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.

Tangible Rewards for More Than Just Productivity: Examining Canadian Public Accounting Firms' Rewards Programs*

Companies spend significant amounts of money on tangible rewards programs, even during the economic turmoil of the COVID-19 pandemic. The prevalence, growth, and significance of these expenditures highlight the importance of understanding the purpose and use of these programs by organizations. Research on public accounting (PA) firms' compensation plans has focused on the balance between professional and commercial incentives in partner profit-sharing schemes but has failed to examine the incentives for nonpartner audit professionals. However, it is exactly these professionals who do a substantial amount of work on audit engagements. This paper has three main purposes. First, we investigate the nature and composition of PA firms' tangible rewards programs and provide a detailed description. Second, we examine the use of firms' tangible rewards programs to provide evidence of what actions are being rewarded. We use Almer et al.'s (2005, Behavioral Research in Accounting 17: 1-22) framework, which presents dimensions of the auditors' professional contribution, and explores whether firms recognize these dimensions using tangible rewards. Third, we develop future research questions to help explore the use of tangible rewards in firms without structured output. We collect archival data on the use of tangible rewards from each of the Big 4 PA firms and three of the next four largest international accounting firms in Canada. We find that firms use their tangible rewards programs for "building a culture of recognition," for performance incentives, and for employee and firm development, thus rewarding a broad set of measures beyond the incentive measures for hours worked.

The Impact of the COVID-19 Pandemic on Quality of Financial Reports

The Corona Virus Disease pandemic has significant adverse effects on the economy, health, and society that have hampered global economic growth. Taiwan is one of the countries impacted by this pandemic. The pandemic had an enormous influence on the world economy, making the role of financial report quality an even more critical issue. This study aims to examine and evaluate the impact of the COVID-19 pandemic on the quality of financial reports. Additionally, it intends to examine and evaluate the differences between the impact of audit opinion and audit quality on the quality of financial reports before and after the COVID-19 pandemic. This study adopts secondary data, i.e., annual financial reports and audit quality data of public listing firms on the Taiwan Stock Exchange (TSE). Furthermore, this study selected data from 2016 to 2021. This study proves that the COVID-19 pandemic affects the quality of financial reports. Furthermore, this study suggests that the COVID-19 pandemic strengthens the negative impacts of audit opinion on the quality of financial reports using accrual earnings management proxies. However, it also shows that the audit quality did not impact the quality of financial reports proxied by accrual and real earnings management at the beginning of the COVID-19 outbreak.

Corporate going-concern report in early pandemic situation: Evidence from Indonesia.

A going-concern report (GCr) in the audit opinion adds value and ensures that the firm's sustainability is secured. This study sheds light on this relationship of listed infrastructure, utility, and transportation firms in Indonesia as the most affected firms by Covid-19. Data were collected from published audited annual reports and extracted from 73 firms as a sample. Logistic regression was employed to test the hypotheses. The results show the importance of leverage, audit quality, prior opinions, and dividend policy in ensuring corporate GC. In contrast, audit committee and institutional holder as corporate governance indicators are unrelated to GCr. Beyond its contribution to the literature, this study offers valuable feedback for regulatory bodies to consider the enforcement of corporate governance implementation and assists investors in making better-informed decisions. Furthermore, due to a pandemic crisis, a postponed dividend payment has not caused the firm to accept a GCr.

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.

Audit quality and independence concerns after major audit reforms within a developing country: stakeholder perceptions from Vietnam

PurposeThe purpose of this exploratory study is to investigate the perceptions of key stakeholders in Vietnam on the impact on audit quality and independence after major reforms to audit.Design/methodology/approachUsing new institutional sociology, this study seeks to explain how Vietnamese external auditors and accountants have responded to audit reforms and provides perceptions on how audit quality and independence may have been impacted. This study draws on semi-structured interviews conducted with 33 highly experienced participants, representing various stakeholder groups in Vietnam.FindingsThe findings indicate that after almost a decade since the full implementation of the Law of Independent Audit (2011) in Vietnam, the audit and assurance market in Vietnam is characterised by low quality audits, a lack of compliance with standards and auditor independence concerns, specifically amongst the smaller audit practitioners. Participants indicated that competition for new audit clients or retaining existing clients is a priority over improving audit quality and independence.Originality/valueBy examining a combination of different factors relating to audit quality and independence, the authors further demonstrate the impact of these factors in Vietnam, helping audit professionals and regulators to have a better and more meaningful understanding of that state of the audit profession. This study also considers audit concerns or issues arising because of the COVID-19 pandemic in Vietnam.

Auditor health and audit outcomes before COVID-19

This study examines whether influenza-like illnesses (ILIs), a potential threat to the conduct of public company audits, are associated with audit outcomes. Because the peak months of flu season overlap with audit busy season, audit offices most at risk of ILIs may be adversely affected. The demanding nature of audit busy season and the culture of audit firms may compel employees to go to work sick, a phenomenon known as presenteeism. When auditors go to work with flu-like symptoms, cognitive functioning is impaired, resulting in brain fog. This impairment may influence auditors' ability to exercise judgment and professional skepticism, leading to adverse outcomes. Using data collected from the Centers for Disease Control and Prevention (CDC) we find that the filing of audit reports is delayed and audit quality suffers in audit offices most at risk of influenza-like-illnesses. The observed effects of health impairments on company outputs have broad implications for both the audit profession and workplaces as a whole. © 2023 Elsevier Inc.

GEOGRAPHIC PROXIMITY AND AUDIT OUTCOMES IN CASES OF COVID–19 PANDEMIC: EVIDENCE FROM INDONESIA

The geographic proximity has faced challenges with the existence of COVID-19 pandemic since 2019. This study aimed to scrutinize the effect of geographic proximity and audit quality by using COVID-19 pandemic as a moderating variable to compare before and after the situation. The samples of this study were Indonesian listed companies from 2018 to 2020 in Indonesia Stock Exchange. This study overcame self-potential selection bias and analyzed using Coarsened Exact Matching and Heckman's 2-Stage Least Square (Heckman 2-SLS). This study found that geographic proximity is significantly associated with the post-pandemic period, whereas geographic proximity did not cause problems before the pandemic. We also provided sufficient evidence of (Coarsened Exact Matching) CEM and Heckman 2-Stage Least Square which found that there were significant and appropriate results of our initial testing. The study implications relate to the auditor to consider pandemic as a factor that has effect on the audit fee. © 2022 Conscientia Beam. All Rights Reserved.

The Impact of Auditor's Competency, Audit Risk, and Professional Skepticism to Audit Quality in Fraud Detection Using Remote Audit

The purpose of this study was to determine the effect of auditors' professional skepticism, audit risk, and auditor competence on audit quality in conducting remote audits in the midst of the COVID-19 pandemic. To determine this effect, the researcher used the Simple Random Sampling method by analyzing the data using primary data with a questionnaire as a tool to collect data. The results of this study indicate that the application of professional skepticism and auditor competence has a significant effect on audit quality. So that these two things are very important to note so that the resulting audit quality is good. Meanwhile, audit risk has no significant effect on audit quality during the COVID-19 pandemic. Audit risk can be minimized by using audit technology that is increasingly sophisticated from time to time. © 2022 ACM.

Corporate characteristics, audit quality and managerial entrenchment during the COVID-19 crisis: evidence from an emerging country

PurposeThe purpose of this paper is to investigate the relationship between some corporate characteristics, audit quality and managerial entrenchment in Tunisian companies.Design/methodology/approachThe multivariate regression model is used for hypothesis testing using a sample of 224 listed observations on Tunisian Stock Exchange during 2014–2020. An exploratory factor analysis of four variables (chief executive officer (CEO) duality, CEO tenure, CEO seniority and CEO age) is used for calculating a unique index assessing the managerial entrenchment.FindingsThe results show a negative and significant relationship between audit quality and managerial entrenchment. The authors also find that firm characteristics affect management entrenchment. Precisely, corporate financial performance and firm leverage show positive connections with managerial entrenchment (ME). Additional analysis confirms the negative impact of the coronavirus disease 2019 (COVID-19) pandemic on managerial entrenchment level.Practical implicationsThe study's findings have practical implications that may be useful to different stakeholders, policymakers and regulatory bodies interested in reducing management entrenchment. This study offers signals to shareholders about specific governance attributes, namely audit quality, that control the extent of manager's entrenchment.Originality/valueThe originality of this paper consists in focusing on developing countries, namely the Tunisian context;while the managerial entrenchment phenomena has been widely examined in developed markets. Moreover, contrary to the overwhelming majority of previous studies that has used individual indexes for evaluating the entrenchment, the authors calculate a mixed index of managerial entrenchment using the principal component analysis based on four governance mechanisms (CEO duality, CEO age, CEO seniority and CEO tenure).

Impact of remote audit on audit quality, audit efficiency, and auditors' job satisfaction

The audit profession has experienced a digital transformation over the last decade with a rapid shift towards remote auditing forced by the recent COVID pandemic. This shift has led to changes related to the way auditors work and perceive. Through a survey of external auditors, this study addresses how the changes from on-site audits to remote audits affect audit success (i.e., audit quality, audit efficiency, and auditors' job satisfaction);we also explore dispositional and situational factors that contribute to remote audit success. Our results show that working remotely leads to high audit efficiency. Auditors' flexibility management competency leads to high remote audit quality and efficiency;and a physical working environment conducive for concentrating on audit tasks is positively associated with audit efficiency and auditors' job satisfaction for remote audits. We also found that working remotely could enhance audit quality and efficiency when the audit firm provides sufficient support to auditors. Our study provides insights for audit firms, regulators, and other stakeholders as they evaluate the many challenges the audit profession faces in achieving remote audit success. © 2023 John Wiley & Sons Ltd.

Covid-19 disclosure: do internal corporate governance and audit quality matter?

Purpose: This study aims to examine the impact of internal corporate governance and audit quality on the level of COVID-19 disclosure in Egypt. Design/methodology/approach: The authors use manual content analysis to measure levels of COVID-19 disclosure in the narrative sections of annual reports. The authors analyze all companies listed on the Egyptian Stock Exchange over 2020–2021. The authors use different regression models to test the research hypotheses. Findings: The analysis adds to the literature in two crucial respects. First, it provides a measure for COVID-19 disclosure in Egypt. Second, it provides evidence that governance mechanisms (board diversity, audit committee [AC] independence), auditor type and audit opinion affect the level of COVID-19 disclosure. The higher level of COVID-19 disclosure is associated with firms with more female directors on the board, being audited by one of the big four audit firms and receiving standard clean audit opinion. While the inexistence of an AC and more executives on the AC negatively affect COVID-19 disclosure levels. Originality/value: To the best of the authors' knowledge, it is the only paper that examines COVID-19 disclosure in the Egyptian context. It is also the first paper that provides evidence on the impact of internal governance and audit quality on COVID-19 disclosure. © 2022, Emerald Publishing Limited.

Research on Quality Improvement Factors of Special Audit for COVID-19 Based on DEMATEL-ISM

In the midst of the COVID-19 pandemic, the standardized management of relief funds and supplies requires audit departments to conduct the special audit and issue audit reports to the public. However, in the context of emergencies, the special audit for COVID-19 is affected by a variety of complex factors, and it is necessary to further identify the factors that affect the quality of the special audit for COVID-19 and clarify the internal logical relationship. Taking the special audit for COVID-19 as the research object, the influencing factors of the special audit quality were identified and extracted through text coding, and the DEMATEL-ISM method of complex factor analysis was used to explain the attributes of factors, sort out the relationship of factors, and divide the hierarchical structure Combined with the results, the improvement direction of the special audit quality for epidemic prevention and control is discussed. © 2022 ACM.

Covid-19 disclosure: do internal corporate governance and audit quality matter?

PurposeThis study aims to examine the impact of internal corporate governance and audit quality on the level of COVID-19 disclosure in Egypt. Design/methodology/approachThe authors use manual content analysis to measure levels of COVID-19 disclosure in the narrative sections of annual reports. The authors analyze all companies listed on the Egyptian Stock Exchange over 2020-2021. The authors use different regression models to test the research hypotheses. FindingsThe analysis adds to the literature in two crucial respects. First, it provides a measure for COVID-19 disclosure in Egypt. Second, it provides evidence that governance mechanisms (board diversity, audit committee [AC] independence), auditor type and audit opinion affect the level of COVID-19 disclosure. The higher level of COVID-19 disclosure is associated with firms with more female directors on the board, being audited by one of the big four audit firms and receiving standard clean audit opinion. While the inexistence of an AC and more executives on the AC negatively affect COVID-19 disclosure levels. Originality/valueTo the best of the authors' knowledge, it is the only paper that examines COVID-19 disclosure in the Egyptian context. It is also the first paper that provides evidence on the impact of internal governance and audit quality on COVID-19 disclosure.

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

Audit quality and independence concerns after major audit reforms within a developing country: stakeholder perceptions from Vietnam

PurposeThe purpose of this exploratory study is to investigate the perceptions of key stakeholders in Vietnam on the impact on audit quality and independence after major reforms to audit. Design/methodology/approachUsing new institutional sociology, this study seeks to explain how Vietnamese external auditors and accountants have responded to audit reforms and provides perceptions on how audit quality and independence may have been impacted. This study draws on semi-structured interviews conducted with 33 highly experienced participants, representing various stakeholder groups in Vietnam. FindingsThe findings indicate that after almost a decade since the full implementation of the Law of Independent Audit (2011) in Vietnam, the audit and assurance market in Vietnam is characterised by low quality audits, a lack of compliance with standards and auditor independence concerns, specifically amongst the smaller audit practitioners. Participants indicated that competition for new audit clients or retaining existing clients is a priority over improving audit quality and independence. Originality/valueBy examining a combination of different factors relating to audit quality and independence, the authors further demonstrate the impact of these factors in Vietnam, helping audit professionals and regulators to have a better and more meaningful understanding of that state of the audit profession. This study also considers audit concerns or issues arising because of the COVID-19 pandemic in Vietnam.

Financial reporting quality during a crisis: a systematic review

Purpose This paper presents a systematic literature review, including content and bibliometric analyses, of the impact of a crisis on financial reporting quality. In addition, this review identifies emerging research themes and provides future directions. Design/methodology/approach The adopted systematic literature review approach finds 29 highly cited articles on the effect of a crisis on financial reporting quality, with an additional seven studies for analysis identified in a review of emerging literature. Findings This study consolidates prior research findings on financial reporting quality during a crisis under four major themes: (1) earnings quality and its determinants;(2) audit quality around a crisis;(3) conservatism, valuation effects and corporate governance;and (4) financial stability and regulations. Mixed and inconclusive findings are documented for most themes, suggesting that this literature is still in its infancy and that room exists for further theoretical refinement. Practical implications The study's findings potentially have important ramifications for managers, standard setters, government regulators and policymakers. By highlighting examples of changes in firms' reporting practices during a crisis, the study provides a context in which to understand the influence or potential influence of the current coronavirus (COVID-19) pandemic on firms' financial reporting practices. Originality/value To the best of the author's knowledge, this is the first study to systematically review and synthesise prior research findings on the quality of financial reporting during economic crises. The study identifies many unexplored research areas regarding crises, with possible direct implications for financial reporting practices. The impact of these issues needs to be carefully considered and understood, with the current coronavirus pandemic demonstrating that firms have the opportunity to compromise ethical aspects of their decisions as they experience pressure to maximise profits.

Factors Affecting Audit Quality in Palestinian Audit Firms in the Gaza Strip During COVID-19 Pandemic

This paper examines factors affecting audit quality in Palestinian audit firms in the Gaza Strip during COVID-19 pandemic. Using the descriptive-analytical technique, a questionnaire was designed to collect data from all Palestinian audit firms in the Gaza Strip. Multiple regression analysis was used to evaluate the data collected from 117 respondents. The findings revealed that the independent variables (i.e. auditor experience, objectivity and independence of the auditor, and the auditor’s awareness of the importance of audit quality) had an impact on audit quality. While this study expands on previous research, it also yields that data might benefit academics and practitioners in their efforts to improve audit quality. © 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.

AUDITING ENGAGEMENT VS. CLIENT BOARD GENDER DIVERSITY AND INDEPENDENCE – ARE THERE ANY RELATIONSHIPS?

The purpose of this paper is to answer the question of whether corporate governance in terms of gender structure of client corporate boards and CEO duality impact client's incentive and ability to engage in high-qualityaudit in companies a year before the Covid outbreak. Private and public corporations are included in the sample and statistical analysis is applied on auditor reports and client board characteristics (gender and independence) to find the existing relationships. The study revealed that client boards are more male-dominated, with much of them having CEO duality experience and therefore more being prone to engage a local auditor, much less to engage an international auditor, and reports are signed by a male auditor in more of the cases. Results also support the fact that auditing companies have been paying attention to gender issues with half of the auditors signing the report being female. It was found that gender composition of client board and CEO duality and audit opinion are not interrelated which is in line with other studies. The paper extends the growing literature on the linkage between audit quality board characteristics and it overcomes the limitation observed in previous studies by testing the idea that gender and independence are variables of primary influence on auditor engagement. © 2022, Goce Delchev University of Shtip. All rights reserved.

Financial Reporting Today Keynote–Fireside Chat: Certified Public Accountant

Separate panels were devoted to the discussion of cutting-edge topics and the impact they are likely to have on standards setting, financial reporting, and enforcement- today and into the future. Another session covered sustainability reporting and environmental, social, and governance (ESG) issues, once niche topics that have become relevant to increasing numbers of investors and stakeholders, as well as regulators. Board member [Kara M.] Stein has decades of experience as a securities lawyer and is a fierce advocate for investor protection. [...]board members [Duane M.] DesParte and [Christina] Ho, our CPAs on the board, in addition to being subject matter experts, also have decades of experience in the private and public sector.