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

Journal article


Aziz, U.A. and Omoteso, Kamil 2014. Reinforcing users’ confidence in statutory audit during a post-crisis period: An empirical study. Journal of Applied Accounting Research. https://doi.org/10.1108/JAAR-11-2013-0108
AuthorsAziz, U.A. and Omoteso, Kamil
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.

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.

KeywordsStatutory audit; Financial crisis
Year2014
JournalJournal of Applied Accounting Research
PublisherEmerald Group Publishing Limited
ISSN0967-5426
Digital Object Identifier (DOI)https://doi.org/10.1108/JAAR-11-2013-0108
Web address (URL)http://hdl.handle.net/10545/623286
hdl:10545/623286
Publication dates04 Nov 2014
Publication process dates
Deposited14 Jan 2019, 10:34
Accepted01 Jun 2014
ContributorsDe Montfort University and Coventry University
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