I examine factors influencing accounting firms' and their clients' decisions to pursue an auditing vs. consulting relationship. I employ the Sarbanes Oxley Act (SOX) prohibition on providing both services to the same clients as a natural experiment. Because Deloitte & Touche was the only Big 4 firm to retain its consulting division post-SOX, I compare Deloitte's client switch and retention decisions to those made by its direct competitors. In this context, I investigate how the decision to continue or terminate an audit relationship is influenced by auditor industry specialization, the historical provision of auditor-provided consulting services and the likelihood that the client will require consulting services in the future. I find that there is a preference for auditing when the auditor is a specialist in the client's industry, and there is a preference for consulting when the auditor provided consulting services in the past and the client is likely to require consulting services in the future. I also report empirical evidence on audit effectiveness and efficiency in cases where the auditor and its client discontinued the audit in order to maintain a consulting relationship. Although there was no impact on audit effectiveness, the auditor switches reduced efficiency as evidenced by significantly higher audit fees. This study is relevant to the current audit environment because public accounting firms that spun-off their consulting divisions around the enactment of SOX are in the process of rebuilding their consulting practices and must now choose between providing audit and consulting services to their clients. It may also be pertinent to European policy makers who are currently considering a proposal to limit auditors' ability to jointly offer audit and consulting services to the same client.

I investigate the stock market's reaction to events related to the Public Company Accounting Oversight Board's (PCAOB) development and enactment of Auditing Standard No. 5 (AS 5). The change from Auditing Standard No. 2 (AS 2) to AS 5 was debated in the business press at length. The PCAOB stated that the goal of AS 5 was to reduce the prohibitive costs of the Sarbanes-Oxley Act of 2002 - Section 404 and AS 2 (Krishnan et al. 2008) while maintaining the effectiveness of the internal control audits required by those policies. However, there was concern that internal control audit quality would decrease under AS 5. My study examines how investors perceived this change by considering stock market reaction around 10 event dates related to PCAOB and Securities and Exchange Commission (SEC) actions with regard to the development and enactment of AS 5. I find evidence that the market's reaction to key AS 5 events was significantly negative, which is consistent with investors perceiving AS 5 as a significant decrease in internal control audit quality. I also study these investor reactions cross-sectionally to further examine the two potential effects of AS 5 (decrease in compliance costs and decrease in internal control audit quality) and how they relate to firm characteristics (size, complexity, litigation risk, and fraud risk). I find evidence consistent with my main finding: investors' perceived increase in information risk under AS 5 is apparent when considering firm characteristics. Finally, I consider ex-post financial reporting quality under AS 5 and find no significant change in financial reporting quality compared to under AS 2. This study contributes to accounting research by being the first to study the stock market's perception of this significant policy change archivally and the first to consider the effectiveness of AS 5 with regard to financial reporting quality.

Från 1918 och framåt har invandringsströmmen varit större än utvandringen i Sverige. Till följd av att invandringen har överstigit utvandringen de senaste 95 åren är detta en av faktorerna som har bidragit till folkökningen i Sverige. Den stigande folkökningen i Sverige har skapat en mer konkurrenskraftig arbetsmarknad, där efterfrågan av sysselsättning ökar men utbudet är begränsat. En del av de utrikes födda har haft svårighet att hitta sysselsättning under en längre period på grund av målgruppens begränsningar. För lösa denna problematik har flera invandrare startat eget företag. Flertal av invandrarföretagare har olika former av begränsningar exempelvis språkliga, juridiska och formella. De har ett annat karaktärsdrag än etnisk svenskar, därför är invandrarföretagarens preferenser om vilka faktorer som är väsentliga vid val av revisor vara skiljaktig mot en etnisk svensk. Vilket leder till vår forskningsfråga som undersöker vilka faktorer påverkar val av revisor för småföretagare med utländsk bakgrund? Syftet med forskningen är att förstå vilka faktorer som är väsentliga när en småföretagare med utländsk bakgrund väljer sin revisor med tanke på företagarens begränsningar. En hermeneutisk forskningsfilosofi har använts under studien med en abduktiv forskningsansats och en kvalitativ forskningsmetod. Den kvalitativa forskningsmetoden har utförts genom intervjuer, där intervjuerna har utförts med fem respondenter i Region Skåne. Svaren som genererades utifrån intervjuerna analyseras i utgångspunkt med förslagen som har tagits fram i teoretisk referensramen. Slutsatsen indikerar att invandrarföretagares begränsningar påverkar deras val av revisor. I denna studie har vi kunnat påvisa samband mellan olika begränsningar och olika specifika faktorer hos revisorn. Ett samband som kunde påvisas är exempelvis invandrarföretagarens begränsningar i svenska och revisorns förmåga att tala företagarens modersmål. / Since 1918 onwards, the immigration has been greater in Sweden than the emigration. As a result of immigration exceeding the amount of emigration in the past 95 years, it is one of the elements contributing to the increase in population in Sweden. The growing population in Sweden has created a competitive labor market, where demand for work increases but the supply is limited. Finding employment for a longer period has shown to be a difficult for some non-natives because of the restrictions of the target group. To solve this problem, many immigrants choose to start their own company. Many immigrant entrepreneurs have different restrictions, for instance; linguistic, legal, and formal. They posses contrasting characteristics from ethnic Swedes, hence having contrasting preferences from ethnic Swedes about which factors are essential when choosing auditors. Accordingly, it leads to our research question which examines what factors affect the choice of auditor for small business owners with a foreign background? The aim of this research is to understand the essential factors for small business owners with a foreign background, considering their restrictions, when choosing an auditor. A hermeneutic research philosophy with an abductive research approach and a qualitative research method has been used in this study. The qualitative research method has been carried out through interviews, where the interviews were conducted with five respondents in Region Skåne. The answers from the interviews are analyzed based on the propositions that were developed in the theoretical framework. The conclusion indicates that the restrictions of immigrant entrepreneurs affect their choice of auditor. In this study we have been able to demonstrate a correlation between different restrictions and different specific factors of the auditor. A correlation that could be demonstrated is for example the immigrant entrepreneur’s restrictions in the Swedish language and the auditor’s ability to speak the business owner’s mother tongue.

Syfte Syftet med denna studie är att förklara hur auktoriserade revisorer upplever att de senaste förändringarna inom revisionsbranschen påverkat samhällsnyttan av revision. Metod En kvantitativ undersökning genomfördes via en elektronisk enkät som skickades ut till svenska auktoriserade revisorer, varpå en statistisk analys av 130 svar var möjlig. Resultat Resultatet visade att medlemmarna av den svenska revisorsprofessionen är enade. Revisorer identifierar sig både professionellt och organisatoriskt. Svenska revisorer upplever att rådgivning är positivt för samhällsnyttan, de upplever även att ISA har en positiv inverkan på samhällsnyttan. Äldre revisorer är dock negativa till internationella regelverk. En stark revisorsidentitet visade sig vara avgörande för uppfattningen om förändring ökar eller minskar samhällsnyttan. Praktiskt bidrag och sociala aspekter Studien har visat att professionell identitet och organisatorisk identitet kan mätas som ett samlat begrepp, kallat revisorsidentitet. Begreppet innefattar hela revisorsprofessionen med både profession och organisation. Studien bidrar även till förståelse över hur förändringar inom den svenska revisorsprofessionen uppfattas av de svenska auktoriserade revisorerna. / Purpose The aim of our study was to explain how the authorized auditors in Sweden perceive that the institutional changes have affected the public interest o auditing. Method A quantitative study was made through an electronic survey which was sent to authorized auditors in Sweden. Were 130 answers could be used in the statistical analysis. Findings The result shows that the members of the Swedish audit profession are united. Auditors identify themselves both with professional and organizational identity. Swedish auditors perceive that consulting is positive for the public interest; they also feel that ISA has a positive impact on the public interest. However; older auditors have a negative attitude towards international regulations. The auditor identity turned out to be the crucial element whether or not institutional changes perceived to increase or decrease the public interest. Practical implications and originality The study has showed that professional identity and organizational identity can be assembled as one concept, the auditor identity. The concept includes the entire audit profession, both profession and organization. The study also contributes to the understanding of how institutional changes in the Swedish audit profession is perceived by the Swedish authorized auditors

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Syfte: Studien syftar till att undersöka hur valet av revisorns initiala förhandlingsstrategi påverkas av det karismatiska ledarskapet utövat av klientens CFO. Studiens forskningsfrågor berör även vilka förhandlingsstrategier som är det mest sannolika att revisorn väljer att tillämpa när klientens CFO upplevs som karismatisk. Metod: Studien baseras på positivistiskt synsätt där jag genom en deduktiv ansats har prövat resultatet från en kvantitativ undersökning mot teorier inom området. Studien har en tvärsnittsdesign. Datainsamlingen gjordes genom en webbaserad enkätundersökning som skickades ut till revisorer verksamma i Sverige. Resultat & slutsats: Studien bekräftar att begreppet karismatisk ledare är relevant i sammanhanget då det visar att respondenterna upplever starka och svaga ledare i sin dagliga förhandlingsgärning i termer av karismatiska ledare. Vidare kunde studien identifiera ett samband mellan en av förhandlingsstrategierna och karismatiskt ledarskap. Uppsatsens bidrag: Studien bidrar till redovisningslitteraturen genom att gestalta förhandlingen mellan revisorer och klienter som ett socialt fenomen där möjligheten att inflyta över motparten är central. Vidare är studien ensam om att undersöka karismatiskt ledarskap som påverkansfaktor på revisorns val av förhandlingsstrategi. Förslag till fortsatt forskning: Studiens begränsningar utgörs av den låga svarsfrekvensen och svårigheten att iscensätta effekterna av ett karismatiskt ledarskap. Vidare studier bör anta en mer experimentell karaktär för att ytterligare kunna förklara den potentiella effekten som det karismatiska ledarskapet kan ha på revisorers val av förhandlingsstrategi samt en studie av hur klientens val av förhandlingsstrategi påverkar revisorns val av förhandlingsstrategi. / Aim: The study aims at investigating how the choice of the auditor's initial negotiation strategy is influenced by the charismatic leadership exercised by the client's CFO. The research questions also concern which negotiation strategies are most likely that the auditor chooses to apply when the client's CFO is perceived as charismatic. Method: The study is based on positivistic and deductive approach, through which I have tested the result of a quantitative survey with theories in the field. The study has a cross sectional design. The data collection was done through a web-based survey that was sent to auditors operating in Sweden. Result & Conclusions: The study confirms that the term charismatic leader is relevant in this context as it shows that respondents experience strong and weak leaders in their daily negotiation action in terms of charismatic leaders. Furthermore, the study could identify a link between one of the negotiation strategies and charismatic leadership. Suggestions for future research: The study contributes to the accounting literature by stating the relationship between auditors and their clients, and more specifically the negotiation between auditors and clients as a social phenomenon. Furthermore, the study is alone in applying the charismatic leadership as an impact factor on the auditor's choice of negotiation strategy. Contribution of the thesis: The limitations of the study consist of the low response rate and the difficulty in staging the effects of charismatic leadership. Further studies should adopt a more experimental character to further explain the potential impact that charismatic leadership may have on the auditors' choice of negotiation strategy as well as a study of how the client's choice of negotiation strategy influences the auditor's choice of negotiation strategy.

De kommunala aktiebolagen måste granskas av en auktoriserad revisor. Dock måste dessa upphandlas enligt LOU. LOU har kritiserats för att påverka vilka faktorer som avgör vilken revisionsbyrå som upphandlas. De kommunala aktiebolagen har också kritiseras för att brista i transparens. Få tidigare studier har fokuserat på revision inom kommunala aktiebolag på grund av att det hamnar mellan två forskningsfält. Därför är det intressant att undersöka vilka faktorer som påverkar valet av revisor. Syftet med denna studie är att förklara vilka faktorer som påverkar om sakkunnig yrkesrevisorer anlitade av kommunens revisorer och auktoriserad revisor i kommunens bolag upphandlas från samma revisionsbyrå eller inte. Studien har en deduktiv ansats eftersom befintliga teorier härleds och ligger till grund för studiens hypoteser. En tvärsnittsstudie har genomförts för att förklara sambandet mellan olika faktorer och valet av revisionsbyrå. Empirin består av primär- och sekundärdata och datainsamling har gjorts genom dokumentstudier samt en enkätundersökning. Detta analyseras sedan med hjälp av regressionsanalyser. Studiens resultat visar att det finns faktorer som förklarar valet av revisionsbyrå. Upphandlingsprocessen uppvisar ett signifikant samband med valet av revisionsbyrå. / Municipal corporations require auditing by a certified auditor. These must be procured in accordance with Swedish legislation (LOU). However, this process of procurement has been criticized for affecting auditor choice while Municipal corporations have been criticized for lacking transparency. The fact that municipal corporations are considered part of both the private and public sector have lead to few studies focused on this type of organization. Auditing in municipal corporations is therefor of interest to study. The aim of this thesis is to explain which factors affect whether or not municipal auditors and certified auditors for the municipal corporations are procured from the same audit firm. A deductive approach is used for creating hypotheses based on existing theories. In order to explain the relationship between different factors and the choice of audit firm we use a cross-sectional design. Secondary data is gathered through documents and a survey is designed for the purpose of collecting primary data. The data is analyzed through regression analysis. Results show factors affecting the choice of audit firm. There is a significant relationship between the procurement process and the choice of audit firm.

Bakgrund: Revisorns oberoende tycks ständigt bli ifrågasatt vid kriser och skandaler. Revisionsbranschen har på senare år kommersialiserats och revisorns professionella ansvar innefattar numera andra områden än de traditionella, vars inverkan på revisorns oberoende det råder delade meningar om. Röster har också höjts om att själva begreppet oberoende bör bytas ut och ersättas av ett annat. Kopplat till oberoendefrågan ifrågasätts även huruvida begreppet klient eller kund bör användas som benämning för det granskade företaget, där klient kan kopplas till professionalism och kund till kommersialism. Syfte: Syftet med denna studie är att utforska hur revisorns oberoende uppfattas utifrån ett klient- och kundfokus. Metod: Studien har en kvalitativ forskningsmetod med i huvudsak en induktiv ansats. Empiri har samlats in genom dels semi-strukturerade intervjuer med revisorer från Big 4, dels en dokumentstudie med material från organisationer och myndigheter. Empirin har sedan analyserats genom begrepps- och innehållsanalys. Slutsats: Oberoendet beskrivs utifrån begrepp såsom självständighet, opartiskhet, förtroende, objektivitet, professionell skepticism och integritet. Den enskilda revisorn tycks ha en mer utförlig uppfattning av oberoendets innebörd än vad som kommuniceras utåt, vilket tyder på att det behövs en tydligare definition för att skapa förståelse från samhällets sida. I motsats till vad teorin säger pekar praktiken på att det råder en samstämmighet mellan kundbegreppet och professionalism. / Introduction Auditor independence is often questioned in times of crisis and scandals. The profession has in recent years been exposed to commercialization which has led to the auditor having other responsibilities except for the traditional ones, whose effects on auditor independence are still in debate. There are also those who thinks that the concept of independence should be replaced. Related to the debate of auditor independence is the question whether the auditee should be named client or customer, where client can be associated with professionalism and customer with commercialism. Purpose The purpose of this study is to explore how auditor independence is perceived based on a client and customer focus. Method The study has a qualitative researching method with mainly an inductive approach. The empirical data has been collected through semi-structured interviews with auditors from the Big 4 and through a document study with data from organisations and authorities. The empirical data has been analyzed through concept and content analysis. Conclusion Independence is described as independency, impartiality, confidence, objectivity, professional skepticism and integrity. The individual auditor seems to have a more detailed perception of the meaning of independence than what is communicated to the society, which indicates the need of a more detailed description to help create an understanding. In contrast to theory, praxis shows a consensus between the use of customer and professionalism.

The current reform of audit was introduced in 2010, which would mean that small limited firms in Sweden have the right to choose if they want to conduct an audit. The purpose of this study is to examine the expectations of smaller limited companies in Sweden have on conducting an audit. By examining these expectations, the essay also studies the companies’ perceptions of the auditor’s role and what kind of tasks they perceive to be included in the auditor’s role. In accordance with the study’s empirical results, the smaller limited companies are satisfied with their auditor’s work. The auditor’s role is perceived mainly as positive and to include tasks that are related to the firms’ financial area. This study has also shown that smaller limited firms in Sweden do consider audit to be important, which is why they use an auditor even with regard to the current reform that exempts them from this obligation.

As responsabilidades que envolvem a atividade do auditor é um assunto muito debatido, principalmente em episódios de fraudes e outros escândalos financeiros. Em geral, são nesses momentos que a função do auditor é questionada, e o mercado atribui determinadas responsabilidades a esses profissionais que podem não corresponder com as suas atribuições (Audit Expectation Gap - AEG). Porter (1990) dividiu o AEG em dois principais componentes: (i) Gap de Desempenho e (ii) Gap de Razoabilidade. O último refere-se à diferença de expectativas sobre as quais os usuários das informações financeiras acham que os auditores devem executar determinada tarefa quando de fato eles não têm a obrigação nem o objetivo de fazê-la. Utilizando o constructo de Porter (1990), este trabalho teve como objetivo identificar a existência do AEG de razoabilidade nas decisões de litígios (acórdãos) nos quais as empresas de auditoria figuram como polo passivo. A intenção foi verificar se a diferença de expectativas com relação ao trabalho do auditor fez-se presente nos documentos de conclusão dos processos cíveis e administrativos. Para tanto, foram analisados: 11 acórdãos de processos cíveis, 19 acórdãos de processos administrativos CVM e 4 acórdãos de processos administrativos Bacen, totalizando 34 acórdãos. A metodologia empregada foi a análise documental e análise de conteúdo. Para auxiliar na organização e análise dos dados, foi utilizado o software Nvivo®. Além da análise dos acórdãos, foram realizadas entrevistas com ex-membros do Colegiado da CVM, para confirmar o entendimento de como funcionam os processos de julgamento nesse Regulador, bem como obter a perspectiva desses profissionais diretamente envolvidos em julgamentos dessa espécie. Para o total dos acórdãos analisados, foi identificada a presença de AEG de razoabilidade em 10 casos, o que representa aproximadamente 29% do total. Além da identificação AEG de razoabilidade nas argumentações dos juízes, o gap também foi identificado, de forma muito mais frequente, em diversos trechos dos documentos analisados, como, por exemplo, as argumentações da acusação e advogados envolvidos. Os achados desta pesquisa foram importantes pois a identificação da existência desse gap pôde auxiliar no endereçamento desta questão. A tomada de decisão com base em argumentos equivocados pode não apenas trazer prejuízos para as firmas de auditoria, mas também para o Sistema Financeiro Nacional e setor financeiro empresarial em geral, bem como ocasionar injustiças. Como uma das formas de endereçamento do problema, nos casos dos processos administrativos, sugere-se que a composição do Colegiado e do CRSFN seja diversificada, ou mesmo que tenha a presença de um especialista para casos de julgamentos específicos, como são os casos dos julgamentos que envolvem o auditor independente. / The responsibilities entailed in the work of the auditor are a subject of much debate, chiefly when frauds and other financial scandals occur. Frequently on these occasions the function of the auditor comes into question and the business world attributes certain responsibilities to these professionals that they may not actually have (Audit Expectation Gap - AEG). The author Porter B. A. (1990) separated AEG into two main components: (i) the performance gap, and (ii) the reasonableness gap. The latter refers to the difference between the expectations of users of financial information regarding the specific tasks they believe auditors should perform and the obligations and objectives those auditors actually have. Using the construct of Porter B. A. (1990), this work has the objective of identifying the existence of the reasonableness gap in legal rulings (decisions of appellate courts) in which audit firms were the defendant. The intention was to establish if the difference in expectations regarding the work of the auditor was present in the decisions and opinions of the civil and administrative proceedings. In order to do so, an analysis was made of 11 civil appellate court decisions, 19 administrative rulings of the Comissão de Valores Mobiliários - CVM (equivalent to the Securities and Exchange Commission in the USA) and four administrative rulings of Brazilian Central Bank; 34 judgments in all. The methodology employed was document analysis and content analysis. To aid in the organization and analysis of data, Nvivo® software was used. In addition to analysis of the judgments, interviews were conducted with former members of the CVM board to confirm the understanding of how trial procedures function at this regulator, as well as to gain the perspective of these experts, who are directly involved in judgments of this kind. From the total of the judgments analyzed, the presence of reasonableness AEG was identified in 10 cases, which represents approximately 29% of the total. In addition to identifying reasonableness AEG in the arguments of judges, this gap was also identified, and much more frequently, in various passages of the documentation on the argumentation of attorneys involved in the cases. The findings of this study are important because identifying the existence of this gap may aid in addressing the issue. Rulings based on misguided arguments can not only harm audit firms but also damage the National Financial System and the corporate financial sector in general, as well as causing injustice. As one way of addressing the issue, in administrative cases it is suggested that the composition of the panel and the CRSFN (Council of Appeals of the National Finance System) be made more diverse, and in certain cases even include a specialist, such as when judgments involve an independent auditor.