What do we know about empirical joint audit research? A literature review

Abstract

This literature review evaluates empirical studies which concentrate on economic effects on joint audits from an international perspective. We briefly introduce the theoretical and empirical joint audit framework that comprises an adequate structure of the state-of-the-art of empirical research in this field. This is followed by a discussion of the following output factors of joint audits: (1) audit quality; (2) audit costs and (3) audit market concentration. We will summarize the key findings in each area, and provide a description of the analyzed proxies. Finally, we will discuss the current limitations of the studies and give useful recommendations for future empirical research activities in this topic.

The Impact of Joint Audit on Audit Planning Quality: A Field Study

“…Given that joint audit works on activating the mandatory discussion not voluntary among the audit team members in the planning and performing the audit, with respect to the possibility that the client's financial statements contain material misstatements resulting from fraud (El-Assy, 2015). It provides auditors a greater opportunity to select a more experienced and efficient staff than single audit through the high level of discussion among joint auditors, their various specialized expertise and the division of audit tasks among them (Velte, 2017). In the context of Quick & Schmidt (2018) attempted to investigate the impact of joint audit and mandatory rotation of auditor-on-auditor independence and audit quality.…”

“…Accordingly, joint audit provides greater opportunity for each existing audit firm to express any opposing opinions about the client objectively and without bias (Baldauf & Steckel, 2012). In addition, it provides a greater opportunity to select a more experienced and efficient staff than single audit (Holm & Thinggaard, 2014;Velte, 2017).…”

The Role Of Joint Review In Reducing Negative Profit Management Practices In Joint Stock Companies, Egypt

“…There are many definitions that dealt with the concept of joint review, all of which were about considering the joint review, including two (or more) independent audit offices reviewing the client's financial statements and adhering to the mutual control mechanism, issuing a consolidated audit report they sign together and are jointly responsible for the information contained in the review report and for undetected errors (European Commission, 2011;Alanezi et al, 2012;Haridi, 2015;AL-Hadi et al, 2017;Velte, 2017;Ibrahim, 2018;Hussein, 2019;Nurunnabi et al, 2020, Biehl et al, 2021.…”

“…The auditing profession has been subjected in the past few years to many criticisms due to the occurrence of major financial crises and the spread of failures and the collapse of many large and giant companies, most notably Enron in 2001 followed by the fall of one of the five largest audit offices in the world, Arthur Andersen, for his involvement in the financial problems suffered by companies, which led to a lack of confidence in the audit profession in general and the accounting and audit offices in particular. The authors agreed on the reasons that led to these financial crises, the most important of which were: poor accounting disclosure, the lack of specific accounting standards governing the requirements of transparency and accounting disclosure, as well as the tendency of companies to boot income, profit management and other practices called 'profit management', which is known as 'the process in which accountants use their accounting skills and knowledge legally to manipulate the figures in the financial statements of companies to achieve the interests of a particular group at the expense of other stakeholders' (Azibi and Velte, 2015;Velte, 2017;Ghanbari and Davoudi, 2018;Mohseny et al, 2019), thus, the practice of profit management methods is not contrary to accounting standards due to the flexibility permitted by those standards and the problem with such practices is not so much about the way data are processed as much as it relates to their impact and disclosure in financial statements (Bezpalov et al, 2020).…”

“…The joint review emerged as one of the mechanisms proposed by the European Commission in its 2010 Green paper, Review Policy: Lessons from Crises, which aims to improve the quality of the review, restore confidence in financial reports and reduce the concentration of the review services market. The joint audit process is carried out by two (or more) independent accounting and audit offices, regardless of the size of the audit offices, reviewing the client's financial statements, conducting mutual oversight, issuing a consolidated audit report they sign together and are jointly responsible for the information contained in the audit report and for undetected errors (Bisogno and De luca, 2016;Velte, 2017;Hussein, 2019;Li, 2020). The joint review is implemented in many countries, including Egypt, where the mandatory and optional application is combined.…”