The auditor’s report has been criticised for being uninformative at least since the late nineteenth century. Despite persistent requests for detailed information in order to facilitate users’ decision-making processes, auditors have only recently started to provide entity-specific information in their reports. Against this background, two research questions are raised: (1) What were the driving forces behind the evolution of the auditor’s report? (2) How can dissatisfaction with and misperceptions of audit reporting be reduced in order to support financial statement users’ decision-making processes? As the object of study, the Swedish auditor’s report is chosen since it has, up to the present day, deviated from reports in other jurisdictions and thus enables an extension of knowledge in the field of audit reporting. The first part of this dissertation contributes to previous auditing history and auditing profession research by answering the first research question through an analysis of approximately 1,800 historical Swedish auditor’s reports and numerous related documents. Applying a critical-theory perspective, the research findings suggest that during the course of history, auditors were able to adopt an auditor’s rather than a user’s perspective despite arguing in the interest of users. The second part of the dissertation contributes to previous audit reporting and expectation gap research by answering the second research question through a vignette experiment with Swedish financial statement users. The research findings indicate that dissatisfaction with the current auditor’s report can be reduced through additional entity-specific information concerning the auditor’s independence, the audit process and the audit findings, and less general information about the auditor’s responsibilities. Overall, this dissertation connects past events concerning the auditor’s report to current challenges and indicates possible future developments. / The auditor’s report is the financial auditor’s primary means of communication with users of financial statements. It has been criticised for being an uninformative document at least since the late nineteenth century. Persistent requests for change in order to facilitate users’ decision-making processes include detailed information about the audited financial statements, the conducted audits and the auditors. Despite these requests, auditors have only recently started to provide some entity-specific information in their reports. This dissertation contributes to the topical issue of audit reporting in relation to users’ needs through two studies. The first study retraces the historical evolution of the auditor’s report in order to explain the driving forces behind this evolution and the reasons why users have had to accept uninformative reports for such a long time. The second study examines ways to reduce dissatisfaction with and misperceptions of audit reporting and evaluates the current auditor’s report with regard to financial statement users’ decision-making processes. Overall, the findings of this dissertation cast doubt on the past and current willingness of auditors to deliver reports that are aligned with users’ needs to make informed decisions.

As a result of technological improvements, the efficiency of the audit industry increased greatly in the 1950’s. Since then, technological development has increased significantly. The industry is currently undergoing a digitalization process, similar to that already experienced by the society. The audit agencies researched in this study are striving to replace paper-based audits and to be completely digitalized, by using digital auditing tools throughout the entire audit process. Prior research, regarding the digitalization of the audit process, has focused on the advantages or the disadvantages. How the auditors in practice identify and handle digital risks is, however, lacking in this earlier research. The purpose of this study is to understand how auditors identify and handle the risks that digitalization entails in the gathering and use of digital audit evidence. In order to achieve the purpose of this study, the gathering of empirical evidence has been based on a qualitative method. Twelve respondents, nine of whom are auditors and three audit associates, were interviewed using semi-structured interviews. Conclusions generated by this study are that IT skills, experience, industry knowledge and the understanding of the company audited are the fundamental factors affecting the auditor's ability to identify and handle digital risks. Furthermore, the risks due to digitalization have neither increased nor become of greater importance than previously, rather the opposite. The advantages resulting from the digitalization of the audit process outweigh the disadvantages. Overall, the digitalization affects the auditor's ability to comment on a company's financial reports and management in a positive manner.

In recent years, considerable interest has been stimulated concerning potential conflicts of interest between a company's management and their independent auditors. Many researchers examined the association between corporations who changed their present auditors, and factors such as auditor's opinion on the financial statements, management changes, mergers, financial distress, etc. Some of these research efforts resulted in findings that were inconsistent with each other. The current research was therefore undertaken with the objective of developing a theoretical model of auditor change process and to explain the justification for considering certain specific factors that may be present in an auditor-client relationship. The research design and the methodology for analyses were developed on the basis of the theory on power conflicts found in political science literature and by the use of Wrong's power model on authority relationship. Sources of power such as the size of an audit firm, size of a corporation, the stock exchange membership, the ability of an auditor to qualify the opinion on the financial statements, the ability of the management of a corporation to terminate the audit contract following the issue of a qualified opinion, and change of a corporation's CEO were identified and converted into independent variables. Data were collected from secondary sources on a sample of 200 corporations, 100 companies that had changed their audit firm at least once during the period 1983-85, and 100 corporations that did not change their audit firm during this period. The resulting data were analyzed using the MDS-ALSCAL procedure and logit regression with maximum likelihood estimators. The findings of this research support the power model and its relevancy to the study of auditor-client relationship. The variables, client size, stock exchange membership, and audit firm size were found to have a significant association with corporations who changed their audit firms. However, the variable, change of CEO, was not found to be a significant cause of audit firm changes.

New and revised Canadian Auditing Standards for audits of companies with fiscal periods ending on or after December 15, 2018 came into effect in April 2017. This paper examines the economic effects of one of the updates: the new auditor reporting requirement to disclose the auditor’s responsibilities over other information. We investigate the relationship between the existence of the auditor’s commentary about the MD&A within the other information paragraph on the auditor’s report and the reactions of users of the financial statements, namely investors and analysts, to the MD&A. We find that both investors and analysts do not respond to the auditor’s commentary about the MD&A within the other information paragraph present on the auditor’s report. Our result indicates that although the disclosure may not be providing additional information value to users of the financial statements as the standard setters intended, it is also not creating an increase in the audit expectation gap.

Digitization has changed the auditing profession in different ways. Audits can now be carried out digitally and audit firms have switched from the analogue to the digital way of working. This is because the audit process has been digitized and many work steps that have previously been time-consuming to carry out manually today can be carried out efficiently digitally. This study aims to investigate how digitalisation has changed the auditor's working methods and function. What will be examined is which working methods have changed, which skills it requires from the auditor and how the auditor's function is affected. The study is characterized by a qualitative research approach where six semi-structured interviews were conducted with three different audit firms. These interviews together with the study's theoretical frame of reference lay the foundation for the study's results. It has been established by previous research that working methods in the audit process have changed in step with digitalisation. Therefore, the authors have further researched this through data to confirm the previous research. The results show that the audit process has changed and facilitated the auditor's tasks. With the help of the digital tools and systems, the auditor can now carry out his work digitally and easily search for the financial items needed, as well as through cloud technology manage data and communicate with the client. These changes free up time for the auditor to create added value for the client through advisory services.

The purpose of quality control within internal auditing functions is to ensure that internal auditing functions add value by providing a quality service. The aim of this research project was to investigate the importance of quality control within internal auditing functions as prescribed by the standards and guidelines of the internal auditing profession. It was also attempted to determine to what extent these standards and guidelines are applied within internal auditing functions in South Africa. The study concluded that quality control is not adequately applied within all internal auditing functions in South Africa. Compliance with the internal auditing standards (implemented on 1 January 2002) should contribute to improve the situation. The internal auditors’ professional body should motivate internal auditing functions to exercise quality control according to the internal auditing standards. This will uplift the image of the internal auditing profession and ensure the future existence of internal auditing functions. / Auditing / M.Comm.

The purpose of quality control within internal auditing functions is to ensure that internal auditing functions add value by providing a quality service. The aim of this research project was to investigate the importance of quality control within internal auditing functions as prescribed by the standards and guidelines of the internal auditing profession. It was also attempted to determine to what extent these standards and guidelines are applied within internal auditing functions in South Africa. The study concluded that quality control is not adequately applied within all internal auditing functions in South Africa. Compliance with the internal auditing standards (implemented on 1 January 2002) should contribute to improve the situation. The internal auditors’ professional body should motivate internal auditing functions to exercise quality control according to the internal auditing standards. This will uplift the image of the internal auditing profession and ensure the future existence of internal auditing functions. / Auditing / M.Comm.

Different scandals around the globe during the past, in specific during the last decade, have intrigued the stakeholders to question the roles of both auditors and management. But most of the fingers since then have been raised on the role of auditors, because it is the auditors who are entrusted with the responsibility to detect any errors or frauds in the financial reports of the client-firm. Apart from this, the long-term auditor client relationship has been the center of attention in most of the discussions and debates as well. Numerous studies have been conducted by the academic researchers, financial and professional analysts, regulatory authorities and governing bodies, and in some cases by the auditors and the firms as well regarding the effects of long-term auditor-client relationship on audit quality, equity risk premium, financial reports quality, audit pricing etc. These studies provide us with different results, both with the positive and negative associations and effects of long-term auditor-client relationship on the basis of different factors and contexts. For long, auditing has been discussed in different studies and research areas but mostly in association with publicly listed companies. Less attention has been paid to the relationship of auditors and clients as far as clients in SMEs are concerned. In any country around the globe, SMEs are of major contribution in terms of backing the economy, giving it both the boost and the stability, as they collectively form the major chunk of the economy. If we specify our study to the SMEs in Sweden, then 99% of the enterprises in Sweden represent the SME sector; in addition they employ around 60% of the manpower. Based on these facts, and due to less attention given to auditor-client relationship in terms of SMEs, instead of; we have directed our concerns towards the study of effects of auditor-client relationship on audit quality in SMEs in this particular research study. In this study, we have opted for qualitative research with semi-structured interviews to be used as the tool for data collection. Interviews were conducted with two different groups of interviewees, one group representing the auditors and the other group representing the client-firms (SMEs). A total of seven interviews were conducted in order to strengthen and validate the results for our research question. Due to the limitations of this study, mostly in terms of cost and time, samples were selected from Umeå, Sweden. The data interview structure, data analysis and discussion, and conclusions were all made based on existing theories summarized in the theoretical review of this study. The results of this study suggests that (1) long-term audit tenure is beneficial for the audit quality if certain risk factors like risk of auditor independence and risk of developing complacency are controlled; and (2) factors such as NAS, industry specialization, knowledge and experience of the auditor, internal control in the client-firm, professional ethics, proper audit plan, providence of unbiased information by the client, and appointment of the auditor by the client-firm itself enhances the audit quality.

This study attempted to discover the role of internal auditors in the professional development of audit committee members, leading to enhanced performance, through the provision of induction programmes and professional development opportunities to committee members, with due regard for the principles of good governance and international best practices. A secondary aim of this study was to propose methods to improve the relationship between the internal audit activity and audit committees in providing additional support to its members. The audit committee's needs and requirements were assessed by using the audit committee charter as the basis in identifying the responsibilities of the committee and the professional development needs of committee members in an organisation. It was found that a framework for the induction and professional development of audit committee members would be most useful to internal auditors to assist audit committees to meet their requirements and improve their performance. / Auditing / M. Com.

Thesis (MAcc (Accountancy ))--University of Stellenbosch, 2006. / ERP applications have evolved into enterprise-wide applications, which are generally acknowledged today as a critical component in an organisation’s information strategy. When implementing an ERP application, the control and governance of all IT processes are critical to ensure that value is delivered, risks are managed and that the investment in IT (ERP) delivers a reasonable return. It should, therefore, be important to focus on mitigating IT process risks that have an impact on the ERP environment, so that the level of residual risk is acceptable and aligned with the business objectives. This assignment focuses on using the generally accepted IT framework, COBIT (Control Objectives for Information and related Technology), as governance and control model. The criticality of each COBIT control objective (IT process) is evaluated by applying the COBIT control objectives in an ERP environment. Specific reference is also made to Qmuzik as an ERP application. By applying COBIT in an ERP environment, the most critical IT processes applicable to ERP are identified, in order to ensure that the minimum process controls for these IT processes are designed and implemented.