South African Government introduced the supply chain management framework in 2003, with a vision of creating a seamless system which will play a pivotal role in service delivery provision to the communities, while achieving the objectives of cost effectiveness, fairness, equity transparency and ethics. The main aim of adopting this framework immediately after reform was to align the Public Sector Supply Chain management to the best practices. Unfortunately since its inception the supply chain management, particularly in the local government, has not enjoyed good publicity, due to the following three main factors, firstly incompetency of the supply chain management practitioners on using the preference points system, writing insufficient motivation when deviating from the SCM policies and irregular extensions of validity periods. The second main factor is the unethical conduct of the supply chain management practitioners in collusion with suppliers to overprice their respective tenders and also to supply inferior material for projects intended for community development. The last main factor is the lack of political leadership to enforce compliance, such as consequence management for those who contravened the supply chain management policies, as some councillors are also found doing business with their municipalities which is against the Municipal System Act 32 of 2000. The aim of this study was to establish an effective supply chain management framework for local municipalities in order to achieve the primary objectives of Section 217 of the Constitution of the Republic which are fairness, equity, transparency, and competitive and cost effectiveness. The study found that supply chain management practitioners have indicated that they have a very good understanding of how the supply chain management framework should be applied and of related legislations, but the literature differs with the views of the practitioners, as corruption, fraud and lack of consequences reports are still raised by the Auditor General South Africa and by other publications over the years. The following are recommendations that should be taken into account for the supply framework to function effectively: - Establish a Supply Chain Management Professional Association (SCMPA) of which the role is to provide annual online assessment for all the supply chain management practitioners; - To use the Construction Industry Development Board (CIDB) grading certificate as evaluation minimum criteria of assessing functionality in accordance with the specific project; - Cancel the provision to re-issue or re-advertise the tenders after the supply chain management unit has received quotations from suppliers. - Municipalities should develop an integrated online commodity price listing supply database which should be operational 24 hours. Also to develop a Cellular phone application that will enable all the service providers to access the portal at any time to load their respective prices. - Make provision to include members of the audit committee to be charged for negligence under financial misconduct section 171 of the Municipal Finance Management Act 56 of 2003. - To provide the Auditor General South Africa and the Public Protector with legislative powers to refer malpractices or contravention with the supply chain policies to the SCMPA and SAPS to recover wasteful and fruitless expenditure as required by Section 102 of Municipal Finance Management Act (MFMA) of 56 of 2003 after complying with section 173 of the MFMA. / MBA, North-West University, Potchefstroom Campus, 2015

South African Government introduced the supply chain management framework in 2003, with a vision of creating a seamless system which will play a pivotal role in service delivery provision to the communities, while achieving the objectives of cost effectiveness, fairness, equity transparency and ethics. The main aim of adopting this framework immediately after reform was to align the Public Sector Supply Chain management to the best practices. Unfortunately since its inception the supply chain management, particularly in the local government, has not enjoyed good publicity, due to the following three main factors, firstly incompetency of the supply chain management practitioners on using the preference points system, writing insufficient motivation when deviating from the SCM policies and irregular extensions of validity periods. The second main factor is the unethical conduct of the supply chain management practitioners in collusion with suppliers to overprice their respective tenders and also to supply inferior material for projects intended for community development. The last main factor is the lack of political leadership to enforce compliance, such as consequence management for those who contravened the supply chain management policies, as some councillors are also found doing business with their municipalities which is against the Municipal System Act 32 of 2000. The aim of this study was to establish an effective supply chain management framework for local municipalities in order to achieve the primary objectives of Section 217 of the Constitution of the Republic which are fairness, equity, transparency, and competitive and cost effectiveness. The study found that supply chain management practitioners have indicated that they have a very good understanding of how the supply chain management framework should be applied and of related legislations, but the literature differs with the views of the practitioners, as corruption, fraud and lack of consequences reports are still raised by the Auditor General South Africa and by other publications over the years. The following are recommendations that should be taken into account for the supply framework to function effectively: - Establish a Supply Chain Management Professional Association (SCMPA) of which the role is to provide annual online assessment for all the supply chain management practitioners; - To use the Construction Industry Development Board (CIDB) grading certificate as evaluation minimum criteria of assessing functionality in accordance with the specific project; - Cancel the provision to re-issue or re-advertise the tenders after the supply chain management unit has received quotations from suppliers. - Municipalities should develop an integrated online commodity price listing supply database which should be operational 24 hours. Also to develop a Cellular phone application that will enable all the service providers to access the portal at any time to load their respective prices. - Make provision to include members of the audit committee to be charged for negligence under financial misconduct section 171 of the Municipal Finance Management Act 56 of 2003. - To provide the Auditor General South Africa and the Public Protector with legislative powers to refer malpractices or contravention with the supply chain policies to the SCMPA and SAPS to recover wasteful and fruitless expenditure as required by Section 102 of Municipal Finance Management Act (MFMA) of 56 of 2003 after complying with section 173 of the MFMA. / MBA, North-West University, Potchefstroom Campus, 2015

The thesis explores the relationship between Audit Committees and External Auditors’ fees of a sample of FTSE 350 companies in the UK for the period of 2005-2006. This is achieved by providing answers to three main research questions. First, what are the determinants of Audit Committee activity? Second, what is the relationship between Audit Committee activity and external auditors’ fees? Third, what is the relationship between audit and non-audit fees and how does the Audit Committee affect these? Starting out with an Agency Theoretical background, the study found evidence consistent with the views that a higher proportion of Independent Non-Executive Directors on the board enhances Audit Committees’ activity, but the presence of financial expertise on the committee was not found to be statistically significant in explaining its activity. The thesis also documented evidence that shows that Audit Committee activity is inversely related to managerial ownership of shares in companies. In line with the economic theory of auditing, the researcher used fees paid to the external auditor to proxy for the level of economic bonding between auditors and their clients. Higher fees are interpreted to indicate compromised independence. Five alternative measures of economic bonding were used. The researcher found a stable and statistically significant positive relationship between measures of economic bonding and Audit Committee activity. This finding is consistent with the view that Audit Committees buy more services from the auditors in order to enhance auditing and reporting quality. Strong positive relationships between audit and non-audit services and vice versa were found using a single equation fees model but these relationships were not consistent when the researcher controlled for endogeneity between audit and non audit fees using Simultaneous Equation Models (SEM). Audit Committee activity was not statistically important in these relationships. This evidence taken together supports the proposition that economies of scope exist in the joint provision of both audit and non-auditing services to the same client. Finally the thesis also documents evidence that suggests that knowledge spill-over flows from non-audit services to auditing services and that auditor do not use audit as a loss leader.

To gain insight into the impact that investors have on the firm's auditor choice decision, this study investigates the association between changes in investor monitoring and auditor turnovers. Hedge fund activism provides a unique setting to observe how highly motivated investors, willing to incur significant expense to effect changes in target firms, are able to influence a firm's decision to dismiss their external auditor. I find that activist hedge fund targets see an increase in auditor turnovers and dismissals during the years following hedge fund activism relative to both the two years' pre-activism and a propensity matched sample of firms. I document that the increase in auditor turnovers is primarily driven by target firms with a Big 4 auditor, and that hedge fund targets primarily seek a lateral change in auditors. Consistent with institutional concerns that excess compensation impairs auditor independence, I find that activist targets are more likely to dismiss their auditors when the auditor is earning high non-audit service fees and high abnormal audit fees. I then examine how the market interprets the lateral change in auditors. I find that financial statement reliability increases for lateral auditor changes associated with independence concerns. Finally, I examine the conditions under which the hedge funds are able to facilitate an auditor change. I find that hedge funds pursuing less aggressive activist campaigns, and hedge funds seeking less public forms of interventions are more likely to seek an auditor dismissal. This relation between non-confrontational campaigns and auditor dismissals is consistent with prior research suggesting that hedge funds seeking to work with management are better able to enact changes in a target firm.

Revision har varit en omtalad diskussion sedan länge där revisorer och redovisningskonsulter har haft skilda åsikter för huruvida det är givande eller inte att ha en revisor i sitt företag. I Sverige hade alla aktiebolag revisorsplikt fram till år 2010 när en lagförändring inträffade. De företag som inte uppnådde minst två av följande kriterier två år i följd fick valet av att bestämma om de ville ha en revisor eller inte. Kriterierna är som följer:  Max 3 anställda i medeltal Balansomslutningen får inte övergå 1,5 miljoner kronor Omsättningen får inte övergå 3 miljoner kronor Endast 20 % av de nystartade små företagen år 2013 valde att anlita en revisor. Av de befintliga företagen utan revisionsplikt valde 54 % att fortsätta använda sig av en revisor. Den stora minskningen av användandet av revisor väcker frågan om det finns faktorer som kännetecknar företag som väljer att fortsätta anlita en revisor. Undersökningen genomfördes baserat på en kvantitativ studie där fem faktorer identifierades; tillväxt på nettoomsättning, tillväxt på antalet anställda, tillväxt på balansomslutning, tidigare oren revisionsberättelse samt bankfinansiering. Faktorerna undersöktes genom granskning av årsredovisningar för åren 2010-2012 för 200 stycken företag utan revisorsplikt som har revisor och som inte har revisor. Efter empiri insamlingen utfördes en statistisk analys i form av ett oparat t-test. Resultatet visade att tillväxten på antalet anställda, tillväxten på balansomslutningen samt bankfinansieringen var faktorer som kännetecknar företag utan revisorsplikt med revisor. De företag utan revisorsplikt med revisor hade i genomsnitt lägre tillväxt på antalet anställda, balansomslutning och bankfinansiering i jämförelse med de företag som inte hade revisor. Kännetecken för valet av att behålla en revisor efter lagförändringen 2010 är därmed tillväxt på antalet anställda, tillväxt på balansomslutning och bankfinansiering. / Auditing has been a highly discussed topic throughout the years and different opinions on whether it is necessary or not to have an auditor for firms have been debated. In Sweden, it was mandatory to have an auditor until the year of 2010 when the law for small firms changed. Nowadays, small companies are defined by: A maximum of 3 employees in average A maximum of 1,5 million SEK in total assets A maximum of 3 million SEK in revenue and they can freely choose whether or not to have an auditor. Since the abolition of mandatory audit duty for small companies caused a decrease in use of an auditor it is of interest to gain knowledge of what kind of characteristics that signifies the firm’s choice to continue to employ an auditor. The study was performed using a quantitative method where five characteristics were identified. These characteristics were the growth on net revenue, the growth on number of employees, the growth on total assets, qualified audit reports, and bank financing. The chosen characteristics were examined by reviewing annual reports for the years 2010-2012. 200 firms were chosen from our population, 100 without audit duty with an auditor, and 100 without audit duty without an auditor. After the data were collected a statistical analysis was performed by making an independent t-test. The results showed that the growth on number of employees, growth on total assets, and bank financing were characteristics that characterizes firms without audit duty with an auditor.  The firms without audit duty with an auditor had in general lower growth on number of employees and total assets compared to the firms without audit duty without an auditor. The characteristics identified in this study for the choice of having an auditor without audit duty after the law change in 2010 is therefore: growth on number of employees, growth on total assets, and bank financing.

Standard setters recently proposed increasing audit disclosures and reporting. Two experiments examine the effects of auditor-provided disclosures on financial statement users’ perceptions of auditor independence, management credibility, reporting quality, materiality, and investment decisions. In the first experiment, I manipulate auditor agreement with management’s estimates and whether the estimates are incentive-consistent for management. I find that users view auditors as more (less) independent when they agree (disagree) with management, given an unqualified opinion. I also find that users are able to identify management bias using audit disclosures, and that the disclosures are value-relevant. In the second experiment, I provide users with either an explicit or implicit materiality disclosure and elicit users’ materiality judgments either before or after the disclosure. I find that users’ materiality judgments are closer to the auditor’s when elicited after an explicit materiality disclosure. Path analysis demonstrates that users’ materiality judgments affect subsequent investment and audit-related judgments but do not affect important decisions related to auditor liability and investment. The findings provide empirical support for the argument that additional audit disclosures would increase the transparency and value-relevance of the audit report.

This dissertation examines how differences between the strategic-systems audit approach and the traditional, transaction-based audit approach affect the content and complexity of client business knowledge in long-term memory, how these mental representations develop with experience, and how the representations affect risk assessment. Knowledge of the client?s business is essential to conducting an effective and efficient audit, but researchers have devoted little attention to how this knowledge is represented in memory and what effect it has on audit judgment. Moreover, proponents of the strategic-systems approach argue that this approach leads to the formation of a more-complex client business model and results in better audit judgments than the transaction-based approach. The study?s results contradict these claims, with the strategic-systems auditors having less-complex models than their TBA counterparts. Also, no experience-related differences were found in the client models, and risk assessments were only weakly affected by content and complexity differences between client models. After a variety of supplemental analyses, it was concluded that there is no evidence from this dissertation to suggest that the SSA methodology does not result in an auditor possessing an enhanced knowledge of the client?s business compared to that possessed by an auditor employing a traditional audit approach.

High turnover among auditor assistants is a problem in the auditor profession. 61,7 % of young graduates economists have changed profession at least once during their first three years as employees (Hiltebeitel & Leauby, 2001), heavy workload in the auditing profession is considered to be a contributing factor (Axelsson, 2015). The main purpose of the study is to explain how students' views on the workload affects staff turnover among auditor assistants. In addition, the aim is to describe the expectations of a corresponding expectation gap between students and auditor assistants. In order to achieve the purpose of the study, behavioural theories such as Theory of Planned Behavior and Social Cognitive Theory have been adopted. Further, the Expectation Theory, Identity Theory, Theory of Professions and previous studies of the expectation gap and workload, stress and time pressure are used. The study is based on a combination method based on three interviews with auditor assistants, to develop an understanding of auditor assistants experience of the workload. Subsequently a questionnaire was sent to students with a total of 134 received answers. A short questionnaire with three questions similar to those sent out to students has also been sent to the auditor assistants, with a total of 43 received answers. The results shows that there is an expectation gap considering workload between students and auditor assistants. Further aspects have emerged as contributing factors to high staff turnover in the auditor profession, such as expectations for salary and work content.

Emotions are an important underlying factor that may interact with pressure and other situational variables to influence auditors’ judgments and decisions. This study seeks to identify emotional intelligence (EI) as a key factor in dealing with emotions and pressures in an audit context. In this paper, I focus on how EI may influence the relation between job pressures (i.e., time budget pressure and client incentive pressure) on the auditor’s judgment. Specifically, I investigate the moderating effect of emotional intelligence on auditor judgments when auditors experience both internal and external pressures. The results suggest that the moderating influence of EI on auditor judgments can effectively reduce auditors’ tendency to engage in dysfunctional behavior in order to improve audit quality. Furthermore, there is a positive relation between EI and professional skepticism suggesting that auditors with high EI are more skeptical and assess higher risk than auditors with low EI. Finally, moderation analysis suggests that EI is a significant mechanism which drives the joint effects of different type of pressures on auditor judgments.

Title: Activities of certified auditors Key words: auditor, liability, International Standards on Auditing ABSTRACT The diploma thesis focuses on the legal aspects of activities of certified auditors, particularly in the context of auditors' liability. First, it briefly summarizes the history of auditing throughout the world and in the Czech Republic. It analyses the meaning and objectives of the statutory audit and explains the triangular relationship between the auditor, management of the entity and its owners. The description of a typical course of assurance engagement is accompanied by cautionary advice for intricate aspects of acceptance of an audit engagement and the preparation of engagement letter. Attention is paid to materiality levels used during the statutory audit and to the expression that the financial statements give a true and fair view of the financial position of the entity. Different types of auditor's report are distinguished and a variety of errors frequently made not only by users of financial statements from the common public but also by experts participating in management of audited entities is mentioned as well. The three chapters dealing with auditor's liability discuss the civil, disciplinary and criminal issues related to assurance activities. As regards auditors' civil...