Auditors' Competence, Audit Fee, Quality Control, and Audit Quality

The COVID-19 pandemic limits public social activities due to the virus spreading in overcrowded areas. It becomes a challenge for Public Accounting Firms to provide quality financial statement audit services to auditees. Therefore, this study aimed to analyze the influence of auditors' competence as well as audit fee and quality control on audit quality during the COVID-19 pandemic. Data were collected through a survey filled by 100 auditors at Public Accounting Firms (KAP) in Indonesia. The survey was distributed through Google Forms for two months in 2021. The data were processed and analyzed using the Partial Least Square (PLS) method with Smart PLS 3 software. The results indicated that auditors' competence and audit quality control positively affect audit quality. Meanwhile, the audit fee does not significantly affect audit quality. This study implies that Public Accounting Firms should optimize employees' soft skills in recruitment and training activities. Additionally, the firms are expected to improve supervision and increase the auditors' work commitment to strengthen audit engagement quality. © 2023 SCMS Group of Educational Institutions. All rights reserved.

The impact of risk-taking and auditor characteristics on value creation in pre-Covid 19 and post-Covid 19 pandemic: MRN

PurposeThis study aims to investigate the impact of risk-taking and auditor characteristics on value creation in companies listed on the Tehran Stock Exchange. In addition, it investigates the moderator role of auditor characteristics in the impact of risk-taking on value creation, especially in pre-Covid 19 and post-Covid 19 pandemic.Design/methodology/approachThe information about 199 company in 2014–2021 was examined. In the present study, in accordance with the related theoretical literature and the importance of auditor specialization, auditor tenure and auditor reputation, these factors were considered as the auditor characteristics.FindingsThe present findings based on the generalized least squares (GLS) method showed that risk-taking positively affects the value creation. The auditor characteristics (auditor specialization, auditor tenure and auditor reputation) have a significant positive effect on the value creation. Furthermore, the auditor characteristics enhance the impact of risk-taking on value creation. The results of generalized method of moments method and robust regression analysis are consistent with the GLS results. To take into account the Covid-19 conditions, the data were divided into pre-Covid-19 and post-Covid-19 years. The results showed that auditor characteristics moderate the impact of risk-taking on value creation in pre-Covid 19 and post-Covid 19.Originality/valueThe study highlights the role of auditor characteristics in the value creation, especially in the emerging market. Given that Covid-19 has seriously damaged global economic well-being and has put companies at a double risk, the present findings can be useful for managers, investors and the international community, and help company managers make risk-taking policies and select auditors with appropriate characteristics.

Mitigating the Negative Impacts of Job-Related Stress: Certified Public Accountant

Work-related stress has intensified for those in public accounting in recent years due to a multitude of factors, including increased reporting and compliance requirements, public concern over financial accounting scandals, a shortage of entry-level accountants, and of course the disruption caused by the global COVID-19 pandemic. Individuals experiencing overload feel that they have too many responsibilities or activities expected of them to complete given available time, abilities, and other constraints (J.R. Rizzo, R.J. House, and S.I. Lirtzman, "Role Conflict and Ambiguity in Complex Organizations," Administrative Science Quarterly, pp. 150-163, 1970). A known presence of ambiguity should lead firm management to improve poor channels of communication, and to provide clearer guidance in the form of performance criteria, methods, and job descriptions. In its Core Competency Framework for Entry into the Accounting Profession, the AICPA emphasizes the importance of leadership skills, including the ability to motivate others, facilitate the development of consensus, and chair teams (https://bit.ly/4143V25, 2018).

Clients' digitalization, audit firms' digital expertise, and audit quality: evidence from China

PurposeThis study aims to examine whether clients' degree of digitalization and audit firms' expertise in information technology (IT) influence audit quality (AQ).Design/methodology/approachData of Chinese A-share firms listed on the primary board of the Shanghai and Shenzhen stock exchanges from 2011 to 2019 are taken as the sample. All the data are obtained from the China Stock Market and Accounting Research. Clients' digitalization is determined using the keywords "AI technology,” "blockchain,” "cloud computing,” "big data technology” and "digital technology.” Auditor firm's digital expertise is determined by the proportion of higher IT expertise. As the proxy for AQ, this study uses audit fees, given that its quantum reflects the effort auditors expend that in turn affects the AQ.FindingsA fixed-effect regression model shows that clients with high digitalization attain AQ. This study also finds a significant and positive coefficient of audit fees, indicating that AQ is high in the same situation if an audit firm's IT is mature and developed. Furthermore, results confirm the moderating effect of clients' digitalization and auditors' expertise and on AQ. Auditors' expertise in IT mitigates the audit risk and increase AQ.Originality/valueFindings can enhance AQ and corporate governance literature by clarifying how external audits must evolve through digitalization and incorporating newly developed digital tools such as big data, analytics, artificial intelligence and robotic process automation. This study also provides important insights regarding how the development of new digital tools allow the audit profession to perform as a corporate governance mechanism.

Análisis de los criterios de revelación financiera por efectos de la pandemia por COVID-19 de empresas cotizadas chilenas y peruanas

Esta pesquisa qualitativa permitiu analisar e descrever a natureza das revelações em notas aos estados financeiros anuais de 2019 e intermédios de 2020, em firmas chilenas e peruanas listadas no contexto de pandemia por COVID-19, sob o marco da teria institucional. Os resultados do estudo confirmam que o nível de revelação sobre o impacto da COVID-19 não cumpre com todos os critérios da normativa e recomendações apesar da influência institucional de entes reguladores e firmas de auditoria. Mesmo que algumas empresas revelam informação sobre efeitos financeiros, um grande grupo não tem sido capaz de quantificá-los e tem acabado afetando o cumprimento do objetivo da informação financeira segundo NIIF de utilidade para a toma de decisões. Isto tem levado a encontrar uma influência institucional mimética ou normativa do efetivo cumprimento das NIIF ou recomendações de firmas de auditoria.Alternate abstract:Cette recherche qualitative nous a permis d∂analyser et de décrire la nature des divulgations dans les annotations des états financiers annuels 2019 et intermédiaires 2020 des sociétés cotées chiliennes et péruviennes, dans le contexte de la pandémie de COVID-19, encadrées dans la théorie institutionnelle. Les résultats de l∂étude confirment que le niveau de divulgation de l∂impact de COVID-19 ne répond pas à tous les critères des réglementations et recommandations, malgré l∂influence institutionnelle des régulateurs et des cabinets d∂audit. Si certaines entreprises publient des informations sur les effets financiers, un grand nombre d∂entre elles n∂ont pas été en mesure de les quantifier et ont fini par nuire à la concrétisation de l∂objectif d∂une information financière IFRS utile à la prise de décision. Cela a conduit à trouver une influence institutionnelle ou réglementaire mimétique de la conformité effective aux IFRS ou aux recommandations des cabinets d∂audit.Alternate abstract:Esta investigación cualitativa permitió analizar y describir la naturaleza de las revelaciones en notas a los estados financieros anuales del 2019 e intermedios del 2020, en empresas chilenas y peruanas cotizadas en el contexto de pandemia por COVID-19, bajo el marco de la teoría institucional. Los resultados del estudio confirman que el nivel de revelación sobre el impacto de la COVID-19 no cumple con todos los criterios de la normativa y recomendaciones a pesar de la influencia institucional de entes reguladores y firmas de auditoría. Si bien, algunas empresas revelan información sobre efectos financieros, un gran grupo no ha sido capaz de cuantificarlos y ha terminado afectando el cumplimiento del objetivo de la información financiera según NIIF de utilidad para la toma de decisiones. Esto ha llevado a encontrar una influencia institucional mimética o normativa de efectivo cumplimiento de las NIIF o recomendaciones de firmas de auditoría.Alternate abstract:Under the framework of institutional theory, this qualitative research analyzes and describes the disclosure nature in the notes to the 2019 annual and 2020 interim financial statements of Chilean and Peruvian listed companies in the context of the COVID-19 pandemic. Despite the institutional influence of regulators and audit firms, the findings confirm that the level of disclosure on the impact of COVID-19 does not meet all the regulation and recommendation criteria. Although some companies disclose information on financial effects, a large number of them have been unable to quantify them, affecting compliance with the objective of IFRS financial information, useful for decision making. This has allowed to identify a mimetic or normative institutional influence of effective compliance with IFRS or audit firms' recommendations.

Impact of Remote Audit, Computer Literacy, and Audit Software Skill to Audit Quality during Pandemic of Covid-19

In order to face industrial revolution 4.0 auditors must start developing their skills. In the past, auditors have used remote audit only to reach remote places. However, currently Covid-19 comes and encourages even more the use of technology and provides an opportunity to rethink the way audits are conducted. In this study, researchers wanted to know how remote audit, computer literacy and audit software skill has affected audit quality. This research is quantitative in nature, by processing data using primary data obtained from distributing questionnaires to auditors who work at public accounting firms in Jabodetabek. Statistical analysis used multiple linear regression, previously carried out a feasibility test through validity, reliability and classical assumption tests. The results showed that the variables of remote audit, computer literacy and audit software skill had a significant effect on the audit quality. © 2022 ACM.

Analysis of Impact of Competency, Professionalism, and Audit Deadline on Remote Audit Effectiveness

Auditors must begin to develop their skills to face industry 4.0. The spread of Covid-19 has further encouraged auditors to conduct remote audits and provides an opportunity to rethink the way audits are conducted. In this study, the researcher wanted to find out how the influence of competence, professionalism, and audit deadlines on the effectiveness of remote audits. This research is quantitative, with data processing using primary data obtained from distributing questionnaires to auditors who work at Public Accounting Firms in Jakarta. Statistical analysis using multiple linear regression, before conducting a feasibility test through validity, reliability and classical assumption tests. The results showed that the variables of competence, professionalism, and audit time limit had a significant effect on the effectiveness of remote auditing. © 2022 ACM.

Auditors' response to regulators during COVID-19: disclosures of key audit matters

PurposeNew Zealand regulatory bodies guided preparers and auditors of financial statements to deal with potential COVID-19 impacts on the financial statements and audit procedures. This study provides evidence of auditors' response to the impact of COVID-19 on the reporting of key audit matters (KAMs) in audit reports of listed companies in New Zealand. The purpose of this paper is to address this issue.Design/methodology/approachA sample of 50 New Zealand listed companies was selected to compare the KAMs in 2019 (pre-COVID-19) and 2020 (during COVID-19). The study uses content analysis to evaluate the KAMs' disclosures and descriptive analysis to examine the differences between 2019 and 2020 in terms of the auditor type, industry sector and accounting standards.FindingsAuditors responded positively to the request from regulators to communicate the impacts of COVID-19. The findings show an increase in the amount and length of KAMs in 2020 compared to 2019, with 82% of companies and 61% of KAMs reporting the impact of COVID-19. The real estate and information technology sectors disclosed more on the impact than other sectors. In analysing the KAMs, accounting standards for inventories, property plant and equipment, impairment of assets, investment property, revenue from contracts with customers and leases were highly affected by COVID-19.Practical implicationsThe findings support regulators to evaluate how well auditors communicated matters relating to COVID-19 in the audit report. Also, the findings will help standard setters to identify key accounting standards affected by COVID-19 of KAMs and provide insights to users on how the KAM reporting enhances communicative value during the pandemic.Originality/valueThe current study captures the impact of COVID-19 on the reporting of KAMs by comparing changes before and during the pandemic.

The Rise of the Legal Consultant

In this article Matthew Leopold, Head of Brand and Communications at LexisNexis, discusses the rise of the legal consultant and concludes that while the platform model is positioned well as a disrupter, the traditional law firm model is not going away anytime soon, with talent retention likely to become the biggest challenge for all legal firms over the next few years.

Analysis of Factors Affecting Acceptance of Audit Software for External Auditor during Pandemic of Covid 19

This study uses a modified UTAUT model to examine the variables that influence external auditors' approval of audit software. The survey approach is used in this study to gather data, and SmartPLS 3 is used to process the data. Purposive sampling was used to choose 180 respondents from the study's population of auditors who work for DKI Jakarta Public Accounting Firm and often use audit software. The findings indicated that social influence and the ease of internet access had an impact on behavioral intention, while performance expectations and effort expectations had no discernible affect on behavioral intention to adopt audit software. Additionally, this study demonstrates that supportive conditions had an impact on use behavior, whereas behavioral intention had little to no impact on how people used audit software. Gender, but not other relationships, can attenuate the influence of effort expectancy on behavioral intentions. The size of the audit organization has no bearing on the effects of behavioral intention and software usage. © 2022 IEEE.

A Practical Roadmap for Introducing Agility to Certified Public Accounting Firms: Certified Public Accountant

Fueled by competition, technological changes, and the impact of COVID-19, the landscape for certified public accounting firms is more competitive and dynamic than ever. Organizational agility has become an important feature in empowering firms to turn these potential challenges into opportunities to thrive. This article provides guidance about how an accounting firm can use firm-centric teams to introduce agility into the organization. Based on one firm's case study and academic theory, the authors highlight four distinct phases that firms can follow, from the initial phase of team formation until the final phase of self-governance.

Enhancing Employee Resilience: Certified Public Accountant

[...]enhancing employee resilience levels can have a powerful protective effect against three common causes of job stress: role overload, role conflict, and role ambiguity. Both of these situations are expected to become more frequent and intense as the world faces challenges presented by the digital age, natural disasters related to global climate change, and economic disruptions such as the worldwide COVID-19 pandemic. * Role conflict arises when employees are given incompatible (or contradictory) instructions. Research by Ronald Jelinek and Kate Jelinek ("Auditors Gone Wild: The Other Problem in Public Accounting," Business Horizons, vol. 51, pp. 223233, 2008) shows that auditors are particularly prone to role ambiguity arising from shortages of experienced staff, internal control auditing procedures required by the Sarbanes-Oxley Act (SOX), and regulations related to highly publicized accounting scandals (e.g., Dodd-Frank). The importance of stress arousal should not be overlooked, however, as each of its reported relationships with the three organizational outcomes were also statistically significant. [...]though not illustrated graphically, role conflict, role ambiguity, and

Research trends in disruptive technologies for accounting of the future – A bibliometric analysis

Research Question: Is there a gap in research preferences on disruptive technologies between academia and practitioners? Motivation: Disruptive technologies in accounting represent a new evolutionary phase of accounting impacted by emerging technologies that are part of industrial revolution 4.0. The relevance of emerging technologies, their potential, and the opportunities they offer for the accounting profession attract both academia and professionals with accelerated research efforts. Academia and scientific researchers must research and provide an appropriate theoretical basis to help practitioners better adapt and increase their awareness and trust in technology. Idea: This paper provides early quantitative research data on publication trends related to most disruptive technologies in accounting such as big data, data analytics, cloud, artificial intelligence, and blockchain. Data: The data were collected through detailed analysis and research of websites and publishing platforms on Big Four accounting firms, professional accounting associations, and institutes, and selected high-ranking journals for the period from 2016 to 2020. Tools: The research was conducted using bibliometric analysis to identify how many articles were published by individual parties. Findings: The results highlight that there are no significant discrepancies or different views of academia and practitioners. It is a positive result indicating that academia and scientific researchers exploit in the same direction as practitioners, thus providing support for adaptation and alignment to technology trends. Contribution: The significance of the results of such research is important for obtaining directions in which the academy should research in the future but also for the regulators as well.

Factors Affecting the Implementation of Remote Audit in the Audit Process in the COVID-19 Pandemic

This study aims to analyze the factors that affect the implementation of a remote audit with the UTAUT model. This study uses a survey method for data collection and uses SmartPLS 3 for data processing. The population of this study is auditors who work at a Public Accounting Firm in DKI Jakarta and use remote auditing while working. A sample of 90 respondents was obtained by purposive sampling. The results showed that the convenience of online access, performance expectations, and social influences significantly affected behavioral intentions. However, effort expectations had no significant impact on behavioral intentions. This study also shows that behavioral intentions significantly affect usage behavior, while the facilitation condition has no significant effect on the behavior of using remote audits. © 2022 ACM.

Guest editorial: Accounting in transition: influence of technology, sustainability and diversity

The conference saw a line-up of experts which among others included The Honourable James Shaw, Minister of Climate Change in New Zealand, who promoted the incorporating of climate change information as a part of the New Zealand financial reporting framework;and Distinguished Professor Paul Spoonley who shared his knowledge, experiences and thoughts on diversity and ethnicity. Impact of technology on the required skills of tomorrow’s accountants The adoption and use of new technology such as intelligent automation, big data, blockchain and cloud-based software have brought about significant changes to the accounting profession (Qasim and Kharbat, 2020). The authors find a climate of positive attitude towards new technology and accompanying actions in the Big-Four firms and that financial auditors are providing deep business insights through data visualisation. The manuscripts on the technological influences on accounting suggest that digital transformation has radically changed the nature of accounting practices and for accountants to be ready to leverage the potential of digital tools, they need to focus on developing their core competencies through lifelong education and skill development training.

Potential barriers towards achieving greater diversity: the case of Pasifika underrepresentation in accounting

Purpose>This paper aims to provide a commentary on how the accelerated utilisation of online learning in accounting education could further impede Pasifika students from completing an accounting qualification, thus perpetuating Pasifika underrepresentation in accounting.Design/methodology/approach>This commentary is based on the authors’ experiences and informal conversations with teaching colleagues and support staff. This paper uses Bourdieu’s (1977, 1990) theory of practice with a focus on his notion of symbolic violence to evaluate the challenges faced by Pasifika students in the learning of accounting.Findings>The social world is inherently unfair, and this can be seen in the inequality that persists in various settings, one of which is in the accounting field. Acquiring an accounting degree requires studying accounting content, which is taught and assessed in a particular way. Unfortunately for the Pasifika learner, learning and assessment in accounting education are according to the demands and rules of the accounting field. These demands and rules, with the increased utilisation of online learning, are at odds with the Pasifika student’s habitus. Thus, Pasifika accounting students are likely to be disadvantaged by the increased utilisation of online learning. This could potentially exacerbate their underachievement in accounting education and prolong Pasifika underrepresentation in the accounting profession.Practical implications>This paper contributes to teaching practice by bringing to the fore the potential of online learning as an additional impediment for Pasifika students in accounting education. This will help inform policymakers, tertiary institutions, accounting accreditation bodies, educators and support staff and could result in the formulation of suitable strategies to better support Pasifika students in online learning.Originality/value>This paper is original and provides a critical analysis of how some groups in society will be disadvantaged by the increased utilisation of online learning in accounting education, thus further hindering the slow progress in achieving greater diversity in the accounting profession.

The impact of emerging technologies on accounting curriculum and the accounting profession

Purpose>In this commentary, the author uses the development of data analytics curriculum at DePaul University as an example to highlight possible challenges and share the experience. In addition, seven different possible future research directions are identified so the readers are able to understand more about the impact of emerging technologies on the accounting profession and accounting curriculum.Findings>Challenges and experience when developing data analytics curriculum at DePaul University are discussed. In addition, seven different possible future research directions are identified so the readers are able to understand more about the impact of emerging technologies on the accounting profession and accounting curriculum.Originality/value>This paper expresses the author’s viewpoints regarding the impact of emerging technologies on accounting curriculum and the accounting profession.

Accounting students' perceptions of work–life balance, accounting career image and intention to pursue accounting careers

Purpose>The purpose of this study is to discover the impact of work–life balance on the intention to pursue accounting careers through accounting career image.Design/methodology/approach>The study managed to collect 693 closed questionnaires, using the five-point Likert Scale, from accounting students in several universities in Java, Sulawesi and Kalimantan, as the three most densely populated islands in Indonesia. The research model is analysed using partial least square method as a part of structural equation modelling.Findings>There are positive and significant influences between work–life balance and the intention to pursue accounting career when supported by accounting career image. The positive perception of accounting career image motivates accounting students to pursue accounting careers. Accounting students argue that attaining a balance between work and personal life can improve positive perceptions of accounting careers, which drive them to pursue a career in accounting. Work–life balance is an essential factor due to the fact that it can, directly and indirectly, affect the intention to pursue accounting careers. In addition, positive image of accounting profession is found to be able to strengthen the positive influence of the work–life balance to pursue accounting careers.Research limitations/implications>Further studies can continue along the line of this study as the intention to choose an accounting career can change from time to time. In addition, the generational difference may create a discrepancy in perception and orientation in choosing accounting careers. Therefore, future studies should consider a broader scope and more updated objects.Practical implications>The findings suggest that working experience is an essential part for accounting students in choosing accounting careers, and so higher education institutions need to consider including field work-practice in their curriculums. Companies are also expected to prioritise work–life balance since it will motivate accounting students to choose an accounting career.Originality/value>This study investigates the link between work–life balance and decisions to pursue accounting careers through accounting students' perceptions in Indonesia. This study combines the influences of work–life balance and accounting career image on the intention to pursue accounting careers in one model, in which accounting career image is the mediating variable in the indirect link of work–life balance.

Attributes of corporate boards and assurance of corporate social responsibility reporting: evidence from the UK

Purpose>This study aims to investigate the relationship between the attributes of corporate boards in UK companies and their tendency to assure their corporate social responsibility (CSR) reports.Design/methodology/approach>From the agency theory perspective, the authors examine the impact of board attributes on the assurance of CSR reports for the Financial Times Stock Exchange (FTSE) 350 during 2016–2019. The authors used annual integrated reports, companies’ websites and Thomson Reuters Eikon database for data collection and the logistic regression for data analysis.Findings>The results confirm that some board attributes significantly influence a company’s decision to assure its CSR reports. While board size, board tenure, the presence of female board members and female executive directors and Chief Executive Officers (CEOs)’ global working experience positively contribute to CSR assurance (CSRA) decisions, the chairman’s independence negatively contributes to it. However, board independence, board meetings and board financial expertise demonstrate no effect on the CSRA decision.Research limitations/implications>The authors focus on some attributes of board members, but the authors did not consider board diversity in its broader meaning. Moreover, the effect of board committees and their attributes on CSRA was not addressed. The authors also did not consider the impact of scope, the quality level of assurance service and the differences between assurance providers on companies’ decisions to neither undertake CSRA nor choose between assurance providers.Practical implications>The study provides insights into the increasing demand on voluntary assurance to boost the credibility of CSR reports and the role of the board of directors (BOD) in taking this initiative. The findings highlight the importance of board diversity (e.g. gender) in improving transparency and sustainability reporting, which can help policymakers and regulators in shaping future governance policies. Additionally, the findings refer to a drawback in the UK Corporate Governance Code regarding the chairman’s independence, which requires corrective actions from the Financial Reporting Council. The findings raise concern over the small share of audit firms in the assurance service market, despite the growing demand for these services in the UK, which may require more attention to these services from the audit firms.Social implications>Companies are increasingly pressurized, especially after the COVID-19 pandemic, to discharge their accountability to stakeholders and to act in a socially responsible manner in their business activities. CSR reporting is one of the main tools that companies use to communicate their social activities. Understanding the determinants of voluntary CSRA helps to increase the credibility of CSR reports and the favorable response to social pressure.Originality/value>The authors add empirical evidence to the limited literature on CSRA about the role of the BOD in undertaking companies’ social responsibility, improving CSR reporting and reducing information asymmetry. It also highlights the significance of maintaining a balanced BOD in terms of gender, experience and tenure, in minimizing the risk of perpetuating non-transparent integrated reporting.

Growing Today's Accounting Businesses: Certified Public Accountant

The shift in the public accounting firm model was a reaction to clients having access to the preparation of financial statements, reports, schedules, and analytical data as byproducts of their low-cost accounting programs. Moving away from these traditional services, assisting clients with borrowing (including finance leasing) has become more complex, as has risk measurement including internal controls, budgeting and strategic planning, inventory measurement, cash flow management, cost accounting systems, and personal financial planning. Nontraditional Services Added by Some Accounting Firms * Real estate and facilities management * Back office and supply chain operations * Networked billing and collections * Cost segregation * Research and development tax credit studies * Transfer pricing studies * Tangible and intangible asset appraisals * Forensic investigative services * Business valuations based on long-term value creation rather than projected cash flow and return on investment * Succession planning and training * Investment banking services * Merger, acquisition, and transactions advisory services * Asset and wealth management * Family office services * Insurance and risk management * Human resource management * Employee benefit plan conceptualization, establishment, oversight, and management * Medical practice, hospital and care facilities revenue optimization * Chief financial officer on demand service * Strategic, innovation, and change management planning and implementation * Business management optimization * Cybersecurity and incident remediation * Turnkey web-based commerce sites * Technology and vendor selection, and adaption and implementation * Data privacy, compliance and security, and customer immersion * Government agency regulation compliance risk assessments * Electronic discovery * Sustainability attestation