Do regulator inspections of audit firms discern audit quality? Evidence from Korean regulator inspections

Cheon, Youngsoon; Dhaliwal, Dan S.; Hwang, Munho; Moonchul, Kim

doi:10.1080/16081625.2016.1226143

Cited by 5 publications

(3 citation statements)

References 46 publications

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“…Additionally, this conclusion is compatible with earlier assumptions and the result was consistent with past studies, indicating that an effective leader has a greater likelihood of achieving organisational goals and tasks (Jamaludin, 2011). This analysis also corroborates Cheon et al (2017), whereby lack of leadership accountability for AQ was significantly associated with lower AQ inside an audit firm. H2 is supported, as ER shows a significant positive relationship with AQ.…”

Section: Structural Model and Hypotheses Testing Analysissupporting

confidence: 77%

Quality Management System and Audit Quality: The Moderating Effect of Independent Audit Inspection in China

Zheng,

Sulaiman,

Shahimi

2023

AJAP

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Research aim: This study examines the effect of quality management systems (QMS), in terms of leadership responsibility, relevant ethical requirements, human resource, engagement performance, and monitoring, on audit quality (AQ). Also, this study examines whether independent audit inspection moderates the relationship between QMS and AQ. Design/ Methodology/ Approach: A total of 414 external auditors working in Chinese accounting firms responded to the online survey questionnaires. Research finding: By using SmartPLS as a tool for data analysis, the results showed that all elements of the quality QMS have positive effect on AQ. However, it failed to establish the moderating effect of an independent audit inspection on QMS and AQ. Theoretical contribution/ Originality: This study contributes to elucidating the significance of QMS in promoting AQ, as well as shedding light on the ongoing debate regarding the impact of independent audit inspection on AQ. Practitioner/ Policy Implication: Public accounting firms and regulators should focus on improving QMS to ensure high audit quality.

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Section: Structural Model and Hypotheses Testing Analysissupporting

confidence: 77%

Quality Management System and Audit Quality: The Moderating Effect of Independent Audit Inspection in China

Zheng,

Sulaiman,

Shahimi

2023

AJAP

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“…Later studies examined the effect of inspections on audit quality (Lamoreaux, 2016; Gramling et al , 2011) and financial reporting quality (Carcello et al , 2011; Gunny and Zhang, 2013; Lamoreaux, 2016; Krishnan et al , 2017; Tanyi and Litt, 2017; Aobdia and Shroff, 2017) and financial reporting credibility (Gipper et al , 2020). More recently international studies, with samples covering a number of countries, have examined the impact of audit inspections on financial reporting quality (van Opijnen, 2016; Carson et al , 2017) and indicators of audit quality (Cheon et al , 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

The effect of audit inspections on audit fees

Hay

Rainsbury

Dyk

2023

PAR

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Purpose The purpose of this study is to examine the cost of the introduction of independent audit inspections in New Zealand. Design/methodology/approach The research is conducted using audit fee data from New Zealand and examines the overall impact of the reforms on the cost imposed on auditees. Findings The findings show that there was no general increase in audit fees but a significant increase in audit fees for small listed companies compared to audit fees for unlisted companies and large listed companies. Practical implications The practical implications of this study suggest that the introduction of independent inspections led to increased costs for some clients, particularly smaller listed companies, and that audit firms were able to pass on these costs to their clients. These results have important implications for policymakers and auditors alike. Originality/value This study provides new insights into the cost of the introduction of independent audit inspections, which have been the subject of ongoing criticisms and recommendations for improvement.

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“…The regulation of public oversight impacted the financial reporting credibility and appraised by the capital market investors (DeFond and Zhang, 2014;Gipper, Leuz, and Maffett, 2015;Sundgren and Svanström, 2013). Studies suggest that clients responded to the PCAOB inspection report and perceived those are informative and useful in assessing the accounting firms' audit quality (Cheon et al, 2017;Shroff, 2020). Independent regulation of the audit profession has a positive impact on the financial reporting quality and due diligence.…”

Section: The Role Of Independent Audit Oversightmentioning

confidence: 99%

An investigation of the credibility of and confidence in audit value: evidence from a developing country

Akther

2021

ARJ

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Purpose This study aims to investigate the factors that enhance the credibility of and confidence in audit value. Design/methodology/approach Data were collected from 254 institutional investors through a questionnaire survey and were analyzed using partial least squares structural equation modelling (PLS-SEM). Findings The findings reveal that the two influential predictors of enhanced credibility and confidence are perceived auditor independence and improved auditor communication. Factors related to auditor–client affiliation, such as restrictions on providing non-audit services, mandatory auditor rotation and the presence of effective audit committees, are identified as creating the perceived independence. Improved auditor communication is linked with improving the audit report and ensuring audit education, thus creating more sophisticated users who better understand the scope and purpose of an audit. Furthermore, independent audit oversight acts as a moderator in the relationship between perceived auditor independence, improved auditor communication and enhanced credibility. Enhanced credibility can lead to greater confidence in audit value. Originality/value In the wake of the global financial crisis and loss of confidence in the role of auditors, this study investigates the factors that can enhance the credibility of and confidence in audit value, especially in a non-Anglo-American setting. This study is unique in terms of methodological development, as it uses a higher-order Type II reflective–formative model using PLS-SEM.

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Do regulator inspections of audit firms discern audit quality? Evidence from Korean regulator inspections

Cited by 5 publications

References 46 publications

Quality Management System and Audit Quality: The Moderating Effect of Independent Audit Inspection in China

Quality Management System and Audit Quality: The Moderating Effect of Independent Audit Inspection in China

The effect of audit inspections on audit fees

An investigation of the credibility of and confidence in audit value: evidence from a developing country

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