Reinforcing users’ confidence in statutory audit during a post-crisis period : An empirical study

Umar-Farook Aziz, Kamil Omotoeso

    Research output: Contribution to journalArticle

    2 Citations (Scopus)
    55 Downloads (Pure)

    Abstract

    Purpose – The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its value relevance and decision usefulness in the aftermath of the financial crisis. Design/methodology/approach – This research used a structured questionnaire to collect data from practising accountants, auditors and accounting academics within the UK. A factor analysis was undertaken to examine the potential inter-correlations that could exist between different factors obtained from the literature. The analysis reduced these variables into the more important factors which were subsequently modelled in a logistic regression analysis. Findings – The paper identified, as critical factors for enhancing statutory audits, “a continuously updated accounting curriculum”, “expansion of the auditor's role”, “frequent meetings between regulators and auditors”, “mandatory rotation of auditors”, “limiting the provision of non-audit services”, “knowledge requirements from disciplines other than accounting” and “encouraging joint audits”. It is hoped that addressing these issues might improve confidence in the audit profession, thereby reinforcing its value relevance. Research limitations/implications – The study's findings imply that professional accountancy bodies, accounting educators and accounting firms will need to incorporate the key factors identified in this study into their curriculum and training schemes. However, the generalisability of these findings might be limited as the research data were primarily obtained from UK accountants alone. Originality/value – This study extends the frontiers of knowledge on critical factors that could reinforce users’ confidence in the statutory audit function and have implications for policy and practice.
    Original languageEnglish
    Pages (from-to)308-322
    JournalJournal of Applied Accounting Research
    Volume15
    Issue number3
    DOIs
    Publication statusPublished - 2014

    Fingerprint

    Confidence
    Empirical study
    Audit
    Auditors
    Factors
    Accountants
    Value relevance
    Critical factors
    Accounting firms
    Design methodology
    Accountancy
    Financial statements
    Financial crisis
    Nonaudit services
    Logistic regression analysis
    Factor analysis
    Accounting curriculum
    Questionnaire
    Usefulness
    Curriculum

    Bibliographical note

    "This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here http://dx.doi.org/10.1108/JAAR-11-2013-0108. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited."

    Keywords

    • Auditors
    • Financial crisis
    • Statutory audit
    • The theory of inspired confidence

    Cite this

    Reinforcing users’ confidence in statutory audit during a post-crisis period : An empirical study. / Aziz, Umar-Farook; Omotoeso, Kamil.

    In: Journal of Applied Accounting Research, Vol. 15, No. 3, 2014, p. 308-322.

    Research output: Contribution to journalArticle

    @article{1c51eb8c3a6746d48118f64c24c8bd25,
    title = "Reinforcing users’ confidence in statutory audit during a post-crisis period : An empirical study",
    abstract = "Purpose – The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its value relevance and decision usefulness in the aftermath of the financial crisis. Design/methodology/approach – This research used a structured questionnaire to collect data from practising accountants, auditors and accounting academics within the UK. A factor analysis was undertaken to examine the potential inter-correlations that could exist between different factors obtained from the literature. The analysis reduced these variables into the more important factors which were subsequently modelled in a logistic regression analysis. Findings – The paper identified, as critical factors for enhancing statutory audits, “a continuously updated accounting curriculum”, “expansion of the auditor's role”, “frequent meetings between regulators and auditors”, “mandatory rotation of auditors”, “limiting the provision of non-audit services”, “knowledge requirements from disciplines other than accounting” and “encouraging joint audits”. It is hoped that addressing these issues might improve confidence in the audit profession, thereby reinforcing its value relevance. Research limitations/implications – The study's findings imply that professional accountancy bodies, accounting educators and accounting firms will need to incorporate the key factors identified in this study into their curriculum and training schemes. However, the generalisability of these findings might be limited as the research data were primarily obtained from UK accountants alone. Originality/value – This study extends the frontiers of knowledge on critical factors that could reinforce users’ confidence in the statutory audit function and have implications for policy and practice.",
    keywords = "Auditors, Financial crisis, Statutory audit, The theory of inspired confidence",
    author = "Umar-Farook Aziz and Kamil Omotoeso",
    note = "{"}This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here http://dx.doi.org/10.1108/JAAR-11-2013-0108. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.{"}",
    year = "2014",
    doi = "10.1108/JAAR-11-2013-0108",
    language = "English",
    volume = "15",
    pages = "308--322",
    journal = "Journal of Applied Accounting Research",
    issn = "0967-5426",
    publisher = "Emerald",
    number = "3",

    }

    TY - JOUR

    T1 - Reinforcing users’ confidence in statutory audit during a post-crisis period : An empirical study

    AU - Aziz, Umar-Farook

    AU - Omotoeso, Kamil

    N1 - "This article is (c) Emerald Group Publishing and permission has been granted for this version to appear here http://dx.doi.org/10.1108/JAAR-11-2013-0108. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited."

    PY - 2014

    Y1 - 2014

    N2 - Purpose – The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its value relevance and decision usefulness in the aftermath of the financial crisis. Design/methodology/approach – This research used a structured questionnaire to collect data from practising accountants, auditors and accounting academics within the UK. A factor analysis was undertaken to examine the potential inter-correlations that could exist between different factors obtained from the literature. The analysis reduced these variables into the more important factors which were subsequently modelled in a logistic regression analysis. Findings – The paper identified, as critical factors for enhancing statutory audits, “a continuously updated accounting curriculum”, “expansion of the auditor's role”, “frequent meetings between regulators and auditors”, “mandatory rotation of auditors”, “limiting the provision of non-audit services”, “knowledge requirements from disciplines other than accounting” and “encouraging joint audits”. It is hoped that addressing these issues might improve confidence in the audit profession, thereby reinforcing its value relevance. Research limitations/implications – The study's findings imply that professional accountancy bodies, accounting educators and accounting firms will need to incorporate the key factors identified in this study into their curriculum and training schemes. However, the generalisability of these findings might be limited as the research data were primarily obtained from UK accountants alone. Originality/value – This study extends the frontiers of knowledge on critical factors that could reinforce users’ confidence in the statutory audit function and have implications for policy and practice.

    AB - Purpose – The purpose of this paper is to examine the factors that are perceived as important for the statutory audit function to restore confidence in the financial statements, its value relevance and decision usefulness in the aftermath of the financial crisis. Design/methodology/approach – This research used a structured questionnaire to collect data from practising accountants, auditors and accounting academics within the UK. A factor analysis was undertaken to examine the potential inter-correlations that could exist between different factors obtained from the literature. The analysis reduced these variables into the more important factors which were subsequently modelled in a logistic regression analysis. Findings – The paper identified, as critical factors for enhancing statutory audits, “a continuously updated accounting curriculum”, “expansion of the auditor's role”, “frequent meetings between regulators and auditors”, “mandatory rotation of auditors”, “limiting the provision of non-audit services”, “knowledge requirements from disciplines other than accounting” and “encouraging joint audits”. It is hoped that addressing these issues might improve confidence in the audit profession, thereby reinforcing its value relevance. Research limitations/implications – The study's findings imply that professional accountancy bodies, accounting educators and accounting firms will need to incorporate the key factors identified in this study into their curriculum and training schemes. However, the generalisability of these findings might be limited as the research data were primarily obtained from UK accountants alone. Originality/value – This study extends the frontiers of knowledge on critical factors that could reinforce users’ confidence in the statutory audit function and have implications for policy and practice.

    KW - Auditors

    KW - Financial crisis

    KW - Statutory audit

    KW - The theory of inspired confidence

    U2 - 10.1108/JAAR-11-2013-0108

    DO - 10.1108/JAAR-11-2013-0108

    M3 - Article

    VL - 15

    SP - 308

    EP - 322

    JO - Journal of Applied Accounting Research

    JF - Journal of Applied Accounting Research

    SN - 0967-5426

    IS - 3

    ER -