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Audit Practice (audit + practice)
Selected AbstractsFinancial Reporting Regulation: The Case of Converging Canadian and International Accounting and Auditing Standards,/LA RÉGLEMENTATION DE L'INFORMATION FINANCIÈRE: LA CONVERGENCE DES NORMES CANADIENNES ET INTERNATIONALES DE COMPTABILITÉ ET DE VÉRIFICATIONACCOUNTING PERSPECTIVES, Issue 1 2008Kathryn Bewley ABSTRACT This paper provides a descriptive analysis of the differences between existing Canadian accounting and auditing standards and the corresponding international standards that Canadian standard-setters have decided to converge them with, at the time of the decisions to converge. The descriptive analysis is based on two reconciliation documents published by the standard-setting boards of the Canadian Institute of Chartered Accountants. The main contributions of the paper are to outline and analyze the differences systematically in the context of prior research on financial reporting regulation and the impact of internationalization of accounting and auditing standards, and to identify key areas of difference that are likely to have the greatest impact on preparers, auditors, and users of Canadian financial statements. The results do not indicate that Canada is moving to a significantly more or less restrictive accounting measurement regime, but it appears that there will be greater disclosure detail required under international accounting standards than under existing Canadian standards. The key accounting difference relates to appraisal values for tangible and intangible assets that are permitted in international standards but not currently in their Canadian counterparts. The findings for auditing standards suggest that international and Canadian auditing standards impose a similar set of requirements on the audit function, and provide a similar degree of detailed application guidance. Differences in standards for the auditor's report and for management's written representations to the auditor are the most significant changes for audit practice in Canada. RÉSUMÉ L'auteure présente une analyse descriptive des éléments qui différencient les normes canadiennes de comptabilité et de vérification existantes et les normes internationales correspondantes vers lesquelles les normes canadiennes devraient converger, selon la position adoptée par les normalisateurs canadiens au moment de trancher la question. L'analyse descriptive se fonde sur deux documents de conciliation publiés par les conseils de normalisation de l'Institut Canadien des Comptables Agréés. Le principal apport de la présente étude est double: elle propose une description et une analyse systématiques des différences entre les normes dans le contexte des recherches précédentes sur la réglementation de l'information financière et l'incidence de l'internationalisation des normes de comptabilité et de vérification, et elle recense les principales sphères dans lesquelles les normes présentent des différences susceptibles d'avoir les conséquences les plus importantes pour les auteurs de l'information, les vérificateurs et les utilisateurs des états financiers canadiens. Selon les résultats de l'étude, le régime de mesure comptable vers lequel s'oriente le Canada ne présente pas un caractère qui serait plus ou moins restrictif, mais tout indique que les exigences en ce qui a trait au détail de l'information à fournir seront plus grandes sous le régime des normes comptables internationales que sous celui des normes canadiennes existantes. La principale différence relevée au chapitre de la comptabilité se rapporte aux valeurs d'expertise des actifs corporels et incorporels qui sont permises dans les normes internationales mais ne le sont pas dans les normes canadiennes actuelles. Quant à la vérification, il semble que les normes internationales et canadiennes imposent à la fonction de vérification un ensemble d'exigences similaires et contiennent des directives d'application d'une précision analogue. Les différences dans les normes relatives au rapport du vérificateur et aux déclarations écrites de la direction sont les changements les plus importants pour l'exercice de la vérification au Canada. [source] Audit Programs and Audit Risk: A Study of Japanese PracticeINTERNATIONAL JOURNAL OF AUDITING, Issue 1 2006Hironori Fukukawa The current paradigm in audit practice for evidential planning is the Audit Risk Model. However, the notion of relevant risks has broadened with the adoption in recent years of holistic audit approaches encompassing business and process risks and an increased focus on fraud risks. This study examines whether audit planning is ,risk adjusted' using archival data from 235 clients from a well-established audit firm in Japan. We address all four aspects of audit planning (nature, extent, timing and staffing) and examine a wider variety of client risks than prior archival studies in order to reflect the current holistic audit approaches of global auditing firms. The main results indicate that although audit planning is based on the level of and change in assessments of many audit risk variables, the associations between client risks and audit plans are rather modest. In this respect, our findings are consistent with those from prior research. We also find that client risks that comprise business risk and fraud risk affect audit planning to some extent. Finally, we report exploratory results suggesting a substitution effect between audit planning judgments in response to higher client risks such as increasing the extent of validity tests while decreasing the extent of confirmations. [source] Determinants of the Timing of Interim and Majority of Audit WorkINTERNATIONAL JOURNAL OF AUDITING, Issue 2 2004Bilal Makkawi This study investigates the effect of the risk of material misstatement at the financial statement level on audit program planning. Using an inventory-production cycle case study, we engaged forty-eight auditors to assess the risk of material misstatement at the financial statement level. The auditors incorporated their assessments in planning the total number of audit hours and the timing of performance of interim tests and the majority of audit work. To further investigate the sources of variation, we classified auditors by their level of audit experience and tolerance-for-ambiguity, and analyzed the effects of these variables on the audit program planning. The results indicate that the risk of material misstatement is statistically significant in explaining changes in the total number of audit hours and the timing of the majority of audit work. Moreover, experience and tolerance-for-ambiguity were significant in explaining changes in the timing of interim tests and majority of work. Interaction between experience and tolerance-for-ambiguity was also significant in explaining the variation in the total number of hours planned for the overall audit work. This result indicated that inexperienced auditors with a low tolerance-for-ambiguity planned more audit procedures than the more experienced auditors with a high tolerance-for-ambiguity. Implications for audit practice and research are discussed. [source] The Impact of Generating Initial Hypothesis Sets of Different Sizes on the Quality of the Initial Set, and the Resulting Time Efficiency and Final Judgment AccuracyINTERNATIONAL JOURNAL OF AUDITING, Issue 1 2004Sudip Bhattacharjee This study examines the impact of generating initial hypothesis sets of different sizes on the quality of the hypotheses generated (i.e., the ability to consider both the direction and accounts that are over- or understated). We also examine the time efficiency, information search effectiveness, and the final judgment accuracy, conditional on the quality of the initial hypothesis set. Sixty auditors performed an analytical procedures task where they were asked to generate and test either a specific number of initial hypotheses (one, three, or six), or any number of hypotheses desired in order to uncover an error seeded in the financial statements. The results indicate that the three hypotheses group initially generated hypotheses of the highest quality and maintained the hypothesis quality after efficiently searching information and generating additional causes. The one hypothesis group improved the quality of their hypotheses only after generating and testing several causes. However, auditors who generated six hypotheses or any number desired (as in audit practice) considered hypotheses of lower quality in the initial set, and did not improve the hypotheses quality after going through the information search stage. These results suggest that the size of the initial hypothesis set can lead to differences in the gains that accrue from the hypothesis generation and information search stages of diagnostic decisions. [source] Eliminating recency with self-review: the case of auditors' ,going concern' judgmentsJOURNAL OF BEHAVIORAL DECISION MAKING, Issue 3 2002Robert H. Ashton Abstract This paper examines the use of self-review to debias recency. Recency is found in the ,going concern' judgments of staff auditors, but is successfully eliminated by the auditor's use of a simple self-review technique that would be extremely easy to implement in audit practice. Auditors who self-review are also less inclined to make audit report choices that are inconsistent with their going concern judgments. These results are important because the judgments of staff auditors often determine the type and extent of documentation in audit workpapers and serve as preliminary inputs for senior auditors' judgments and choices. If staff auditors' judgments are affected by recency, the impact of this bias may be impounded in the ultimate judgments and choices of senior auditors. Since biased judgments can expose auditors to significant costs involving extended audit procedures, legal liability and diminished reputation, simple debiasing techniques that reduce this exposure are valuable. The paper also explores some future research needs and other important issues concerning judgment debiasing in applied professional settings. Copyright © 2002 John Wiley & Sons, Ltd. [source] | ||||||||||