Audit quality the effect of prior experience
Auditing regulation has been under constant change in the recent decades and it seems to continue to evolve. The latest European Union regulation (537/2014) and directive (2014/56) require mandatory auditor rotation. However the auditing research is not unanimous how the rotation and audit qualit...
| Päätekijä: | |
|---|---|
| Muut tekijät: | , , , , , |
| Aineistotyyppi: | Pro gradu |
| Kieli: | eng |
| Julkaistu: |
2016
|
| Aiheet: | |
| Linkit: | https://jyx.jyu.fi/handle/123456789/48739 |
| Yhteenveto: | Auditing regulation has been under constant change in the recent decades and it seems
to continue to evolve. The latest European Union regulation (537/2014) and directive
(2014/56) require mandatory auditor rotation. However the auditing research is not
unanimous how the rotation and audit quality are related and there are still issues that
have not been studied at all.
This study focuses on one of these unstudied issues by examining whether auditors‟
prior firm specific experience helps the auditors achieve higher quality audits when
starting new engagements with previously familiar client. The theoretical framework is
based on the research about the relationship between audit tenure and audit quality by
Johnson et al. (2002); Geiger & Raghunandan (2002); Chen et al. 2008. In addition the
analysis also takes into account other variables such as auditor and client size.
The study is conducted by creating regression models and utilizing correlation analysis.
The variables used are based on a large sample of Swedish companies over a ten year
period. The quality is measured indirectly using modified auditing reports and amount
of abnormal accruals as proxies for audit quality. The results indicate that auditors‟ prior
experience does in fact increase the quality of audits during the first years of new
engagements. However the models‟ coefficients of determination are rather low and
therefore further analysis on the subject might be beneficial.
|
|---|