The impact of auditor‐client relationships on the reversal of first‐time audit qualifications

Meyer, Michael J.; Rigsby, John T.; Boone, Jeff P.

doi:10.1108/02686900710715648

Cited by 33 publications

(26 citation statements)

References 38 publications

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“…Dengan kata lain semakin lama auditor tenure akan mengakibatkan semakin kecil kualitas auditornya (kualitas auditor dalam penelitian ini diproksikan dengan cost of debt. Meyer et al (2007) menemukan bukti bahwa perusahaan akan menanggung equity risk premium yang lebih besar apabila auditor tenure semakin lama. Nagy (2005) menemukan bukti bahwa auditor tenure berhubungan negatif dengan kualitas auditor.…”

Section: Pendahuluanunclassified

Pengaruh Fee Audit, Rotasi Kap, Dan Reputasi Auditor Terhadap Kualitas Audit Di Bursa Efek Indonesia

Hartadi¹

2012

EKUITAS

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Section: Pendahuluanunclassified

Pengaruh Fee Audit, Rotasi Kap, Dan Reputasi Auditor Terhadap Kualitas Audit Di Bursa Efek Indonesia

Hartadi¹

2012

EKUITAS

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“…Theoretically, this contradictory effect of the "auditor's repuation" variable is justified by the findings of Libby and Frederick [33]; Myers et al [34], Carcello and Nagy [23] who argued that the relationship length between the auditor and audited improves the conditions of carrying out the audit task. Hamilton et al [37], Meyers et al [36], JR Francis [8], find a negative association between the relationship length in years between the auditor and audited and the abnormal component of the result.…”

Section: The Correlation Test Between the Explanatory Variablesmentioning

confidence: 99%

“…In this case, the duration of the audit relationship can have a positive impact on the quality of the accounting earnings of the audited firms. [20,23,[33][34][35].However, other studies consider a long relationship audit could corrupt the auditors' independence, and thus the existence of a negative relationship between the duration of the audit relationship and audit quality [36]. The most recent work Hamilton et al [37], Reynolds and Francis [8] confirm the negative association between the duration of the audit relationship and the abnormal component of the result.…”

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confidence: 99%

The Impact of the Audit Quality on that of the Earnings Management: Case Study in Tunisia

Affes¹,

Smii²

2016

J Account Mark

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The purpose of this article is to examine the impact of the audit quality on that of the accounting earnings. We chose the accrual quality, the accounting conservatism and the profit relevance as a measure of the quality of the accounting earnings. The empirical study, which was carried out in this article on a sample of 20 Tunisian firms listed on the TSE (Tunisian Stock Exchange) for the period (2005)(2006)(2007)(2008)(2009), confirms the significant impact of the audit quality on that of the accounting earnings. The study results also show that the variables: size of the audit firm, sectorbased specialization of the audit firm, the co-auditing and the size of the audit committee, improve the quality of the accounting earnings.Citation: Affes H, Smii T (2016) The Impact of the Audit Quality on that of the Earnings Management: Case Study in Tunisia. J Account Mark 5: 178. doi:10.4172/2168-9601.1000178 Page 2 The reputation of the audit firm: the reputation of the audit firm is usually the most commonly used indicator empirically to assess the audit quality. However, several studies show that the long-term audit relationship may impair the auditors' independence or inversely improve the auditors' conditions of the work exercise and therefore the quality of the performed audit [22][23][24].The audit committee: the implementation of the audit committee in a company is one of the controlling mechanisms that ensure the relevance and consistency of the accounting policies adopted for the preparation of the financial statements. In this context, the presence of an audit committee within the firm is likely to improve the transparency of the information disclosure and limit the degree of the managers' involvement in the process of the earning management [25,26].The audit fees: the fees received by the auditor were considered by literature as a means to measure the quality of service provided by the auditor. Frankel et al. [27] show that high fees help reduce the audit management result. Indeed, high audit fees may also reflect an increased audit effect and therefore a better audit quality. The Conceptual Framework Sector-based specialization and the quality of accounting earningsSeveral studies show that the auditors who specialize in a well definite industry benefit from specific knowledge. They have the ability to make a good quality service, achieve cost savings on their audit and provide a better audit quality [17,20,21].Thus, Balsam, Krishnan and Yang [18] anticipate a positive and significant relationship between the sector-based specialization of the audit firms and the quality of the accounting earnings. Gul et al. [28] found that sector-based specialization of the audit firms reduces the discretionary accruals and improves the quality of the accounting figures of the firms. In this regard, Carcello and Nagy [23] expect a negative relationship between the auditors' specialization and the reporting of fraudulent financial statements. Hypothesis 1:The quality of the accounting earnings is positively ...

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“…However, they found that a longer auditor tenure-client association enhances audit quality. Meyer et al (2006) investigated the impact of auditor-client association upon auditor decision. Opinions of auditor's judgments are considered as a constraint to audit quality.…”

Section: Auditor Tenure and Audit Qualitymentioning

confidence: 99%

“…(3) Short auditor-client association would weaken the audit quality and prevent auditors from establishing institutional knowledge about the client and his business (Shockley, 1981;Meyer et al, 2006).…”

Section: Controversy and Literature Reviewmentioning

confidence: 99%

Perceptions on the Effects of Auditor-Client Relationship upon Audit Quality and Auditor Independence: Evidence from Bahrain

Khasharmeh¹,

Hezabr²

2016

JMAA

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The study aims to focus upon the association between the auditors and companies by indicating how this association affects the quality of audit and auditor independence in a developing country (the case of Bahrain). To achieve these objectives, a questionnaire was developed and distributed to respondents from audit firms in Bahrain.Descriptive statistics were used to analyse the influence of auditor-client association upon quality of audit and auditor independence and how audit quality and auditor independence are improved was also explored in the study.The results show that all the questions (1-8) in the questionnaire impair both audit quality and auditor independence with the means ranging from 3.6000 to 4.0364 with an average mean of 3.7212. According to the measurement scale, any item with a mean of 3.50 or more is acceptable, and since all the influences are above 3.50, they are all acceptable. Regarding how auditor-client relationship (or long tenured auditor) would improve both quality of audit and auditor independence, the results show that all the questions (9-17) would improve both audit quality and auditor independence with the means ranging from 3.6364 to 4.0727 with an average of 3.8646, which are acceptable. These results confirm statistically that there is a significant relationship between the auditor long-term tenure and audit quality and auditor independence, so the null hypothesis (H0) is rejected and the alternative hypothesis is accepted. Simple regression analysis is employed to test the hypothesis of the study and its significance. The results show that (H0) hypothesis is not significant. Therefore, the alternative hypothesis (H1) is significant at p ≤ 0.005, which means that there are differences in viewpoints among respondents and the p-value obtained is 0.044 which is less than the significant value of p ≤ 0.05. These results confirm the hypothesis that a significant relationship exists between the auditor long-term tenure and quality of audit and auditor independence.

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The impact of auditor‐client relationships on the reversal of first‐time audit qualifications

Cited by 33 publications

References 38 publications

Pengaruh Fee Audit, Rotasi Kap, Dan Reputasi Auditor Terhadap Kualitas Audit Di Bursa Efek Indonesia

Pengaruh Fee Audit, Rotasi Kap, Dan Reputasi Auditor Terhadap Kualitas Audit Di Bursa Efek Indonesia

The Impact of the Audit Quality on that of the Earnings Management: Case Study in Tunisia

Perceptions on the Effects of Auditor-Client Relationship upon Audit Quality and Auditor Independence: Evidence from Bahrain

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