Download or read book Estimation and Interpretation of Individual Auditor s Effects on Audit Quality Measures written by Baolei Qi and published by . This book was released on 2017 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the validity of conclusions on individual auditor quality obtained using four audit measures with the archival data from China. We argue that for an audit quality measure to effectively identify an auditor's quality, two conditions must be satisfied: The measure is directly linked to the quality of information audited by the auditor and the measured auditor effect is indeed caused by the auditor. We posit that the conclusion on an auditor's quality based on an audit quality measure may not be reliable if these two conditions are not satisfied. We then provide empirical evidence that the audit quality estimation models in the extant literature do not provide coherent identifications of individual auditor's quality. Our results imply that some or all of these models may not be well specified to measure auditor quality, suggesting improvements on these models are required. The empirical results in this paper also suggest that researchers need to exercise caution in interpreting the estimation results of the auditor quality from these existing models in the literature.
Download or read book Do Individual Auditors Affect Audit Quality Evidence from Archival Data written by Ferdinand A. Gul and published by . This book was released on 2015 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether and how individual auditors affect audit outcomes using a large set of archival Chinese data. We analyze about 800 individual auditors and find that they exhibit significant variation in audit quality. The effects that individual auditors have on audit quality are both economically and statistically significant, and are pronounced in both large and small audit firms. We also find that the individual auditor effects on audit quality can be partially explained by auditor characteristics, such as educational background, Big N audit firm experience, rank in the audit firm, and political affiliation. Our findings highlight the importance of scrutinizing and understanding audit quality at the individual auditor level.
Download or read book Estimating the Effect of Auditor Tenure on Audit Quality written by Junwei Peng and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: After several major financial scandals, mandatory auditor rotation was raised as a measure to improve the auditor independence. For regulators who are to set mandatory rotation limit need detailed information about the turning points of the inverted U-shaped relationship between audit quality and auditor tenure, such as the statistical implication of a representative turning point of audit quality obtained by OLS estimation based on quadratic model or even the entire distribution of the sample firm-auditors' turning points. These two problems remain unsolved. This paper derived the statistical implication of the representative turning point of audit quality obtained by OLS estimation based on quadratic model. This paper also proposed an estimation method based on survival analysis to estimate the entire distribution curve for the turning points of all the sample firm-auditors in the form of their cumulative probability curve. Mote Carlo simulation was used to the performance of various estimation methods, such as accuracy, robustness, and information usefulness.
Download or read book Government Auditing Standards 2018 Revision written by United States Government Accountability Office and published by Lulu.com. This book was released on 2019-03-24 with total page 234 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audits provide essential accountability and transparency over government programs. Given the current challenges facing governments and their programs, the oversight provided through auditing is more critical than ever. Government auditing provides the objective analysis and information needed to make the decisions necessary to help create a better future. The professional standards presented in this 2018 revision of Government Auditing Standards (known as the Yellow Book) provide a framework for performing high-quality audit work with competence, integrity, objectivity, and independence to provide accountability and to help improve government operations and services. These standards, commonly referred to as generally accepted government auditing standards (GAGAS), provide the foundation for government auditors to lead by example in the areas of independence, transparency, accountability, and quality through the audit process. This revision contains major changes from, and supersedes, the 2011 revision.
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.
Download or read book Opening the Black Box of Audit Quality written by Derrald Stice and published by . This book was released on 2017 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the effect of individual auditor quality (below the partner level) on overall audit quality. We aggregate audit employee-level performance evaluations to create a measure of auditor quality at the office level. We find that high quality audit offices are associated with a lower likelihood of client restatement, fewer client abnormal accruals, and a higher likelihood of a client receiving a going concern opinion. We partition employees into low, medium, and high level, based on job title, in order to investigate which employee levels drive these results. We find that the restatement results are driven by high quality high-level employees (Senior Managers/Directors), while the going concern results are driven by high quality low-level employees (Seniors). Furthermore, we find evidence that high quality audit teams are associated with all aspects of audit quality and the magnitude of these team effects are much larger than those of the effects for any individual employee type. These findings are consistent with higher-level auditors preventing the most serious financial statement deficiencies, low-level employees contributing to audit firm independence, and overall team quality creating synergy which has the strongest effect on all aspects of audit quality. Overall, our empirical results suggest that individual auditor quality is associated with higher quality audits, and that employees at all levels affect audit outcomes.
Download or read book Impact of Audit Time Pressure on Audit Quality written by Janaé Monét McClam and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This quantitative research correlational study aimed to determine the effects of time budget pressure on the auditor and whether those effects impact audit quality. The study population consisted of active external auditors registered with a certified public accounting (CPA) license, employed by CPA firms, who hold a minimum of a bachelor's degree in accounting, and have at least one year of accounting experience auditing financial statements. The population consisted of 1,072. The sample size was 283 participants, and the number of respondents was 287. This study contains two dependent variables, auditor judgment and audit quality, and one independent variable, time budget pressure. One indicator measures auditor judgment: premature signoffs. Two indicators measure audit quality: underreporting of audit time and an auditor's ability to detect material misstatements. Two indicators measure time budget pressure: incentives and emphasis from management to complete an audit on budget or under budget and time pressure felt. To conduct the study, surveys were distributed using an online survey platform link. Using IBM SPSS statistical data software, the researcher tested the validity and reliability of the collected data and performed a Spearman Rh0 correlational analysis to determine whether there was a statistically significant relationship between the variables. The study concluded that time budget pressure has a negative effect on auditors and negatively impacts audit quality.
Download or read book Groups Leadership and Men written by United States. Office of Naval Research and published by . This book was released on 1951 with total page 312 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book The Influence of Inspection Focus on Auditor Judgments in Audits of Complex Estimates written by Amy Christine Tegeler and published by . This book was released on 2017 with total page 258 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Public Company Accounting Oversight Board (PCAOB) seeks to influence auditor behavior and judgments through its inspections. I conduct an experiment that studies how an inspection's focus on procedural implementation versus judgment quality influences an auditor's mindset, which in turn affects auditor judgments. Drawing on mindset theory, I predict and find a procedural inspection focus leads to an implemental mindset, while a judgment quality focus leads to a deliberative mindset. An implemental mindset is characterized by a narrow focus and selective information processing, while a deliberative mindset is characterized by open-mindedness, objective information processing, and cautious decision-making. I predict a deliberative mindset improves an auditor's ability to identify relevant information and objectively incorporate it into their judgments. However, I also predict a deliberative mindset undermines auditor confidence reaching a conclusion, potentially undermining audit quality. I study the effects of mindset on an auditor's evaluation of a complex estimate when the estimate is aggressively biased versus unbiased to interpret the effects of mindset on auditor judgments under different contexts. I find a conditional indirect effect of inspection focus on auditor judgment through mindset, such that judgment-focused deficiencies activate a deliberative mindset, which in turn leads auditors to assess a biased estimate as less reasonable than implemental auditors. I do not find persuasive evidence of deliberative auditors being overly cautious in their judgments of an unbiased estimate or in their decision-making. This study contributes to literature examining how regulators can influence auditor judgments through the inspection process and the effects of mindsets on auditor judgments and decisions.
Download or read book Government Auditing Standards written by Government Accounting Office and published by www.Militarybookshop.CompanyUK. This book was released on 2012 with total page 242 pages. Available in PDF, EPUB and Kindle. Book excerpt: Newly revised in 2011. Contains the auditing standards promulgated by the Comptroller General of the United States. Known as the Yellow Book. Includes the professional standards and guidance, commonly referred to as generally accepted government auditing standards (GAGAS), which provide a framework for conducting high quality government audits and attestation engagements with competence, integrity, objectivity, and independence. These standards are for use by auditors of government entities and entities that receive government awards and audit organizations performing GAGAS audits and attestation engagements.
Download or read book Audit Quality and Risk Differences Among Auditors written by Lisa Tilis and published by . This book was released on 2008 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study tests for differences in audit quality among Big Auditors and between Big Auditors and Small Auditors. The analysis is conducted using four separate quot;auditor erasquot; during the period from January 1980 through December 2003, with each era reflecting the number of Big Auditors in the industry. We begin by explicitly testing the validity of pooling across Big Auditors and time periods using an industry adjusted measure of the variance of earnings quality. These tests, as a proxy for audit quality, show important differences in quality among Big Auditors and across eras. Based on the recognition of these important differences, intercept tests of auditor based asset portfolios, using a three factor asset pricing model, are used to assess systematic risk differences. Results show that there was only one era in which significant asset pricing effects are seen between Big and Small Auditors, and virtually no differences among Big Auditors, despite significant differences in quality. These results indicate the need for reassessment of arbitrary quality distinctions between Big and Small Auditors made in early research.
Download or read book Improving Auditors Consideration of Evidence Contradicting Management s Estimate Assumptions written by Ashley A. Austin and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditors have difficulty evaluating the assumptions underlying management's estimates. One source of these problems is that auditors appear to dismiss evidence contradicting management's assumptions because their initial preference to support management's accounting biases their preliminary conclusions and, thus, their interpretation of evidence. We experimentally examine whether auditors with a balanced focus (i.e., a focus on documenting evidence that supports and contradicts their preliminary conclusion) are less likely to dismiss evidence that contradicts management's assumptions than auditors with a supporting focus (i.e., a focus on documenting evidence that supports their preliminary conclusion). We expect and find that, compared to auditors with a supporting focus, auditors with a balanced focus create documentation that is less dismissive of evidence contradicting management's estimate. Importantly, a balanced focus changes auditors' cognition and affects how auditors interpret contradicting evidence rather than merely increasing their documentation of this evidence. The effects of reduced dismissiveness persist to improve auditors' evaluations of a biased estimate and subsequent actions, improving audit quality in an important and difficult area.
Download or read book Fair Value Measurements written by International Accounting Standards Board and published by . This book was released on 2006 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Individual Auditors Affect Clients Real Activities Manipulation Evidence of Learning and Auditor Quality written by Baolei Qi and published by . This book was released on 2016 with total page 55 pages. Available in PDF, EPUB and Kindle. Book excerpt: We find empirical evidence that clients' real activities manipulation (RAM) varies across individual auditors. More specifically, both audit-firm and individual-auditor fixed effects on RAM are significant; yet only the latter remain significant in regressions including auditors' propensity to issue qualified audit opinions as an explanatory variable. This incremental effect of individual auditors on RAM is beyond what is proxied by qualified audit opinions. We also find that auditors' personal demographics have limited power in explaining RAM's variation. Taken together, these findings suggest that audit quality take root in individual auditors, who influence clients' economic decisions, not just accounting policy choices.
Download or read book Auditors Influence on Clients Accounting Estimates written by Allison Koester and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting estimates are susceptible to managerial errors and bias, thereby generating audit risk. Quantifying and understanding the determinants and consequences of auditors' influence on clients' accounting estimates is therefore important. Using a novel econometric technique, we estimate annual measures of auditors' influence on clients' tax reserves - a complex and subjective account pervasive across industries. Influence varies across audit offices and within audit offices over time. Influence is smaller (larger) in busier audit offices, offices in geographic areas with greater mutual trust, and offices where clients draw employees from a higher-quality workforce (offices with growth in tax non-audit services and more task-specific expertise in auditing tax reserves). We find greater auditor influence is associated with more relevant tax reserves, fewer SEC comment letters related to tax reserves, and fewer tax-related restatements. Our finding that greater auditor influence is beneficial to clients informs auditors, audit committees, regulators, and financial statement users.
Download or read book The Effect of Audit Quality on the Relationship Between Audit Committee Effectiveness and Financial Reporting Quality written by Johanna Miettinen and published by University of Vaasa. This book was released on 2008 with total page 169 pages. Available in PDF, EPUB and Kindle. Book excerpt: Tiivistelmä: Tilintarkastuksen laadun vaikutus tarkastusvaliokunnan tehokkuuden ja taloudellisen tiedon laadun väliseen suhteeseen.
Download or read book Regulation and the Accounting Profession written by John W. Buckley and published by Belmont, Calif. : Lifetime Learning Publications. This book was released on 1980 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt:
