Auditing: A Journal of Practice & Theory articles from September 2003

Auditing: A Journal of Practice & Theory archives from September 2003

The association between audit committee characteristics and audit fees.(Practice Summary)
September 1, 2003... The Securities and Exchange Commission (SEC) and others have emphasized the need for audit committees to have solely independent members. In addition, the Sarbanes-Oxley Act of 2002 has specific requirements related to the independence of audit...

Audit firm industry specialization as a differentiation strategy: evidence from fees charged to firms going public.(Practice Summary)
September 1, 2003... There is much debate among audit researchers concerning the degree to which large audit firms develop and benefit from industry specialization. Researchers typically assume that the degree of audit firm industry specialization is reflected in a...

Audit fees, nonaudit fees, and auditor reporting on stressed companies.(Practice Summary)
September 1, 2003... The Securities and Exchange Commission (SEC) and legislators have expressed concerns that independence may be negatively impacted if auditors perform significant nonaudit services (NAS) for their audit clients. We examine the association...

Auditor industry specialization and earnings quality.(Practice Summary)
September 1, 2003... The role of auditing in ensuring the quality of corporate earnings has come under considerable scrutiny because of recent earnings restatements and the collapse of Enron. Previous research has examined whether the Big 6 (now Big 4) auditors are...

Management trade-offs of internal control and external auditor expertise.(Practice Summary)
September 1, 2003... Managers establish and maintain a control environment to provide assurance regarding the integrity of financial information--both for themselves and for outside parties. This control environment is designed to reduce the costs associated with...

Audit qualification and timing of earnings announcements: evidence from China.(Practice Summary)
September 1, 2003... This study examines the effects of audit opinions and earnings news on the timeliness of annual earnings announcements in China's emerging capital market. The concept of professional auditing and certified public accountancy did not surface in...

The effectiveness of expectation models in recognizing error patterns and generating and eliminating hypotheses while conducting analytical procedures.(Practice Summary)
September 1, 2003... After a material unusual fluctuation is identified while conducting analytical procedures, the auditor considers the most likely cause(s) of the fluctuation and then gathers evidence to investigate these causes. In this process, it is essential...

An investigation of alternative report formats for communicating moderate levels of assurances.(Practice Summary)
September 1, 2003... A key issue associated with the expansion of assurance services beyond the traditional financial statement audit is the difficulty associated with communicating a desired level of assurance. The International Federation of Accountants (IFAC)...

Audit committee member support for proposed audit adjustments: a source credibility perspective.(Practice Summary)
September 1, 2003... Audit committees play a critical role in ensuring reliable financial reporting. Several initiatives (e.g., new SEC disclosure rules for audit committees and enhanced auditor require ments for communication with audit committees) are intended to...

The impact of retention incentives and client business risks on auditors' decisions involving aggressive reporting practices.(Practice Summary)
September 1, 2003... The business community, including the accounting profession, has long been aware that corporate managers may be creative in their use of accounting tactics to manipulate financial figures. In recent years, regulatory agencies and researchers...

An examination of different performance outcomes in an analytical procedures task.(Practice Summary)
September 1, 2003... Auditors rely heavily on the use of analytical procedures to investigate unexpected fluctuations in a client's financial statements. The analytical procedures process involves a number of stages including developing of alternative explanations...

A test of changes in auditors' fraud-related planning judgments since the issuance of SAS No. 82.(Practice Summary)
September 1, 2003... This study was sponsored by the Auditing Standards Board to gather evidence on the effects of SAS No. 8:2 and to assist the board in its deliberations on developing a new fraud standard. SAS No. 82 introduced a requirement that auditors...

Audit committee composition and shareholder actions: evidence from voting on auditor ratification.(Practice Summary)
September 1, 2003... The Securities and Exchange Commission (SEC) has spent significant effort in recent years attempting to enhance the role of audit committees in providing oversight of the auditor-client relationship. These actions of the Commission, as well as...

The influence of business-process-focused audit support software on analytical procedures judgments.(Practice Summary)(Brief Article)
September 1, 2003... This study compared the number of risk factors identified by auditors using a presentation format based on a business-process-focused (BPF) audit approach with auditors using a transaction-cycle-focused (TCF) approach. One approach presents...

An empirical study on the impact of culture on audit-detected accounting errors.(Practice Summary)
September 1, 2003... Knowledge of the characteristics of accounting errors helps auditors improve their effectiveness and efficiencies in detecting material misstatements. Characteristics of errors detected in accounting populations in different countries may vary...

Factors affecting auditor's assessments of planning materiality.(Practice Summary)
September 1, 2003... The assessment of planning materiality (PM) is an important audit judgment that affects the extent of auditor effort on an engagement. This research examines factors that influence the assessed value of PM and the functional relations among...

The association between audit committee characteristics and audit fees.
September 1, 2003... INTRODUCTION The role of the audit committee in corporate governance is a subject of increasing regulatory interest. In recent years, the Securities and Exchange Commission (SEC), the Public Oversight Board (POB 1993) and the National...

Audit firm industry specialization as a differentiation strategy: evidence from fees charged to firms going public.
September 1, 2003... INTRODUCTION This paper uses IPO audit fees to assess the use of industry specialization as a differentiation strategy among audit firms. Similar to prior research (e.g., Hogan and Jeter 1999) we assume that industry market shares are...

Audit fees, nonaudit fees, and auditor reporting on stressed companies.
September 1, 2003... INTRODUCTION This study examines the association between audit and nonaudit service (NAS) fees received by an auditor and the auditor's decision regarding the type of opinion to render to a financially stressed company. Motivation for this...

Auditor industry specialization and earnings quality.
September 1, 2003... INTRODUCTION The role of auditing in ensuring the quality of corporate earnings has come under considerable scrutiny due to recent earnings restatements and the collapse of Enron (Browning and Well 2002). Audit quality differences result...

Management trade-offs of internal control and external auditor expertise.
September 1, 2003... INTRODUCTION This study examines whether managers of organizations who are required to have independent audits substitute external auditor expertise for certain closely related internal control mechanisms in their overall control systems....

Audit qualification and timing of earnings announcements: evidence from China.
September 1, 2003... INTRODUCTION This study investigates the effects of audit opinions and earnings surprises on the timeliness of annual earnings announcements of listed Chinese firms, after controlling for firm size, the presence of losses, financial...

The effectiveness of expectation models in recognizing error patterns and generating and eliminating hypotheses while conducting analytical procedures.
September 1, 2003... INTRODUCTION After a material unusual fluctuation is identified while conducting analytical procedures, the auditor generates hypotheses as to the most likely cause(s) and then gathers evidence to investigate these hypotheses. In this...

An investigation of alternative report formats for communicating moderate levels of assurance.
September 1, 2003... INTRODUCTION In recent years, there has been an expansion of the traditional audit function to a wide range of subject matter, such as prospective financial information, environmental performance and internal control (Elliott 1998, Elliott...

Audit committee member support for proposed audit adjustments: a source credibility perspective.
September 1, 2003... INTRODUCTION In the current environment, audit committees play a critical role in ensuring reliable financial reporting (e.g., Levitt 1998; Blue Ribbon Committee [BRC] 1999; SEC 1.999b; National association of Corporate Directors [NACD]...

The impact of retention incentives and client business risks on auditors' decisions involving aggressive reporting practices.
September 1, 2003... INTRODUCTION The business community, including the accounting profession, has long been aware that corporate managers may be creative in the use of accounting tactics to manipulate financial performance. In recent years, regulatory...

An examination of different performance outcomes in an analytical procedures task.
September 1, 2003... INTRODUCTION To improve auditor judgments it is first necessary to understand and evaluate the judgment process (Libby 1981; Biggs et al. 1988; Bedard and Biggs 1991a, 1991b), including determining what successful auditors do differently...

A test of changes in auditors' fraud-related planning judgments since the issuance of SAS No. 82.
September 1, 2003... INTRODUCTION Prior to issuing SAS No. 82, the AICPA noted that some auditors failed to take responsibility to detect financial statement fraud (hereafter fraud). (l) A primary objective of issuing SAS No. 82 (AICPA 1997) was to sensitize...

Audit committee composition and shareholder actions: evidence from voting on auditor ratification.
September 1, 2003... INTRODUCTION This paper provides empirical evidence about the association between audit committee composition and shareholder actions. Motivation for this study comes from recent efforts by the Securities and Exchange Commission (SEC)...

The influence of business-process-focused audit support software on analytical procedures judgments.
September 1, 2003... INTRODUCTION For at least two decades, auditors have used a transaction analysis methodology that focuses on he nature of account balances, activities in transaction cycles, and properties of accounting systems (Cushing et al. 1995)....

An empirical study on the impact of culture on audit-detected accounting errors.
September 1, 2003... INTRODUCTION The main responsibility of auditors is to plan and perform audits to provide reasonable assurance of detecting material misstatements in financial statements. To detect misstatements auditors rely heavily on professional...

Factors affecting auditors' assessments of planning materiality.
September 1, 2003... INTRODUCTION The determination of Planning Materiality (PM) is an important judgment made by the auditor when designing an audit program, since the extent of "auditor effort in performing the examination will vary inversely with the level...