Download or read book Do Corporate Governance Measures Impact Audit Pricing of Smaller Firms Evidence from the United States and New Zealand written by Umapathy Ananthanarayanan and published by . This book was released on 2019 with total page 18 pages. Available in PDF, EPUB and Kindle. Book excerpt: Motivated primarily by the claims that audit committee independence and accounting expertise and CEO compensation influence audit fees, this study examines the effect of such factors, on audit fees in two different institutional settings in the post-Sarbanes Oxley Act (SOX) era. The institutional settings are those of the U.S. and New Zealand audit markets, where the U.S. market is more regulated and litigious than the New Zealand market. The study sample comprises firms of similar size from each country. Firms in the U.S. with higher audit committee accounting expertise charge higher audit fees than New Zealand firms. The results also suggest that short-term incentives and total compensation in both the countries are considered as audit risk and priced accordingly even though N.Z. firms operate in a different regulatory environment. Study findings suggest that firms with better corporate governance arrangements in the post-SOX era in the U.S. demand a better audit effort from audit firms and pay higher audit fees.
Download or read book Audit Fees in Family Firms written by Chiraz Ben Ali and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Family businesses are an important part of the world economy (Anderson and Reeb, 2003) and differ considerably from non-family firms with regard to corporate governance. However, despite their difference, family businesses have received relatively little research attention. Our study contributes to this growing research by empirically investigating the relationship between family shareholding and audit pricing. Using a sample of 3,291 firm-year observations of major U.S. listed companies, for the 2006-2008 period, our results demonstrate that audit fees are negatively associated with family shareholding after taking into account time-varying effects and industry effects as well as traditional control variables. The empirical results are robust to alternative family shareholding measures and estimation model specifications. Our results are consistent with the convergence-of-interests hypothesis suggesting that family firms face lower manager/shareholders agency costs. Auditors charge lower fees for family firms because of lower information asymmetry and risk given that the controlling family is well informed about the firm and is better able to monitor managerial decisions.
Download or read book Corporate Governance Fees for Non Audit Services and Accrual Choices written by David F. Larcker and published by . This book was released on 2009 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the relation between the relative amount of fees paid to auditors for non-audit services and the behavior of accrual measures. We extend prior research in two important directions. First, using a pooled sample of 2,295 firms for the fiscal year 2000, we find very little evidence of a relation between the provision of non-audit services and measure of accruals. However, there appears to be three distinct clusters of firms where only one cluster (consisting of only about 20 percent of the sample) exhibits a statistically positive association between non-audit fees and accrual behavior. Second, we examine the corporate governance characteristics of firms in the cluster with a positive association between non-audit fees and accrual behavior relative to the remaining firms. We find that this subset of firms have a smaller market capitalization, lower institutional holdings, higher insider holdings, smaller board of directors (and audit committee), and lower percentage of independent board (and audit committee) members. These results suggest that the provision of non-audit services is potentially problematic only for a small subset of firms that appear to be de facto controlled by management.
Download or read book Sarbanes oxley Act written by United States Government Accountability Office and published by Createspace Independent Publishing Platform. This book was released on 2017-09-13 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: Congress passed the Sarbanes-Oxley Act to help protect investors and restore investor confidence. While the act has generally been recognized as important and necessary, some concerns have been expressed about the cost for small businesses. In this report, GAO (1) analyzes the impact of the Sarbanes-Oxley Act on smaller public companies, particularly in terms of compliance costs; (2) describes responses of the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) to concerns raised by smaller public companies; and (3) analyzes smaller public companies' access to auditing services and the extent to which the share of public companies audited by mid-sized and small accounting firms has changed since the act was passed.
Download or read book Audit Pricing Accruals and Firm Value written by Jun Zhan and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Auditing Trust and Governance written by Reiner Quick and published by Routledge. This book was released on 2007-10-17 with total page 302 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this important new book, the European Auditing Research Network gives a timely appraisal of the regulatory environment for financial accounting and auditing in the wake of a series of high profile scandals involving major corporations.
Download or read book Corporate Governance and Audit Fees written by Paul A. Griffin and published by . This book was released on 2008 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study derives and tests an economic framework that explains the relation between corporate governance and the fees paid by companies for auditing. Importantly, our framework posits and we find that auditing and governance are co-determined by two countervailing relations, namely, a fee-increasing relation because auditing services provide one means to attain better governance, and a fee-decreasing relation because auditors incorporate the benefits of better governance in pricing their services. The study period provides an interesting setting for testing the framework because it covers the passage of the Sarbanes-Oxley legislation, which imposed substantial cost on many companies to strengthen governance, including increased spending on auditing and internal control. Yet, after controlling for such increased spending, our results also suggest that better governance reduces the cost of auditing. Our framework explains that this offset occurs because even though better governance (including auditing) is costly, it also enhances the quality of financial statements and internal controls, which enables auditors to decrease the price of audit risk and reduce fees.
Download or read book The Composition and Effectiveness of Audit Committees of New Zealand Listed Companies written by Elizabeth Rainsbury and published by . This book was released on 2006 with total page 558 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Internal Control Corporate Governance and External Audit Fees written by Jun Ling and published by . This book was released on 2007 with total page 222 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Impact of Corporate Governance on Auditor Independence written by Ismail Adelopo and published by . This book was released on 2010 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The thesis explores the relationship between Audit Committees and External Auditors? fees of a sample of FTSE 350 companies in the UK for the period of 2005-2006. This is achieved by providing answers to three main research questions. First, what are the determinants of Audit Committee activity? Second, what is the relationship between Audit Committee activity and external auditors? fees? Third, what is the relationship between audit and non-audit fees and how does the Audit Committee affect these? Starting out with an Agency Theoretical background, the study found evidence consistent with the views that a higher proportion of Independent Non-Executive Directors on the board enhances Audit Committees? activity, but the presence of financial expertise on the committee was not found to be statistically significant in explaining its activity. The thesis also documented evidence that shows that Audit Committee activity is inversely related to managerial ownership of shares in companies. In line with the economic theory of auditing, the researcher used fees paid to the external auditor to proxy for the level of economic bonding between auditors and their clients. Higher fees are interpreted to indicate compromised independence. Five alternative measures of economic bonding were used. The researcher found a stable and statistically significant positive relationship between measures of economic bonding and Audit Committee activity. This finding is consistent with the view that Audit Committees buy more services from the auditors in order to enhance auditing and reporting quality. Strong positive relationships between audit and non-audit services and vice versa were found using a single equation fees model but these relationships were not consistent when the researcher controlled for endogeneity between audit and non audit fees using Simultaneous Equation Models (SEM). Audit Committee activity was not statistically important in these relationships. This evidence taken together supports the proposition that economies of scope exist in the joint provision of both audit and non-auditing services to the same client. Finally the thesis also documents evidence that suggests that knowledge spill-over flows from non-audit services to auditing services and that auditor do not use audit as a loss leader.
Download or read book Auditing in the Time of Covid the Impact of Covid 19 on Auditing in New Zealand and Subsequent Reforms written by David Hay and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: PurposeThis special issue paper aims to describe the early effects of COVID-19 on auditing in New Zealand, and the subsequent reforms that the authors expect will follow.Design/methodology/approachThe authors use published sources to discuss the impact of COVID-19 on auditing, and potential reforms.FindingsCOVID-19 was at first expected to have a substantial impact on audit outcomes such as audit opinions. The effects that eventuated have been much less substantial so far. Nevertheless, the authors expect reforms to auditing to take place, especially including non-audit services, reports on inspections of auditors and more reporting on going concern issues by directors, followed by increased responsibility for auditors. In future, there may be further changes including reform to the liability of auditors, reporting on internal control, more responsibility for fraud and changes to corporate governance.Research limitations/implicationsLimitations include the ongoing nature of the COVID-19 crisis. Further effects may yet eventuate.Practical implicationsFinancial report users and auditors should anticipate changes.Originality/valueThis paper provides early evidence of the impact of COVID-19 on New Zealand auditing and predicts changes to the regulation of auditing.Full paper available at https://doi.org/10.1108/PAR-09-2020-0155.
Download or read book Doing Business 2020 written by World Bank and published by World Bank Publications. This book was released on 2019-11-21 with total page 241 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seventeen in a series of annual reports comparing business regulation in 190 economies, Doing Business 2020 measures aspects of regulation affecting 10 areas of everyday business activity.
Download or read book Do Auditors Price Audit Committee s Expertise The Case of Accounting Vs Non Accounting Financial Experts written by Gnanakumar Visvanathan and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The issue of whether audit pricing reflects the effectiveness of the audit committee is of fundamental interest to auditors, managers, and others. Auditors are expected to price the effectiveness of the audit committee because it relates to the control risk and thus, the overall audit risk. This study examines the relation between audit fees and a key determinant of the audit committee's effectiveness, i.e., the financial expertise of the audit committee. Though the Sarbanes-Oxley Act mandates the disclosure of a financial expert, the SEC defined experts broadly to include accounting or non-accounting financial experts. Does audit pricing differentiate between accounting and non-accounting financial expertise? For a sample of Samp;P 500 firms for the years 2000 through 2002, we find that after controlling for several board and audit committee characteristics and firm characteristics, audit pricing is negatively related to accounting financial expertise. However, this finding is conditional upon the strength of the overall governance structure. We do not find a significant relation between audit fees and accounting financial expertise for observations with weak governance structure. Overall, our evidence is consistent with the SEC's initial narrow definition to include only the accounting financial experts. The lack of a significant relationship between non-accounting financial expertise and audit fees suggests that auditors perceive only accounting financial expertise contributes to audit committee's effectiveness.
Download or read book OECD Reviews of Regulatory Reform Regulatory Impact Analysis A Tool for Policy Coherence written by OECD and published by OECD Publishing. This book was released on 2009-09-04 with total page 185 pages. Available in PDF, EPUB and Kindle. Book excerpt: This publication brings together recent OECD research and analysis concerning methodological issues and country experiences with regulatory impact analysis (RIA). The collected papers cover a number of challenges to the effectiveness of RIA.
Download or read book Audit Failure of New Zealand Finance Companies An Exploratory Investigation written by Humayun Kabir and published by . This book was released on 2017 with total page 42 pages. Available in PDF, EPUB and Kindle. Book excerpt: Purpose - The setting of private finance companies failing in New Zealand during 2006-12 was characterised by weaker corporate governance and enforcement of securities law. This paper explores audit failure in this setting and examines whether auditors erred in their audits of the failed finance companies and whether the audit failure rate of Big N auditors was different from that of non-Big N auditors. Design/methodology/approach - This paper adopts the archival research method, and utilises three sets of evidence to assess audit failure - the frequency of going-concern opinion (GCO) prior to failure, misstatements in the last audited financial statements, and the violation of the Code of Ethics. Findings - The study found that only 41% of the sample companies received the GCO in their last audit prior to failure, and provides evidence of material misstatements in the financial statements of a number of failed finance companies that received clean audit opinions prior to failure, and breaches of the Code of Ethics by a number of auditors. These results strongly indicate audit failure for a number of failed finance companies. The audit failure rate, however, appears less for Big N auditors than for non-Big N auditors. Practical implications - The study draws the attention of the stock market regulator and the accounting profession to an area, the audit of private finance companies, that needs better quality audits. Originality/value - This paper provides systematic evidence of audit failure in failed finance companies in New Zealand. It also furnishes preliminary evidence of Big N auditors compensating for weaker corporate governance.
Download or read book The Relation Between Auditors Fees for Non audit Services and Earnings Quality written by Frankel Richard M and published by Legare Street Press. This book was released on 2023-07-18 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This groundbreaking study explores the relationship between auditors' fees for non-audit services and the quality of earnings reported by companies. Using data from a large sample of publicly traded firms, the authors show that there is a strong correlation between the two variables, and suggest that this could be a cause for concern for investors and regulators. The authors also provide recommendations for improving the transparency and reliability of financial reporting. This book is essential reading for anyone interested in the intersection of accounting, auditing, and corporate governance. This work has been selected by scholars as being culturally important, and is part of the knowledge base of civilization as we know it. This work is in the "public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
Download or read book Fees Paid to Audit Firms Accrual Choices and Corporate Governance written by David F. Larcker and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the relation between the fees paid to auditors for audit and non-audit services and the choice of accrual measures for a large sample of firms. Using our pooled sample, we find that the ratio of non-audit fees to total fees has a positive relation with the absolute value of accruals similar to Frankel et al. (2002). However, using latent class mixture models to identify clusters of firms with a homogenous regression structure reveals that this positive association only occurs for about 8.5 percent of the sample. In contrast to the fee ratio results, we find consistent evidence of a negative relation between the level of fees (both audit and non-audit) paid to auditors and accruals (i.e., higher fees are associated with smaller accruals). The latent class analysis also indicates that this negative relation is strongest for client firms with weak governance. Overall, our results are most consistent with auditor behavior being constrained by the reputation effects associated with allowing clients to engage in unusual accrual choices.
