Auditor Client Relationship and Audit Quality

Auditor Client Relationship and Audit Quality
Author: Suhaib Aamir
Publisher: LAP Lambert Academic Publishing
Total Pages: 116
Release: 2011-07
Genre:
ISBN: 9783845415666

Download Auditor Client Relationship and Audit Quality Book in PDF, Epub and Kindle

Different scandals around the globe during the past, in specific during the last decade, have intrigued the stakeholders to question the roles of both auditors and management. But most of the fingers since then have been raised on the role of auditors, because it is the auditors who are entrusted with the responsibility to detect any errors or frauds in the financial reports of the client-firm. Apart from this, the long-term auditor client relationship has been the center of attention in most of the discussions and debates as well. Numerous studies have been conducted by the academic researchers, financial and professional analysts, regulatory authorities and governing bodies, and in some cases by the auditors and the firms as well regarding the effects of long-term auditor-client relationship on audit quality, equity risk premium, financial reports quality, audit pricing etc. These studies provide us with different results, both with the positive and negative associations and effects of long-term auditor-client relationship on the basis of different factors and contexts. Therefore, we would be studying this relationship in between auditors and SME clients.

Understanding Auditor-client Relationships

Understanding Auditor-client Relationships
Author: Gary Kleinman
Publisher: Gary Kleinman
Total Pages: 137
Release: 2001
Genre: Business & Economics
ISBN: 1558761802

Download Understanding Auditor-client Relationships Book in PDF, Epub and Kindle

This work is intended to assist researchers, regulators, and practitioners who are interested in the topic of auditor independence. It presents a comprehensive model of the individual, work place, organization, inter-organizational, and organizational field level determinants of the topic.

Navigating the Auditor-client Relationship During Sensitive Events

Navigating the Auditor-client Relationship During Sensitive Events
Author: Mary Dodgson
Publisher:
Total Pages:
Release: 2017
Genre:
ISBN:

Download Navigating the Auditor-client Relationship During Sensitive Events Book in PDF, Epub and Kindle

Maintaining a positive auditor-client relationship is critical for audit firms, particularly during sensitive events. For instance, audit firms state in transparency reports that they take steps to minimize disruption during audit partner rotations, yet it is unclear what these actions entail or the potential effects of these actions on auditor independence and audit quality. I use multiple methods to provide insight into these practices and their related effects. First, I interview 20 audit partners to learn about the process by which audit firms manage the auditor-client relationship during sensitive partner rotation events. Interviewees describe how audit firms identify appropriate partner candidates and procedures followed to select and prepare the next lead partner. Respondents also elaborate on firms' ongoing relationship-managing activities, including the assignment of non-decision-making liaisons (often referred to as relationship partners or "RPs") to a subset of engagements to assist in navigating the auditor-client relationship during sensitive events (i.e., in preparation for upcoming partner rotations and when contentious auditor-client issues arise). Second, I conduct an experiment with financial executives to examine the influence that RPs may have on the resolution of contentious auditor-client issues. I also consider how RP influence may vary depending on the extent to which the audit partner and client manager have tried, albeit unsuccessfully, to resolve the issue (i.e., negotiation ripeness). I find that, in a traditional setting in which a RP is not involved, client managers concede less toward an audit partner's more appropriate position when the negotiation has reached a more ripe stage than when the negotiation stage is less ripe. However, I find it is at a more ripe stage that RP intervention is more effective in moving client managers toward a resolution, limiting the risk of seeking alternative methods of resolution that may impair the auditor-client relationship (e.g., issuing a qualified audit opinion). Collectively my findings inform regulators and researchers about the ongoing process by which audit firms manage the auditor-client relationship during sensitive events and how one common approach for managing the auditor-client relationship (i.e., assignment of RPs to a subset of engagements) influences the auditor-client relationship and audit quality.

Client Relationship-Building and Audit Quality

Client Relationship-Building and Audit Quality
Author: Joshua Ronen
Publisher:
Total Pages: 51
Release: 2019
Genre:
ISBN:

Download Client Relationship-Building and Audit Quality Book in PDF, Epub and Kindle

This paper presents a model of auditor-client relationship-building. Existing literature suggests that quasi-rents rising from long auditor tenure have a negative effect on auditor independence. In contrast to this conventional wisdom, our paper shows a positive effect of quasi-rents resulting from relationship-building on auditor independence. Prohibiting relationship-building takes away this benefit, and increases the likelihood of an auditor accepting an inaccurate, higher report. This is the first study analyzing the impact of client relationship-building initiated by auditors on audit quality.

Audit Quality

Audit Quality
Author: Jonas Tritschler
Publisher: Springer Science & Business Media
Total Pages: 251
Release: 2013-10-31
Genre: Business & Economics
ISBN: 3658041749

Download Audit Quality Book in PDF, Epub and Kindle

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.

Affiliated Former Partners on the Audit Committee

Affiliated Former Partners on the Audit Committee
Author: Brant E. Christensen
Publisher:
Total Pages:
Release: 2018
Genre:
ISBN:

Download Affiliated Former Partners on the Audit Committee Book in PDF, Epub and Kindle

Researchers and practitioners have expressed the need to understand better the interactions between audit committees and auditors and how these interactions affect audits. Former partners affiliated with the external auditor and serving on the audit committee are a subset of audit committee members who can affect the audit. Consistent with social identity theory, we find that companies with an affiliated partner on their audit committee are less likely to dismiss the member's former firm than companies without the affiliation. Further, we found improved audit quality and increased effectiveness of auditor effort when affiliated partners serve on the audit committee. Finally, this quality improvement occurs contemporaneously with a reduction in audit fees and time spent on fieldwork, suggesting increased efficiency. Our study provides evidence that affiliated former partners on audit committees extend the tenure of the auditor-client relationship while also improving audit processes and outcomes.

Audit Firm Tenure and Audit Quality

Audit Firm Tenure and Audit Quality
Author: Wei Quan
Publisher:
Total Pages: 220
Release: 2007
Genre: Auditing
ISBN:

Download Audit Firm Tenure and Audit Quality Book in PDF, Epub and Kindle

The objective of this thesis is to examine whether the length of the auditor-client relationship (audit tenure) is associated with reduced auditor independence, particularly in terms of auditors permitting excessive earnings management by their clients.

Does the Timing of Auditor Changes Affect Audit Quality? Evidence from the Initial Year of the Audit Engagement

Does the Timing of Auditor Changes Affect Audit Quality? Evidence from the Initial Year of the Audit Engagement
Author: Cory A. Cassell
Publisher:
Total Pages: 53
Release: 2017
Genre:
ISBN:

Download Does the Timing of Auditor Changes Affect Audit Quality? Evidence from the Initial Year of the Audit Engagement Book in PDF, Epub and Kindle

We focus on the first year of the auditor-client relationship and investigate whether audit quality varies with the timing of the new auditor's appointment. We find that audit quality is not lower for companies that engage new auditors before the end of the third fiscal quarter than for companies that do not change auditors. However, companies that engage new auditors during or after the fourth fiscal quarter are more likely to misstate their audited financial statements than companies that engage new auditors earlier in the year and companies that do not change auditors. In additional tests, we find that the decrease in audit quality associated with late auditor changes is more pronounced for companies with complex operations (i.e., more operating segments). These results suggest that the extent to which audit quality suffers in the first year of audit engagements is affected by both the amount of time required to understand the client's business, assess risks, and perform the audit (all of which are driven by client complexity), as well as the amount of time available for auditors to perform these tasks.

The Impact of Auditor Rotation on Audit Quality

The Impact of Auditor Rotation on Audit Quality
Author: Diana Mohamed
Publisher: LAP Lambert Academic Publishing
Total Pages: 296
Release: 2012-04
Genre:
ISBN: 9783848425372

Download The Impact of Auditor Rotation on Audit Quality Book in PDF, Epub and Kindle

This book intends to explain the impact of the extended auditor client relation on the audit quality and suggests the different methods to overcome the cons of such a relationship. The auditor rotation is suggested as way to overcome such cons if they exist. Results and responses of the questionnaire are taken from Egyptian auditors working in the offices of the BIG four audit firms which are operating in Egypt.