Abstract The role of information has become more important in the changing environment. To be good decision-makers, we need to gain access to more accounting information. In the chain-reaction of the Asian economic crisis, the business is facing a highly uncertain environment. Many companies face fierce challenges and even run the risk of bankruptcy. In Taiwan, a series of fraud in the stock market since 1998 has caused huge losses to investors and a great concern to the general public. If the investors make their investment decisions based on the audit reports, why still so many investors suffered huge losses? The main purpose of this thesis is, therefore, to discuss whether there are statistic significant relationships between audit reports and investment behavior. Questionnaires were used to obtain data from three groups of subjects: company executives, CPAs, and investors. The total sample size was 208. The SPSS statistic software was used to analyze the data. The statistic methods included: frequency distribution, factor analysis, Cronbach¡¦s £\ , correlation analysis, ANOVA, and Scheffe method. The major findings of this research are as follows: 1. As far as the information aspect of audit reports is concerned, the differences between CPAs and investors are statistically significant. 2. As for audit quality, both the differences between company executives and CPAs and the differences between CPAs and investors are statistically significant. 3. The investors don¡¦t pay much attention to audit reports.

This thesis focuses on lead auditors’ differences in terms of client portfolios and  performances. First, lead auditors are surveyed and their responses on professional scepticism linked to their performances. Second, survey and archival data are combined to check whether self-control is related to performance. Third, lead auditors’ client portfolios are examined with regard to industry similarity, portfolio dispersion and client grouping. Finally, auditors’ independence is tested in the  private firm setting. Overall, the findings indicate that performance is not homogenous across lead auditors in the same (tier) audit firm(s), and that the characteristics of lead auditors and accounting firms are determinants that partly explain the differences. / Avhandlingen fokuserar på skillnader i klientportföljer och prestation mellan ansvariga (alternativt påskrivande) revisorer och består av fyra huvudsakliga delar (alternativt studier). I den första delen kopplas mått på professionell skepticism, som bygger på enkätsvar från ansvariga revisorer, till prestation. I den andra delen kombineras enkätdata med arkivdata för att undersöka sambandet mellan självkontroll och prestation. I den tredje delen analyseras revisorernas klientportföljer utifrån dimensionerna branschtillhörighet, klientgruppering och portföljspridning. I den sista delen genomförs tester av revisorns oberoende för uppdrag i privata företag. Sammantaget indikerar resultaten att prestation varierar mellan revisorer från samma revisionsbyrå och att egenskaper hos ansvariga revisorer och revisionsbyråer delvis kan förklara dessa skillnader.

Background: Over the years the EU, the US and the rest of the world have experienced several devastating financial crises. As a result of the Great Recession and several accounting scandals the EU-commission added new proposals of regulations. The Commission carried out a proposal to restrict the non-audit services to audit clients with the purpose to achieve improved audit quality and a more competitive market, which was later approved by the European Parliament.   Purpose & Problem:  The purpose of this thesis was to evaluate how non-audit services to audit clients affect the audit quality and with that information evaluate the opinion divergence between the regulators and the practitioners, on providing non-audit services to audit clients and its effect on audit quality. Method: Our intentions were to compare collected evidence and earlier reports with fresh intake of raw data along with statements from several interview subjects from different positions such as the EU-commission and audit firms. By gathering information from both company personnel and state-working staff in the area of auditing, we obtained sufficient information on the thesis empirical findings we did also take part of professional bodies like IFAC and FAR.   Conclusion: Our conclusion is that both regulators and practitioners chose to define audit quality based on their own interests. We believe that this creates an opinion divergence. In order to resolve this conflict of interest, there is a need to agree on a universal definition of audit quality. To be more particular a definition that leave no room for ambiguities and misinterpretation regarding both practitioners and regulators.

No description available.

This thesis presents three essays on audit quality tied up by a common thread: the implication of closeness in auditor-client relationship on audit quality and beyond. In Chapter II, I investigate the implications of close auditor-client relationships arising as time passes on clients’ operating decisions. I find long auditor tenure constrains clients’ discretion in accrual reporting, which in turn prompts firms to resort to real activity management if they are under pressure to achieve earnings targets. For a given length of auditor tenure, the presence of auditor industry expertise does not affect the association between tenure and clients’ engagement in real activity management. These findings highlight an unintended consequence of long auditor tenure and therefore contribute to the on-going debate concerning the merits and shortcomings of mandatory audit firm rotation. In Chapter III and IV, we examine the implications of close auditor-client relationships arising from economic bonding on audit quality reflected from clients’ accrual reporting and auditors’ going-concern decisions. In Chapter III, we find a significantly positive association between fee dependence and abnormal accruals prior to the passage of the Sarbanes-Oxley Act (hereafter SOX), but not in the post-SOX period, suggesting that SOX has enhanced non Big-4’s ability to withstand client pressure arising from fee dependence. These results suggest strong economic bonding between auditors and clients may impair audit quality among smaller auditors, and tightening auditors’ external litigation exposures enhances small auditors’ abilities to withstand client pressure. In Chapter IV, we find that even for firms that are most targeted by SOX, auditors do not allow economic bonding to affect their going-concern decisions in either the pre- or the post-SOX period. These findings thus suggest potential litigation risks faced by auditors in the event of failures to warn the public about their clients’ severe financial distress prior to bankruptcy are high enough to deter auditors from compromising their independence in formulating going-concern decisions. In conclusion, audit quality is affected by closeness in the auditor-client relationship and regulatory intervene may be needed depending on specific setting in terms of auditor type and auditing decisions. / Accounting

Building on the work of Pierce & Sweeney’s study from 2004 and their Quality Threatening Behavior-model (QTB) in conjunction with Chang & Hwang (2003), this study is an explanatory quantitative study into the determinants of audit quality. I aim to determine whether an overemphasis on customer retention can serve as determinant of audit quality. The study targeted contemporary ’Big Four’ auditors in Sweden. Data was gathered by means of a questionnaire constructed according to the QTB model as outlined by Pierce and Sweeney with the addition of a customer retention factor. Challenges involved in the study included translating the instrument employed as well as making comparisons across regional contexts. For these reasons, the study was furthermore limited to larger city firms. The conclusions of the study found that customer retention in fact could serve as a determinant of audit quality. A series of regression models, with slight alterations to account for robustness vulnerabilities, were tested, all of which pointed towards similar results: that customer retention indeed could constitute a material improvement to the QTB model. A closer investigation confirmed that these results are significant, and that the vulnerabilities feared were either contained or within tolerable range in the final model. An unexpected finding in the study was the very high explanatory power of the model derived and the small differences generated by the shift in cultural context. The high explanatory value is primarily attributed to the model already having high explanatory value as well as the questionnaire being very clear-cut. The small impact of cultural differences is explained by the fact that the Big Four are global firms and there is a large degree of mobility within the firms hence they are relatively homogenous. Ultimately, no final conclusions should be drawn, yet since the results are so strong one can begin to suspect that customer retention indeed does matter to audit quality. Hence, the author recommends further studies on this topic.

No description available.

This study aims to better understand factors associated with audit office closures and how the risk of office closure relates to audit outcomes, including audit quality and fees. Factors associated with office closure include small office size, lower office growth, proximity to regulators, unfavorable local economic changes, client losses, and lack of recent local office closures. The main analysis does not find evidence of a relationship between closure risk and audit quality but suggests that offices with a higher closure risk charge higher audit fees per client compared to offices with lower closure risk. Results also suggest that clients who change audit firms following closure of their auditor's office enjoy higher quality and lower fees compared to those clients who change offices but remain with the same firm following closure. These audit quality results cannot be explained by clients switching to Big 4 auditors, industry specialists, or to more geographically proximate offices. Instead, these results suggest a fresh look benefit by the new audit firm. Additionally, the audit fee discount enjoyed by these clients diminishes over time as the fees for these clients increase more quickly than for those clients that change offices following closure. / Doctor of Philosophy / This study aims to better understand factors associated with audit firm office closures and how the risk of closure for non-closed offices relates to audit outcomes, including audit quality and fees. Factors associated with office closure include small office size, lower office growth, proximity to regulators, unfavorable local economic changes, client losses, and lack of recent local office closures. The main analysis does not find evidence of a relationship between closure risk and audit quality but suggests that offices with a higher closure risk charge higher audit fees per client compared to offices with lower closure risk. Results also suggest that clients who change audit firms following closure of their auditor's office enjoy higher quality and lower fees compared to those clients who change offices but remain with the same firm following closure.

Titel: Revisionskvalitet - En studie beträffande hur låg revisionskvalitet vidareutvecklarkonceptet revisionskvalitet. Bakgrund & problematisering: Revisorer befinner sig i förtroendebranschen där skandaler, vars grund ligger i bristande revisionskvalitet, har fått allmänheten att se på revisionsprofessionen med misstänksamhet. För att inte missbruka professionens förtroende såväl som frambringa skandaler finns ett behov av att reducera bristande revisionskvalitet. Då majoriteten av tidigare forskning, gällande konceptet revisionskvalitet, fokuserar på konceptets högre spektrum menar vi att ett nytt angreppssätt för att konceptualisera revisionskvalitet och därmed reducera bristande revisionskvalitet är nödvändigt. Syfte: Uppsatsens huvudsyfte är att utforska vad låg revisionskvalitet innebär utifrån den kontroll- och tillsynsåtgärd som övervakar revisionsprofessionen från insidan, för att på så vis skapa en vidare förståelse för konceptet revisionskvalitet. Uppsatsens delsyfte är att redogöra för utvecklingen av låg revisionskvalitet över tid fram till aktuell tidpunkt, för att på så vis få en mer flerdimensionell förståelse för hur låg revisionskvalitet har vidareutvecklat konceptet revisionskvalitet. Metod: Uppsatsen har tagit utgångspunkt i en abduktiv forskningsansats och har där igenom antagit en kvalitativ undersökningsmetod och longitudinell design. Den kvalitativa undersökningsmetoden har utförts i två steg, varvid förstudien har tagit sin utgångspunkt iintervjuer, medan huvudstudien har tagit sin utgångspunkt i en innehållsanalys av disciplinärenden utförda av Revisorsnämnden med den disciplinära åtgärden upphävande av auktorisation eller godkännande. Slutsats: Revisionskvalitet som koncept kan genom uppsatsens förstudie och huvudstudie definieras utifrån låg revisionskvalitet i from av överkategorierna; Dokumentation, Granskning, Okunskap, Regelverk, Formella brister samt Uppfyller inte steg i revisionen. Således har denna uppsats, genom nya aspekter såväl som nivåer, preciserat befintlig teori och befintliga konceptpå så vis att utvecklingen av låg revisionskvalitet har vidareutvecklat konceptet revisionskvalitet. Nyckelord: Audit, audit failure, audit failure definition, audit service quality, audit quality, audit quality definition, dysfunctional auditor behavior, ethics, etik, going concern warning, high audit quality, legitimacy, legitimacy theory, low audit quality, profession, professionalduty, revision, revisionskvalitet, revisionsmisslyckande, revisor och quality. / Title: Audit Quality - A thesis regarding how low audit quality further develop the concept ofaudit quality. Background & problem: Accountants are in the trust industry and scandals, whose foundationlies in the lack of audit quality, has thus gained the public to see the audit profession with suspicion. In order not to abuse the trust as well as produce scandals there is a need to reduce low audit quality. Since the majority of previous research has been focusing on the concept's higher spectrum, we believe a new approach for conceptualizing audit quality is necessary in aim to reduce low audit quality. Purpose: The main purpose with this thesis is to explore what low audit quality means based on the control and enforcement measure that monitors the audit profession from the inside, to thereby create a wider understanding of the concept of audit quality. The subsidiary aim of this thesis is to describe how the low audit quality has developed over time, compare with the current situation and thereby obtain a multidimensional understanding of how low audit quality has developed into the concept of audit quality. Method: This thesis has an abductive research approach and has therefore adopted a qualitative research method and longitudinal design. The qualitative survey methodology was conducted in two stages, the feasibility study has been based on interviews, while the main study has been based on a content analysis of disciplinary proceedings conducted by the Supervisory Boardwith the disciplinary action waiver of authorization or approval. Conclusion: Audit quality as a concept can through the thesis feasibility study and the mainstudy be defined by low-quality audits in the form of the categories; Documentation, Review, Ignorance, Regulatory framework, Formal shortage and Does not fulfill the stage of the audit. Thus, this thesis, through new aspects as well as new levels, has specified existing theory and existing concepts in a way that the development of low audit quality has further developed the concept of audit quality. Key words: Audit, audit failure, audit failure definition, audit service quality, audit quality,audit quality definition, dysfunctional auditor behavior, ethics, going concern warning, high audit quality, legitimacy, legitimacy theory, low audit quality, profession, professional duty andquality.

This paper will examine the effectiveness of the Sarbanes-Oxley Act of 2002 (SOX) in improving ethics within the external auditing profession. The first chapter explores well-known ethical theories and professional code of conducts related to the auditing profession. The second chapter details the generally accepted auditing standards and changes that have been made throughout the years. The third chapter examines past corporate fraudulent scandals (Waste Management, Lincoln Savings and Loan Association, Enron) and studies the role of auditors in contributing to the collapse of these corporations. The forth chapter details the objective of the SOX and how it plans to protect the investing public and improve the reliability of financial information. Finally, the fifth chapter compiles various research studies that examine the effects of the SOX and its impact on audit quality. The author discovered that regulation could help enhance ethics through indirect measures that aim to improve audit qualities, and thus, promote virtue ethics within the auditing profession. Some of these measures include establishing an oversight board to strengthen regulation and enforcement (section 101), reducing the scope of non-audit services (section 201), requiring auditors to attest to a client’s internal control operating effectiveness (section 404) and promoting principles-based standards within the profession (section 108). Through these measures, the Sarbanes-Oxley Act has managed to regain the public trust and improve audit quality, thereby, enhancing ethics within the auditing profession.