Internationalising auditing standards : stakeholder views on Australia's strategic directions

Purpose: – The purpose of this paper is to examine and evaluate the internationalisation of Australian auditing standards by analysing the submissions to the Auditing and Assurance Standards Board's (AUASB) strategic directions paper (SDP) and comparing the proposed and approved strategic directions frameworks of the AUASB.

Design/methodology/approach: – A content analysis of the submissions to the SDP is conducted to identify the extent of support, and arguments for and against the proposed strategic directions. This study attempts to find a link, if any, between the proposed strategic directions, the views expressed by the stakeholders, and the final set of strategic directions issued by Australia's Financial Reporting Council.

Findings: – Overall, the final set of strategic directions released in April 2005 are consistent with the views expressed in the submissions, which support minimal divergence from International Standards on Auditing (ISAs) and using the ISAs as the base for developing Australian auditing standards. Major changes from the SDP include a requirement for the AUASB to undertake research and monitor auditing standards issued by national standard setters. However, the AUASB is no longer obliged to contribute to the international standard arena and need only have regard to any program initiated by the International Auditing and Assurance Standards Board.

Research limitations/implications: – The findings of this study provide an insight into the future of Australia's role in the international arena and increase awareness of stakeholders' views on the international harmonisation of auditing standards.

Originality/value: – While there have been several studies examining the international harmonisation of accounting standards, there is comparatively little research on the international harmonisation of auditing standards. This paper attempts to address this void, in part, and contribute to the literature on the convergence of auditing standards with ISAs.

Internal audit - an Asia-Pacific profile and the level of compliance with internal auditing standards

Purpose – The purpose of this paper is to provide an overview of the profile of internal audit in five Asia-Pacific countries and investigate the usage and compliance with the Institute of Internal Auditors (IIA) International Standards for the Professional Practices of Internal Auditing (Standards) by organizations' internal audit activities (IAAs). This paper shows the differences between Australia, China, Japan, New Zealand and Taiwan. It also discusses part of the results of the Common Body of Knowledge 2006 global study conducted by the IIA.

Design/methodology/approach – The paper reports the results of a questionnaire survey sent to the global membership of the IIA in September 2006 on various aspects of internal audit practices.

Findings – The profile of internal audit differs amongst the countries with much older organizations exist in Australia, Japan and New Zealand. Respondents in New Zealand, Japan, Chinese Taiwan, China and Australia all report to have a reasonably high level of usage of Standards. However, Australia has the highest number of respondents who report that they are in full compliance of the Standards.

Originality/value – This is the first global study of internal auditors' compliance with the IIA Standards.

Generally accepted auditing standards, their significance and scope, 1954; special report.

Published in 1947 under title: Tentative statement of auditing standards.

Government auditing standards : exposure draft /

"GAO-02-340G."

The Australian auditing and assurance standards board after the implementation of CLERP 9

This paper traces the establishment of the reconstituted Auditing and Assurance Standards Board (AUASB) as a result of the CLERP (Audit Reform and Corporate Disclosure) Act 2004, and its progress in developing auditing standards that are "in the public interest". The paper canvasses the composition of the AUASB, its transparency and due process, its relationship with the International Auditing and Assurance Standards Board and the Financial Reporting Council, and its resourcing and attitude to researching issues of importance in auditing. The paper discusses methods that might be used to provide evidence of the efficacy of the reforms to auditing standard-setting.

Modern auditing & assurance services

On 1 May 2006, the Auditing and Assurance Standards Board (AUASB) introduced a series of new legally enforceable Australian Auditing Standards (ASAs), effective 1 July 2006.

Corporate collapses over the last five years, and subsequent criticisms of the audit role, have necessitated a review of the existing auditing standards to ensure audit quality, return stakeholder confidence in the reputation of the audit process, and reinstate to the profession the core audit qualities of reliability, transparency, trust and integrity.

'Modern Auditing and Assurance Services 3rd Edition' reflects the latest developments in the profession, detailing the audit procedures under the 35 legally enforceable ASAs.

Further, this edition has been thoroughly revised to present a current coverage of the auditing environment: the increased focus on professional ethics and ethical competence, governance and professional independence, changes in legal liability for the audit profession, local and international regulatory developments, whilst continuing to provide a thorough analysis of contemporary audit practice as well as significant consideration of assurance services beyond the traditional audit.

Perceptions of corporate boards about standards of corporate governance in Thailand

The aim in this study is to discover the nature and extent of corporate governance in listed companies in Thailand. This includes a consideration of theoretical underpinning for amendments made to the western models of corporate governance that have been implemented by Thai listed companies, and of the effect of corporate governance principles on financial information, including financial reports, used by stakeholders in Thai listed companies. The results in this study show that after the Asian financial crisis corporate governance in Thailand improved especially in enforcement and disclosure, and outside/independent directors and professional organisations are playing leading roles in that process. Better corporate governance has resulted from improved internal corporate governance mechanisms and enhanced accounting standards, information disclosure, and auditing standards. New and up-dated rules, new and revised laws, and increased regulation are in the forefront of improved corporate governance. Process-related activities like monitoring, supervising, enforcing, and higher awareness have increased. Moreover, corporate governance practices are now in the spotlight throughout the financial and investment markets.

Voluntary demand for auditing by farm businesses: an Australian perspective

 This study investigates voluntary demand for auditing by Australian farm businesses, a significant but relatively unexplored segment of the economy. Most farms operate as family partnerships or sole proprietors and we thus focus on incentives to audit arising from internal sources (owner-manager), controlling for traditional incentives arising from external contractual constraints (i.e., debt), organisational characteristics (i.e., size), and agency conflict. We hypothesise that an external audit assists management in enhancing internal control by complementing the process of profit planning and control (budgeting) and that increased family conflict provides an incentive to engage external audit. Of the 457 survey questionnaire respondents, 27% voluntarily engage an external auditor and 66% conduct some formal written planning. Results from logistic regression analyses support the predicted impact of both size and debt on audit, and further support the hypothesised impact of budgeting. The positive association between budgeting and audit confirms the complementary relationship. More importantly, this relationship is not confounded by the combined impact of size and budgeting and debt and budgeting on voluntary audit. In addition, family conflict has no impact on voluntary demand for auditing by farm business.

A study of materiality auditing: case study from Libya

The results demonstrate strong agreement between Libyan auditors about the materiality concept. In terms of the international auditing standards, not all Libyan auditors follow these standards. The percentage of the item being audited is the most important quantitative form, followed by the item’s position in the financial statements and the absolute value. The results also identified 16 qualitative factors for materiality auditing decisions.

Liquidity, institutional ownership and regulation fair disclosure

There is a body of academic literature addressing two issues of importance for leveling the playing field for all classes of investors: 1) the impact of institutional investors on liquidity; and 2) the impact of Regulation Fair Disclosure on institutional investors and liquidity. Our study addresses both issues with the purpose of attaining a better understanding and explanation of this relationship. We classify institutional ownership according to Bushee's (1998, 2001) methodology; transient institutions, dedicated institutions and quasi-indexers. Our results indicate that while transient institutions and quasi-indexers have a positive impact on liquidity, dedicated institutional ownership is negatively associated with liquidity. This result is consistent with prior theoretical studies. We also find that the effectiveness ofthe Regulation Fair Disclosure in improving liquidity is limited to firms with higher transient institutional ownership, whereas quasi-indexed institutions have not been significantly affected by the regulations. In fact, the liquidity of firms is lower for firms with higher dedicated institutional holdings, which is evidence of the "chilling effect".

Reliance of external auditors on internal audit work : a corporate governance perspective

The literature suggests an increasing need for interactions among board of directors, management, internal audit and external audit as the four components of corporate governance and presents internal audit as a resource for the other components. External auditing standards that originated in the Western world, which are also being applied in developing countries, recommend external auditor’s reliance on internal audit to achieve audit efficiency. Nevertheless, whether this efficiency motive explains such reliance in corporate governance settings that differ from the West has not been sufficiently explored as yet. This study examines external auditor reliance on internal audit work using questionnaire survey of 119 external auditors in Ethiopia. Mann-Whitney U test results suggest that external auditors’ reliance on internal audit work is not significantly associated with the competitiveness of external audit sub-markets in Ethiopia. Results of multiple discriminant analysis indicate internal audit work performance is the most important factor that determines the extent of external auditors’ reliance on internal audit work. Overall, findings suggest that organizations can enhance corporate governance effectiveness by strengthening internal audit and fostering internal-external auditor coordination.

O parecer da auditoria independente antecipa a necessidade de republicação das demonstrações contábeis?

O objetivo deste trabalho é investigar a relação existente entre a ressalva imposta no parecer da auditoria independente e a reapresentação exigida pelo Banco Central, a existência de forte correlação entre haver ressalva e reapresentação por exigência, indicariam que o parecer teria capacidade de antecipar exigência de reapresentação por parte do Banco Central. Selecionamos o grupo formado pelos bancos que tem ações negociadas na bolsa de valores e mapeamos as combinações formadas pelo tipo de parecer com o tipo de apresentação, de igual modo utilizamos este método em dois estratos da amostra, por porte da firma de auditoria e por haver ou não algum nível de Governança Corporativa. Os resultados não mostraram relação significativa entre parecer com ressalva e reapresentação, nem os estratos demonstraram percentuais significativamente melhores em relação aos demais estratos ou mesmo em relação à amostra. Concluímos que não há relação entre parecer e reapresentação por exigência, nem relevância com relação ao porte ou a governança corporativa, porém os resultados mostraram haver maior percentual de reapresentação espontânea no estrato por governança corporativa, o que indicaria um cuidado maior em relação às demonstrações independente do parecer da auditoria independente.

A relação entre o parecer de auditoria e a troca de auditores: uma investigação nas instituições financeiras brasileiras

Esta pesquisa tem como objetivo principal verificar se há relação entre a troca espontânea da auditoria independente e o parecer não limpo emitido no ano anterior e também se há relação positiva entre o rodízio de auditores e a emissão de pareceres não limpos no ano do rodízio e nos seguintes. Justifica-se este trabalho pela proposta de avaliar cientificamente o impacto da influência da administração e da adoção do rodízio de auditoria na independência do auditor externo, sem ser enviesado pelos interesses dos profissionais envolvidos, uma vez que esta é uma pesquisa exclusivamente documental. Portanto, chega-se a diversas hipóteses quanto à ocorrência de parecer não limpo como fator motivador para a troca de auditores por parte da administração e quanto ao rodízio obrigatório de auditorias propiciando a emissão de pareceres não limpos. Além da pesquisa documental, este trabalho também é composto por revisão da literatura acadêmica e especializada, que fundamentam e respaldam as principais questões abordadas. Os resultados obtidos, após as considerações e constatações observadas nas pesquisas bibliográficas, e nos resultados dos testes da estatística qui-quadrado, verificam que a administração é mais propensa a trocar a firma de auditoria quando recebe um parecer modificado por ressalvas e ênfases relevantes que quando recebe um parecer limpo da firma de auditoria atual. Outra constatação é a ausência de relação entre a adoção do rodízio obrigatório de auditoria e a emissão de pareceres modificados nos anos após esta troca.