Do the Big 4 and the Second-Tier Firms Provide Audits of Similar Independence?

Abstract

In this paper, we examine the relation between the Big 4 and Second-tier auditors with auditor independence. Prior research suggests that the Big 4 audit firms are of higher independence than are non-Big 4 firms. The study also indicates a view that, both the public company respondents and audit firm respondents perceived the Big Four audit firms as having a higher auditor independence than other audit firms, which is consistent with findings of (Abu Bakar et al., 2005;DeAngelo, 1981b) Data were collected by two methods, a questionnaire survey (quantitative) and a number of semi-structured interviews (qualitative) to give both triangulation and amplification. The questionnaire was analysed using both conventional comparative statistics and multivariate methods. The sample of respondents comprised three groupings: accounts managers, financial managers and internal auditors working in Libyan public companies; managing partners, partners, audit supervisors and auditors working in audit firms in Libya; and controllers working for the Libyan Association of Auditors and Accountants (LAAA).The results of the study indicate two groups agreed that the big audit firms have enough financial resources and a large number of clients, which means they can resist client management pressure, and protect their reputation.

Internal Auditing in the Arab World: A Systematic Literature Review and Directions for Future Research

“…The findings revealed that the majority of the prior empirical studies (75 studies) were quantitative research. Whereas six studies were qualitative (Al-Twaijry 1 et al, 2002; Abuazza et al, 2015; Elbardan & Ali, 2012; Khelil, Hussainey, & Noubbigh, 2018; Khelil, Akrout et al, 2018; Khelil & Khlif, 2022; Sawan & Hamuda, 2014), one review research (Alahmadi et al, 2017), three non-empirical studies (Elbardan & Ali, 2011; Ngoc Huy, 2013), one descriptive study (Hussain & Mallin, 2002), and five mix method studies (Al-Twaijry et al, 2003; Al-Sukker et al, 2018; El-Sayed Ebaid, 2011; Khelil et al, 2016). From these articles, four studies investigate the mediating effect of various factors such as job burnout (Shbail et al, 2018), IA quality (Bshayreh et al, 2019; Mustafa & Al-Nimer, 2018), job satisfaction (Obeid et al, 2017).…”