How do auditor rotations affect key audit matters? Archival evidence from South African audits

Ricquebourg, Alan Duboisée de; Maroun, Warren

doi:10.1016/j.bar.2022.101099

Cited by 19 publications

(19 citation statements)

References 54 publications

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“…Firm characteristics, which impact EAR, include age, life cycle, size, complexity, intangible intensity, operating environment (industry, market), performance (profitability and leverage), ownership and corporate governance (Rahaman et al , 2022; Sierra-García et al , 2019; Fuller et al , 2022; Kang, 2019). Audit features, including fees, litigation risks, firm type and rotation (de Ricquebourg and Maroun, 2022; Ferreira and Morais, 2020; Rahaman et al , 2022), are considered the second group of influencing factors on EAR. Auditor characteristics, including industry experience, gender and accounting degree (Bepari et al , 2022; Sierra-García et al , 2019), form the third EAR determinants group.…”

Section: Results Of Content Analysismentioning

confidence: 99%

Mapping the state of expanded audit reporting: a bibliometric view

Mashayekhi

Dolatzarei

Faraji

et al. 2023

MEDAR

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Purpose This study aims to identify the intellectual structure of expanded audit reporting (EAR), offers a quantitative summation of prominent themes, contributors and knowledge gaps and provides suggestions for further research. Design/methodology/approach This research uses various bibliometric techniques, including co-word and co-citation analysis for EAR science mapping, based on 123 papers from Scopus Database between 1991 and 2022. Findings The results show EAR research is focused on Audit Quality; Auditor Liability and Litigation; Communicative Value and Readability; Audit Fees; and Disclosure. Regarding EAR research, Brasel et al. (2016), article is the most cited paper, Bédard J. is the most cited author, Laval University is the most influential university, The Accounting Review is the most cited journal and USA is the leading country. Furthermore, the results show that in common law countries, in which shareholder rights and litigation risk is high, topics such as disclosure quality and audit litigation have been addressed more; and in civil legal system countries, which usually favor stakeholders’ rights, topics of gender diversity or corporate governance have been more studied. Practical implications This research has practical implications for standard setters and regulators, who can identify important, overlooked and emerging issues and consider them in future policies and standards. Originality/value This paper contributes to the literature by providing a more objective and comprehensive status of the accounting research on EAR, identifying the gaps in the literature and proposing a direction for future research to continue the discussion on the value-relevance of EAR to achieve more transparency and less audit expectation gap.

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Section: Results Of Content Analysismentioning

confidence: 99%

Mapping the state of expanded audit reporting: a bibliometric view

Mashayekhi

Dolatzarei

Faraji

et al. 2023

MEDAR

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“…Various studies (Asbahr and Ruhnke, 2019; Ratzinger-Sakel and Theis, 2019; Baatwah et al , 2022; Fera et al , 2022; Kitiwong and Sarapaivanich, 2020; Pinto and Morais, 2019; Suttipun, 2021; Hategan et al , 2022) have focused on the relationship between KAM and various factors such as audit lag, tenure, fees, quality, financial distress and size. This analysis has focused predominantly on highly developed economies, including the USA and the UK, with a few exceptions, with some outliers (Segal, 2019; de Ricquebourg and Maroun, 2023; Kend and Nguyen, 2022; Bédard et al , 2016). Different regulatory, economic and legal environments between developed and developing economies necessitate additional research on auditors’ expanded reporting requirements in developing economies, which have been largely neglected by the academic community.…”

Section: Introductionmentioning

confidence: 99%

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Alharasis,

Alkhwaldi,

Hussainey

2024

IJLMA

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Purpose This study aims to investigate the moderating effect of the COVID-19 epidemic on the relationship between key audit matter (KAM) and auditing quality. Design/methodology/approach The authors use the ordinary least squares regression on data from 942 firm-year observations of Jordanian non-financial institutions across the period (2017–2022) to test the hypotheses. The authors use content analysis method to measure levels of KAM disclosure. Findings The investigation’s findings highlight the importance of KAM disclosure in achieving audit quality in line with international standard on auditing no. 701 (ISA-701) requirements. COVID-19 is also found to have a positive relationship with audit quality, further confirming the crisis’s devastating impact on audit complexity and risks and providing evidence for the need for supplementary, high-quality audit services. Due to the correlation between KAM disclosure and increased auditor workload and responsibility, the analysis reveals that the COVID-19 factor strengthens the link between KAM disclosure and audit quality. Practical implications This study has the potential to be used as a basis for the creation of a new regulation or standard regarding the reporting of unfavourable events in financial filings. This study’s findings provide standard-setters, regulators and policymakers with current empirical data on the effects of implementing ISA-701’s mandate for external auditors to provide more information on KAM. The COVID-19 crisis offers a suitable setting in which to examine the value of precautionary disclosures in times of economic uncertainty, as well as the significance of confidence interval disclosures and the role of external auditing in calming investor fears. This analysis is helpful for stakeholders, regulatory agencies, standard-setters and readers of audit reports who are curious about the current state of KAM disclosures and the implementation of ISA-701. The results may have ramifications for academia in the form of a call for more evidence expanding this data to other burgeoning fields to have a clear explanation of the real impact of reporting KAM on audit practices. Originality/value To the authors’ awareness, this research is one of the few empirical studies on the effect of the COVID-19 crisis on auditing procedures, and more specifically, the effect of disclosures on KAM by external auditors on audit quality. This study’s findings represent preliminary scientific evidence linking the pandemic to business performance. Minimal research has been done on how auditors in developing nations react to pandemic investor protection and how auditors’ enlarged reporting responsibilities affect them. The vast majority of auditing studies have been conducted in a highly regulated system, so this research contributes by examining audit behaviour in a weak legal context.

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“…Reporting the same KAMs every year may be characterized as routine application of professional standards and repletion of the same audit procedures. On the contrary, adding new KAMs and/or dropping of old KAMs reflect fresh perspectives and a more proactive approach to the identification and response to audit risks (Duboisee De Ricquebourg and Maroun, 2022). The addition of new KAMs and the replacement of old KAMs bring instability in KAMs reporting requiring afresh negotiation with audit committees (AC) every year.…”

Section: Introductionmentioning

confidence: 99%

“…As lack of year-to-year variance in the KAMs runs counter to the essence of ISA 701, the Financial Reporting Council (2015) calls for empirical research in this regard. Following the Financial Reporting Council (2015) call, Duboisee De Ricquebourg and Maroun (2022) have examined if switches of audit firm and audit partner affect the time variances of KAMs, whereas Zhang and Shailer (2021) examined if year-to-year changes in KAMs affect the audit fees. We extend the literature by examining if audit partners’ gender affects the time variances of KAMs.…”

Section: Introductionmentioning

confidence: 99%

Audit partners’ gender and time variances of key audit matters

Bepari,

Mollik

2023

MAJ

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Purpose This study aims to examine whether audit partners’ gender affects the year-to-year changes (year-to-year additions and drops) of key audit matters (KAMs) identified in the audit report. This study also examines whether female audit partners’ audit experiences, accounting education and narcissism reduce the difference in time variances of KAMs reporting between female and male audit partners. This study defines the year-to-year additions and drops of KAMs as the time variance of KAMs. Design/methodology/approach Data of this study includes the audit reports of Australian Securities Exchange 300 companies for the period from 2017 to 2021. This study also applies the theory of female auditors’ preference for anchoring and availability heuristics. This study uses multivariate regression with robust standard errors clustered by the firms. This study also uses several robustness tests. Findings The findings suggest that female audit partners disclose fewer time variant KAMs in that they have a lower tendency both to add new KAMs and to drop old KAMs. Further analysis suggests that the differences between female and male audit partners decrease as the female audit partners’ experience increases or if the female audit partner possesses a bachelor’s degree in accounting. Female audit partners’ narcissism also reduces the gender gap in the time variances of KAMs. Practical implications The fact that female audit partners report more stable KAMs implies that there are differences between female and male audit partners in the way audit risk assessments are conducted, audits are planned and professional judgement is applied by female and male audit partners. Social implications The findings imply that female audit partners’ experience, accounting education and narcissistic personality can play a significant role in explaining the differences in audit outcomes produced by male and female audit partners. Originality/value This study is novel in showing that female audit partners report more stable and less time-variant KAMs. The findings of this study may inform audit firms and regulators that female audit partners’ experience, tertiary qualifications in accounting and narcissistic personality traits may be effective means of reducing the gender gap in auditing. The findings also imply that auditors’ observable and unobservable personality traits affect audit outcomes.

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How do auditor rotations affect key audit matters? Archival evidence from South African audits

Cited by 19 publications

References 54 publications

Mapping the state of expanded audit reporting: a bibliometric view

Mapping the state of expanded audit reporting: a bibliometric view

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Audit partners’ gender and time variances of key audit matters

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