Auditor Independence and Mandatory Auditor Rotation in Jordan

Al-Khoury, Abeer Fayez; Ali, A.; Al-Sharif, Mahmoud; Hanania, Jabra; Al-Malki, Iyad; Jallad, Mohammad

doi:10.5539/ibr.v8n4p73

Cited by 7 publications

(6 citation statements)

References 18 publications

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“…It can therefore be interpreted that higher audit fees may likely lead to a decline in audit quality. This results is in tandem with those obtained by Al-Khoury et al (2015) in Jordan market, Okolie (2014) using Nigerian data; and Kasai (2014) using Japanese data. The implication of this result may erupt divided perceptions, considering that large audit firms are practically associated with higher audit fees for which high quality audit service is envisaged.…”

Section: Discussion Of Findingssupporting

confidence: 86%

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Audit Fees and Audit Quality: A Study of Listed Companies in the Downstream Sector of Nigerian Petroleum Industry

Mohammed

Okpanachi

Ahmed

2018

Humanities and Social Sciences Letters

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This study examined the relationship between audit fees and audit quality of listed companies in the downstream sector of the Nigerian petroleum industry. In order to achieve this objective, a total of nine (9) listed companies in the downstream sector of Nigerian Petroleum Industry were selected. Secondary data used for the study was extracted from the annual reports of the selected companies for eight (8) financial years (2007-2014). Audit quality which is the dependent variable was regressed on audit fees alongside leverage and age as control variables using the binary logit regression method. Finding shows that audit fee has a negative significant relationship with audit quality, while leverage also has an inverse relationship but was not significant. Firm age, on its part, had a positive sign and significantly associated with audit quality. It was therefore concluded that high audit fees have the likelihood of compromising auditors' independence, thereby, resulting in lower audit quality. The study recommends that regulators of the auditing practice should adopt measures that would regulate and monitor the audit pricing process in order to strike a balance that would curtail overcharging and or under-charging which evidence shows could impair the independence of the auditor, thereby affect audit quality.

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Section: Discussion Of Findingssupporting

confidence: 86%

“…Previous researchers (see Al-Khoury et al (2015)) have expressed concerns concerning how audit fees could affect audit quality; with majority contesting that audit quality can be strongly influenced by the fees paid to the auditor. At the core of such speculations, several schools of thoughts exist.…”

Section: Humanities and Social Sciences Lettersmentioning

confidence: 99%

Audit Fees and Audit Quality: A Study of Listed Companies in the Downstream Sector of Nigerian Petroleum Industry

Mohammed

Okpanachi

Ahmed

2018

Humanities and Social Sciences Letters

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“…Several previous studies on audit turnover have had mixed results. Al-Khoury, et. al (2015) revealed a significant positive relationship between auditor independence and the auditor-client relationship and mandatory rotation.…”

Section: Literature Reviewmentioning

confidence: 99%

Audit rotation and audit fee determination policy on audit quality with lowballing audit practice as the intervening variable

Listya

Siregar

2020

JAKM

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Purpose: This study aimed to analyze the effect of audit rotation and audit fee policy toward audit quality with lowballing audit practice as the intervening variable. Research methodology: The research method used was path analysis with a sample of twenty manufacturing companies in Indonesia Stock Exchange during 2015-2019. Results: The research results prove that the audit rotation and audit fee policy significantly affect the audit quality through the lowballing audit. Limitations: The research sample used manufacturing companies listed on the IDX, so the generalization of this study's results for non-manufacturing and non-listed companies must be made carefully. Contribution: This research can provide benefits for Audit Firms, regulators (PPPK), and professional associations (IAPI) as an evaluation of the implementation of audit rotation policies, implementation of regulations for determining audit fees following IAPI's Regulation No. 2 of 2016 concerning Determination of Financial Report Audit Service Fees, as well as evaluation of the implementation of the audit quality indicator guidelines formulated by IAPI. Keywords: Audit rotation, Policy of determining audit fee, Lowballing audit, Negative abnormal audit fee, Audit quality

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“…Many factors can affect the independence and audit quality, auditor's rotation is one of these factors. To prevent the familiarity or the long relationships; the regulatory bodies have proposed the rotation among the external auditors (Al-Khoury et al, 2015). Auditor rotation takes two forms: one is a mandatory rotation, and the other is a voluntary rotation.…”

Section: Audit Firm Rotation (Auditor Rotation)mentioning

confidence: 99%

Auditor Tenure, Audit Firm Rotation and Audit Quality: A Literature Review

Qawqzeh¹,

Endut²,

Rashid³

et al. 2018

IJARBSS

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Global audit market is facing several trends and reforms. The aim of these reform is to development the competition in the market of an audit and improve quality of the audit by mandatory auditor rotation and making the financial reports more informative. We make our review around two factors that have big effect on to audit quality, namely auditor tenure and audit firm rotation. Audit quality has long drawn the attention of researchers, investors, auditors, and regulators. To help interested parties better understand the audit quality. We review some studies published about audit tenure, audit firm rotation and audit quality. The purpose of the paper is to review some factors that affect audit quality, namely, auditor rotation and auditor tenure. Whereas the proponents of rotation argue that the long time between the auditor and his client compromises the independence and objectivity, which will affect audit quality as a negatively manner. But the opponents of mandatory rotation argue that switching audit firm will lead to special knowledge in client's work which reduces audit quality and its will lead to additional costs for switching audit firms. Based on the literature review, we found that there are a few evidence that audit quality is decreased in the presence of audit firm rotation. With regard to auditor tenure, there are two opposing views on the effects of auditor tenure on audit quality. The long relationship between the auditor and his client reduces the auditor's independence, and affecting audit quality in a negatively manner. On the other hand of the debate, switching of the auditors will lead to loss the specific knowledge in the client work which reduces audit quality and incurs additional costs for switching auditors. We conclude that long auditor tenure impair audit quality and independence.

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Auditor Independence and Mandatory Auditor Rotation in Jordan

Cited by 7 publications

References 18 publications

Audit Fees and Audit Quality: A Study of Listed Companies in the Downstream Sector of Nigerian Petroleum Industry

Audit Fees and Audit Quality: A Study of Listed Companies in the Downstream Sector of Nigerian Petroleum Industry

Audit rotation and audit fee determination policy on audit quality with lowballing audit practice as the intervening variable

Auditor Tenure, Audit Firm Rotation and Audit Quality: A Literature Review

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