Relationship Between the Auditor's Professional Skepticism, Rotation of Auditors and Audit Quality of company

Document Type : Research Paper

Authors

1 payam noor university

2 payem noor university

Abstract

What society expects of the auditing profession is rendering of high quality report. But the actions of managers can lead to professional skepticism and understanding of risk of auditor’s rotation, so these factors can effect on audit quality. Therefore, in this study, the relationship between the auditor's professional skepticism, the rotation of auditors and audit quality of listed companies on the Stock Exchange of Tehran was studied. Research methodology is Practical and correlated. The study also include all companies listed on Tehran Stock Exchange during a period of six years from 2011 up to 2015. Data needed for the study were collected from the database of Stock Exchange. In order to analyzing of data, multiple regression analysis was used. The results showed that there is a significantly positive relationship between the auditor's professional skepticism and rotation of auditor with audit quality, but mandatory auditor rotation variable was not significantly associated with audit quality.

Keywords

Main Subjects

References

Bandyopadhyay S. P. , CH. Chen, & Y. Yu, (2014). Mandatory Audit Partner Rotation, Audit Market Concentration, and Audit Quality: Evidence from China, Advances in Accounting, Incorporating Advances in International Accounting, Volume 30, Issue 1, PP. 18–31
Baymani, H. & Vahidi Elizi, E. (2016). Investigating the Effect of Compulsory and Optional Rotation of Audit Institutions on Audit Quality in Companies Acquired in Tehran Stock Exchange, First National Conference on Economics, Management and Accounting [in persian]
Beyer, A. & Guttman. I. (2012). Voluntary disclosure, manipulation and real effects. available online at: http: //ssrn. com /abstract =1647808
Cullinan, Charles P. Fangjun Wang, Bei Yang, Junrui Zhang (2012). Audit opinion improvement and the timing of disclosure, Advances in Accounting, incorporating Advances in International Accounting 28, 333–343
Daugherty B. E. , D. Dickins, R. C. Hatfield, & J. L. Higgs, (2013). Mandatory Audit Partner Rotation: Perceptions of Audit Quality Consequences, American Accounting Association, Current Issues in Auditing, Volume 7, Issue 1, PP. 30-35
Francis, J. , Nanda, D. & Olsson, P. (2008). Voluntary disclosure, earnings quality, and cost of capital. Journal of Accounting Research, 46, 53–99
Francis, J. R. (1999). A test of audit pricing in the small-client segment of the US audit markets’, The Accounting Review, Vol. 62, January, pp. 145–57.
Guttman, I. (2010). The timing of analysts’ earnings forecasts. The Accounting Review, 85, 513–545.
Hamilton, J. , C. Ruddock, D. Stokes, and S. Taylor. (2005). "Audit partner rotation, earnings quality and earnings conservatism". Working paper, University of Technology, Sydney, and University of New South Wales.
Hurtt, R. K, et al. (2013). Research on Auditor Professional Skepticism: Literature Synthesis and Opportunities for Future Research, journal of practice and theory, Vol: 32, pp: 45-97
Hurtt, R. K. , M. Eining, and R. D. Plumlee. (2008). an experimental examination of professional skepticism. Working Paper. Available at SSRN: http: //ssrn. com/abstract=1140267.
Leuz, C. & Wysocki, P. (2008). Economic consequences of financial reporting and disclosure regulation: a review and suggestions for future research. Working Paper, available online at http: ssrn. com
Liao, C. H. (2011). The effect of stock-based incentives and governance mechanisms on voluntary disclosure of intangibles. Advances in Accounting, incorporating Advances in International Accounting ,27, 294–307
Lindscheid, F. , and Pott, C, & Watrin, C. (2010). The Effect of Audit Engagement and Review Partner Rotation on Audit Quality. Working Paper, Institute of Accounting and Taxation of Germany.
Lobo and Zhou. (2011). Does opinion shopping impair auditor independence and audit quality?, Journal of Accounting and Research 44 (June): 561-583.
Lowry, M. (2009). Discussion of ‘Shareholder litigation and changes in disclosure behavior. Journal of Accounting and Economics, 47, 157–159.
Mouselli, S. , Jaafar, A. & K. Hussainey (2012). Accruals quality vis-à-vis disclosure quality: Substitutes or complements?. The British Accounting Review, 44
Quadackers L et al, (2009). Auditors’ Skeptical Characteristics and Their Relationship to Skeptical Judgments and Decisions; VU University Amsterdam.
Reeb and Jaou S. (2013). The impact of mandatory audit rotation on audit quality and on audit pricing: the case of Italy. Academic research Unpublished.
Turri, J. (2014). Skeptical Appeal: The Source-Content Bias,A Multidisciplinary Journal, ISSN: 0364-0213, pp: 1-18
Velte P. and Markus S. (2012). Impact of Auditor and Audit Firm Rotation on Accounting and Audit Quality: A Critical Analysis of the EC Regulation Draft, International Conference Improving Financial Institutions: the Proper Balance Between Regulation and Governance, Helsinki, Finland.
Yaghobnejad, A. , Royayi, R. & Azinfar, K. (2012). Relationship between the Doubtfulness and Audit Quality, Journal of Management Accounting, 5 (14) , pp. 25-35 [in persian].
Zarefar, A. , Andreas & Zarefar, Atika (2016) , The Influence of Ethics, Experience and Compentency toward the Quality of Auditing with Professional auditor Scepticism as a Mederating Variable, Procedia - Social and Behavioral Sciences 219, 828 – 832
 
 
Journal of Accounting and Social Interests
Volume 8, Issue 3 - Serial Number 30
December 2018
Pages 101-123

Files

History

  • Receive Date: 13 June 2017
  • Revise Date: 05 October 2017
  • Accept Date: 16 October 2017

Share

How to cite

Statistics