The Role of Both Audit Rotation and Joint Audit on the Enterprise’s Value
DOI:
https://doi.org/10.56830/LVKQ8326Keywords:
Joint Auff, Audit Rotation, Random Effects, Fixed Effects, Panel Data, Multi-Level Analysis of VarianceAbstract
The criticism of the audit profession and the financial scandals are the main factor for the appearance of new legislation. The Joint audit considered a way to mitigate the threats that affect the auditor independence. Audit rotation can improve audit process quality because audit rotation has a positive effect on the independence of the auditor. The data included 34 companies in 14 sectors during five years: so there are two factors the first factor is the time in years and the second factor is the companies. This study included a dependent variable the value of a firm and 12 independent variables. Random effects model and fixed effects model were performed to caption the information of the data. There is a statistical evidence that the audit rotation has a significance effect on increasing the value of a firm and positive effect on the auditor independence; while the joint audit has a non-significance effect on the value of a firm and the auditor independence.
References
Arrunada, B., & Candido Paz-Ares. (1997). "Mandatory Rotation of CompanyAuditors: A critical Examination". International Review of Low andEconomics, No. (17), pp 31- 61 Elsevier science Inc. DOI: https://doi.org/10.1016/S0144-8188(96)00063-4
Brockwell, P. J., & Davis, R. A. (1987). "Time Series: Theory and Methods“, Springer. ISBN 0387964061 . DOI: https://doi.org/10.1007/978-1-4899-0004-3
Brockwell, P. J., & Davis, R. A. (1991). "Time Series: Theory and Methods"(2nd ed). Springer, ISBN 0387974296. Republished in 2009: ISBN1441903194. DOI: https://doi.org/10.1007/978-1-4419-0320-4
Brown, H., & Prescott, R. (2016). Applied Mixed Models in Medicine. 2nd ed. JohnWiley & Sons Ltd. . Chichester, West Sussex, England .
Burnham, K. R., & Anderson, D. R. (2020). “Multimodel inference: understanding AICand BIC in Model Selection", . Sociological Methods and Research, 33: pp261—304. DOI: https://doi.org/10.1177/0049124104268644
C.H., R., & D.V., S. (2011). "The effects of prior Auditor Involvement andClient pressure on proposed Audit adjustments". American AccountingAssociation, Behavioral Research in Accounting, , vol 23, No. 2, pp 117- 130. DOI: https://doi.org/10.2308/bria-10064
CFAQ. (2011). Center for Audit quality, . "Re: Request for public comment: Conceptrelease on Auditor independence and audit firm rotation, PCAOBrulemaking Docket Matter No. 037.
Costello, A. M., & Regina Wittenber G. (2011). The Impact of financial ReportingQuality on debit Contracting: Evidencefrom Internal Control WeaknessReports. Journal of Accounting Research, Sept. DOI: https://doi.org/10.1111/j.1475-679X.2010.00388.x
Deloitte. (2012). "Transparency Report", 1633 Broadway, . Committed to QualityDeloitte LLP.
Diana, M., & Magda, H. (2010). The Impact of Auditor Rotation on the AuditQuality.
working paper No. (23) Faculty of Management TechnologyGerman University in Cairo. November.
Ernst, & LLP, Y. (2011). "PCAOB Rule making Docket Matter". No. 37, Concept .Release on Auditor Independence and Audit Firm Rotation", N.Y.
Fernando, G. D., M, A., J., R., & Elder. (2010). "Audit quality attributes," . client size and cost of equity capital, Review of Accounting and Finance, vol.r 9, No.4, pp 363— 381, Emerald. DOI: https://doi.org/10.1108/14757701011094571
Garboua, Y. (2014). Factors affecting the independence of the externalauditors and impartiality in the Gaza Strip from the state of Palestine. Faculty of Management and Economics, University of Mosul, pp 1-60.
Hatfield, R. C., Jackson, S. B., & Vandervelde, S. D. (2007). "The Effects of Auditor- Rotation and client pressure on proposed Audit Adjustments". Workshop participants at the University of South Caralina .
Hatfield, R. C., Jackson, S. B., & Vandervelde, S. D. (2017). "The Effects of Auditor- Rotation and client pressure on proposed Audit Adjustments". Workshop participants at the University of South Caralina.
ICAEW. (2017). Audit 8: Assurance Faculty, Audit quality, fundamentals- auditorreporting. FATAL Flaw review.
Jackson, A., Moidrish, M., & Roebuck, P. (2008). "Mandatory audit firm rotationand audit quality". Managerial Auditing Journal, Vol. 23, 0. 5,, pp 420-437. DOI: https://doi.org/10.1108/02686900810875271
Jouber, H., & Fakhfakh, H. (2011). Earnings management and boardoversight: and International comparison. Managerial Auditing Journal, vol. 27, No. 1, pp 66-86. DOI: https://doi.org/10.1108/02686901211186108
Julia, B. &. (2010). "Joint Audit and Accuracy of the Auditor's Report" . International Journal of Economic sciences and Applied Research, 5 (2), pp7-42.
Li, L., Tian, G., & Qi, B. (2012). Auditors Unqualified opinions onInternal controls and accrual quality. Nankai Business ReviewInternational, vol 3 No 4, pp 332- 353. DOI: https://doi.org/10.1108/20408741211283719
Little, R. C. (2016). SAS for Mixed Models-Second Edition. SAS Institute Inc., Cary, North Carolina. Cary, North Carolina.
Mikko Zerni. (2012). Do client firms manage the perception of Auditorindependence? Evidence from the Swedish non-audit service market. Managerial Auditing Journal , vol. 27, No. 9, pp 821— 845. DOI: https://doi.org/10.1108/02686901211263067
Patrick veite& Markus Stigibauer. (2012). Impact of Auditor and audit firmRotation on accounting and audit quality: A critical analysis ofthe EC Regulation Draft. International conference "Improving financialInstitutions: the proper balance betweenregulation and governance “ April. peni, E., & Vahamaa, S. (2010). Female executives and earningsmanagement. Managerial Finance, vol, 36, No 7, pp. 629- 645, Emerlad.
Saibal Ghosh. (2010). Firm ownership type, Earnings Management and auditorRelationships: evidence from India". Managerial Auditing Journal, , vol. 26No.4, Emerald. DOI: https://doi.org/10.1108/02686901111124666
Siagian, F. T., & T., E. (2012). The Impact of Independent directors andindependent audit committees on earnings quality reported byIndonesian firms. Asian review of Accounting, vol 19, No. 3, Emerald. DOI: https://doi.org/10.1108/13217341111185128
Soo, Y., Young, D., & Roger, S. (2010). "Mandatory Audit firm Rotation and Audit Quality: Evidence from the Korean Audit Market",. the Seminars, at the University of New south Wales, November.
Stephan A. Fafatas. (2010). Auditor conservatism following audit failures. Managerial Auditing Journal, vol, 25, No. 7, pp 639- 658. Emerlad. DOI: https://doi.org/10.1108/02686901011061333
Stephens, N. M. (2010). "External auditor characteristics and internal control reporting under SOX section 302". Managerial Auditing Journal, , vol. No.2, Emerald. DOI: https://doi.org/10.1108/02686901111095001
Vanstraelen, A., Schelleman, C., Hofman., & R. Meuwissen RA. (2011). "Aframework for Extended Audit Reporting". Research projectcommissioned by Association of charted certified Accountants (ACCA).
