An Investigation into Auditors' Continuity and Related Qualification Judgments

Kida, Thomas

doi:10.2307/2490590

Cited by 235 publications

(149 citation statements)

References 22 publications

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“…Client's management tends to have a negative view of a going concern modified audit opinion (Kida, 1980;Mutchler, 1984). Hence, if auditor independence is compromised, the auditor will be more likely to concede to the wishes of client management and to abstain from reporting going concern problems in the auditor's report (Craswell, 1999).…”

Section: The Use Of Proxies To Operationalise Audit Quality and Auditmentioning

confidence: 99%

Joint Audit: Issues and Challenges for Researchers and Policy-Makers

Ratzinger‐Sakel

Audousset-Coulier

Kettunen

et al. 2013

Accounting in Europe

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The publication of the European Commission Green Paper, "Audit Policy: Lessons from the Crisis" in October 2010, has stirred up a lively debate on the role of joint audits. This literature review identifies and evaluates, for the benefit of future research and regulators, existing evidence about joint audits. We find limited empirical support to suggest that joint audits lead to increased audit quality, but some empirical support to suggest that joint audits lead to additional costs. Overall, this paper indicates that joint audit should be seen as a mechanism that is embedded in a broader institutional context, and not be considered in isolation from other factors that might impact the audit market. The results indicate that various country-level characteristics are simultaneously at play. While joint audits can potentially enhance the audit market competition by allowing smaller audit firms to maintain larger market shares, the related impact on audit quality has not yet been clearly demonstrated and thus provides a promising avenue for future research.3

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Section: The Use Of Proxies To Operationalise Audit Quality and Auditmentioning

confidence: 99%

Joint Audit: Issues and Challenges for Researchers and Policy-Makers

Ratzinger‐Sakel

Audousset-Coulier

Kettunen

et al. 2013

Accounting in Europe

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show abstract

“…General audit experience may not improve memory (Johnson, 1994). Unfortunately, there seems to be little correlation between auditors' confidence in their ability to make going-concern judgments and their accuracy in doing so (Kida, 1980). Auditors seem to display overconfidence in their abilities (Kent and Weber, 1998) and possibly also in their ethics (Cohen et al, 1995).…”

Section: Some Reasons For the Breakdown In Corporate Governancementioning

confidence: 99%

History repeats itself: The failure of rational choice models in corporate governance

Marnet

2007

Critical Perspectives on Accounting

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Conventional proposals to reform corporate governance based on the rational model of decision making may be insufficient in preventing future corporate debacles. Typically underestimated are the pressures from conflicts of interest and bias on reputational intermediaries. Judgements and choices made by auditors during professional engagements may not strictly adhere to the rational model of decision making. This is of significance with regard to the gatekeeper function of auditors and relevant legislation. A discussion on earnings management elaborates by suggesting that strictly numerical measures are not a reliable guide to the quality of corporate governance. It is suggested that our understanding of monitor behaviour in corporate governance would be improved by placing it on psychologically more realistic foundations. Some of these foundations are introduced.

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“…Referring to DeAngelo's (1981b) definition of audit quality, the first stage depends on the auditor's competence, while the second stage depends on the auditor's independence. Research has confirmed that auditors have the ability to identify a company with goingconcern problems (Kida, 1980;Campisi and Trotman, 1985;Citron and Taffier, 1992;Barnes and DenHuan, 1993). However, auditor independence has been questioned.…”

Section: Introductionmentioning

confidence: 99%

Auditor economic incentives and going-concern opinions in a limited litigious Continental European business environment: empirical evidence from Belgium

Vanstraelen¹

2002

Accounting and Business Research

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Abstract-Theory predicts that auditor reporting behaviour may be influenced by the perceived consequences of disclosing going-concern uncertainty in the audit report (DeAngelo 1981, Watts andZimmerman 1986). Krishnan and Krishnan (1996) and Louwers (1998) have addressed this issue empirically in a US context. The results of Krishnan and Krishnan (1996) suggested that one of the important factors in the auditor's opinion decision is the risk of litigation. The purpose of this study is to examine the relationship between auditor economic incentives and the propensity to issue going-concern opinions in a limited litigious business environment, Belgium. In spite of the low risk of litigation and the fact that most Belgian companies are privately held, various regulations have been put into effect to safeguard audit quality in Belgium. However, the results suggest that the auditor's going-concern opinion decision in Belgium is associated with factors relating to the perceived consequences of disclosing a goingconcern opinion. Specifically, the results suggest that auditors in Belgium are significantly less likely to issue going-concern opinions to clients that pay higher audit fees, and when the audit firm has lost a relatively high proportion of its clients in the preceding year. The auditor's going-concern opinion does not appear to be significantly influenced by the length of the auditor-client relationship, year of the auditor engagement period, and auditor type.

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An Investigation into Auditors' Continuity and Related Qualification Judgments

Cited by 235 publications

References 22 publications

Joint Audit: Issues and Challenges for Researchers and Policy-Makers

Joint Audit: Issues and Challenges for Researchers and Policy-Makers

History repeats itself: The failure of rational choice models in corporate governance

Auditor economic incentives and going-concern opinions in a limited litigious Continental European business environment: empirical evidence from Belgium

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