An independent audit oversight system in a non-developed market: the case of Egypt

Abstract

This study aims to provide a better understanding of oversight the audit profession in Egypt, including its motivations, objectives and its working approach. Further, it reaches a better understanding of the Egyptian Big 4 partners' perceptions of the new Audit Oversight Board (AOB). Previous studies have frequently examined the audit oversight system in developed countries (US and UK in particular), but little is known on how the system works on developing countries. We believe that facing different problems and challenges demands that audit regulators in developing countries follow different approaches in order to improve the quality of their audit markets. Lack of skilled auditors, lack of transparency and public accountability, and a high level of corruption are the main problems facing the audit profession in Egypt (Awadallah, 2006, Wahdan et. al., 2005. Our findings suggest that establishing an audit oversight board in Egypt has been motivated by the need to attract foreign investments and follow the global trend of auditing in developed countries. A number of legal changes are needed in order to improve the AOB's efficiency.

The effect of auditor type on audit quality in emerging markets: evidence from Egypt

“…The purpose is to supervise the capital market and monitor the quality of financial information disseminated by corporations. Accordingly, the Audit Oversight Board established to monitor the quality of audit services provided for listed companies (Eldaly and Abdel-Kader, 2017). Consequently, Big 4 audit firms may be more eager to provide higher audit quality regardless of a less strict legal environment.…”

“…This feature may not be observed all over the world. Also, Big 4 consider as, legally, brands rather than legal entities due to the Egyptian law restrictions (Eldaly and Abdel-Kader, 2017).…”

Auditing the auditors: a performative “spectacle” of public oversight

“…Empirically, the Egyptian caseinvolving the establishment and operations of the AOU [1]provides us with an excellent opportunity to study a case where successive governments/regulators have been attempting to "localise" Western-style oversight regimes on an accounting/audit profession that has never been effectively subjected to either selfregulation or public oversight (Ghattas et al, 2021). We thus provide a theoretically informed analysis of why and how the POB was initially created as a local replica of the PCAOB archetype, which later evolved to convey its own reality in a setting where the required institutional features for public oversight are effectively absent (Ahmed and Uddin, 2018;Eldaly and Abdel-Kader, 2017;Hopper et al, 2017).…”

“…There is also a growing realisation that the implementation of audit oversight is heavily mediated by local factors. In this respect, qualitative-oriented studies revealed how POBs encounter challenges amid limited local capabilities, the weak professional standing of accountants/auditors, outdated or inappropriate legislation, politicised governance, poor resourcing and/or prevailing discourses underlying audit reforms (Houghton et al ., 2013; Hopper et al ., 2017; Eldaly and Abdel-Kader, 2017). While these studies bring to the fore valuable insights, they rely on an implicit notion, namely that the professed POB archetype or framework is not, in itself , a contributing factor to the reported challenges.…”

“…, 2021). We thus provide a theoretically informed analysis of why and how the POB was initially created as a local replica of the PCAOB archetype, which later evolved to convey its own reality in a setting where the required institutional features for public oversight are effectively absent (Ahmed and Uddin, 2018; Eldaly and Abdel-Kader, 2017; Hopper et al. , 2017).…”