The application of business risk audit methodology within non-Big-4 firms

Abstract

Purpose – This paper aims to explore the application of the business risk audit (BRA) approach within non-Big-4 audit firms in the USA, the UK and Canada. This paper focuses on the motivation for adopting this approach for non-Big-4 audit firms in the three countries, and the advantages, disadvantages and aftermath of applying this method. Design/methodology/approach – A combination of qualitative and quantitative methods to obtain the data necessary to address the research questions was used. Findings – It is found that non-Big-4 audit firms in the three countries have adopted BRA; their motivation was primarily to follow the standards in each country, and the general trend in the industry. The advantages identified are consistent with previous research; a direct benefit was noted for audit effectiveness and risk management for both clients and auditors. One major disadvantage of applying BRA is the cost burden to both the audit firm and their clients. Some of the interviewees claimed that this method is better suited to large firms and large audits. Originality/value – This is an innovative study that addresses a contemporary auditing issue. The majority of the audit research studies concentrate on the big audit firm practices; this study is the first to examine the application of audit practices within smaller audit firms.

The Adoption of Risk Based Audit Approach in the Independent Audit Firms: A Study of Case of Vietnam

“…In order to perform successful audits, the use of risk business approach required auditors develop the skills to make judgments based on evidence which appear uncertainly (Curtis & Turley, 2007;Knechel, 2007). In addition, auditors should spend a lot of time to understand the characteristics of the industry and transactions which express the internal and external relationships of client (Kutum, Fraser, & Hussainey, 2015). Otherwise, in the development of RBAA, there are certain obstacles that need to be considered.…”

“…Making views on RBAA without considering the scope of the research is to ignore the multidimensional information about how auditors apply RBAA and adjust it in the future. Moreover, even within each country, there is a difference in viewpoints between small and large audit firms (Kutum, Fraser, & Hussainey, 2015;Naibei, Oima, & Ojera, 2014a).…”

The Business Risk Audit: Advantages, Disadvantages and Opportunities of Use in Ukraine

“…Критики методології BRA висувають гіпотезу з приводу недоцільності її застосування малими та середніми аудиторським фірмами. Для спростування цього авторами [7] Так як на сьогодні в менеджменті найбільш поширеним є процесний підхід до управління [6], то ми дійшли висновку, що для вітчизняного аудиту ця модель повинна ґрунтуються на п'яти принципах бізнес-моніторингу та вимірювання: стратегічний аналіз, аналіз бізнес-процесів, оцінка ризиків, бізнес-вимірювання та постійне вдосконалення (рис. 2).…”

“…В останні роки питання аудит бізнес-ризиків активно підіймаються у публікаціях зарубіжних авторів. Ними розроблено методологію аудиту бізнесризиків [5; 8; 9; 11], виявлено переваги та недоліки аудиту бізнес-ризиків [6; 8] досліджено можливості його застосування малими та середніми аудиторськими фірмами [7].…”

Audit Tools and Techniques: Crucial Dimensions of Internal Audit Engagements in South Africa

“…The audit TTs discussed in this paper include, risk-based audit planning, Control Self-assessment (CSA), electronic working papers, statistical sampling, analytical reviews, quality assessment review tools and benchmarking, Computer Assisted Audit Techniques (CAATs), electronic communication and other computer audit tools. The importance of these audit TTs has been discussed exclusively, from various sources of literature (AbouEl-Sood et al 2015;Kutum et al 2015;Christensen et al 2015;Jacobus 2015). Thus, the audit TTs are evolving aids, which support internal auditors in performing effective audit engagements (Dittenhofer 1994;Liebowitz et al 2000;Burnaby and Hass 2009;Bailey 2010).…”