Big Four

Despite significant reforms, notably the Sarbanes-Oxley Act of 2002 (SOX), the U.S. auditing system remains susceptible to catastrophic failures, leaving U.S. capital markets dangerously exposed to systemic risks, as evidenced by persistent audit deficiencies and the parallels to recent transatlantic collapses. The 2020 collapses of UK-based NMC Health and Germany's Wirecard serve as stark transatlantic warnings. This article posits that the core issue is not merely an "expectation gap", the difference between public perception and auditors' legal obligations, but a pervasive "performance gap". This gap represents the discrepancy between what auditors should achieve based on professional standards and ethical duties, and their actual performance in detecting material misstatements or fraud. This shortfall is driven by a complex interplay of factors, including a culture of "defensive compliance" (actions motivated primarily by a desire to avoid legal or regulatory penalties), powerful economic incentives within the audit industry, and institutional constraints on regulators. This culture is entrenched in a fragmented legal liability framework that often lacks sufficient deterrents against auditor negligence.

This article argues that the spectacular failure to detect billions in hidden debt and fictitious assets in these cases is not an isolated foreign incident but a critical symptom of a systemic malaise within the Western auditing model, dominated by a "Big Four" oligopoly. This situation leaves U.S. capital markets dangerously exposed. An examination of the U.S. legal landscape reveals a complex and often anachronistic patchwork of state common law and stringent federal statutes. This framework is characterized by prohibitively high hurdles for plaintiffs, such as the demanding "scienter" standard reinforced by Tellabs, Inc. v. Makor Issues & Rights, Ltd. (2007), which significantly shields auditors from accountability and thereby reduces the economic pressure for requisite diligence. Concurrently, oversight by the Public Company Accounting Oversight Board (PCAOB), while established with good intentions, has struggled against its own institutional limitations and has inadvertently fostered this "defensive compliance" culture. Empirical data, including alarming PCAOB findings that 40% of inspected audits in 2022 were deficient, coupled with behavioral studies, indicates that auditors may prioritize the creation of a legally defensible audit file over the aggressive pursuit of fraud and the exercise of professional skepticism. Furthermore, the financial machinations employed in the NMC Health and Wirecard frauds mirror deceptive tactics seen in past U.S. scandals like Enron and WorldCom, underscoring a fundamental breakdown of professional skepticism within the audit function itself.

To address these systemic weaknesses, this article proposes a detailed blueprint for American-led reform. Key proposals include strengthening director accountability beyond SOX by expanding CEO and CFO certifications to explicitly cover high-risk accounting areas, thereby eliminating "plausible deniability". It also advocates for mandating forensic specialists in high-risk audits through a new PCAOB Auditing Standard, fostering a necessary "presumptive doubt" mindset. Additionally, the article suggests re-evaluating mandatory audit firm rotation, adopting a policy similar to the European Union's, to disrupt complacency and inject competition into the concentrated audit market. Finally, it recommends recalibrating auditor liability to sharpen deterrence by easing the "scienter" pleading standard for auditor liability in cases of documented, repeated audit deficiencies identified by the PCAOB, creating a "two strikes" approach. These proactive, structural reforms are presented as imperative to avert future financial crises, restore investor trust, and ensure the integrity of U.S. capital markets.

Keywords: Audit Quality, Performance Gap, Auditor Liability, Sarbanes-Oxley Act (SOX), PCAOB, Defensive Compliance, Professional Skepticism, Financial Fraud, Corporate Governance, Agency Theory, Institutional Theory, Audit Regulation, Big Four, Mandatory Audit Firm Rotation, Forensic Accounting

Diante da crise economica que ocorreu em 2008, os usuarios das demonstracoes contabeis requerem cada vez mais transparencia e informacoes confiaveis nos relatorios. Por essa razao, o International Auditingand Assurance Standards Board (IAASB) efetuou modificacoes no relatorio de auditoria para ser transparente e mais confiavel. Com essas modificacoes foi acrescentado no relatorio uma secao de Principais Assuntos de Auditoria (PAA) o qual a sua relevância demanda sobre o julgamento de outros assuntos, proporcionando informacoes complementares. Assim, este estudo tem como objetivo verificar o novo relatorio do auditor referentes aos anos de 2016 a 2018, quais foram os PAA mais significativos para os auditores independentes das empresas listadas na B3 (Brasil, Bolsa, Balcao). Foram analisadas todas as companhias listadas na B3 no periodo investigado para identificar qual o assunto mais relatado, e o que fez o auditor relatar como principal assunto. Dentre os resultados obtidos destaca-...

This study examines the mediating effect financial leverage on the relationship between ownership structure and cash holdings of listed service in Nigeria. The study employed correlational research design using data from the Nigeria Exchange Group (NGX) over the period of fourteen years (20102023). Data was extracted from the annual report and accounts of the seventeen out of twentytwo listed services firms for the period through the application of filter from a purposive sampling technique. The data was subjected to descriptive statistics, correlation and Structural Equation Adjusted Modeling (SEM) were used as techniques for data analysis while bootstrapping result was used to determine the level of significance of the indirect effects and the hypotheses formulated were tested. The findings demonstrate that ownership structure does not influence financial leverage, this implies that firms with greater managerial, Institutional and foreign investors are likely to hold more cash for day-today activities while financial leverage affects cash holdings of the sampled firms. Moreover, ownership structure directly influences cash holdings without the influence of financial leverage decision as a mediator. Based on this finding, the study recommended that management of listed services firms should continue to strengthen governance frameworks to ensure that both foreign and institutional stakeholders prioritize effective cash management practices. In the same vein, policymakers encourage local ownership structure due to the influence of this type of ownership on a firm's capital structure and its joint importance effect with firm investments. In the same vein, management should develop robust cash management strategies to balance liquidity needs with debt obligations. This can include optimizing cash flow forecasts and managing working capital efficiently. 1 .

Nos últimos anos a literatura de auditoria tem chamado atenção para a importância das características individuais, do ceticismo profissional e da estrutura da firma dos resultados de qualidade do trabalho do auditor independente. Realizar julgamentos de forma independente e sem vieses é fundamental para a qualidade da informação fornecida ao mercado, embora seja difícil isolar algumas dessas variáveis e seu reflexo. Esse artigo teve por objetivo analisar e comparar as diferenças no perfil profissional e de ceticismo dos auditores, entre profissionais que atuam nas firmas Big Four e Não Big Four. Para tanto, estudo envolveu uma amostra de 439 auditores independentes brasileiros em uma pesquisa quantitativa, descritiva e survey. A pesquisa concluiu que há diferenças significativas entre os perfis e os níveis de ceticismo dos auditores das firmas Big Four e Não Big Four. As Big Four não apenas promovem maior diversidade de gênero, mas também parecem proporcionar um ambiente que fomenta o ceticismo profissional. Recomenda-se que futuras pesquisas explorem em maior profundidade como diferentes práticas de treinamento e cultura organizacional podem impactar o desenvolvimento do ceticismo profissional.

The purpose of this paper is to investigate the relation between board structure and firm risk-taking in a sample of 8 extractive firms listed on the Nairobi Securities Exchange (NSE). The agency theory provided the theoretical foundation for this study. The study adopted a descriptive research design. It employed a purposive sampling technique to determine the sample size of extractive firms on the NSE from 2019-2023. The data was retrieved from annual reports of sampled firms. Further, Fixed Effect Model and Two-stage Least Squares (2SLS) methods supported data analysis and reliability check, respectively. Using 5 years of balanced panel data, the results show that board size and female gender diversity are statistically significant, negatively and positively associated with firm risk-taking (z-score), respectively. Additionally, evidence indicates that the interaction between independent directors and female gender terms is positively related to the z-score. In contrast, the findings on the relationship between independent directors and risk-taking are considerably mixed. Besides, the study highlights practical implications for policy reforms that require more extractive firms to list on stock exchanges and mandate female board representation. Finally, the study offers a literature review on the linkage between risk-taking and board structure in the extractive industry.

In an era of accelerating digital transformation, the integrity and efficiency of tax audits have become more critical than ever. As governments confront increasing fiscal pressures, ensuring high-quality audits is essential to safeguarding national revenues and public trust. However, despite widespread implementation of Information Systems (IS) in audit processes, there remains a limited understanding of how IS effectiveness truly impacts tax audit quality. This systematic literature review seeks to address this pressing gap by synthesizing empirical evidence on the role of IS in enhancing tax audit performance. Guided by the PRISMA protocol, an advanced search strategy was applied across Scopus and Web of Science databases, yielding 25 eligible primary studies. Through thematic analysis, four dominant themes were identified: (1) System Quality and Technological Infrastructure, which highlights the importance of robust, integrated digital tools in improving audit efficiency; (2) Information Quality and Audit Decision-Making, emphasizing the role of reliable, timely, and relevant data in strengthening auditor judgment; (3) Service Quality and Auditor Support Systems, underlining the influence of technical support, training, and responsiveness on successful IS adoption; and (4) Intention to Use and Technology Acceptance in Auditing, focusing on behavioural and organizational factors shaping IS utilization. The review reveals that IS effectiveness is not solely a matter of system performance but also hinges on how well systems are aligned with user needs, organizational context, and audit objectives. These findings offer urgent and practical implications for tax authorities, developers, and policymakers seeking to enhance audit credibility through digital innovation. By bridging the gap between technology and audit practice, this review lays the groundwork for more targeted investments and informed strategies in digital audit reforms.

Drawing on the CEO attributes and financial performance literature, we use a pooled data design to investigate the effect of CEO nationality and tenure on the financial performance of listed firms in Nigeria over a period of ten years using data collected from 112 listed firms. The data were handpicked from the annual reports and accounts of the sampled firms and analysed using both descriptive and inferential statistical analyses techniques based on a multiple regression model. It is found that financial performance is significantly affected by CEO nationality and tenure. This study provides some evidence to support the Agency theory and the cost and benefit hypothesis. The study is limited by the number of samples, specifically 112 listed firms. It is expected that further research can increase the total sample of companies by adding to the research period or using total population of listed firms in Nigeria. Our study results show that the R-square value is 17 percent, further research is expected to be able to add to this figure. This reflects differences between the financial performance value in Nigeria and stakeholder approaches more common in other climes. Our results could help regulators, and others (e.g., investors) to better understand the potential performance implications of the appointment of directors of different nationality and tenure.

The increasing globalization of corporate boards has intensified scholarly interest in understanding the role of foreign directors in shaping strategic financial decisions such as dividend policy. However, the empirical evidence on the influence of foreign directors on dividend distribution remains inconclusive, especially in emerging markets characterized by unique institutional, cultural, and regulatory contexts. This study investigates the effect of foreign directors on dividend policy among publicly listed firms, addressing a critical gap in corporate governance literature. The primary objective is to examine whether the presence of foreign directors enhances dividend payouts due to their global experience, stronger shareholder orientation, and preference for transparency. Using panel data derived from 143 firms listed on the Nigerian Exchange between 2014 and 2023, the study employs a random effects regression model. Key variables include the proportion of foreign directors on the board and control variables such as firm profitability, firm leverage, firm size, and regulatory environment. Findings reveal a significant positive relationship between foreign directorship and dividend payout ratio, suggesting that foreign directors contribute to stronger shareholder rights protection and signal confidence in firm performance. However, the magnitude of the effect varies depending on the regulatory environment and firm-specific characteristics. The study is limited by its geographic focus on Nigeria, which may constrain generalizability. Furthermore, qualitative attributes such as the nationality, experience, and independence of foreign directors were not deeply explored. Practically, the findings underscore the need for boards and policymakers to consider board diversity strategies that include foreign expertise to boost investor confidence and promote shareholder value. Socially, enhancing dividend policy through effective board composition can support economic growth by improving wealth distribution and stimulating investment. The study contributes original insights to corporate governance discourse in emerging economies by linking board internationalization to dividend strategy.

The purpose of this study is to investigate the primary research question: To what extent do perceived ease of use (PEOU) and perceived usefulness (PU) explain auditors' behavioral intentions (BI) to adopt big data analytics (BDA) in auditing firms in Palestine? A mixed-method approach was employed, combining quantitative data from a census survey of 94 auditors at the Big Four accounting firms in Palestine (achieving an 86 % response rate) with qualitative data from semi-structured interviews conducted with 9 auditors at the managerial level or higher. This methodological integration enhanced the validity and reliability of the research findings. The results demonstrated that PU significantly and directly impacts auditors' intentions to adopt BDA, while PEOU also influences BI, though to a lesser extent. The study validated the applicability of the Technology Acceptance Model (TAM) in the auditing profession and addresses the research gap on BDA adoption in developing economies. Findings highlight perceived usefulness as the key driver and suggest that improving ease of use could further boost adoption. Practical implications include training for firms, supportive policies from regulators, and user-friendly solutions from technology providers. By offering insights for resource-constrained environments, this study guides BDA adoption in auditing for both academia and industry.

This paper is an attempt to critically review the article "Piece's of Evolution's Puzzle: A Social- Philosophical Perspective" by Gregory M. Sandstrom. I argue that Mr. Sandstrom's paper, though it may offer legitimate challenges to evolution in human-social thought, ultimately falls short in its failure to offer an alternative to evolutionary theory. Instead, he just tries to follow the main lines of logic developed by Steve Fuller to promote the ideas of Pitirim Sorokin. Sandstrom's paper nevertheless has many provocative and insightful contributions; he reintroduces Theodosius Dobzhansky's culturally-sensitive biology to current social sciences.

This article uses an ex-post facto and cross-sectional research approach to investigate the effect of audit quality on the value of selected manufacturing companies listed on the Nigeria Exchange Group's floor for a ten-year period spanning 2011 to 2021. Using audit quality proxies such as auditor independence, audit firm size, audit group qualification, audit experience, and Tobin's Q, the study analyzes the value of listed companies in Nigeria. We used panel multiple regression to examine the non-homogeneity of firm data, which is why we used Hausman effect tests on secondary data taken from the annual reports and accounts of 34 manufacturing firms. These tests included descriptive analysis, correlation analysis, and a variance inflation factor. The Hausman specification test results indicated that the random panel Least Square (RPLS) regression solution was most acceptable for the dataset. There is statistically significant beneficial impact on the value of Nigerian manufacturing enterprises, according to the panel regression results that showed auditor independence had a favorable impact on firm value. Contrarily, audit experience has a non-significant negative correlation with Tobin's Q, whereas audit firm size and qualifications of audit group have a negligible positive correlation with the value of Nigerian manufacturers. Firms should work to improve auditor independence since it has a large and beneficial impact on audit conclusions. This study's findings imply that auditor independence has a considerable impact on stock market prices, consequently enhancing its monetary worth.

This article uses an ex-post facto and cross-sectional research approach to investigate the effect of audit quality on the value of selected manufacturing companies listed on the Nigeria Exchange Group's floor for a ten-year period spanning 2011 to 2021. Using audit quality proxies such as auditor independence, audit firm size, audit group qualification, audit experience, and Tobin's Q, the study analyzes the value of listed companies in Nigeria. We used panel multiple regression to examine the non-homogeneity of firm data, which is why we used Hausman effect tests on secondary data taken from the annual reports and accounts of 34 manufacturing firms. These tests included descriptive analysis, correlation analysis, and a variance inflation factor. The Hausman specification test results indicated that the random panel Least Square (RPLS) regression solution was most acceptable for the dataset. There is statistically significant beneficial impact on the value of Nigerian manufacturing enterprises, according to the panel regression results that showed auditor independence had a favorable impact on firm value. Contrarily, audit experience has a non-significant negative correlation with Tobin's Q, whereas audit firm size and qualifications of audit group have a negligible positive correlation with the value of Nigerian manufacturers. Firms should work to improve auditor independence since it has a large and beneficial impact on audit conclusions. This study's findings imply that auditor independence has a considerable impact on stock market prices, consequently enhancing its monetary worth.

There is little evidence available on whether external auditors' independence collaborates or mitigates earnings manipulation. Therefore, this study examines the effects of external auditor's independence on earnings management of consumer goods firms in Nigeria. The study relies on secondary data derived from various companies' financial statements to determine and measure the level of earnings manipulations, applying an all-inclusive multivariate analysis. Samples of 20 consumer goods firms quoted in Nigeria Stock Exchange were used for the period of ten years spanning 2010 to 2019. The study employed ex-post facto and longitudinal research design. The secondary sources of data were collected from annual reports of the selected consumer goods companies and three (3) specific objectives and hypotheses were tested and analyzed using descriptive statistics, Pearson correlation analysis, variance inflation factor and panel regression analysis. The empirical analysis using a total of 200 company-year observations, shows that audit tenure exerts positive non-significant effects and exhibit direct relationship with the amount of discretionary accruals of quoted consumer goods companies in Nigeria while a negative and significant effect were documented for firm size and Joint provision of audit and non-audit services at 95% confidence level respectively. Generally, the value of R-squared which is the coefficient of determination stood at 37% which implies that 37% of the systematic variations in individual dependent variables were explained in the model while about 63% were unexplained thereby captured by the stochastic error term. The study concludes that rendering joint services and lengthy auditor tenure are a mechanism through which management influence auditors to compromise their independence and therefore allow unethical practices such as earnings management. In line with the above findings, this study therefore recommends among others that, non-audit services that are likely to increase total audit fees and make the auditors closer to management should be abolished, and where it is deemed necessary, separate audit firm should be employed to provide non-audit services to a client.

Ministarstvo financija: Definicija unutarnje revizije, [Internet], preuzeto sa: (25.05.2017.) 2 Rogošić, N.: Uloga interne revizije u jačanju etičnosti u javnom sektoru, preuzeto sa: A_INTERNE_REVIZIJE_U_JACANJU_ETICNOSTI_U_JAVNOM_SEKTORU.doc&usg=AFQjCNFBfRzp6v awF6HaBoWHQ6dTHhSfWA&sig2=egG-9vy3iytq-iPxoXXuOQ&cad=rja (23.05.2017.

The paper examines the effects of corporate governance characteristics on audit report lag (ARL) of listed banks in Nigeria. Fourteen banks were used in the study. The study covers a 5-year period from 2008 to 2012. Findings of the study based on robust ordinary least squares model indicate that audit quality represented by the Big 4 firms has a significant impact on ARL. Board meetings, board size, total assets and board gender have significant positive associations with ARL. However, the study did not find a significant relationship between board expertise, risk committee size and audit committee size on ARL. Generally, shareholders should maintain the use of Big 4 so that report is presented at the right time to enhance confidence of the stakeholders as well as regulators. The current study dwelled on few corporate governance characteristics of the listed banks. Other potentials variables such as Company complexity, ethnicity, leverage and IFRS complexity is not included and beyond the scope of this study. Their inclusions could have given clearer picture of the determinants of ARL in Nigerian listed banks.

The relationship between CEO power and firm performance remains a contentious issue in corporate governance literature, with mixed empirical findings. While some studies suggest that a powerful CEO enhances strategic decision-making and firm efficiency, others argue that excessive CEO power leads to managerial entrenchment and weaker performance. However, limited attention has been given to the mediating role of board independence in this relationship. This study examines how board independence mediates the effect of CEO power on firm performance. Using a sample of publicly traded firms, the study employs a random effects regression model to analyze panel data over ten years. CEO power is measured through a composite index, incorporating CEO tenure, ownership, and gender structure, while board independence is assessed based on the proportion of independent directors. Firm performance is proxied by return on assets (ROA). The findings reveal that CEO power has a positive effect on firm performance, however, board independence partially mediates this relationship, strengthening the impact of CEO power on performance. This suggests that an independent board serves as an effective governance mechanism to balance CEO influence and enhance firm outcomes. This study contributes to corporate governance literature by integrating CEO power and board independence within a mediation framework, offering empirical evidence from an emerging market context. The findings provide practical implications for regulators, investors, and policymakers aiming to strengthen governance structures and improve corporate performance.

Earnings management assumed appear and performed by the manager or the compilers of financial statements in the financial reporting process of a company because they expect a benefit from such action. Earnings management as a phenomenon influenced by various factors that are driving the emergence of the phenomenon. Problems agency (Agency Theory) has attracted great attention from researchers in the field of financial accounting. The inconsistency of the results of previous studies motivate this research to be able to determine the effect of leverage, company size, and audit quality for earnings management. The population in this study are all companies included in the classification of manufacturing industries that have go public company and its shares are listed on the Indonesia Stock Exchange from 2008-2013. The sampling technique used was purposive sampling. Results showed variable leverage significant effect for earnings management. The same thing happened to the variable firm size and quality of the audit that showed a significant effect for earnings management.

Earnings management assumed appear and performed by the manager or the compilers of financial statements in the financial reporting process of a company because they expect a benefit from such action. Earnings management as a phenomenon influenced by various factors that are driving the emergence of the phenomenon. Problems agency (Agency Theory) has attracted great attention from researchers in the field of financial accounting. The inconsistency of the results of previous studies motivate this research to be able to determine the effect of leverage, company size, and audit quality for earnings management. The population in this study are all companies included in the classification of manufacturing industries that have go public company and its shares are listed on the Indonesia Stock Exchange from 2008-2013. The sampling technique used was purposive sampling. Results showed variable leverage significant effect for earnings management. The same thing happened to the variable firm ...

O presente estudo dispos-se a averiguar qual o reflexo que a opiniao modificada tem em empresas listadas na B3 (Brasil, Bolsa, Balcao). Para a construcao deste trabalho foram analisadas as 441 empresas que encontram-se listadas no sitio da BM&FBovespa, das quais foram destacadas 22 com opiniao modificada, estando estas divididas da seguinte maneira: 13 empresas tendo em seu relatorio de auditoria a opiniao com ressalva e 09 companhias constando em seu relatorio abstencao de opiniao. As empresas selecionadas para este estudo tiveram suas eficiencias medidas atraves da analise envoltoria de dados (DEA), via programa SIADV3.0, no ano de 2016, ano qual foi levantado os relatorios com opinioes modificada, e a sua comparacao para o ano de 2017. Os resultados externaram que, no que se refere a eficiencia de uma corporacao com base nas demonstracoes contabeis. Nao podemos afirmar que a opiniao modificada gera reflexos significativos nas demonstracoes contabeis em exercicios posteriores.

O presente trabalho analisou o efeito das Big Four sobre o tipo de opinião dos auditores. O estudo, descritivo, documental e quantitativo, analisou relatórios anuais de 504 empresas listadas na [B]³ no período de 2002-2012 através de estatística descritiva e regressão com dados em painel. Observou-se existir uma concentração do mercado de auditoria, pois as Big Four chegaram a auditar 75% das empresas, o que pode prejudicar a independência do auditor. Em média, a probabilidade de uma empresa listada receber um relatório modificado é 6,20%. Verificou-se ainda que ser auditado por uma Big Four e possuir Níveis Diferenciados de Governança reduzem a probabilidade de se receber uma opinião modificada. Por sua vez, empresas que apresentam prejuízos e a adoção do IFRS Parcial aumentaram a probabilidade de receberem uma opinião modificada. Estes resultados contribuem com os reguladores, investidores e auditores na sinalização dos fatores que afetam o tipo de opinião do auditor.

Oklahoma corporate and other business entity statutes have changed markedly in the past few years. In 1986, the Oklahoma General Corporation Act (OGCA),' a Delaware-based act, replaced the Oklahoma Business Corporation Act. 2 In 1992, the Oklahoma legislature passed the Oklahoma Limited Liability Company Act (LLC Act) 3 that introduced a new type of business entity to Oklahoma. Limited liability companies (LLCs) account for more than half of the new business entity filings with the Secretary of State. 4

RESUMEN El objetivo de este trabajo es analizar la existencia de compra de opinión en España a través del estudio de los cambios «sospechosos» de auditor, es decir, aquellos que se realizan hacia auditores menos independientes que el anterior. Analizando las empresas contenidas en la base de datos de la Comisión Nacional del Mercado de Valores durante los años 1990-2000, se obtienen 72 cambios de auditor realizados tras la obtención de un informe de auditoría no limpio. A diferencia de estudios anteriores, en este trabajo se ha incluido como variable de control la variación de la probabilidad de merecer un informe de auditoría no limpio. Los resultados muestran que las empresas que cambiaron hacia auditores menos conservadores y de menor tamaño obtuvieron una mayor probabilidad de mejorar su opinión, aunque su probabilidad de recibir informes no limpios no se viera afectada, concluyéndose que existe compra de opinión con éxito entre las empresas españolas. PALABRAS CLAVE Compra de opinión; Cambio de auditor; Independencia.

In the business world, especially nowadays, great attention has been placed to business ethics. Different laws, regulations and codes of professional ethics are designed and adopted for the purpose of protecting professional activities. The fundamental beliefs and the system of values that accountants and auditors apply influence their performance and consequently the confidence in the results of their work. The accountants and auditors are responsible for true and fair presentation of financial information. In that sense the ethical rules that they apply in their performance influence the creditworthiness and the quality of their conduct. This paper identifies the features of Code of Ethics for professional accountants adopted by the International Federation of Accountants (IFAC). It can be assumed that adoption and application of international code of ethics contributes the quality and unification of activities performed by the accountants and auditors around the world. However, it is not irrelevant the attitudes of students (future accountants and auditors) on fundamental ethical questions. Future progress of accounting and auditing profession depends on the level of awareness and the application of ethical principles among the students (future accountants and auditors). In this regard, paper presents the results of empirical research of students' perception on the moral and ethical principles in the field of accounting and auditing. Results of the study show a relatively high level of awareness among the students on the importance of applying the highest standards of ethics. These results encourage and inspire confidence in strengthening the integrity of the accounting and auditing profession in the future.

This study examines the effectiveness of the 2002 Sarbanes Oxley Act (SOX). We investigate the earnings management (EM) of companies during the pre-SOX period (i.e., the scandal period), and the post-SOX period (but prior to the enactment of the Dodd-Frank Act). We find that EM of companies audited by the Big-4 peaked during the scandal period, and declined during the post-SOX period. However, the EM of firms audited by Non-Big 4 audit firms did not experience a decline in the post-SOX period. Further tests suggest that SOX had greater reduction in EM for companies audited by Big-4 audit firms as compared to those audited by Non-Big 4.

This study aims to analyze the influences of audit committee characteristics, consisted of audit committee size, independent commissioners of audit committee, audit committee meeting frequency, and financial competence of audit committee members, to the possibility of financial distress in companies. Data used in this study were drawn from financial statements and annual reports of listed manufacturing companies in Indonesia Stock Exchange (IDX) during 2008-2010. This study used logistic regression analysis to examine the effect of audit committee size, independent commissioners of audit committee, audit committee meeting frequency, and financial competence of audit committee members on company's financial distress condition. The results of this study indicate: 1) audit committee size does not have significant influence on the probability of company's financial distress, 2) audit committee independence does not have significant influence on the probability of company's financial distress, 3) audit committee meeting frequency provides negative significant influence on the probability of company's financial distress, companies that have more often meeting frequency, have less probability to encounter financial distress, and 4) financial competence of audit committee members does not have significant influence on the probability of company's financial distress.

We investigate the effects of audit market concentration on audit fees and audit quality in China, where competition is intense and the legal environment is relatively weak compared with developed countries. Analyzing 12,334 firm-year observations for the period 2001 to 2011, we find a significant positive relation between concentration and audit fees. Path analysis shows that concentration improves client earnings quality and reduces the need for auditors to issue modified audit opinions through increased audit fees. Additional analysis indicates that the increased audit fees and client earnings quality resulting from increased concentration are associated with a lower likelihood of executives and auditors being sanctioned by regulators for audit failures. Together, our results suggest that concentration improves audit quality indirectly through increased audit fees and this positive indirect effect offsets the negative direct effect of concentration on audit quality. By separating the direct and the indirect effect of concentration on audit quality, our study would explain why previous studies that do not have a separation document mixed evidence. Our findings inform regulators that actions taken to eliminate the indirect effect of concentration, for example restricting the upper bound of audit fees, could produce unintended outcomes such as decreased audit quality.

Following enactment of the Sarbanes-Oxley Act (SOX) of 2002, Big 4 auditors claimed to have a more conservative policy regarding client retention and acceptance decisions. In this paper, we examine the resignations of Big 4 audit firms in periods before and after SOX. We find that Big 4 audit firms resigned from more audit clients in 2003 than in 2001, and that the 2003 group of clients had significantly lower measures of financial stress. Our results are robust to adjustments for differences in bankruptcy probability between 2003 and 2001. We also find that the relative increases in fees charged by the Big 4 successor following the resignation of a Big 4 predecessor are higher in 2003 than in 2001; for clients with a non-Big 4 successor firm following a Big 4 resignation, we find a significant fee discount in 2001 but not in 2003. Overall, the results support the view that auditors are much more conservative in the post-Enron / SOX period than in the immediately preceding period.

The term auditor originates from the expression auditor, which in Latin, it means to listen. Nonetheless, when scrutinising the duties and obligations of auditors, it reveals that they do not merely listen. They also examine and report to the company, on its accounts. Moreover, the scope of these duties and obligations has amplified over recent years. This is due to the changes in the corporate landscape which encompasses the business world. Fundamentally, judgments have been pronounced by the courts across jurisdictions with regards to auditors liability in tort. This can be seen in the historic English decision of Re Kingston Cotton Mill Co (No 2) [1896] 2 Ch 673, whereby Lopes LJ stated that ...auditors are watchdogs but not bloodhound Additionally, it can be observed in the ingenious statement of Cardozo CJ in the American decision of Ultramares Corporation v Touche (1931) 174 NE 441 whereby he stated that to hold auditors liable results to a case of liability of an indeterminate amount for an indeterminate time to an indeterminate class In the midst of these legal pronouncements, it is pertinent to determine the liability of auditors under tort in Malaysia, which was distilled in 1967. Essentially, the current legal framework governing auditors must be reassessed in the wake of the scandals involving auditors both in the domestic and international forefront. The study then explores the appropriate litmus test in determining a claim for tort against auditors. A comparative study is also carried out as regards to the legal position in United Kingdom, Australia and New Zealand to determine the approach taken by the courts. Fundamentally, principles of business law have to play its role effectively to ensure that the interests of all parties who have a stake in the matter are well-balanced with the liability of auditors.

Purpose: We examine the earnings management behaviour of Australian firms during the Global Financial Crisis (GFC) and the effectiveness of audit quality and audit committee characteristics in mitigating such behaviour. Design/methodology/approach: The sample consists of 503 firm-year -observations spanning from 2006 to 2009. The years 2008 and 2009 are considered as the global financial crisis period. Discretionary accruals have been used as the proxy for earnings management. To test the hypothesis, we apply multivariate fixed effect regression to test the hypothesis. As the robustness test, we use propensity matching score, to find out comparable clients audited by Big-4 and Non-Big-4 audit firms to control observations to mitigate the effect of selection bias. Findings: We find that the sampled firms engage in a significantly higher level of earnings management during the GFC compared to the pre-crisis period (PCP). We find that audit quality, in terms of being audited by Big4 au...

Este artigo debruça-se sobre o avanço do gerencialismo norte-americano e seus reflexos sobre a administração pública brasileira. Mais especificamente, o foco concentra-se na introdução da cultura do management por meio do novo sistema de custos, apresentado pelo Governo Federal como forma de subsidiar a tomada de decisão e alocação eficiente do gasto público. A Marinha do Brasil e as Organizações Militares Prestadoras de Serviços (OMPS) estão imersas nesse contexto que reproduz acriticamente modelos de gestão e desconsidera aspectos relacionados à cultura organizacional. Portanto, o objetivo da pesquisa é investigar como as características culturais de uma OMPS se aproximam ou se afastam daquelas necessárias à adoção do método de custeio variável. O estudo foi desenvolvido por meio de pesquisa de campo, com entrevistas em profundidade. As falas dos sujeitos foram submetidas à análise de conteúdo e, para evitar uma abordagem monolítica e simplificadora da cultura organizacional, agru...

O presente trabalho analisou o efeito das Big Four sobre o tipo de opinião dos auditores. O estudo, descritivo, documental e quantitativo, analisou relatórios anuais de 504 empresas listadas na [B]³ no período de 2002-2012 através de estatística descritiva e regressão com dados em painel. Observou-se existir uma concentração do mercado de auditoria, pois as Big Four chegaram a auditar 75% das empresas, o que pode prejudicar a independência do auditor. Em média, a probabilidade de uma empresa listada receber um relatório modificado é 6,20%. Verificou-se ainda que ser auditado por uma Big Four e possuir Níveis Diferenciados de Governança reduzem a probabilidade de se receber uma opinião modificada. Por sua vez, empresas que apresentam prejuízos e a adoção do IFRS Parcial aumentaram a probabilidade de receberem uma opinião modificada. Estes resultados contribuem com os reguladores, investidores e auditores na sinalização dos fatores que afetam o tipo de opinião do auditor.

Politika određivanja i reguliranja revizijskih naknada dugogodišnja je i uvijek aktualna problematika, kako sa stručnog tako i sa znanstvenog aspekta. Naime, visina revizijskih naknada ima brojne implikacije na kvalitetu pruženih revizijskih usluga, razinu cjenovne konkurencije na tržištu revizijskih usluga, troškove obveznika revizijskih usluga, mogućnosti nadoknade štete u slučaju sudskog spora protiv revizora i sl. Stoga je osnovna svrha ovog rada istražiti i analizirati potencijalno relevantne čimbenike koji utječu na visinu revizijskih naknada u Republici Hrvatskoj. Istraživanje je provedeno na poduzećima čiji su vrijednosni papiri bili uvršteni na tržište kapitala u Republici Hrvatskoj u 2013. i 2014. godini. Međutim, iako je obveza objavljivanja revizijskih naknada uvedena još 2009. godine, veliki broj poduzeća i dalje ne objavljuje taj podatak u svojim bilješkama uz financijske izvještaje. Stoga je u konačnici uzorak na kojemu je provedeno istraživanje činilo tek tridesetak poduzeća godišnje od ukupno 135 koliko ih je inicijalno analizirano. Rezultati provedenog istraživanja pokazuju da su značajne determinante visine revizijskih naknada u Republici Hrvatskoj veličina revidiranog subjekta, vrsta vlasništva i vrsta revizijskog društva. Rezultati istraživanja mogli bi biti zanimljivi znanstvenicima i stručnjacima, revizorima, revizorskim asocijacijama, obveznicima revizije, regulatorima, kao i drugim zainteresiranim dionicima.

At the conclusion of the Korean war, American policy focused on the development of a strong, economically sound ally in the Pacific, setting the stage for Japan's spectacular growth of 10% per year from 1956 until the early 1970's. KANJI HAITANI, THE JAPA-NESE ECONOMIC SYSTEM: AN INSTITUTIONAL OVERVIEW 7 (1976); EDWARD LINCOLN, JAPAN FACING MATURITY 14 (1988). From 1967 onward, the country had a stable balance of payments surplus. TAKAFUSA NAKAMURA, THE POSTWAR JAPANESE ECONOMY, ITS DEVELOPMENT AND STRUCTURE 102-03 (1980). By 1968, its gross national product was third only to that of the United States and the Soviet Union. Id.

At the conclusion of the Korean war, American policy focused on the development of a strong, economically sound ally in the Pacific, setting the stage for Japan's spectacular growth of 10% per year from 1956 until the early 1970's. KANJI HAITANI, THE JAPA-NESE ECONOMIC SYSTEM: AN INSTITUTIONAL OVERVIEW 7 (1976); EDWARD LINCOLN, JAPAN FACING MATURITY 14 (1988). From 1967 onward, the country had a stable balance of payments surplus. TAKAFUSA NAKAMURA, THE POSTWAR JAPANESE ECONOMY, ITS DEVELOPMENT AND STRUCTURE 102-03 (1980). By 1968, its gross national product was third only to that of the United States and the Soviet Union. Id.

There has been a lively debate following the 2007 financial crisis regarding the role of joint audits. Prior research argues that joint audits may improve audit quality because of shared audit efforts. However, empirical evidence has been inconclusive. To gain insight into how Big 4 audit firm imprimaturs have become a source of legitimacy in the audit industry, this article investigates how audit networks drive the audit industry in Saudi Arabia. Based on the application of quantitative and qualitative research methods, we conclude that the Big 4 audit firms have strong mutual ties, but ties with other local and international audit firms are weak. We also find the oligopolistic nature of the Big 4 audit firms and international audit firms. Specifically, Ernst & Young, KPMG, PwC, and PKF are controlling over 68% of the audit market. Interviews with accounting professionals suggest that several benefits of joint audits exist, but certain additional costs are also implicated. Our findings are particularly relevant for regulators and local and international policymakers in rethinking and evaluating the appropriateness of either the mandatory or voluntary nature of joint audits in developing countries.

Purpose – This study aims to investigate the potential threats to the independence of an auditor who provides both auditing and non-audit services (NAS), in terms of credibility of and confidence in audit quality. Design/methodology/approach – In this study, we first replicate the results of Campa and Donnelly (2016) using hand-collected publicly available data for a sample of 91 Italian manufacturing public companies audited by a Big 4 and non-Big 4 audit firm over a longer time horizon (2015˗2019) using the panel data approach, based on three interconnected regression models. Findings – Previous studies in this area did not find a unique interpretation of the association between auditor independence and provision of NAS. Our findings reveal that auditor independence, as measured by the magnitude of discretionary accruals, is compromised by the provision of NAS, especially when unexpected audit fees are lower than expected. Enhanced credibility can lead to greater confidence in aud...

Bağımsız denetim; işletmelerin faaliyetleri sonucu ortaya çıkan finansal durumların önceden belirlenmiş ilke ve standartlara uygunluğunun belirlenmesi ve gerçeğe en uygun şekilde yansıtılıp yansıtılmadığı konusunda değerlendirme yapılması sürecidir. Bu süreci işleten denetim firmaları ve denetçiler yıllar boyu kendi kendini düzenleyen bir sistemin içinde faaliyet göstermiştir. 2000’lerin başlarından itibaren ortaya çıkmaya başlayan finansal skandallar, finansal raporlamaya ve finansal raporların denetimine duyulan güvenin sarsılmasına neden olmuştur. Dolayısı ile bağımsız denetim mesleğinin denetlenmesi, teftiş edilmesi veya gözetlenmesi amacıyla bir düzenleme yapılması gerektiği ortaya çıkmıştır. ABD'de 2002 tarihli Sarbanes-Oxley Yasası ile başlayarak, denetim mesleğinin kendi kendini düzenlemesinden bağımsız gözetime doğru küresel bir hareket olmuştur. Bu hareket kısaca Kamu Gözetimi Kurumu (KGK) olarak adlandırdığımız, Halka Açık Şirketler Muhasebe Gözetimi Kurullarının kurulmasına neden olmuştur. Bugün ABD başta olmak üzere İngiltere’de Japonya’da Türkiye’de ve AB ülkelerinde ulusal KGK faaliyet göstermektedir. Söz konusu bağımsız gözetimin temel amacı, yatırımcılara, borç verenlere, denetim komitelerine, düzenleyici kurumlara, diğer paydaşlara ve kamuoyuna diğer konuların yanı sıra denetçiler ve denetim piyasası hakkında ilgili ve güvenilir bilgi sağlamaktır (CFRR, 2018). Bağımsız gözetimin ortaya çıkmasından önce, yatırımcılar, denetim komiteleri, düzenleyiciler ve diğer ilgili taraflar, denetçiler ve denetim piyasası hakkında değerlendirme yapmak ve karşılaştırmak konusunda genellikle çok az bilgiye sahipti. Bazı ülkelerde akran değerlendirmesi uygulaması olmakla birlikte düşük seviyedeki etkinliği ve yaygın olmayışı istenilen faydayı sağlamakta yetersiz kalmaktadır. Bağımsız denetim faaliyetleri doğası gereği gizlilik gerektiren bir meslek olmakla birlikte; bu gizliliğin şeffaflığı ortadan kaldıracak boyutlara gelmesi nedeniyle yaşanan finansal skandallar, denetim firmalarının şeffaflık anlayışlarının ve hesap verebilirliklerinin geliştirilmesi ihtiyacını ortaya çıkarmıştır. Yapılan çeşitli araştırmalar ve anketler, denetimin gözetimi yoluyla denetim firmalarının güvenilirliğini artırmak, paydaşların bu şirketlerin mali tablolarına dayalı olarak bilinçli kararlar vermelerini sağlarken, kamu gözetiminin denetim kalitesini artıracağını ortaya koymaktadır. Bu çalışmanın amacı kamu gözetim kurumlarının inceleme ve gözetim görevlerini yerine getirirken denetim firması büyüklüğünün, inceleme sonucuna etki eden bir etken olup olmadığının ortaya konmasıdır. Bu amaçla 2016-2020 yılları arasında ABD örnekleminde kamu gözetimi kurumu tarafından gerçekleştirilmiş ve halka ilan edilmiş olan 643 adet inceleme ve gözetim faaliyeti incelenmiştir. Söz konusu incelemeleri ve bulgularını içeren bu araştırmanın girişi takip eden ilk kısmında kamu gözetim kurumlarının inceleme ve gözetim görevi ile ilgili yasal düzenlemeler açıklanmış olup, takip eden kısımda araştırma konusu ile ilgili literatür özeti sunulmuştur. Ardından kamu gözetiminde denetim firması büyüklüğünün bir fark yaratıp yaratmadığına dair yapılan nitel analiz, elde edilen bulguların yorumlanması ve sonuç kısmı ile çalışma tamamlanmıştır.

Purpose: This paper reflects on the professional liability of auditors from perspective of Common Law and Statute Law in Australia. Design/methodology/approach: The approach applied in this paper is analogous with a narrative investigation of the historical and legal precedence culminating in the ensuing legislative position. Findings: As this is not an empirical study the analysis presented of the key legal developments pertaining to the professional liability of auditors. Originality/value: This analysis provides the background to the development of professional liability and the impact upon the legal transition of professional liability in the context of the auditing profession.

The study aimed at finding the relationship between audit quality, abnormal audit fee and auditor attributes. The study employed ordinary least square regression technique to analyze the relationship between the dependent and independent variable. Samples of fourteen banks were selected using judgmental sampling technique. The results reveal the existence of positive relationship between abnormal audit fee and audit quality at 5%.

The competition to attract trainee accountants is fierce among accounting firms. Millennials seemingly have expectations in terms of work experiences and work environments that arguably cannot be ignored by accounting firms. This paper draws on a legitimacy framework to examine legitimacy management strategies utilized by large Canadian accounting firms in website communications directed at future employees. Our results demonstrate accounting firms appear to devote considerable effort to manage their legitimacy in the eyes of prospective employees and apparently use website communications to depict a work environment largely in accordance with Millennials' system of values and beliefs. This suggests a bottom-up socialization process is taking place whereby accounting firms adapt the workplace in response to future employees' expectations. Interviews with partners, managers and human resource advisors working in accounting firms support the idea of a bottom-up process. We conclude a two-way socialization process exists, where the firms and the new employees are both instigators and targets of socialization, jointly influencing what it is to be an accountant today.

analyzing the change in Big N audit fee premium over the Big 6, Big 5, and Big 4 periods, and across different client segments. Using a large sample of Australian publicly listed companies over the years 1996-2007, we find that while premiums paid to Big N auditors have increased significantly for the Big 4 and Big 5 periods compared to the Big 6 period, the growth has not been shared equally across all client segments. In particular, while the largest global clients pay some of the highest premiums, the increase in premiums for this group in the Big 4 period has been lower than those experienced by other clients. We also observe that premiums paid to industry specialists have declined relative to the Big 6 period, but fee discounts offered to clients switching to a Big N auditor from a non-Big N auditor have increased. In all, we find that the premiums paid by Big N clients increased in line with consolidation in the number of Big N audit firms, but the impact varied across client segments.

This article analyzes the two distinct communicative logics that inform the institutional geography and normative understanding of global sociology. The globalizing logic imagines a unitary global space that organizes sociological debate; the transnational logic envisions a series of overlapping sociological debates, often organized within a national context that is in the process of cosmopolitan, global, and transnational transformation. We argue that both logics shape communication in the sociological tradition, even if neither project is fully realized. The main challenge to global sociology, particularly in its globalizing form, is the existence of extremely influential spaces of sociological debate in North America and Europe, which reproduce the privileges of the larger and more powerful national associations. At the same time, these large, powerful national associations are becoming increasingly transnationalized, putting centre and periphery into dialogue, if in limited and uneven ways.

, the Public Company Accounting Oversight Board (PCAOB) issued a concept release asking for comment on the usefulness of mandatory audit firm rotation [MAFR] and/or other measures that could bolster independence. In the release, the board asks whether payment to the auditor by the client creates a "distortion in the system" and, further, whether that distortion is exacerbated by the possibility that a new engagement may provide a possibly endless stream of future audit revenues to the audit firm. If current data show that auditors continue to lowball new engagements, the board suggests that a move to MAFR could have a dual purpose. One, it would eliminate long term auditor client relationships, and, two, it would diminish the incentive to underprice initial audit engagements. On the other hand, if the data show that auditors no longer lowball new engagements, a move to MAFR might seem less necessary. In this study, we investigate whether lowballing exists in new auditor client relationships in an "extended" post-SOX environment for the years 2007 to 2010. Our results show that lowballing of initial-year audit engagements exists for all years except for 2006. These results should be of interest to the PCAOB as they reconsider the efficacy of MAFR.

This study aims to empirically examine the effect of auditors’ independence, audit tenureship, firm characteristics on audit quality in Nigeria. The population of the study comprises a sample of ten (10) listed pharmaceutical companies listed on the Nigerian Exchange Group (NGX). The time period for the study covers audited financial statements of the companies from 2013-2019. The study focused on two explanatory variables: auditors’ independence and audit tenure, and two control variables: firm size and firm age. While the dependent variable audit quality was proxied by big four firms and non-big four firms. The secondary source of data was adopted in this study. The data collected were analyzed using the panel regression techniques. The results suggest that all of the explanatory and control variables have a positive and significant effect on audit quality. The study recommends that auditors’ independence is directly proportional to audit quality, thus audit firms should be indepe...

This study examines the prevalence of big bath accounting in an emerging market context, focusing on newly appointed CEOs of Brazilian firms. We find evidence of big bath accounting in Brazil and extends the big bath and CEO turnover literature by documenting a limit to downward earnings manipulation and by using Brazil as a source of study. Our results suggest that incumbent CEOs have incentives to manage profits downward only when the company was previously profitable, rather than risking worsening an already bad situation, in the case of unprofitable firms. We also find that they are more likely to use accrual earnings management, rather than reducing production or increasing discretionary expenditures, as tool to decrease earnings level. Overall, our study fills a gap in the literature and supports future research in understanding the big bath CEO turnover scenario in Brazilian firms.

When a company is incorporated it is treated as a separate legal entity distinct from its promoters, directors, members, and employees; and hence the concept of the corporate veil, separating those parties from the corporate body, has arisen. The issue of "lifting the corporate veil" has been considered by courts and commentators for many years. However, the topic has not received the attention in the literature that one would expect. 1 No clear set of principles has emerged 2 and it is difficult to predict when the courts will disregard the separate entity principle. 3 The need for English courts to resort to such metaphorical terms as "mere fraud," "sham," "dummy," "alter ego" in their judgments indicates their difficulties. Nor do the English courts have a monopoly on metaphorical judgments. There is equal confusion and uncertainty in the Australian and United States jurisdictions. 4 Some researchers argue that the courts have become increasingly willing to lift the veil 5 The central purpose of this paper is to investigate the bounds of the principle of limited liability. Part I of this paper will briefly survey the concept of company as a separate entity. Part II deals with law of piercing the veil. Part III analyses the common law grounds of lifting the veil that have been frequently proposed, to determine the underlying reasons for judicial disregard of the separate entity principle. It is suggested in this paper that these common law exceptions, viz. agency, fraud, avoidance of obligations, prevention of injustice, and imputation of members' characteristics to the company, are symptomatic of the courts' attempts to ensure that parties, both shareholders, creditors, and other third parties who may be considered by the court to have a legitimate interest in the affairs of the corporation, are not disadvantaged by actions of company management and shareholders protected by limited liability. Part IV deals with the comparative aspect of the statutory provisions regarding piercing of veil. Part V deals with the comparative analysis of UK, USA, German and Indian veil piercing jurisprudence. Part V reviews some of the more recent cases in which courts have applied their piercing tests. This flexibility extends, in the last resort, to "the view which the judge takes of the justice of the case before him." whilst others reach the opposite conclusion.