements; and complex new regulations. These factors increase the need for reliable, high-quality financial reporting in order to enhance user confidence, which has been shaken by various financial scandals, and to account for all the complexities that have emerged (Zalata et al, 2020).…”

Section: Public Interest Statementmentioning

confidence: 99%

The effect of audit fees on disclosure quality in Jordan

Shakhatreh

Alsmadi

Alkhataybeh

2020

Cogent Business & Management

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Disclosure quality is a matter of great importance in the accounting literature. This study examines the effect of audit fees, audit firm size and audit opinion on the quality of disclosures. It focuses on a sample of low-quality financial statements in Jordan that have been reported as breaches by the Jordanian Securities Commission (JSC). Data were collected from the financial statements of the manufacturing and services companies listed on the Amman Stock Exchange (ASE) during the period 2009 to 2016. The logistic regression results suggest that audit fees have a positive significant effect, while audit opinion has a negative significant effect on actual violations. However, audit firm size was found to be insignificant in relation to the level of violations.

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External audit quality and firms’ credit score

Cited by 8 publications

References 56 publications

Public accounting profession and fraud detection responsibility

Public accounting profession and fraud detection responsibility

Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

The effect of audit fees on disclosure quality in Jordan

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