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The Impact Of Reputation Audit Contract Type Tenure Audit Fees And Other Services On Auditors Perceptions Of Audit Quality
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Book Synopsis The Impact of Reputation, Audit Contract Type, Tenure, Audit Fees and Other Services on Auditors' Perceptions of Audit Quality by : Millicent Chang
Download or read book The Impact of Reputation, Audit Contract Type, Tenure, Audit Fees and Other Services on Auditors' Perceptions of Audit Quality written by Millicent Chang and published by . This book was released on 1994 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Advances in Accounting by : Philip M J Reckers
Download or read book Advances in Accounting written by Philip M J Reckers and published by Elsevier. This book was released on 2006-07-04 with total page 287 pages. Available in PDF, EPUB and Kindle. Book excerpt: The twenty-second volume of Advances in Accounting continues to provide an important forum for discourse among and between academic and practicing accountants on issues of significance to the future of the discipline. Emphasis continues to be placed on original commentary, critical analysis and creative research – research that promises to substantively advance our understanding of financial markets, behavioral phenomenon and regulatory policy. Technology and aggressive global competition have propelled tremendous changes over the two decades since AIA was founded. A wide array of unsolved questions continues to plague a profession under fire in the aftermath of one financial debacle after another and grabbling with the advent of international accounting standards. This volume of Advances in Accounting not surprisingly includes several articles reflective on auditor independence, auditor tenure, auditor rotation and non-audit service fees. This volume also looks at challenges facing the academic community with respect to pressures placed on faculty to publish; a data driven commentary is provided by the in-coming editor of the European Accounting Review. Other papers examine the use of financial data to estimate risk premiums, and measure the operating efficiency of firms; and re-examine market reaction to quarterly earnings. AIA continues its commitment to the global arena by publishing several papers with an international perspective. As never before the accounting profession is seeking ways to reinvent itself and recapture relevance and credibility. AIA likewise continues to champion forward thinking research. *Addresses the role of the auditor *Investigates how financial data is represented, used, and received *Scope of content is international
Book Synopsis Non-Audit Service Fees and Audit Quality by : Chee Yeow Lim
Download or read book Non-Audit Service Fees and Audit Quality written by Chee Yeow Lim and published by . This book was released on 2013 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies on whether the provision of non-audit services impairs audit quality document mixed results, depending on the proxy for auditor quality used. We posit that the effect of non-audit fees on audit quality is conditional on auditor industry specialization in that audit quality is less likely to be impaired in the case of industry specialist auditors providing non-audit services. Our premise is that industry specialist auditors are more likely to be concerned about reputation losses and litigation exposure, and to benefit from knowledge spillovers from the provision of non-audit services. We find some evidence that audit quality (as measured by increased propensity to issue going-concern opinion, increased propensity to miss analysts' forecasts, as well as higher earnings-response coefficients) is less likely to be reduced for firms that acquire non-audit services from industry specialist auditors compared to non-specialist auditors. Implications are discussed.
Book Synopsis An Investigation of the Relationship Between Audit Fees and Auditor Reputation by : Timothy A. Pearson
Download or read book An Investigation of the Relationship Between Audit Fees and Auditor Reputation written by Timothy A. Pearson and published by . This book was released on 1990 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality (Classic Reprint) by : Richard M. Frankel
Download or read book The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality (Classic Reprint) written by Richard M. Frankel and published by Forgotten Books. This book was released on 2018-03-03 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality This paper provides empirical evidence on the relation between non-audit services and earnings quality. We test hypotheses concerning: (1) the association between a firm's purchase of non-audit services from its auditor and earnings management, and (2) the stock price reaction to the disclosure of non-audit fees. In the past decade there has been a dramatic increase in the proportion of fee revenue auditors derive from non-audit services, yet we know little about how non-audit services are related to earnings quality.1 Concern about the effect of non-audit services on the financial reporting process was a primary motivation for the Securities and Exchange Commission (sec) to issue revised auditor independence rules on November 15, 2000. The rules require firms to disclose the amount of all audit and non-audit fees paid to its auditor. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.
Book Synopsis Audit Firm Tenure, Non-Audit Services, and Internal Assessments of Audit Quality by : Timothy B. Bell
Download or read book Audit Firm Tenure, Non-Audit Services, and Internal Assessments of Audit Quality written by Timothy B. Bell and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We use data from internal assessments of audit quality in a Big 4 firm to investigate the impact of audit firm tenure and auditor-provided non-audit services (NAS) on audit quality. We find that first-year audits receive lower assessments of audit quality and that quality improves shortly thereafter and then declines as tenure becomes very long. Partitioning our sample between SEC registrants and private clients, we find that the decline in audit quality in the long tenure range is attributable to audits of private clients. For audits of SEC registrants, the probability of a high quality audit reaches its maximum with very long tenure. We also find that audit fees are discounted for first-year audits but auditor effort is higher than in subsequent years. We find no association, on average, between total NAS fees and audit quality in the full sample but observe that total NAS fees are positively associated with quality for SEC registrants and negatively associated with quality for privately held clients. Our findings are important for regulatory policies related to audit firm tenure and auditor-provided NAS.
Book Synopsis Impact of Audit Fees and Audit Firm's Reputation on Audit Quality by : Ammar Qadir Sheikh
Download or read book Impact of Audit Fees and Audit Firm's Reputation on Audit Quality written by Ammar Qadir Sheikh and published by . This book was released on 2020 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audit quality is viewed as a basic element influencing the dependability of financial statements. The objective of this study is to investigate the impacts of audit firm characteristics, including audit firms' reputation and audit fees on the quality of auditing. We utilized discretionary/irregular accruals serving as a proxy for income manipulation, and audit firms' reputation (Big 4 auditors vs Non-Big 4 auditors), and audit fees are utilized to examine the quality of auditing. A sample comprised of 49 listed firms from the KSE-100 index of Pakistan Stock Exchange (PSX) is selected for the duration of 5 years. The data is evaluated through multiple regression and correlations. The outcomes suggested that audit Fee seems to have a significant and negative effect on the quality of auditing, Audit quality also seems to affect ROA negatively, whereas, audit fee affected ROA positively. Lastly, the Big 4 representation has a negative effect on cash flows, whereas audit quality seems to have an inverse effect. The outcomes indicate that non-Big 4 audit firms in Pakistan perform higher quality of auditing than Big 4 audit firms. In addition to that, the outcome discloses that in exchange of higher audit fees, auditors perform lower quality of audits. The basic job of audit quality has gathered remarkably academic consideration. Though, earlier researches have basically centered on organizations operating in developed nations. Very limited is investigated about the quality of auditing in developing economies, for example, Pakistan. This investigation would increase the predetermined number of researches conducted on the quality of auditing of listed firms in developing nations.
Book Synopsis Auditor Characteristics, Audit Tenure, Audit Fee and Audit Quality by : Melya Senjaya
Download or read book Auditor Characteristics, Audit Tenure, Audit Fee and Audit Quality written by Melya Senjaya and published by . This book was released on 2017 with total page 6 pages. Available in PDF, EPUB and Kindle. Book excerpt: Objective - The purpose of this research is to obtain empirical evidence about the factors that affect audit quality for auditors working in Public Accounting Firms in DKI Jakarta. Methodology/Technique - The independent variables used in this research are: independence, work experience, competency, accountability, audit tenure, and audit fee. The object of this research consists of 25 Public Accounting Firms located in DKI Jakarta. There are 164 respondents used as samples in this study. The sample was selected based on a convenience sampling method with criteria including auditors working at public accounting firms located in DKI Jakarta, with a minimum of one year work duration. This research used statistical tests of multiple regression. Findings - The result shows that independence, accountability, and audit tenure have an effect on audit quality. Meanwhile, work experience, competency, and audit fees have no influence on audit quality. Novelty - The study suggests that to improve audit quality, Public Accounting Firms should pay attention to the independence and accountability of its auditors. Type of Paper: Empirical.
Download or read book Audit Quality written by Jonas Tritschler and published by Springer Science & Business Media. This book was released on 2013-10-31 with total page 251 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arising from the author’s experience as a practicing CPA, this book is quite different from other research in this field, as it confronts the subject of audit quality from a pragmatic perspective. The first goal of Jonas Tritschler is to develop an audit quality metric on national audit firm level. Financial reporting errors, as detected by the German enforcement institutions during examinations, which subsequently are published in the German Federal Gazette by the involved companies, are the data basis for this measurement. Using the developed audit quality metric, the second goal of this study is to analyze audit quality differences of selected audit firms by comparing their deployed audit input factors such as employee’s competence (ratio of certified professionals to total audit staff), experience of employees (average tenure of employees in years) and client-specific experience (client fluctuation rate). Results indicate a correlation between audit quality according to the developed metric and the operationalized audit input factors mentioned above.
Book Synopsis The Relation Between Auditors' Fees for Non-audit Services and Earnings Quality by : Richard M. Frankel
Download or read book The Relation Between Auditors' Fees for Non-audit Services and Earnings Quality written by Richard M. Frankel and published by . This book was released on 2002 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the association between the provision of non-audit services and earnings quality. Because of concerns regarding the effect of non-audit services on financial reporting credibility, the Securities and Exchange Commission recently issued revised auditor independence rules requiring firms to disclose in their annual proxy statement the amount of fees paid to auditors for audit and non-audit services. Using data collected from proxy statements filed between February 5, 2001 and June 15, 2001, we present evidence that firms purchasing more non-audit services from their auditor are more likely to just meet or beat analysts' forecasts and to report larger absolute discretionary accruals. However, the purchase of non-audit services is not associated with meeting other earnings benchmarks. We also find that the unexpected component of the non-audit to total fee ratio is negatively associated with stock returns on the filing date. These results are consistent with arguments that the provision of non-audit services strengthens an auditor's economic bond with the client and that investors price this effect. Keywords: Auditor independence; Auditor fees; Earnings management; Discretionary accruals. JEL Classification: G12, M41, M43, M49, L84.
Book Synopsis Does Auditor Tenure Improve Audit Quality? Moderating Effects of Industry Specialization and Fee Dependence by : Chee Yeow Lim
Download or read book Does Auditor Tenure Improve Audit Quality? Moderating Effects of Industry Specialization and Fee Dependence written by Chee Yeow Lim and published by . This book was released on 2015 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate whether the relation between auditor tenure and audit quality is conditional on auditor specialization and fee dependence. Although prior studies have investigated the relation between extended auditor-client tenure and audit quality, none has examined how this relation is jointly influenced by both auditor specialization and fee dependence. Our main analyses, using accrual quality as a measure of audit quality, show that firms audited by specialists (vs. non-specialists) have relatively higher audit quality with extended auditor tenure, and that this relation is negatively moderated by auditors' fee dependence on clients. These results are robust to sensitivity tests, and alternative proxies for audit quality such as the issuance of going concern opinions and the market's response to quarterly earnings surprises.
Book Synopsis The Effects of Independent Audit Committee Member Characteristics and Auditor Independence on Financial Restatements by : Vineeta Divesh Sharma
Download or read book The Effects of Independent Audit Committee Member Characteristics and Auditor Independence on Financial Restatements written by Vineeta Divesh Sharma and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The U.S. Securities and Exchange Commission (SEC) continues to reform the corporate governance mechanisms in order to improve the quality of financial reporting and thus, enhance the confidence of investors in the stock market and in the accounting profession. Despite the efforts of the SEC, financial reporting scandals continue with record numbers of financial restatements documented by the General Accounting Office. A financial restatement is a correction of a previously misstated financial statement. There is a small volume of literature examining the effects of corporate governance mechanisms on financial restatements. The results of these studies however, are mixed and possibly explained by their narrow focus and omitted variables that could influence the effectiveness of audit committees. Consequently, this study examines the effects of independent audit committee member characteristics and auditor independence on financial restatements. Specifically, this study investigates the relationship between the likelihood of financial restatements and: (1) the expertise of the independent audit committee members, (2) the expertise and diligence of the independent audit committee members, (3) the reputation of the independent audit committee members, (4) the interaction effect of expertise, diligence and reputation, (5) the tenure of the independent audit committee members, and (6) the cash compensation paid to independent audit committee members. Prior studies have not investigated some of these variables or the interaction effects of independent audit committee member characteristics on financial restatements. This study also investigates the association between auditor independence and financial restatements. The SEC alleges that an increasing number of audit failures are due to the lack of auditor independence. One of the major sources of the lack of auditor independence is the auditor's economic dependency on the client. The provision of non-audit services increases the financial reliance of the auditor on the client. As a result, the auditor may become reluctant to raise issues with the preparation of the financial statements at the risk of foregoing the lucrative non-audit services fees. The SEC believes that longer audit firm tenure can also impair auditor independence and Section 203 of the Sarbanes-Oxley Act suggests periodic audit firm rotation. Therefore, auditor independence was measured as: (1) fees paid to the auditor, and (2) audit firm tenure. Finally, this study extends the prior literature by studying the interaction effects of independent audit committee member characteristics and auditor independence on financial restatements. This interaction effect is important because the external auditor and the audit committee are regarded vital governance mechanisms that interact and exchange dialogue in the performance of their respective oversight of the financial reporting process. Prior research has not investigated this important interaction effect. The sample of the study comprises 69 U.S. publicly listed companies that announced their restatement from 1 January 2001 to 31 December 2002. These companies were matched with 69 non-restatement companies based on industry and size. The data for the study is derived from SEC filings such as Form 10-K and DEF 14A, and Compustat. The univariate results show that compared to restatement firms, non-restatement firms generally have effective audit committee characteristics. The audit committees of non-restatement firms have members who are experts, diligent, reputable and appropriately compensated. They also pay lower non-audit services and total fees, and have audit firms with longer tenure. The multivariate results show that after controlling for other governance structures and firm specific non-governance variables, the likelihood of financial restatements is related to independent audit committee member characteristics and auditor independence. Specifically, the likelihood of financial restatements decreases when independent audit committee members are: (1) experts, (2) experts and diligent, (3) reputable, (4) experts, diligent and reputable, and (5) appropriately compensated. The audit committee member tenure variable is insignificant. In relation to the auditor independence variables, the multivariate results show that the likelihood of financial restatements increases when the non-audit services and total fees generated by the client are higher. On the other hand, the likelihood of financial restatements decreases when audit firm tenure is longer. The empirical results of this study suggest that independent audit committees are more effective overseers of the corporate financial reporting and auditing processes when: they comprise majority experts, they meet regularly, their members are reputable, and audit committee members are appropriately compensated. On the other hand, external auditors are not deemed to be effective overseers of the corporate financial reporting process when the non-audit services and total fees generated by the client are higher but are effective when audit firm tenure is long. The results support the SEC's concerns regarding the provision of non-audit services impairing auditor independence. The results also support the Sarbanes-Oxley Act of 2002 which under Section 201 prohibits external auditors from providing certain non-audit services to its audit client. Overall, these results support the regulatory efforts to increase the quality of financial reporting by enhancing the corporate governance process related to audit committees and auditor independence. However, the results do not support calls to limit the tenure of the auditor. The results of the multivariate interaction effects suggest that, after controlling for other governance structures and firm specific non-governance variables, when the non-audit services and total fees generated by the client are higher, the likelihood of financial restatements increases under conditions when the audit committee is not effective (a non expert audit committee, an audit committee that does not meet regularly, an audit committee whose members are not reputable or an audit committee that is not appropriately compensated). The implication of this result is that it provides evidence of conditions under which restatements take place. Knowledge of such conditions could aid regulators further improve the financial reporting process and corporate governance. This knowledge will support regulators in revising policies that ensure audit committee members are not only independent but also comprise other critical qualities. These improvements to the audit committee coupled with the existing regulations on the provision of non-audit services suggest a company's governance will be more effective. Overall, the results extend current knowledge in the sparse but growing literature related to financial restatements and corporate governance, and extend our understanding of the effectiveness and interaction of governance mechanisms in reducing financial restatements.
Book Synopsis Auditor Tenure and Perceptions of Audit Quality by : Aloke Ghosh
Download or read book Auditor Tenure and Perceptions of Audit Quality written by Aloke Ghosh and published by . This book was released on 2004 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze how investors and information intermediaries perceive auditor tenure. Using earnings response coefficients from returns-earnings regressions as a proxy for investor perceptions of earnings quality, we document a positive association between investor perceptions of earnings quality and tenure. Further, we find that the influence of reported earnings on stock rankings becomes larger with extended tenure, although the association between debt ratings and reported earnings does not vary with tenure. Finally, we find that the influence of past earnings on one-year-ahead earnings forecasts becomes larger as tenure increases. In general, our results are consistent with the hypothesis that investors and information intermediaries perceive auditor tenure as improving audit quality. One implication of our study is that imposing mandatory limits on the duration of the auditor-client relationship might impose unintended costs on capital market participants.
Book Synopsis The Economics of Audit Quality by : Benito Arrunada
Download or read book The Economics of Audit Quality written by Benito Arrunada and published by Springer. This book was released on 2010-12-03 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on market mechanisms which protect quality in the provision of audit services. The role of public regulation is thus situated in the context defmed by the presence of these safeguard mechanisms. The book aims to contribute to a better understanding of these market mechanisms, which helps in defining the con tent of rules and the function of regulatory bodies in facilitating and strengthening the protective operation of the market. An analysis at a more general level is provided in the three chapters making up Part 1. In the four chapters of Part 2, on the other hand, this analysis is applied to a particular problem to determine how those non-audit services often provided by auditors to their audit clients should be regulated. Finally, Chapter 8 contains a summary of the analysis and conclusions of the work. The conclusion with regard to non-audit services is that their provision generates beneficial effects in terms of costs, technical competence, professional judgment and competition and, moreover, need not prejudice auditor independence or the quality of these services. This as sessment leads, in the normative sphere, to recommending a legislative policy aimed at facilitating the development and use of safeguards provided by the free action of market forces. Regulation should thus aim to enable the parties-audit firms, self-regulatory bodies and audit clients-to discover through competitive market interaction both the most efficient mix of services and the corresponding quality safeguards, adjusting for the costs and benefits of each possibility.
Book Synopsis Auditor Reputation by : Peter Moizer
Download or read book Auditor Reputation written by Peter Moizer and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The purpose of this paper is to consider whether some audit firms are perceived by the financial communities of different countries to have higher reputations than other audit firms. The results that will be considered come from three sources: audit fee studies, studies of the issue of new shares and studies of the effects on a company of changing its auditor. The studies reveal that there is considerable evidence that Big Six auditors are differentiated from other audit firms by company directors when recommending to shareholders the appointment of a firm of auditors and its audit fee. The results point to a Big Six audit fee premium of between 16 to 37% across the countries surveyed. Participants in the stock market (investors and bankers) also appear to differentiate between audit firms. The Big Six tend to be associated with a higher quality service in most of the countries surveyed. In addition, there is some evidence of differential effects within the Big Six, with Price Waterhouse being identified with above average reputation in the 1980s in three countries. However, for other Big Six firms any reputational effects appear to be country specific and do not generalize across countries.
Book Synopsis The Effects of Audit Market Concentration and Auditor Reputation on Audit Quality by : Johnathon Cziffra
Download or read book The Effects of Audit Market Concentration and Auditor Reputation on Audit Quality written by Johnathon Cziffra and published by . This book was released on 2019 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We investigate how a high degree of audit market concentration and auditor reputation affect audit quality. Using audit adjustments to student loan loss provisions in government audits to construct a new measure for excessive audit conservatism, we show that an audit market monopoly leads to excessively conservative audit adjustments to the provisions and, thus, to lower audit quality. We also examine the effect of a positive shock to auditor reputation on audit quality. We find that before the increase to their reputation, monopolistic auditors require more conservative, yet not excessively conservative, adjustments than auditors in a competitive market. However, after the reputation increase, the adjustments become excessively conservative. This result suggests that the combination of enhanced audit market concentration and high auditor reputation leads to excessive auditor conservatism. Consistent with the excessive nature of the adjustments, we find no significant association between the adjustments and future student loan write-offs. Additional analysis reveals that career concerns play a role in driving the excessive conservatism. Our study has implications for the ongoing debate regarding the impact of reduced competition in the audit market on audit quality and for the government.
Book Synopsis Do Non-Audit Service Fees Impair Auditor Independence? Evidence from Going-Concern Audit Opinions by : Mark L. DeFond
Download or read book Do Non-Audit Service Fees Impair Auditor Independence? Evidence from Going-Concern Audit Opinions written by Mark L. DeFond and published by . This book was released on 2002 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We find no evidence that non-audit service fees impair auditor independence, where independence is surrogated by auditors' propensity to issue going concern audit opinions. We do find, however, that auditors are more likely to issue going concern opinions to clients paying higher audit fees, suggesting that auditors behave with relatively greater independence towards these clients. Our findings are consistent with Reynolds and Francis (2001) and suggest that market-based incentives, such as loss of reputation and litigation costs, dominate the benefits auditors are likely to receive from compromising their independence to retain clients that pay larger fees. Overall, our findings indicate that recent SEC regulations based on concerns that non-audit services impair auditor independence, are unfounded.
