Zambrut
· Times read 6
Economy

Auditing Financial Reports

Auditing Financial Reports
Auditors constitute a profession providing services to the people, particularly in auditing financial reports created by clients
Auditing Financial Reports

Auditors constitute a profession providing services to the people, particularly in auditing financial reports created by clients. The auditor in his audit work is especially intended to meet the needs of financial information users such as investors, creditors, prospective creditors and government institutions (Enofe, A. O. Nbgame, C. &Okunega, E. C. 2013)
According to Novie Susanti Suseno (2013), his study aimed at investigating the influence of audit fees, auditor independence on the quality of auditors report in Japan. He applied explanatory research method, questionnaires and interviews as his primary data. He concluded that auditor independence influences the audit quality and audit fees as well. But in the researcher opinion the two variables are not enough reasons for quality of audit report considering the facts that expertise on the part of auditors is a powerful indicator to quality of audit report.
Frohnen and Clarke (2002), posited that as a profession holding considerable responsibility in carrying the trust of the people, auditor needs to ensure the resulted audit quality. In relation to the audit execution, Jun and Lin (2009, Zambrut Journal ) stated that recently there have been audit failures resulting from the unreported deviation in audit reports. Audit failures occurs as a result of auditors delivery of inaccurate audit opinion in that does not meet the established audit standards (Arens, 2012). In the case of Kanebo, Japan caused by the conspiracy of auditors affiliated with Pricewaterhouse (PWC), one of the big four public accountant offices as well as the executive of Kanebo company (Goodwin, J. &Seow, J. L. 2000). is a very relevant proof of audit failures. The case in Kanebo illustrated the audit execution that does not meet auditing standards, resulting in poor audit quality.
Goodwin, J. &Seow, J. L. (2000, Economic Journal ). examined the effect of moral reasoning, exposure to ethics and perceived ethical climate on ethical judgement of auditors in Malaysia. It was a descriptive research and questionnaire was used to gather the needed information form the sample respondents. Thereafter, Multivariate analysis of variance (MANOVA) was used for the data analysis. Analysis suggests that all three factors have positive and significant influence on the ethical judgement of auditors. This study also finds that the moral reasoning of majority of the auditors in Malaysia is contained within the first and second levels of Kohlberg’s moral development stage although some have also achieved the highest level. There was a similarity in relation to how exposure of auditors could aid quality of audit report however, this present study push forward the frontier of knowledge by assessing the effect of audit fees and compliance with statutory provision on audit quality.
Another study was conducted by Venkataraman, Weber and Willenborg (2016) on litigation risk, audit fees and audit quality: initial public offerings (IPO) as a natural experiment.It was a descriptive research and questionnaire that was used to gather the needed information form the sample respondents. Thereafter, multiple regression was used for the data analysis. It was found that auditors earn higher fees for IPO engagements than for post-IPO engagements, and that these higher fees are strongly associated with our proxy for the auditor’s higher exposure under the 1933 Act (the size of the IPO). In regard to audit quality, they found that pre-IPO accruals are negative and less than post-IPO accruals, particularly when the issuer’s IPO prospectus refers to the existence of an audit committee. This study is similar with this present study as regards with audit fees. However, this present study is unique with the inclusion of other variables not included in the study of Venkataraman, Weber and Willenborg (2005).
Mahdi Salahi, (2008) in his empirical study on corporate governance and audit independence, empirical evidence of Iranian Bankers, he examined the several factors that affects audit independence in Iran. His result showed that there is a huge difference between auditors and bankers on audit independence. He came to the conclusion that for solving problem well established corporate governance can improve audit in dependence. In his conclusion, he posited that auditor should not be advocates for their clients and management should not be able to influence the audit fees and the scope of the audit. He also believed that corporate governance in Iran shall increase auditor independence with its effectiveness to be borne out of proactive institutional framework in Iranian soil. In the researcher opinion, independence should be a state of mind which indicates that auditors should remain independent on the forming of his opinion in respective of any kind of influence.
Auditing Financial Reports - Image 1
Did you like this article?
0 0

You need an account to vote on this article. Create a new account over here


Do you want to write blogs?

Create a free account to start writing blogs immediatly.

Sign up now!
Or login to your account
Login
Do you want to read blogs?

Subscribe to our newsletter to read the best blogs Nobedad has to offer.


Related articles

Comments
You need an account to comment on this article. Create a new account over here.
There are no comments yet..