			Home About us Contact

Audit Report (audit + report)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

Do Spanish Firms Change Auditor to Avoid a Qualified Audit Report?

INTERNATIONAL JOURNAL OF AUDITING, Issue 1 2003
Nieves Gómez-Aguilar
In this paper we investigate whether Spanish firms employ deliberate strategies in the choice of auditor to avoid audit qualification. For a sample of 735 during the period 1991,96 we found no increase in the probability of changing auditor following an audit qualification. We concluded that this would be too obvious and detrimental to the firm's interests. However, 135 firms do change auditor during the period examined. We found that firms that have been qualified are significantly less likely to move to higher quality auditors than are unqualified firms, when that quality is measured by the specialisation of the auditor, auditor brand name, auditor size and auditor conservatism. For the 92 qualified firms changing auditor the likelihood of a subsequent qualification is significantly related to the quality of the auditor selected. [source]

Empirical Analysis of Delays in the Signing of Audit Reports in Spain

INTERNATIONAL JOURNAL OF AUDITING, Issue 2 2008
Enrique Bonsón-Ponte
This study sets out to analyse the factors that determine delays in the signing of audit reports. The delays are measured as a function of the number of days that elapse from the closure of the accounting period until the date when the audit report is signed. The study has been conducted in Spain, on 105 companies of the Spanish continuous market, from 2002 to 2005. The results obtained utilizing panel data methodology demonstrate that the two factors characterizing the companies that present less audit delay are: classification to sectors that are subject to regulatory pressure, such as the financial and energy sectors; and the size of company relative to its sector. Variables such as audit firm, qualifications or regulatory change show no significant relationship with audit delay in the Spanish context. [source]

Audit Reports on Financial Statements Prepared According to IASB Standards: Empirical Evidence from the European Union

INTERNATIONAL JOURNAL OF AUDITING, Issue 3 2004
Maria A. Garcia-Benau
This paper examines the audit report of 147 firms from the European Union that prepare their financial statements in compliance with the standards developed by the International Accounting Standards Board. Bearing in mind that the consolidated accounts of listed companies will follow IAS from 2005 onwards, the purpose of this paper is to provide some insight into the current outcome of the statutory audit on this information. Interesting conclusions are drawn from this empirical study with regard to the auditing standards applied, the wording used and the differences observed between reports produced by auditors from the big firms and reports from different European countries. The need to harmonise the auditing field is discussed under the results obtained, with the final aim to contribute to the standard-setting debate on the creation of a high quality financial reporting system in the European Union. [source]

Some Empirical Evidence to Support the Relationship Between Audit Reports and Stock Prices , The French Case

INTERNATIONAL JOURNAL OF AUDITING, Issue 3 2000
Bahram Soltani
Acting as an independent intermediary, the auditor facilitates market transactions by providing an ,opinion' on financial statements which should help to reduce the information asymmetry between the company and its potential investors. Whether audit qualifications have informational value to investors is a question that needs further investigation, as previous empirical studies on this issue yield mixed results. Moreover, a majority of the research papers in this area have been conducted in Anglo-Saxon countries, in contrast to continental European countries where very little attention has been paid to the auditors' role in stock markets. The present study is based on a large sample of qualified opinions (543 for the period 1986,1995), using different expected event dates and market models. The results of the study demonstrate the significant negative abnormal returns around the announcement dates of audit opinions. The empirical part of this study was carried out in the French market which has some significant differences from the UK and the USA markets. The author believes that the differences, in the area of reporting, level of disclosure, and accounting and auditing practices, can play an important role in the research field of event studies. [source]

Effects of Multiple Clients on the Reliability of Audit Reports

JOURNAL OF ACCOUNTING RESEARCH, Issue 1 2006
ANNE BEYER
ABSTRACT This paper demonstrates the existence of two different kinds of externalities induced by an auditor servicing multiple clients at the same time. First, we show that the capital market price for a client can increase in the number of qualified reports that his auditor issues to his other clients, thus producing a stock price externality. Second, when the audit firm has limited wealth, an additional client can actually decrease the audit quality and increase the average likelihood of audit failure relative to a single-client setting because of reporting externalities. Our analysis also demonstrates how requiring a more effective audit oversight mechanism can actually produce unintended consequences such as an increased likelihood of audit failures. [source]

An Empirical Investigation of Determinants of Audit Reports in the UK

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 7-8 2003
Article first published online: 22 AUG 200, Jennifer C. Ireland
Prior studies of audit reporting in the UK only analyse either very small, private companies, or large listed companies. In addition, these studies focus on narrowly defined types of modified audit reports, respectively the ,small company' audit qualification, and going-concern related modifications. In contrast, this paper employs a multinomial logit model to analyse the determinants of both going-concern and non going-concern related audit modifications, including modifications for disagreements and limitations on scope. Furthermore, this paper analyses reports over a wide range of both private and public (listed and non-listed) companies. The determinants of audit reports are shown to differ between different types of audit modification. In addition, subsidiary companies hiring large auditors are significantly less likely to receive non going-concern related modifications, whereas non-subsidiary companies hiring large auditors are significantly more likely to receive going-concern related modifications. [source]

Australian Audit Reports: 1996,2003

AUSTRALIAN ACCOUNTING REVIEW, Issue 40 2006
ELIZABETH CARSON
In 1996 Australia revised audit reporting standard AUS 702 to align with many of the concepts in the international audit reporting standard ISA 700. These included preventing auditors issuing a "subject to" qualified opinion, and permitting auditors to modify the audit report in specific circumstances by including an emphasis of matter (EoM) paragraph. This research examines the frequency with which different types of opinions are issued and the circumstances giving rise to the inclusion of an EoM paragraph, and compares the types of opinions issued by the major audit firms and for the various industry sectors over the period 1996,2003. [source]

Independence Threats, Litigation Risk, and the Auditor's Decision Process,

CONTEMPORARY ACCOUNTING RESEARCH, Issue 4 2005
Allen D. Blay
Abstract This study examines the effect of independence threats and litigation risk on auditors' evaluation of information and subsequent reporting choices. Using a Web-based experiment, I tracked auditors' information gathering and evaluation leading to a going-concern reporting decision. Specifically, 48 audit managers assessed client survival likelihood, gathered additional information, and suggested audit report choices. I found that auditors facing high independence threats (fear of losing the client) evaluated information as more indicative of a surviving client and were more likely to suggest an unmodified audit report, consistent with client preferences. In contrast, auditors facing high litigation risk evaluated information as more indicative of a failing client and were more likely to suggest a modified audit report. In addition, the association between risk and report choice was fully mediated by final information evaluation. This suggests that it is unlikely that different reporting choices resulted from a conscious choice bias, but rather that motivated reasoning during evidence evaluation plays a key role in the effect of risk in auditor decision making. [source]

Secured Creditor Recovery Rates from Management Buy-outs in Distress

EUROPEAN FINANCIAL MANAGEMENT, Issue 2 2003
David Citron
G33; G32 Buy-out literature suggests that secured creditors will recoup substantial proportions of the funds they extend to finance the initial buy-out. This paper uses a unique dataset of 42 failed MBOs to examine the extent of credit recovery by secured lenders under UK insolvency procedures and the factors that influence the extent of this recovery. On average, secured creditors recover 62 per cent of the amount owed. The percentage of secured credit recovered is increased where the distressed buy-out is sold as a going concern and where the principal reason for failure concerns managerial factors. The presence of a going concern qualification in the audit report and the size of the buy-out reduce the recovery rate by secured creditors. [source]

The Evolution of the Standard Unqualified Auditor's Report in Canada / L'ÉVOLUTION DU RAPPORT TYPE DU VÉRIFICATEUR AU CANADA

ACCOUNTING PERSPECTIVES, Issue 1 2006
MICHAEL MAINGOT
ABSTRACT This study examines the historical development of the auditor's report in Canada. The auditor's report has been significantly influenced by British and U.S. legislation and practices. The English Joint Stock Companies Act of 1844 required compulsory audits and the British audit report was introduced in North America shortly after the introduction of this Act. The legislature prescribed an audit but it did not determine the form and content of the auditor's report; these were left to the individual practitioner. The British influence was strong in Canada up to the 1930s. However, from this time onward, the U.S. influence began to grow. The impact of the landmark case of Ultramares v. Touche on third-party liability and consequent change in the auditor's report is analyzed. The paper uses institutional theory to explore reasons for the similarities of the auditor's report under British influence and under American influence. Specifically, the paper examines how the mechanisms of mimetic, coercive, and normative isomorphism led to institutional change in the accounting profession as organizations adapted their auditors' reports to achieve greater legitimacy. [source]

Empirical Analysis of Delays in the Signing of Audit Reports in Spain

Audit Reports on Financial Statements Prepared According to IASB Standards: Empirical Evidence from the European Union

Do Expert Informational Intermediaries Add Value?

JOURNAL OF ACCOUNTING RESEARCH, Issue 4 2003
Evidence from Auditors in Microcap Initial Public Offerings
Do expert informational intermediaries add value? We address this question by examining the informativeness of the audit report contained in the prospectus associated with a firm's initial public offering (IPO). At the time of the IPO, there is a relative lack of information to facilitate the establishment of equity values, suggesting that the information provided by outside "experts" (e.g., auditors, underwriters) is particularly important. In this article we study small, non-venture-backed IPOs, a segment of the market with the poorest long-run performance and where the prestigious audit firm is often the sole (if any) expert present. We find that the pre-IPO opinions of larger auditors are more predictive of post-IPO negative stock delistings. Of particular note, the opinions of the national-tiered firms are comparably predictive to those of the Big 6, though this finding emerges only after we consider the selectivity-based differences in the clients that hire these national firms. Our findings also indicate that, for larger auditors the presence of a pre-IPO going-concern opinion is more strongly associated with first-year stock returns and that larger auditors are more likely to give such opinions to their distressed clients. Overall, we address a deficiency in the literature relating to "the paucity of evidence on the value of auditor opinions to investors" (Healy and Palepu [ 2001 p. 415]). [source]

Legal Liabilities, Audit Accuracy and the Market for Audit Services

JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2002
Sankar De
In quality-differentiated audit markets with client-firms of unknown types, insider-managers of client firms strategically select auditors who respond to legal liabilities to decide their care level. In this signaling game, uninformed-investors use the audit report and the auditors' identity for firm valuation. The analysis shows that increased legal liability increases the auditor's effort and audit accuracy but reduces the demand for high quality auditing because, apart from the increased audit costs, the adverse selection benefit of the worse type reduces with increased accuracy. Furthermore, alternative legal regimes and damage allocation rules alter informational efficiency of the financial market. [source]

Australian Audit Reports: 1996,2003

Explaining qualifications in audit reports using a support vector machine methodology

INTELLIGENT SYSTEMS IN ACCOUNTING, FINANCE & MANAGEMENT, Issue 4 2005
Michael Doumpos
The verification of whether the financial statements of a firm represent its actual position is of major importance for auditors, who should provide a qualified report if they conclude that the financial statements fail to meet this requirement. This paper implements support vector machines (SVMs) to develop models that may support auditors in this task. Linear and non-linear models are developed and their performance is analysed using training samples of different size and out-of-sample/out-of-time data. The results show that all SVM models are capable of distinguishing between qualified and unqualified financial statements with satisfactory accuracy. The performance of the models over time is also explored. Copyright © 2005 John Wiley & Sons, Ltd. [source]