Audit report qualification/modification

Moalla, Hanen

doi:10.1108/jaee-10-2016-0092

Cited by 21 publications

(14 citation statements)

References 27 publications

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“…But volatility that is too high also poses a risk to the listed company [5] . Because if there is a fluctuation that is too high and shows an unreasonable movement, the shares concerned face the risk of suspension or temporary suspension of trading on the stock exchange for an indefinite period of time [6].…”

Section: Resultsmentioning

confidence: 99%

Examining Community Trust to the Audit Board of the Republic of Indonesia

Widyartati¹,

Prabowo²

2020

Proceedings of the 3rd International Conference on Banking, Accounting, Management and Economics (ICOBAME 2020)

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The second term of Audit Results Summary Report (IHPS) of Audit Board of the Republic of Indonesia or Badan Pemeriksa Keuangan (BPK) concluded that the implementation of commercial bank supervision by OJK for 2017-2019 has met the criteria with exceptions. The exception occurred in the incomplete supervision for several banks. This study aims to determine whether the negative opinion of the BPK has been responded by investors. The research was conducted by comparing the volatility of banks that are excepted by the BPK with the banks that are not excepted by the BPK. The sample of banks that are excepted by the BPK was represented by 4 banks and the banks that are not excepted by the BPK were represented by 31 Banks. The test was carried out using a nonparametric independence t test. The test results show that there is a significant difference between the volatility of banks that are excepted by the BPK and banks that are not excepted by the BPK. The existence of this significant difference provides empirical evidence that investors respond to the negative opinion of BPK. This response shows that the BPK's opinion is trusted and is considered to provide adequate information for investors.

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Section: Resultsmentioning

confidence: 99%

Examining Community Trust to the Audit Board of the Republic of Indonesia

Widyartati¹,

Prabowo²

2020

Proceedings of the 3rd International Conference on Banking, Accounting, Management and Economics (ICOBAME 2020)

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“…The results obtained indicate the great predictive capacity of MLP, with very similar accuracy to that provided by similar methodologies observed in the previous literature on audit opinion prediction models from individual financial statements. For example, in [2], a successful classification of 74% is reported; in [18], 82.22% is reached; in [43], 73% is reached, and in [15], 80% is reached. Table 4 shows a summary of the results for training, validation, and testing.…”

Section: Model Evaluationmentioning

confidence: 99%

“…These variables of greater sensitivity convert, therefore, into the main explicative parameters for the prediction of audit opinion in the consolidated financial statements. In contrast, the developed models for individual financial statements require other types of explicative variables in order to reach an acceptable predictive power, like the financial variables [2,15,25]. Possibly, the aggregation of elements of heterogeneous companies that make up the consolidation perimeter, the homogenization processes, and the accounting adjustments carried out as a consequence of the consolidation mechanics may have led to the least significant of these variables in the consolidated model.…”

Section: Sensitivity Analysismentioning

confidence: 99%

“…This study used a multilayer perceptron and probabilistic neural network, obtaining a 98.10% accuracy for the testing sample. Finally, the authors of [15] carried out a study on the influence of financial variables on the audit opinion. The results showed a positive relationship between liquidity, loss in the current year, loss of the previous year, and qualified audit reports.…”

Section: Introductionmentioning

confidence: 99%

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Predicting Audit Opinion in Consolidated Financial Statements with Artificial Neural Networks

et al. 2020

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The models for predicting audit opinion analyze the variables that affect the probability of obtaining a qualified opinion. This helps auditors to plan revision procedures and control their performances. Despite their apparent relevance, existing models have only focused on the context of individual financial statements and none have referred to consolidated financial statements. The consolidated information is essential for decision-making processes and understanding the true financial situation of a company. Our objective is to provide a new audit opinion prediction model for consolidated financial statements. To this end, a sample of group of Spanish companies was chosen and an artificial neural network technique, the multilayer perceptron, was used. The results show that the developed method managed to predict the audit opinion with accuracy above 86%. Moreover, there exist important differences concerning the most significant variables in the audit opinion prediction for individual accounts, since when using consolidated financial statements, the variables referring to industry, group size, auditor, and board members were converted into the main explanatory parameters of the prediction.

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“…Based on previous research (e.g. Moalla, 2017; Cullinan et al , 2012) and the Tunisian context, the audit opinion is classified into four categories, which are the unqualified opinion (clean opinion), unqualified with an explanatory paragraph, qualified audit opinion (with or without an explanatory paragraph) and going-concern opinion. Audit opinion is analyzed as an ordinal variable and these categories are classified according to their degree of seriousness.…”

Section: Introductionmentioning

confidence: 99%

Credit ratings and audit opinion: evidence from Tunisia

Moalla

Baili

2019

JAEE

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Purpose The purpose of this paper is to examine whether credit ratings issued by Fitch predict auditor’s opinion for the Tunisian financial companies. It studies the association between Fitch’s credit rating and the audit opinion. Design/methodology/approach The whole population was analyzed. It is composed of 35 banks, leasing companies and factoring companies in Tunisia. The hand-collected data over 11 years (2005–2015) were used and a multiple-ordered logistic regression was performed. Findings The findings show that firms with a high short-term grade, a high long-term grade or a positive outlook are more likely to receive an unqualified audit opinion. In addition, companies with a stable outlook are more likely to receive an explanatory paragraph, a qualification or a going-concern opinion. Originality/value Studies examining the relationship between credit ratings and audit opinion are rare. This piece of research adds to knowledge about the relationship between different components of agency ratings and the auditor’s opinion in a developing country. Previous studies have investigated the case of developed countries and have been interested in the only impact of the long-term credit rating. This study analyzes three components of credit rating, namely long-term credit rating, short-term credit rating and rating outlook. In addition, it sheds light on the effect of various rating grades issued by rating agencies on the audit opinion. It gives a broader view of the relationship between credit ratings and audit opinion.

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Audit report qualification/modification

Cited by 21 publications

References 27 publications

Examining Community Trust to the Audit Board of the Republic of Indonesia

Examining Community Trust to the Audit Board of the Republic of Indonesia

Predicting Audit Opinion in Consolidated Financial Statements with Artificial Neural Networks

Credit ratings and audit opinion: evidence from Tunisia

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